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Omatek engages CBN, BOI on single digit funding rate

By BusinessNews Staff on December 11, 2013

Omatek Plc, has disclosed plans to engage the Central Bank of Nigeria, CBN and Bank of Industry, BOI on a single digit funding rate that would assist small and medium companies raise working capital, even as the company bounces back to profitability.

The Group Managing Director, Omatek Plc, Dr. Florence Seriki, who disclosed this during the presentation of company’s fact behind figures to the capital market community in Lagos, said that Omatek is making effort to source for cheaper offshore funding.

According to her “Since our main manufacturers are same for the foreign brands, whose source of funding is via the LIBOR rate and our products are all over Africa now, competing with the foreign brands, we have no choice than to look for cheaper source of finance. Equally we are working with the Bank of Industry, BOI and Central Bank of Nigeria, CBN for single digit funding in order to compete with foreign brands that borrow at LIBOR rate and procure their raw materials from the same factories with us.”

It should be noted that LIBOR stands for the London Interbank Offered Rate and refers to a set of interest rates banks pay each other to borrow money for very short period of time.

While explaining the difficulties in securing cheap fund from local banks, Seriki, said, local banks are not able to understand our transaction dynamics and accommodate our pioneering structure and supply chain management; in order to understand the right kind of funding structure required for our factory and the distribution companies.

We do not import finished products and our distribution company cannot establish letters of credits for their finished products as ordered by their clients. They pay the factory for finished products and the factory in turn can only purchase what is in stock. The factory cannot also await orders from the distribution company before replenishing its raw materials inventory because of the lead and transit time required.”

Commenting on the company’s financial positions, the Omatek boss stated that Omatek has bounced back to profitability, while assuring shareholders that they have invested in the future and in a very viable venture that its results was definitely to be reaped from the day they had invested.

In her words, “We had not only survived the storm but had a very successful private placement that led to our being listed on the floor of the Nigerian Stock Exchange. We had moved from a company with only one founder/shareholder to three shareholders and to over 6000 shareholders.

We have come out of a situation of a Small Medium Enterprise, SME scheme.”

Continuing, she said, “Our result showed our effort in managing our expenses despite rising costs as our administration expenses reduced by 15 per cent from N380million in 2011 to N323million in 2012.

The drastic reduction in Finance income from ¦ 12million to about ¦ 2million demonstrate our capabilities in managing relationships with our Bankers and Financiers.

We have had impressive growth; recording a turnover that grew by 275 per cent in 2012 from a figure of N367m in 2011 to underscore the series of efforts made to expand the service and product portfolio of Omatek.”

[Vanguard]

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