The Group Managing Director/Chief Executive Officer of Dangote Sugar Refinery Plc., Ravindra Singhvi, is responsible for the sugar business of Dangote Industries Limited. In this Interview with BAMIDELE FAMOOFO, he says the implementation of the Backward Integration Projects in the sugar industry will facilitate economic growth, reduce inflation, conserve foreign exchange and generate employment, among others
What did you start from before joining Dangote Sugar?
I am a chartered accountant with a background in Company Secretarial Practice and Management. I hold a bachelor’s degree in Law from the University of Jodhpur, India. I have about 42 years of experience across different industries. Before I joined the Dangote Group, I had worked in different multinational companies – petrochemical, textiles, cement and especially the sugar industries. Before joining the Dangote Group, I was the Managing Director and CEO of NSL Sugars Ltd & EID Parry Limited, one of India’s largest sugar companies.
What is your assessment of the sugar industry in Nigeria?
The sugar industry in Nigeria is still at the nascent stage. Lots of efforts have been made to produce sugar in Nigeria, and a leading driver in that regard is the Dangote Group. The Dangote Group acquired Savannah Sugar Company Limited from the Federal Government in 2003 with the intent to embark upon a backward integration plan (to produce sugarcane locally and refine it). This was a major step the Dangote Group took towards sugar self-sufficiency in Nigeria even before the release of Nigerian Sugar Master Plan by the Federal Government in 2013.
Dangote Sugar Refinery Plc. is currently the largest producer of sugar, not only in Nigeria but Africa. We are very committed to invest in the BIP to ensure that we grow cane to produce sugar locally. This has its own advantages. First of all, we do not need to spend scarce foreign exchange to import sugar. Secondly, it generates employment because of the agricultural activities and the refining of sugar locally. For instance, in Numan, Adamawa State, where the legacy Savannah Sugar Company Limited was situated, we engage between 7,000 and 8,000 direct labour during the crushing season and more people indirectly for transport, and distribution. Besides forex and employment, BIP has more advantages. For instance, we can use the by-products of cane to produce and supply electricity, ethanol, and animal feed. The beauty of this industry is that every input is converted into a product and nothing is a waste. The sugar industry is a very important one for any nation to grow. Inflation will be reduced when you produce sugar in a country like Nigeria where inflation is currently very high. The Federal Government is committed to making BIP work in the sugar industry in Nigeria. We need more support from the government to spur the progress of the BIP. BIP can also spur the development of agriculture in Nigeria.
What is your market share since you claimed that you are the leader in the sugar industry in the country?
Our market share is determined based on the sugar allocation we get from the Federal Government through the National Sugar Development Council, a government nominated body to catalyse the development of the sugar industry with a view to attain the self-sufficiency in her sugar requirement. Dangote Sugar Refinery Plc has the single largest quota and more than the combined quota of all the other Sugar Refiners in Nigeria. Besides, DSR is not only having the sugar BIP growing cane with the largest cane development in the country (approximately 72 per cent) but the only one producing refined sugar in the Nigeria from BIP.
How much success have you recorded since you purchased of Savannah Sugar?
At Numan (the legacy Savannah Sugar Company Limited), we have 32000 hectares of land available for the development of cane. From the original 2,500 tonnes of crushing capacity per day, we have already attained 6,000 tonnes crushing capacity and by May 2024, we will increase the capacity to 9,800 tonnes of cane crushing per day. With this increase in capacity, we will be producing about 100,000 tonnes of sugar in Numan from 2024, and this will continue to grow. The Sugar Refinery has a great potential to assist the country in its vision of sugar sufficiency. The environment at Numan is conducive for business, plenty of water available round the year and the soil is good for development of sugarcane.
We are engaged in community development activities and the communities are also supporting us. We are investing in latest technology equipment, agricultural implements, mechanisation, and automation. The investment in the development of Numan Project is continuing and our aim is to produce 250,000 tonnes (15 per cent of sugar consumption in Nigeria) of refined sugar out of locally grown cane from Numan alone in the near future.
There is a proposal to merge Dangote Sugar Refinery, Dangote Rice and Salt. Why this consideration at the moment?
The proposed merger has been approved by all the boards of the three merging entities. The requisite regulatory approvals are being sought, which would be followed by shareholders approvals.
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It is expected that the merger will consolidate and solidify the group’s market position and ultimately reposition the group to harness future opportunities in the foods industry. Further details will be communicated to the market upon relevant approvals being obtained from shareholders and regulators.
You have competition in the market. Last year, BUA FOODS was listed on the Nigerian Exchange Limited. Are we looking forward to an entity that will be called Dangote Foods?
The merger is awaiting regulatory and shareholder approval. The name of the surviving entity would be approved in due course.
Access forex poses major challenge to the country’s importers, especially manufacturers. This has had a negative impact on individuals and businesses. How has this impacted on your business?
The increases in petrol and diesel prices are affecting the business directly. Generally, costs have risen and it is affecting the company adversely. Scarcity of forex is disrupting the business and causing great hardship. We are awaiting the new reforms/policy initiatives from the Federal Government to help mitigate the foreign exchange scarcity. Our business is dependent on forex for import of raw materials, spare parts and chemicals. Currently, the performance of the business is being adversely impacted and we are working hard to manage this transition. We look up to the Federal Government to manage the forex scarcity and alleviate the current crisis. We believe that this is a transition phase and will be over soon. The impact of the reforms/policy measures announced by the Federal Government will improve the availability of forex and positively impact the business environment.
How will you describe the business environment in Nigeria?
The business environment is currently difficult. Input costs are rising continuously, and inflation is rising amidst the depreciating currency. The reducing purchasing power of consumers is affecting demand and thus impacting business adversely. During this transition, we are making efforts to control our costs, optimise our overheads with innovation to sail through these challenging times. We are expecting that this crisis will be over and businesses will return to normalcy. We look forward to all the stakeholders including the government, banks, and companies to come up with ideas to mitigate the challenges. I must also mention that the ease of doing business is very important and the required policy measures should be put in place for companies to thrive.
What do you think the government should do to create a more conducive atmosphere for businesses to thrive?
The government needs to reduce the bureaucratic challenges to be able to attract more investments. Recently, as reported in the G-20 Summit, our leadership went to India and signed various MoUs, which is a right step in the right direction, and this kind of initiatives will help the country. When we want to attract foreign direct investments into the country, the government needs to make the environment conducive, improve security, and the ease of doing business, among others. In all, we see that the new initiatives are noteworthy. The bold decisions taken so far seem to be in the right direction and with improved governance. The economy is expected to turn around.
Is the merger of Dangote sugar, salt and rice likely to happen before the end of this year?
The merger would be completed as soon as possible. It is awaiting regulatory and shareholders’ approval.
What more do you want the public to about Dangote Sugar?
Dangote Sugar is committed to implementing the BIP despite all the challenges we are facing. We want to ensure that sugar prices remain under control and remain affordable. Whatever food items we are producing, we want to ensure that people can afford to buy it. This is our medium to long-term commitment to the people of Nigeria.