Aroms was Right, Dangote Goofed on his Closed Tomato Factory

Aroms was Right, Dangote Goofed on his Closed Tomato Factory

We recently published an article written by Aroms Aigbehi on how Africa’s richest man, Aliko Dangote who ultimately controls what happens in the Dangote Group invested in a tomato company in Kano but has had to close it for now. The article generated a lot of online debate with some observers questioning the validity of Mr Aigbehi’s submissions.

However, further research by our team supports Mr. Aigbehi’s submissions.

Our Findings

Nascon Allied Industries, a subsidiary of Dangote Industry Limited, producer of Dangote salt and DanQ seasoning, recorded strong performance in 2017.

Nascon recorded impressive turnover of N27.06 billion, profit after tax improved by 121% from N2.42 billion in 2016 to N5.34 billion. An expanded fleet operation with the addition of 98 new trucks contributed over N3bn to revenue. Through intense focus, accelerated productivity, and operational discipline, it maintained financial stability with healthy cash reserves of N9.4 billon.

Its core salt business remains the major revenue driver, while its DanQ seasoning brand has just one percent market share. However, the tomato paste segment is still experiencing drawbacks, and unable to find a foothold in the highly competitive fast-moving-consumer­-goods market, as the Triple Tomato Concentrate required to make tomato paste remain on the restricted list of the Federal Government.

Local suppliers of tomatoes are unable to meet the required quantity to run the plant efficiently, because locally grown tomatoes contain too much water, unfit to make quality tomato paste.

But as part of its backward integration policy, in 2018 the company plans to mitigate counter-party risks, to ensure quality control, and to optimize route-to-market efficiency.

Our Conclusion

The summary is that Dangote built a factory without guaranteeing his source of raw materials. This is a classic case of how not to conduct a business. This does not take anything away from his achievements as Africa’s richest man and probably largest single employer. It is also interesting to note that the company is now trying to rectify the anomaly. It just goes to show how complex business is to the extent that even  successful people make big mistakes.

 

  • pinit_fg_en_rect_gray_20 Aroms was Right, Dangote Goofed on his Closed Tomato Factory

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