It was just some months ago when Japaul Oil and Maritime Services Plc was all over the news, albeit for all the wrong reasons. Its immensely huge debt portfolio aside, the company had gotten itself immersed in a scandalous $350 million deal with Milost Global Inc; a deal it later pulled out from. It has been months since then and Japaul is yet to get ahead of its many problems.
For this week’s company profile on Nairametrics, we shall be doing a corporate overview of Japaul. This will avail you the opportunity to read about the company’s history, its business model, services, target market, competition, corporate governance, financial troubles, and more.
About the company
Japaul Oil and Maritime Services Plc is a Nigerian engineering/energy equipment company operating in the oil and gas sector. It is specialised in a range of services; including maritime, logistics/vessel support services for drilling installations, downstream oil marketing, dredging, etc. The company was incorporated in the year 1994, although it did not begin full-time operations until 1997.
In the early 2000s, Japaul Oil decided to restructure, the main restructuring agenda being to transition from an initial status of a private company to a publicly quoted one. As a result, the company’s Initial Public Offering on the Nigerian Stock Exchange (NSE) happened in 2005. Apparently, the IPO was quite successful, so much so the company became the first Nigerian upstream service firm to raise N1.3 billion, according to claims on its website. It followed up with the IPO success, raising N20 billion through a public offer in 2007.
A closer look at the company’s services and segments
As a fully-fledged business concern, Japaul Oil offers a wide range of services, but all within the purview of engineering. For the sake of specificity, enumerated below are some of its various services:
- It owns deep sea vessels which it charters to oil companies, offering LPG tanker/cargo lifting and drilling installation services.
- It also designs and installs such facilities as platform decks, CLAM buoys, topsides, etc.
- The company provides ship repairs and docking services.
- It also offers emergency firefighting services to oil companies.
- Japaul is also into dredging and reclamation activities.
- It is fully invested in downstream oil marketing.
- It is into the mining and quarry business.
- The company is also into the construction of roads, residential and industrial housing, bridge construction, etc.
Due to the highly-diversified nature of Japaul’s business model, it is divided into subsidiaries some of which operate outside Nigeria and in such countries as the UAE, India, Oman, etc. One of the main subsidiaries is Japaul Shipping and Offshore Services Limited which is one of the major revenue generators for the company. This segment contributed some N171 million to the company’s total revenue according to its half-year 2018 financial report.
Other subsidiaries of the company are Japaul Energy Limited (JEL) which engages in energy trading, Japaul Mines and Products Limited, Japaul Infrastructure Limited, Japaul Dredging Services Limited, etc.
A look at the company’s target market
Japaul Oil’s primary target market audience are oil companies operating in Nigeria’s upstream energy sector. These companies require such services as those offered by Japaul, including marine logistics/LPG cargo lifting, ship maintenance, docking services, amongst others.
Another target market for Japaul is other companies in need of industrial complexes. Real Estate developers also consist of the company’s target market, as do Governments hoping to build bridges and roads, etc. Meanwhile, asides the engineering expertise it offers, Japaul also provides one of the basic raw materials used for construction – gravel.
The company also targets energy consumers with its petroleum marketing enterprise.
Japaul is in constant face-off with competitors
Japaul Oil and Maritime Services Plc is not a monopolist. As a matter of fact, the company faces competition in each of the various segments of its business. Perhaps one of the segments, where this competition is most rife, is maritime. Here, Japaul faces competition posed by the likes of C & I Leasing Plc, Lagos Deep Offshore Logistics Base (LADOL), and Caverton Offshore Support Group Plc, among others.
About the company’s Board of Directors
One of the most notable members of the company’s Board of Directors is Mr Jegede Paul. He is the Founder and current Chairman of the Japaul Oil and Maritime Services Plc. He holds a degree in Accounting, having graduated from the University of Ilorin. Mr Jegede is also an alumnus of the Rivers State University from where he graduated with a Master’s in Business Administration, MBA. He was, until recently, the company’s Group Managing Director/Chief Executive Officer.
Other members of the company’s Board are:
- Mr Akinloye Daniel Oladapo: He is the current Group Managing Director.
- Mr. Olubunmi Falua: Executive Director, Finance & Planning.
A look at the company’s financial performance
On August 2nd, 2018, Japaul released its half-year 2018 financial report. Total revenue reported was N662 million as against N544 million reported for the same period in 2017. Unfortunately, this slight increase in revenue is nothing compared to the huge loss of N4.79 billion which was reported for the period under consideration. Note that this loss is worse than the N3.46 billion loss that was recorded in half-year 2017.
This latest financial result is a continuation of the company’s losing streak in recent years. In full-year 2017, revenue declined drastically to N1.90 billion, down from N3 billion in 2016. The company recorded a loss of N13 billion in 2017.
Why the abysmal performances?
Most companies are not to blame for a bad performance on factors that are outside of their control, and Japaul is no exception. The company blames its poor performance on everything from the economic recession to depreciating crude oil prices. But Nigeria has mostly been out of recession in 2018. Moreover, the global oil prices have remained favourable, thereby indicating that the company’s financial problems are beyond external economic factors.
The truth is that Japaul has been immersed in a messy debt crisis for a long time. The debt crisis is so serious to the extent that its auditing firm (Pannell Kerr Forster) has more than once questioned its continued existence as a company. According to Pannell Kerr Forster, Japaul’s indebtedness as at December 31st, 2017 is about N46.4 billion.
Meanwhile, despite this huge debt, the management of Japaul Oil and Maritime Services Plc continues to spend so much on administrative cost which, by the way, increased to N3.52 billion in half-year 2018 compared to N2 billion within the comparable period in 2017.
Recall that Japaul was hopeful that the $350 million Milost Global deal would help it reposition for growth. Unfortunately, that deal fell apart whilst taking its toll on the struggling company; just as many of its shareholders sold off their equities.
It is yet to be seen how Japaul Oil intends to redeem itself. In the meantime, however, perhaps it should consider cutting down on its administrative expenses while focusing more on providing the best services possible to their customers. This is important because its many troubles aside, this company’s business model has immense potentials.