Nigeria @59: Rise, fall & rise of Nigerian stock market , Top 10 Stockbroking firms traded N280.6 billion shares in Q3 2019 , Exclusive: NSE suspends Aso Savings, Omatek, NGC, others over account filling deficiency

Aside from the glaring uncertainties surrounding both global and local markets, the fortunes of some Nigerian conglomerates listed on the Nigerian Stock Exchange (NSE) have dropped from boom to bust.

While the Regulation Committee of the National Council of The Exchange (RegCom) has recommended some for delisting, others got delisted a few years back and others that were not listed have gone moribund.

From the manufacturing sector to the Construction, Media and hospitality industries, a large number of businesses established by prominent individuals had collapsed few decades after they were established due to their inability to survive stiff competition posed by younger firms or demise of their owners.

Data obtained from the NSE by Nairametrics shows that RegCom has approved for The Exchange to proceed with the delisting process of Evans Medical Plc, Nigerian German Chemicals Plc, Roads Nigeria Plc, and Omatek Ventures (on delisting watch-list) over their failure to comply with some post-listing requirements, including failure to file their quarterly and annual reports.

[READ MORE: Exclusive: NSE suspends Aso Savings, Omatek, NGC, others over account filing deficiency]

Already, NSE had delisted UTC Plc (2017), African Paint Plc (2018), Costain (2016), Lennards (2016), Premier Breweries Plc (2016), Nigerian Ropes (2016), Nigerian Wire & Cable Plc (2015), Starcomms (2014), Big Treat (2014), Daily Times (2011), FAMAD (2009), and Enpee (2008) among others.

Others that were never listed but used to be giants decades back before they went moribund are Adeola Odutola Industries (AOI), whose owner, Late Chief Adeola Odutola, was the First President of The Exchange (1972- 1975); Okin Industries, whose major products (Okin cabin and shortcake biscuits) were served on the international flights of the ill-fated Nigeria Airways, and Alata Flour Mills, among others.

Deal book 300 x 250

Considering the performance of the economy in the 1970s, 80s and 90s when many of these companies were established and the positive forecast of international economic experts for preceding years, many of the companies were expected to pose a challenge to several international brands that also started as family businesses.

Today, most of the companies are moribund. Findings disclosed that while the factories of some of them have been sold, others are living in their shadows as their premises are overgrown with weeds with caveat emptor written on their walls. This has also boosted unemployment rate in the country as these companies disengaged the services of about one million Nigerians over the years.

[READ MORE: Top 10 Stockbroking firms on the NSE in Q3 2019]

Factors responsible for their states

Brand and human resource experts blamed the lull witnessed by the companies on operators’ inability to cope with the stiff competition by their rivals (both local and foreign), lack of consistent service delivery, succession plan and poor managerial skills.

The Managing Partner, The Workplace Centre, Mrs Bola Adeniyi-Taiwo, admitted that while Nigerian entrepreneurs’ tenacity could be rated over their counterparts in other developed and developing nations, it was regrettable that most of the brands and entrepreneurs could not build irresistible brands that should position self across industries irrespective of competition.

She said, “Their lack of innovation to have an edge over rivals led to poor level of patronage they witnessed and that led to their gradual extinction. Their states are also connected to the ‘care free’ attitude of either the managers or the chief executives of the brands. When compared to some businesses that invest immensely in great customer service strategies, several Nigerian firms still have a long way to go.

“The most immediate and important factor is establishing an orientation of respect. That is one element that is immediately felt by the consumer. This alone can either lead a hesitant customer to make an instant purchase or cause them to walk right out of the door.

“After the respectful attitude is established, then it is vital to anticipate and very importantly focus on the customers’ needs. This is when active listening skills are essential.”

[READ MORE: NSE fines Conoil, Unity Bank, others N487.7 million over account filling default]

Liquidity status

Investigations conducted by Nairametrics showed that the last result posted by Nigerian German Chemicals Plc was its 2015 Half Year (H1). The pharmaceutical firm’s profit after tax (PBT) dropped by 37.9% from N79.6 million to N49.4 million.

In the result, the company was indebted to its creditors to the tune of N2.71 billion. It stated that the company owes bank overdrafts, commercial papers, Term loans, Trade payables, other payables & Accruals and taxation, among others worth N637 million, N182 million, N456 million, N306.3 million, N818.5 million and N257.8 million respectively.

Why big brands go from boom to bust

Costain

While the company’s turnover dropped from N9.19 billion in 2012 to N7.3billion in 2013, its Loss after Tax increased from N967.86 million to N1.92 billion within the same period. The Shareholders fund also dropped from N6.60 billion to N4.67 billion between 2011 and 2012.

Tantalizers

Though not delisted but also struggling to keep head above waters. After it’s management raised several millions of naira from the stock market when it listed its shares in June 2008, the International Finance Corporation also invested $28.5million loan in the firm and Food Concepts Plc. Today, the funds do not translate into growth for the company.

The last annual result submitted to the Exchange was its 2017 reports. Though, it moved from a loss of N1.01 billion in 2016, to a Profit after Tax to N443.37 million, the trade and other payables, overdrafts and loans totaled N2.7 billion.

UTC Nigeria Plc

The conglomerate’s fortune is definitely dwindling, considering its 2013 financials. From a Profit after Tax of N308.86 million at the end of the year, it dropped to a Loss after Tax of N607.80 million. Also, its revenue dropped from N2.8 billion to N1.18 billion within the same period. UTC’s bank loan obtained stood at N400 million

Lessons from abroad

The companies are expected to emulate their counterparts in other African countries like Ethiopia, Kenya and Ghana that are beginning to record appreciable successes due to marketing strategies, succession plan, international standard accounting system and transparent policy.

[READ MORE: Some NSE’s oldest firms]

Why big brands go from boom to bust

For instance, about 10,000 pairs of shoes come out of Huajian Shoe factory in Ethiopia every day and it has Tommy Hilfiger and other big fashion brands across the globe on its patrons’ list. The nation’s export of shoes under African Growth and Opportunity Act, AGOA, increased by 62% between October 2017 and September 2018 and still counting.

Founded in 1974, Kenya Nuts Company is another sought after company in Africa that is designed and managed to compete with rivals and outlive its pioneer chairman. The manufacturer of Out of Africa nuts, official nut of British Airways, has over 4,000 skilled personnel on its payroll.

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