General Manager, Lucky Fibres Limited, Mr. Jitesh Pamnani, spoke to Eromosele Abiodun on how cheap imported Chinese goods are hindering manufacturing and what the federal government should do to revive the sector. Excerpts:
Noble carpets and rug has been in Nigeria for a while, what motivated you to believe in Nigeria?
As a group we believe in manufacturing, any country we go, we want to manufacture locally and make it competitive for the local market. What motivates us is that we believe in delivering quality stuffs for our consumers at an affordable price.
What makes your brand stand out?
Our system delivery of quality, we are an International Standard Organisation (ISO) certified company, our products are eco friendly and we believe that our quality stands out. That is the reason we are still standing in this tough terrain.
How has your experience been in Nigeria?
The experience has been wonderful. It is almost three decades now that Lucky Fibres Limited has been in Nigeria and as the years goes by we keep on adding different products and designs to our kitty to keep the market afresh.
Can you throw light on the partnership between Noble Carpet and Gerflor
We partnered Geflor as Noble carpets and rugs, we are into carpet and rugs business, but we saw the need to cover the entire flooring. That was why we partnered with Geflor to cover the entire floor range, not just putting the carpet for residential and commercial purposes. To bridge the gap to cover the floor covering we came up with the partnership with Geflor so that we could cover sports, healthcare, hospitality, and even industrial flooring we have it. We cover some wide range of port-folio in terms of flooring solutions.
How is the partnership going so far?
The partnership is going well. We are just entering the market with the product, so we hope to get the better benefit in the future.
What can you say is the biggest unique selling propositions that make Noble Carpet a success?
Again quality, world class quality, we are competitive in terms of standards as a whole, we keep innovating so that we can meet our consumers demands.
Some local manufacturers have closed shop in recent times because of the influx of cheap products from abroad, mainly China. How has this trend affected your company?
Definitely it has affected us. However, as business you try to maximise your opportunity by leveraging on the cost, if you are able to keep the cost competitive, despite the influx of Chinese and other goods coming into Nigeria, you have some advantage. So we try to keep our cost at the barest minimum, we try outsourcing raw materials at very reasonable prices so that we can make the end products competitive against imported ones.
You are a top player in the industry; the federal government in a bid to encourage local manufacturing has restricted access to foreign exchange to cerp products. What else can government do to encourage local production of carpets?
We are thankful to the government of Nigeria, they have been very supportive. There are four countries around Nigeria so the border is huge, you cants control each and every kilometer of the border. But efforts have been put in place, we have discussions with Comptroller General of Customs last year and he promised to take care of the challenges and we are seeing progress coming in. The forex scarcity is helping the local manufacturers to compete effectively.
How affordable is Noble Carpet?
Very affordable. With N4,000 you can buy a piece of rug.
Your designs cut across every facets of human life, where does your inspiration come from?
What we say is, you imagine and we deliver. We have the facility, knowledge and technology to do whatever the customer wants even if it their faces or images on the rugs. We are the only company in sub-Saharan Africa that has the kind of facility to manufacture carpets. We are there to deliver what our customers want delivered. When you come to us, you demand a certain quantity and quality and we will deliver it to you as per your need.
Where can the average Nigerian go to in order to get Noble carpet?
We have about 220 distributors nationwide. So you can go to any of our distributors and ask for the product. We have another platform where customers can reach us through our website or dial our number.
Tell us about Corporate Social Responsibility (CSR)?
We have a foundation that is providing limbs to the needy. We have that in place as a company. We have also done several CSR projects in this community that I cannot tell because of time.
In what other ways government can help industries to encourage local production?
The import duties on the raw materials that we import should be reduced so that we can be competitive in the world with our finished products. Two, the cost of finance is very high, if we can work on the cost of finance to be single digit that will be very helpful to improving the industry. I want to use this opportunity to thank the bank of industry for been supportive enough at regular intervals by providing cheap sources of financing. However, we still need more because what we do requires huge working capital. If you see our factory we will see the amount of investment and stocks which we have on ground.
Thirdly, to make the manufacturing a little bit more affordable, we will like the gas prices to be in tandem with international prices. It is an irony that Nigeria with a large deposit of gas exports gas and it is very expensive. Government needs to lower the gas prices so that local manufacturers can really thrive and not pass high cost of production to the customers.
It is very difficult in this market and to add to consumer prices because you can’t sell. Anytime you increase the price; the volumes will decline. We have to get to the level where we are consistent in terms of pricing.
Government talks about backward integration to boost employment, what type of back integration is involved in carpet manufacturing?
A lot of carpet manufacturers import what they use but we have our own in-house fibre plant called Yan BCF. So we produce own in-house Yan and we have various processes. You can say our process is backward integration process because we don’t import fibres, we make fibres here.
In terms of investments, what are you looking at in three or five years from now?
In the last ten years we have invested about $20 million in Nigeria. The market has been sluggish from the start. The 2008 recession really hit us from hard and from there we are battling to get the volumes up. Investment in the future depends on how you play on the investment you have already made. If what we have now is heading in the right direction we will definitely do more.
The economic recession has actually affected consumption pattern, how has the recession affected your sales in terms of volume and financial earnings?
In terms of capacity utilisation we are about 20-25 per cent which is very low for an industry. You can barely survive at level, but we are still managing to come up with that. Definitely we hope that things will be better in the future.
How are you coping with forex scarcity?
It is tough. As a business, we must make sure that the supply chain is not a challenge. As manufacturing outfit, we are running on 25 per cent capacity. We need to ensure that all raw materials are in place. We are not able to get what we require, but at least we get some from the Central Bank of Nigeria (CBN) and we also source from the inter-bank market at a very high price.
So how are you coping with imported carpets and rugs?
Rugs are the most imported and majority of them come from countries where some of these rugs are rejected and sent to Africa at very cheaper prices. So you can see lot of rugs smuggled into the country at a very low price, therefore we are not able to compete with them because their manufacturing cost is low and our cost is high. Smuggling is a challenge for us.
The Minister for Trade and Investment visited you recently and promised to fight smuggling, has there been an improvement?
I will not say much improvement, but they are working on the direction. But in the market, you still see that the goods are there. The entire industry is suffering from that, not just carpets.
How are you dealing with the issue of power?
We are using gas, which keeps us in business in terms of the cost. If we are using the diesel generators we would be off the market by now. Also, it is not economical.
Is it true that tiles have taken over rugs?
In some ways, it is. The climatic condition of Nigeria is hot and humid; carpets are used in countries that are usually cold. Having said that, when it comes to out of pocket expenses, carpets are still cheaper when compared to tiles. It will cost you more money to lay your tiles; you have to buy cement which prices have doubled. Carpets are still affordable and cheaper. It gives a cozy feeling when you enter your house. The sector can still rebound and we have faith in our consumers that they will come back to us.
What future do you see for the carpet industry and noble carpet?
For the carpet industry, it is a challenging period. We have to look forward to year after year. We are not considering the long term because it is quite difficult. Drastic changes must be done, such lowering import cost, the forex prices, the gas prices and the finance cost. If these are looked into, these industry can be regenerated and move on forward. But looking at this current trend, we don’t see much happening in terms of looking at the long term.
Do have plans of going into tiles?
We don’t have any immediate plans as such.