The board of directors of Vitafoam Nigeria Plc has been advised to inject equity capital into the company via a rights issue. A shareholder of the company, Alhaji Gbadebo Olatokunbo, gave the advice at the annual general meeting (AGM) held in Lagos thursday.
According him, such funds from existing shareholders with the prudent management of the N2.1 billion loan from the Bank of Industry(BoI), will reduce finance cost and boost the bottom-line of the company.
Olatokunbo commended the company’s foresight in diversification into pre-fabricated buildings and leather products that could be exported to earn foreign exchange and enhance its revenue.
Commenting on the rights issue, Group Managing Director of Vitfaom Nigeria Plc, Mr. Taiwo Adeniyi said the advice would be looked into and the most professional decision would be taken on it at the appropriate time.
Adeniyi reviewed the unfavorable operating environment and its impacts on the manufacturing sector.
He said:”On the forex issue, unfavorable monetary policy of the federal Government led to high interest rates, devaluation of the Naira and hyper inflation which all combined to increase our production costs. With the economic recession experienced during the greater part of last financial year under review, management was mindful of price increases but as a good corporate citizen, the company could not completely pass the costs to consumers through products’ prices increases.”
In his address to the shareholders, Chairman of the company, Dr. Bamidele Makanjuola said it had completed its expansion project and has begun to consolidate for optimal performance as reflected in the current status of some subsidiaries.
“Vitapur Nigeria Limited has become a source of hope and inspiration. It has posted profit for the second year running. Our moulded foam products, Vitavisco Nigeria Limited has continued to operate profitably. It is growing slowly but steadily. Vitafoam Nigeria Limited has maintained its profit-making streak, although this was attenuated during the year by the adverse economic conditions in the country,” said Makanjuola.
According to him, going the company’s performance last year, most of its subsidiaries are already operating profitably while others have strong potential to enhance its profitability.
He noted that shareholder value would be increased with expected strong earnings from the subsidiaries.
The chairman assured the shareholders that the company would revamp Vono Furniture Products, Vitagreen Nigeria Limited while strategic decision would be taken on Vitafoam Sierra Leone Limited and Vitafoam Ghana Limited respectively in view of the negative impacts of foreign exchange on their operations.