Mr. Taiwo Adeniyi, the Group Managing Director, Vitafoam Plc, in an interaction with journalists, outlines the demands for the incoming administration. Rhoda Ogunseye reports
Are there any areas you would like the incoming administration to address to improve manufacturing?
The incoming administration should address the foreign exchange, insecurity and energy challenges currently facing the country’s economy. We hope the government will bring in an economist to look at the impact of various currency decisions on the economy, rather than an individual putting whatever it is, imagining it will work for everyone. What we are asking the government to address is the dichotomy between the different forex windows we have in Nigeria. Second, insecurity in the country. Everyone likes to do business in a safe environment. Many of us produce from factories around the country. Moving our products from one place to another is very difficult. Drivers are now telling you they can’t go to certain places and those who are ready to go are charging through the roof. This causes all cost items to go up from time to time. Third on the list is energy. In fact, if you do a combination of these three elements, you’ll find that if you think back to what has kept the nation going, these three elements make up most of what has sustained the economy.
What has been the benefit of the privatization of the energy sector?
I don’t know if the common people will say they benefit from it. But as far as the industry is concerned, we haven’t benefited that much. We cut the subsidies and we’ve been getting on with our lives. But due to the pressure on foreign exchange, diesel has now gone through the roof. Infrastructure is the language of the day. if you involve the private sector and the government to show confidence in the administration of Public-Private Partnerships (PPPs), there is sure to be much more participation. Because at the end of the day, it’s good for everybody, but what you find is that those in the private sector don’t trust the government. You find these infrastructure deficits everywhere, and it makes running a business so impossible. The cost is skyrocketing every day because what you buy is what you sell.
What other areas do you want the government to address in the manufacturing sector?
You know, BOI lends to manufacturers and they do very well. When BOI started giving out loans, I remember very well, for example, Vitafoam Nigeria got a loan from BOI. One of the things BOI used to do was they would list your foreign exchange requirements to CBN. The CBN will give a window to the genuine manufacturers because they know that when you do that, you can get your materials cheaply and get them into that environment. By doing so, you have created job opportunities and broadened your horizon. Maybe I’m not quite right. But I can also be sure that the foreign currency bonuses to the legislators and judges have not failed a day in getting there; Maybe I’m not too sure. Lawmakers and judges do not cry that the CBN has not paid them foreign exchange dues as we in the manufacturing sector cry to the government. So why wouldn’t the government create a special window where genuine manufacturers can evaluate currencies? The government knows them, values them and compares them. The government has implemented all kinds of policies and yet it is not working. You find that those items that are even on the exclusive list come to this environment, cheaper than what is made locally because the window manufacturer gets foreign exchange and makes a mess of it. I always say that in the wisdom of the parents of this country and even in the wisdom of this current government, they should invest heavily in agriculture. But between us, who measures this window and who controls that If I, as an agricultural investor, take 20 tons of garlic and sell it and get $20, do I bring $20 back into this environment? And even when I bring the $20 into this environment, how can I sell the $20? This $20 is what I am supposed to make available for CBN to redistribute into the economy. This is not happening as we speak. A special window is expected to be created for manufacturers to have access to foreign exchange to operate their business.
How is Vitafoam able to remain consistently profitable despite all these headwinds?
We are always proud of our elves. You can see two products in the market and they are very similar. But you wonder, why don’t they cost the same price? There are intrinsic values that we have in our products that stand out in the market. We tell ourselves that our definition of quality is fit for purpose. As long as our product fits the purpose for which you went to the market to spend your money, you will continue to buy. So what we’ve done is create a niche market for ourselves. We do not play in all markets. We don’t run the same race as others. We have created a niche market to say that when you buy our product, you will not regret spending your money and that is what makes us stand out in the market. And that is why we produce well and have a good price in the market.
How will you describe the group’s performance in 2022, despite the challenges?
Group performance fell 2.2% in terms of profit, but the top line grew 31%. We started the year with N192/litre of diesel. If you have to look at the administrative costs or the items that contributed to this decline, you will find it under the types of electricity and financing costs. Now I say electricity, rates went up over the year and diesel prices went up over the year. Now, you will also know the maintenance of the machines. How it works, these machines are not made here; so the same dollar you’re struggling to get to buy your raw material is the same dollar you’re applying to buy spare parts for those machines and get them up and running. So when you do a combination of all those elements, that’s what’s responsible. I will say that we didn’t plan for it but if you look at the exchange losses for this financial year alone, Vitafoam lost over a billion naira to exchange them which should have gone straight to our profits and our shareholders . If our government is serious, they should be concerned.
