Notore draws N13.32bn facility from Afrexim bank for Turn-Around Maintenance programme

Notore Chemical Industries Plc has drawn down a N13.32 billion facility from the African Export-Import Bank (Afreximbank) for a Turn-Around Maintenance (TAM) programme to achieve nameplate capacity of its plant in 2020. The Africa’s leading chemical and agro-allied company disclosed this in its report for the financial year ended September 30, 2019.

The company said the TAM would reduce downtime at the plant, boost production and increase revenue, adding that the facility drawn from Afreximbank would be used for orders of critical components of its plant for the TAM to ensure optimal performance.

According to the company, “Notore has commenced its TAM programme.  The N13.32 billion facility granted by Afreximbank has been drawn down and orders placed for critical components.  The TAM programme is expected to be completed by financial year ended 2020.  The completion of the TAM programme will ensure the Plant operates at its nameplate capacity resulting in a consistent and significant improvement in production numbers and revenue.

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“To the extent that Notore’s operating costs (N24.5 billion in FY 2019 and N24 billion in FY 2018) are largely fixed, it is expected that a significant amount of the upside from the increase in revenue post TAM will flow to the bottom line.”

The company said the Federal Government’s policies were favourable for its business, and would boost its revenues when its new NPK blending plant comes on stream this year.

“The current Federal Government policies in the fertilizer space are quite favourable to Notore’s business. Additionally, on-going market demand for NPK and NPK specialty blends will boost the business’ revenues when Notore’s newly installed and commissioned 2,000 MTD NPK blending plant begins its inaugural production in FY 2020,” it noted.

It added, “Consequently, Notore has begun gradual efforts to further diversify its revenue streams by selling specifically produced Notore seeds to farmers.”

Notore said its greatest challenge to its profit after tax (PAT) remains its Net Finance Cost; adding that “and asides the TAM initiative which will be completed in FY 2020 to introduce reliability into Notore’s Plant, the Group is working on various other initiatives for FY 2020 to bring the company to profitability by considerably reducing its Finance Cost and improve its working capital.”