Following the troubling economic situation in Nigeria, Aarti, an Indian steel maker is reportedly planning to exit the Nigerian manufacturing sector.
If this becomes a reality, Aarti will now join the long list of companies leaving the country on account of economic woes.
The Ogun State-based steel maker, according to Businessday, has already been put up for sale and big players in the industry have submitted unconfirmed bids ranging between $50 million and $100 million.
The steel maker’s planned exit is attributed to a combination of factors, notably high rate of indebtedness, challenging economy, fluffing currency, surging inflation and high energy cost, a source who spoke on condition of anonymity told the paper.
“We are aware that Aarti Steel Nigeria has been put up for sale but we are yet to make our bid,” a reliable source from one of the bidding companies, who doesn’t want to be quoted, said.
According to the source, African Industries and Bharti are bidding to buy the Indian-owned steel manufacturer for $50 million to $100 million. The process is expected to be completed in a few months.
The company is asking investors to submit their profiles, another source noted, saying that the management of the company wants to hand over Aarti to a credible investor.
READ ALSO :Dangote accuses IOCs of crude oil price manipulation, claims firms sabotaging refinery
Meanwhile, this will make it the sixth company to exit Nigeria in the first half of 2024 after Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria and Diageo PLC left the shores of Africa’s most populous nation.
The exit of Aarti will further stain the country’s perception as an investment hub and its $1 trillion gross domestic product (GDP) target, experts told BusinessDay.
“The continuous exiting of multinationals from the economy is a serious cause for concern and this is because of the implication that it has,” said Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise.
“It has a negative implication for employment and the country’s perception as an investment destination,” Yusuf said.
In 2017, Aaarti spent $20 million to $30 million to establish a 120,000-capacity cold-rolled mill in Ota, Ogun State, to serve Nigeria’s downstream players using the steel to produce home appliances, roofing sheets, metal furniture and filing cabinets, tables and chairs, among others.
But the investment does not seem to matter much now.
G C Tripathi, a director at Aarti Steel Nigeria, told BusinessDay that he is not aware that the company has been put up for sale, noting that key operating decisions come from Indian – the business headquarters.
Tripathi however said the business is trying to get more finance and bank commitments to increase production.
But a senior management of the company had confirmed to BusinessDay in March 2024 that the company was seeking investors.
The official said the company’s indebtedness was high and suppliers were worried that timelines for delivery had been missed several times.
“We are seeking a lifeline,” the official told one of our reporters.
– news.band
About Author
