LOCALIZATION

Nigeria 2018 | INDUSTRY & MINING | INTERVIEW

TBY talks to Ashok Manghnani, COO of Sona Group of Industries, on the evolution of the company's operations, its socioeconomic impact on Nigeria, and recommendations to boost industry.

Ashok Manghnani
BIOGRAPHY
Ashok Manghnani is a chartered accountant of the Institute of Chartered Accountants from India since 1986. He has been in Africa for 29 years, including 26 years in Nigeria. He has been with Sona Group for 22 years. He joined Sona Group as Financial Controller and progressed to Group Finance Director and then Group COO.

What is the history of the company?

We started this business in Nigeria in 1994. In 2011, we sold our brewery business to Heineken and diversified into other areas. At the time, we had an injection molding factory and were producing the crates for Heineken, Guinness, and SABMiller. We manufacture plastic pallets and were the first to start in Nigeria as all other companies were using wooden pallets. We have two recycling plants where we recycle the crates, battery cases, and whatever plastic we get from the market. We are launching a PET recycling plant and two plastic recycling plants in 2018, which have already been sourced. We have nine total industries, including two independent power plants.

How has your ethanol plant project impacted local businesses?

We recently completed the plant and conducted a water trial in December. We have a distillery here; importing pure ethanol is extremely expensive as the duty is 30%, and we decided to bring in crude ethanol, the raw material for the distillery. It was entirely internally financed, and we have not taken any bank loans. The next phase, which will take place in 2018 after starting production, will be to produce crude ethanol from cassava. The government has given us some land for which we have found some co-producers and farmers. We will control the farming here, and 1,000 farmers will be involved. The plant capacity is 120,000 liters per day, which requires 300 tons of cassava per day. We have formed a cooperative, and once we receive the physical allocation of land from the government, we will start harvesting there. We have a malt extracting plant that was also financed internally and produces malt extract from locally produced sorghum for breweries like Nigerian Breweries, Guinness, and SABMiller as well as glucose syrup, which we supply to bakeries and biscuit manufacturers.

How does Sona contribute to Nigeria's socioeconomic growth in the long term?

The government is encouraging local industries, and the industrial agenda provides employment to people; we have a direct workforce of 3,000 people and almost 8,000 indirectly through the supply chain of transporters and so on. We also pay taxes and duties to the government as well as excise duty as we produce alcoholic beverages.

What are your expansion plans for the future?

We have complete confidence in the Nigerian economy. We are still expanding in the biscuit and chocolate industries as well as our packaging industry. All our machines are from Germany and other European countries; European machinery may be more expensive; however, it is of the highest quality and lasts for a long time. In 2017, we committed EUR50 million for machinery, some of which are under construction and others under commission. Our total investment in Nigeria thus far has been almost USD650 million, and we have committed an additional EUR50 million for this machinery.

What is needed to further boost the 'Made in Nigeria' brand and import substitution?

Items from the Far East, especially China, are cheaper. To compete with that, the government needs to provide infrastructure and better roads. The second issue is that the borrowing costs in the country are high: commercial banks charge 25-26% interest. The Bank of Industry is supposed to support industries; however, it charges 10% in addition to other charges and the fees come to almost 11.5% per annum. It also charges 15% for working capital, in addition to a monitoring fee. In terms of finance cost, there is no support from the government. Industrialists cannot bring 100% investment here, and some support is required from the industrial and infrastructure banks. Other challenges are power supply and the high cost of diesel.