What are the ways in which Vitafoam has benefited from the African Continental Free Trade Area?
What is happening is that we have signed this agreement without looking at all the nuts that bind it together. Nigeria only signed it not wanting other African countries to overtake us. We are still trying to work out all the elements of the fee. How do you handle the origin of goods from one African country to another? These are details that must be resolved. Some Nigerian companies benefit from the deal because they have offshore businesses in other countries in Africa. You will find that there is an exchange of goods between the offshore companies of these Nigerian companies and their home country. But the real trade has not started because many problems have not been solved. The good thing is that we signed the agreement.
How does multiple taxation affect the manufacturing sector in Nigeria?
We in the organized private sector have decided to put our problems in the bucket. I had listed the following, but if I had continued, I could have listed several taxes. The question we asked ourselves is, what does the Joint Tax Board (JTB) do? I’m sure they have DGs, directors and people going to the office every day who are supposed to be looking at these taxes. They are people who could have looked at these taxes and seen how they monetize the tax bosses. We have complained, we shout and nothing is done. The other time, the Ogun state government wrote to us that we should come and pay a fee for everyone who wears Vitafoam shirts is an advertisement. They wanted us to pay for Vitafoam shirts in Ogun State. We told them that anyone seen wearing Vitafoam T-shirts should be removed or charged. Can you imagine this? All sorts of things happen in the name of generating income. We have told them that if they try to muscle the horse that trades the coins, it will die. If the horse dies, the little you get will no longer reach you. We can only continue to involve the tax collectors.
Vitafoam subsidiaries seem to be doing well too.
Vitafoam is a trusted name in the bedding industry, thanks to its high quality products. Since 1963, Vitafoam has been making the best sleep products on the market. With an extensive network of distributors, sub-distributors, modern retail stores, sleep galleries and online shopping portals, Vitafoam products can be found at thousands of branded retail outlets in Nigeria. Vitafoam has many warehouses across the country and production facilities in Lagos, Abuja and Kaduna, Aba to better serve its prestigious clientele. Sleep well and wake up refreshed with our unique mattress. When you sleep on one of our mattresses, you’ll feel like you’re floating on air. Our mattresses are made by skilled professionals who meet strict quality standards and are individually inspected before shipping to the customer. We have consistently provided customers with high-quality lifestyle products that are the result of our dedication to originality, innovation and perfection. Creating a unique work of art and a radiant aura of class. Our ever-expanding and supremely delicious product line is the pinnacle of refined living and we are committed to maintaining that standard.
What’s the latest news from Vitafoam?
The new baby in the group is the Vitapart operation, which we have just started. It is improving every day and we expect this particular year to contribute significantly to the number, but it has started to perform well but not to our expectations. Vitaparts Nigeria Limited is a subsidiary of Vitafoam Nigeria Plc. It has become the first company in Nigeria to produce oil filters for automobiles. Vitaparts currently produces two variants of automotive oil filters: Spinon Vitafilter and Cartridge Vitafilter. Vitaparts is all set to revolutionize the automotive industry with the manufacturing of automotive oil filters. The vision that gave birth to the company arose out of the need to provide proven and trusted oil filters and other auto parts to serve Nigerians and their automobiles.
Oil filters are manufactured in different sizes and are manufactured from the user’s car engine. Filters can easily be purchased at the Vitaparts office, at various mechanic shops and at accredited dealers throughout the country. Over the years, Vitafoam has carved a niche for itself and evolved from being just a manufacturer of flexible, reconstituted and rigid foam products to offering complete home furnishing solutions to customers looking for comfort and reliability. By demonstrating these innovative and forward-looking attributes, the company has recently added to its many value-added products in the automotive industry; the production of oil filters for automobiles. The product offers the best performance for automotive engines, is optimized for both synthetic and conventional engine oils and has a minimum oil change interval of 10,000 km. Using state-of-the-art testing equipment, the filters have been confirmed to meet international standards.
How did the company weather the storm, declaring a dividend payout of N1.9 billion, translating to N1.52 per ordinary share of €50,000 each for the 2022 financial year?
The dividend is a commitment to a positive rate of return, a testament to Vitafoam’s stellar performance, despite the tough operating climate. You may see two very similar products on the market, but they don’t cost the same price. The intrinsic values of our products stand out to us and we have created a niche market for ourselves as we invest heavily in research and development. And we customize our products to meet the needs of our diverse customers, including consideration of age and gender. This is what makes us stand out in the market.
