The Chief Executive Officer of Dangote Sugar Refinery Plc, Ravindra Singhvi has assured stakeholders that the proposed merger between Dangote Sugar Refinery, NASCON Allied Industries, and Dangote Rice to form Dangote Foods Plc is expected to yield many benefits, solely for the growth of the business and high returns to all the key stakeholders.
Speaking last week on the Business Morning Programme of Channels Television, Ravindra said that the merger when completed will bring economies of scale to the business. He maintained that the merger would lead to cost reduction as the evolved company will gain with an increase in production. The cost, according to him, will now be spread over many goods.
According to him, Dangote Foods will have operational efficiencies, as there would be a reduction in the time needed to obtain raw materials, fuel, manpower, etc for production. Husk and biomass from Rice and Sugar Units will be useful to generate power for the running of the plants.
Also, it is expected that the merger will result in improvement in the supply side of the food industry as many products will roll out of the one-stop food company. The Dangote Sugar Refinery helmsman opined that the merger will further advance the backward integration strategy of the Group as resources, machinery, and skilled manpower are to be harnessed to drive the process.
Dangote Foods Plc, he stated will have the potential for more geographical spread than the legacy companies as the products will be readily available in all the niche markets of the former and even more given the combined assets in terms of manpower, product range, transport, and warehouses.
The company will have a stronger business case for access to capital as the combined business will be bigger and more attractive to lenders, he added.
Speaking on the impact of deregulation of the foreign exchange market, he lamented that many manufacturing companies have sustained forex-linked losses in the period as they made provisions for the slump in the value of the Naira against the dollar. Manufacturers, he noted are making provisions monthly to take care of the fluctuations in the value of the Naira.
He said, “The headwinds are really there. So, we have to be careful in provisioning for changes in the value of the local currency. The floating of the Naira led to a massive fall in its value. This has affected our operations in the sugar industry.”