In a bid to enhance production capacity and further increase its market share, shareholders of Dangote Sugar Refinery Plc. have given the nod for the formal takeover of Savannah Sugar Company Ltd., SSCL.
Shareholders of DSR during their Extraordinary General Meeting, EGM, which was preceded by the 2019 Annual General Meeting, voted in favour of the merger of the two company as the sub-Sahara Africa’s largest sugar refining firm embarked on the next stage of its backward integration plan to revolutionize the sugar sub-sector of the nation’s economy.
Chairman of the company, Aliko Dangote, said the DSR which has installed capacity to produce 1.44million metric tonnes per annum, would be leveraging the Savannah Sugar’s sugarcane production capacity to enhance its production capacity.
According to him, Savannah Sugar has 32,000 hectares of land available for cultivation of sugar cane as well as milling capacity of 50,000 tonnes of sugar per annum.
Mr Dangoted disclosed that after the merger, further investments would be made to increase SSCL land under cultivation.
He explained that the DSR board considered the merger as fair and reasonable and believed that it would provide strategic opportunities and benefits for the company, employees and other stakeholders as the new company would be operating from the position of increased access to capital and then higher profitability.
He listed some of the benefits of the merger as being to consolidate the assets, intellectual property rights, operations, and business dealings of the SSCL into the DSR; eliminate cost inefficiencies arising from duplication of resources and processes and improve the efficiency through more focused-management of resources and position it as the biggest integrated sugar producer in Nigeria.
The chairman of the company explained that necessary approvals have been given by all concerned regulatory authorities and that the merger would positively alter the sugar sectorial landscape as the federal government’s backward integration policy would be better implemented by the company.
Earlier, during AGM of the company, a shareholder rights’ activist, Nona Awoh, urged the government to protect the manufacturing sector through incentives and promotional policies.
He specifically asked the government to secure the borders in order to deter smugglers who flood the market with inferior goods at lower prices.
He asked Dangote Sugar to liaise with the Manufacturers Association of Nigeria, MAN, and NECA to form a pressure group that would engage the government to increase efforts in curbing smuggling.
He appreciated that he was chosen to represent other shareholders at the AGM where attendance and participation were restricted because of the COVID-19 guidelines.
In his reaction, foremost shareholder activist, Sir Sunny Nwosu, charged Dangote Sugar to increase local production by setting more sugar plantations so as to make Nigeria sufficient in sugar production.
He said that Mr Dangote had achieved this feat in cement industry which has made Nigeria a net exporter of cement adding that it is possible to replicate same in sugar production.
Mr Nwosu was particular that management should increase production volume now that the borders are shut and develop export capabilities as to increase sales and profit.
Another shareholder representative, Bisi Bakare, tasked the management of the sugar refinery to put more efforts as to make more profits which would result in more dividends.
Responding, Mr Dangote noted that the future of the business was in growing more sugar locally so as to hedge from the fluctuations in foreign exchange.
“Growing more sugar locally means removing the need for import of raw sugar for refining,” he said.
He said that the backward integration which is still ongoing has seen the establishments of many sugar plantations across Nigeria. We will try to meet the domestic demand for sugar from local production, he added.
Despite the challenging business environment and the intense competition in the industry, the company posted a group turnover of N161.1 billion, a 7.1 percent increase over N150.4 billion in 2018, a profit before tax (PBT) of N29.8 billion, profit after tax (PAT) of N22.4 billion.