By Nkiruka Nnorom
DANGOTE Sugar Refinery, DSR Plc, has revealed plans to raise N21.2 billion through equity injection from the capital market to fund its backward integration project and also actualise the Dangote Sugar Master Plan.
The Group Managing Director, Mr. Abdullahi Sule, who made the disclosure, yesterday, at the company’s ‘facts behind the figure’ presentation at the Nigerian Stock Exchange, NSE, said the fresh capital would be raised before the end of 2017 financial year.
He explained that the N21.2 billion will form part of the N106 billion budgeted by the company to finance its operations within the next six years, adding that the Board of Directors was in the process of finalising plan for the capital raising and to decide the right mix of funding.
Self sufficiency in sugar production
Sule stated that the Dangote Sugar Master Plan (DSMP), which is an offshoot of the Federal Government’s Nigerian Sugar Master Plan (NSMP) introduced in 2012, aimed to ensure self sufficiency in sugar production by 2020.
While the nation consumes average of 1.3 million metric tonnes per annum, MT/pa of sugar, the NSMP aims to produce 1.7 million metric tonnes of sugar per annum within the specified period, and Dangote Sugar as a dominant player in the industry has undertaken to produce 1.5 million Mt per annum of the nation’s need.
He said that the DSMP is in two phases, with the first phase targeting production of 690,000 MT of sugar across five sites in Adamawa and Kebbi States, while the second phase will result in production of 881,000 MT of sugar and creation of 75,000 jobs.
“Dangote Sugar is a zero debt company for all these number of years. But it is also a company that still has some sizeable amount of cash. Therefore, we decided that in this first three years that we have budgeted that we are going to spend roughly N106 billion on the project and out of that, the Board members decided that 20 per cent is going to be equity.
“We believe that between now and the end of the year, we should be able to fund the 20 per cent. So, that is why it is taking us time actually to make final decision about coming to the market, whether we are going to go for an Extra-ordinary General Meeting, EGM, in order to raise grant, whether we are going to get it in form of loan.”
‘The bottom-line, actually, is that you have no fears because your company is in a position to borrow if we decide to go borrowing and most likely still pay some dividend while we are on the way borrowing,” he assured.
On the company’s financial position, he said that shortages in gas supply, which forced it to switch to high cost LPFO, increases in prices of raw materials as well as foreign exchange challenges resulted in 100 per cent rise in cost of sales in the first quarter ended March, 2017.