I am delighted to welcome you all to the 66th Annual General Meeting of our Company and to present to you, our Annual Report and Financial Statements for the Financial Year ended 31st March 2015.
The Economic Environment:
The Global economy grew by 2.6 percent in 2014 against 2.5 percent in 2013 while Nigeria achieved a GDP growth rate of 5.9 percent which this time around was driven by non-oil sector. During the first- half of 2014, the Country rebased its GDP which resulted into an increase of 79 percent in the estimated size of the economy from previous assessed value of USD285.5 Billion to re-assessed value of USD509.9 Billion, thus, uplifting the Country to the top- most of Africa’s continent economy ahead of South Africa whose GDP is USD350 Billion.
However, the second-half of the year 2014 witnessed a sharp drop in crude oil prices which culminated into devaluation of Naira. The sharp drop in crude oil prices impacted significantly on the economy and raised up inflation rate from 8% in December 2014 to 8.2 percent in January 2015.
This situation as well as the continued security challenges in the Northern parts of the Country contributed largely to the depressed economic situation in which we find ourselves.
The Nigerian Economy is traditionally import based and depends on crude oil exports for forex earnings. Crude pricing demonstrated a mixed trend last year, peaking above $120 per barrel and dropping below the $100 mark. The significant development of the year was the removal of the Federal subsidy on the importation of petroleum products and resultant increase in pump prices by over 50%. While various agencies of the Government are investigating possible mis-use of the petroleum subsidy, the common man is struggling to cope with increased living costs.
Another and most disturbing aspect of last year was the unrest in the Northern region on account of “Boko Haram”activities. In the last 6months, the Country has witnessed a spate of bomb blasts and attacks on Government and citizens, causing fear in peoples’ minds. This has affected trading activity in general as well as cross-border trade.
The Central Bank of Nigeria continues to hold the Naira within a reasonable band, thanks to crude oil prices remaining in a zone higher than the budget number. However, every now and then, the currency shows weakness and threatens to cross the psychological barrier of N160 to $1. Inflation continues to be in double digits and in trying to curb it, the Central Bank of Nigeria is putting pressure on bank liquidity, thus pushing interest rates upwards. In fact, it confirms that there is going to be a general slowdown in all industrial and trading activities, as the interest rates will remain high and industries will be caught between higher costs and lower turnover.
The Company’s Revenue for the Financial Year ended 31st March 2015 decreased to N21.466 Billion as against N25.063 Billion achieved at the corresponding Financial Year of 31st March 2014 as a result of the harsh economic environment earlier enumerated. Moreso, your Company had to absorb foreign exchange loss of around N866 Million in addition to Income Tax Liability of over N700 Million.
Due to the loss of N2.986 Billion recorded at the end of Financial year of 31st March 2015, your Board is unable to recommend payment of Dividend for the reporting financial year.
Relentless efforts at mitigating the loss incurred during the ensuing financial year of 31st March 2015, would be made by your Board/Management at embarking on cost-saving measures including eliminating product lines that are not contributing to the bottom-line of the Company.
During the current financial year, strategic investment on Cold Rooms development in Lagos and Onitsha that can boost your Company’s Revenue would be commissioned with a view to enhancing its earnings.
However, it should be noted that given the prevailing Country’s volatility of Naira rate of exchange vis-à-vis other foreign currencies, the current financial year would be challenging but all efforts would be made to keep your Company afloat.
Corporate Social Responsibility (CSR):
The CSR initiative being intensified by your Organization through Murli T. Chellaram Foundation extended Universities Education Scholarships to qualified Students in various Tertiary Institutions in Nigeria during the reporting year and also supported varied Medical related challenges to members of our Company’s Staffers and non-Staffers alike.
Please be assured that the momentum would be maintained in the current year.
Management & Staff:
On your behalf, let me express my gratitude to Management and Staff of our Company for their commitment in the face of obvious difficulties and would wish to assure them that priority would continue to be accorded to staff capacity building and maintenance of harmonious industrial relation between the Company and its work-force.