By InvestAdvocate
Lagos (INVESTADVOCATE)- Salt producer and food products firm, Union Dicon Salt Plc (UNIONDICON) said its seeking to restructure and has earmarked $100 million for diversification, according to Cordros capital company update.
Cordros reported that the plan, according to its management is to transform the company from an integrated salt entity into a West African integrated Agro–Industrial and consumer goods business, with an initial focus on agriculture.
It said in a move towards expanded production in the identified agric categories, UNIONDICON has recently completed investment in the acquisition of land in strategic locations across the country, and plans to spend over $100million in the development of the projects over the next five (5) years. Execution of the projects will be funded through a mix of new equity for organic expansion and growth by acquisitions.
The Cordros company update said the Nigerian Stock Exchange (NSE) has been notified, and approval has been granted for the reclassification of the company’s classification on the Daily Official List from Consumer Goods- Products to Agriculture- Crop Production.
“Currently, UDS has identified profitable opportunities in the agro business value chain, and is building resources and capacity for investments in eight (8) major groups — cassava, rubber, tomato, palm oil, rice, livestock, spices and fruit juices,” the company update affirmed.
It said beginning with cassava, the company is currently preparing for cultivation, 15,000 hectares of land in the Mid-western region. The plan, according to management, is to invest over $40 million over the next twelve (12) months towards achieving the production of 10,000 tonnes of High Quality Cassava Starch (HQCS) per annum on this asset, the Cordros updated added.
It further affirmed that the cassava harvested from the land will be used for the production of sweeteners (Glucose), and ethanol, an industrial raw material used in the production of alcoholic beverages and cosmetics. Interestingly, management hinted that it has already signed off-take agreements to supply HQCS to manufacturers in the FMCG and pharmaceutical industries across Nigeria.
According to Cordros, whilst acknowledging the challenges presently faced by the Nigerian economy and its consumer market, UNIONDICON believes that both the country and sector’s long term outlook — considering the growing population, strong middle class, rapidly changing tastes/preferences, increasing urbanisation and growing retail grocery outlets — is attractive.
The update says more importantly, the company is concentrating on businesses with 100 percent domestic raw materials base, largely insulated from external risks, and have huge potential for local and foreign demand. Also supportive of the business’ long term outlook is that agriculture is strongly recognised as one (1) of current administration’s thematic areas (which were the cardinal point of discussion at the recently concluded National Executive Council Retreat) of strategic economic importance.
“The Executive management of Union Dicon Plc are due to make a statement to the Nigerian Stock Exchange in a “facts behind the restructuring “session on the 8th of April 2016, and we expect further guidance on their growth strategy,” Cordros said.
