Union Dicon Salt Embarks on $100m Transformation Strategy

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Goddy Egene

The Management of Union Dicon Salt (UDS) Plc has initiated a 48-month, $100 million strategy that is aimed at transforming the company into an integrated fast moving consumer goods (FCMG) and Agri – business with an initial focus on food and agriculture.

The Managing Director of UDS, Mr. Chuka Mordi stated this on Monday during the company’s ‘Facts beyond the restructuring’ to stockbrokers at the Nigerian Stock Exchange (NSE).

According to him, the models for the plan are: farming (build production capacity in key food areas); processing (become a national manufacturer and distributor of FMCG in foods); logistics(build an integrated supply chain and be a processor of agricultural products and food ingredients.

He disclosed that core investors have injected a total of N3.3 billion into the company to revitalise it.
Mordi said that discussion is on-going with Central Bank of Nigeria (CBN) and other financial institutions to get cheaper loans, adding that the estimated cost for corporate restructuring and business transformation of cassava farming and starch processing for the next to two years is between N5billion and N10billion, while rice farm development and fruit juices is N5billion.

Mordi stressed that the indicative costs of the development plan is based on initial discussion with potential hires, consultants and acquisition counter parties.

To revive the business, he said the company will raise 40 per cent equity and 60 per cent debt.
He added that cassava and starch production is the immediate focus of the business to achieve near-term profitability and drive the company’s growth and success.

“Leveraging on 2015’s success and announcing the return of the UDS, we want to finalise the acquisition of cassava and rice farms, acquire 7,900 hectares in Delta State and finalise agreement for land in Ebonyi State.
“We are working with Federal Government, State Governments and private land owners. In the pipeline, we have over 10 transactions, these will establish a long term, land bank pipeline,” he added.

UDS recently replaced the Cargil, a United States based agro-industrial as core investor in the Alape Staple Crop Processing Zone (SCPZ) in Kogi State.

Speaking on the development, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh said: “I am glad to see that a Nigerian company is taking over this very important project, and is championing the indigenous development of agribusiness. We are not going to engage in policy somersault. We are carrying on with the great idea of SCPZ and we are adding even greater ideas. We are carrying on as we now produce what we call the green alternative: that alternative being agriculture, since oil and gas are unstable sources of income.”