Right above is a picture of Japaul’s shares chart in the last 5 years. It depicts how badly the shares have performed underlined by dismal results year after year the company releases. Low margins, low profitability grow and poor returns. In the past, the company had blamed depreciation, finance cost and reporting standards as reason for their poor results. This time around the Managing Director, Paul Jegede briefed journalist (as reported by Guardian) about its current plans to turn the fortunes of the company around and gave a unique insight into why the company’s results have been very poor;
On Raising Capital
As I speak to now, we are in discussion with a foreign company that wants to come and merge with us and they want to do business with us and we are raising additional money in the essence of N50 billion . We have taken approval from shareholders because we want to coin out a company where this people will merge with us and after five years, they will exit.
Before the end of this year, we have about N50 billion capital injected into this company in the mixture of equity and loan with a daring ratio and by the time we have that one with our present asset, the income that would be coming from there will be able pay dividend.
on the diversification plan;
We want to carry wet cargo. We are currently doing dredging but we want to invest more on it and we would also develop our mining business but our core business is maritime, production of oil&gas but we would do more on shipping.
Why dividends having been paid in the last few years.
After we finished raising money in 2008, we bought some old vessels and we were using it for business but in 2009 when the market crashed, the first challenge was that the vessel we bought for N18 billion crashed to less than N10 billion in terms of value and income also plunged. In 2012, a foreign company brought brand new vessels up to 125 vessels into Nigerian market and that sent all indigenous companies packing and those vessels for the past three years has not being making money because they are pushed out of the market.
“But we still went ahead to acquire new vessels and two years from now, these vessels will be free to bring income to shareholders because we have paid the bank substancially and some are purchased while some are on long-term lease. By the time these assets are paid off in 3-4 years, the assets becomes ours and we have them for shareholders.”
The Japaul oil boss submitted that this would reposition the company to compete favorably with foreign companies, which, according to him, has dominated the industry, adding that the company would also acquire additional 20 vessels to add to the existing eight.