Ikechukwu Eze
As a seasoned accountant and consummate management consultant, Ike Osakwe has earned respect and acclaim mentoring companies as well as running his own outfit. But this time, he is handling a rather tough assignment: leading the board of Thomas Wyatt, a once thriving paper company that is now struggling to return from the doldrums.
At the company’s 62nd Annual General Meeting held in Lagos yesterday, Osakwe explained to shareholders how the marginal increase in gross profit from last year’s N66.73 million to N67.57 million got eaten up by interest burden which shot up by 153 percent, forcing the company to post a loss account of N5.52million as against last year when a profit of N0.977 million was declared. The company’s result for the year also showed a turnover of N114.7million against N201million in 2009, a decrease of 28 percent.
“It is clear that the year under review was a most challenging one,” Osakwe said, while soliciting shareholders’ support for management’s effort at restoring Thomas Wyatt’s position as the defining force in the paper industry. In the past two years, the chairman and his board members have been striving to lift the fortunes of the company against the backdrop of achallenging business climate which had ensured that manufacturing activity stayed depressed with capacity utilisation dipping significantly.
According to Osakwe: “The process of modernizing our machines and equipment had to be halted due to the liquidity crises in the banking system. Continued use of existing out-dated machines (some of which are over 40 years), further limited our production capacity, in spite of the growing demand for our products.” He also noted that during the year, “prices of imported paper reels increased by about 33 percent, partly because of the earthquake in Chile which supplies over 25 percent of this category of paper products, and also because of the depreciation of the naira against major world currencies.”
Despite what appeared to be an overcast picture, it was obvious that the shareholders were not disappointed, knowing the depth to which the company had sunk in the past. “We are on the right path, but probably not as fast as we should”, says Emman Obinyan, the company’s MD/CEO, in a recent interview with BusinessDay, adding that the company is already out of the woods.
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When Thomas Wyatt’s shareholders celebrate a little progress, it does not surprise those who have followed the life of the company which once controlled the paper and paper products markets in the sub-region. Perhaps a peep at the lows and highs of the firm might elucidate the point. A measure of how Thomas Wyatt, the paper company founded by a Briton by the same name in 1948 played key roles in the economic equation of the country of that era is that at a point, it owned the entire Abebe Village Road, Iganmu, Lagos, a sprawling vicinity that the company eventually sliced up and was freely giving to then budding businesses with its immediate neighbour, Nigerian Breweries, being one of the beneficiaries.
Then, the paper company commanded exclusive control and tremendous market patronage as the first paper conversion firm in the country with its main product, the Apex range of exercise books, enjoying wide acceptance. All that meant steady growth in sales volumes, opening of subsidiaries in Kaduna, Port Harcourt and the United Kingdom, high turnover and profits and greater degree of respectability through to the middle 1980s. But then the rot came in the late 1990’s and early 2000’s. A combination of many factors, including impassive management actions, orchestrated a steady decline and huge indebtedness such that by 2005, the company was at the point of liquidation having been put under receivership by a creditor bank.
It was at this inauspicious moment that Obinyan came in. The management team of Moorehouse, a corporate management and investment group led by Obinyan, took over the affairs of the embattled firm in 2005 after acquiring a sizable stake in the company. As a means of charting a new course for the firm, the new management embarked on a rescue mission which involved outright sale of some of the properties of the firm and a sale-and-lease-back deal on its main office complex. The board’s management record within the past couple of years has definitely lifted Thomas Wyatt. “By the end March of 2005, we had a loss of N115 million. By the end of 2006, which is the first year of our operations, we had broken even… The company that was closed is back. Consumers are getting products now, and as promptly as they need,” Obinyan said.
Osakwe, who is a chartered accountant and practicing management consultant is also managing director of GRID Consulting Ltd., a company that specialises in the planning and implementation of change processes and systems for businesses, government and civil society. Assuring the shareholders that the future looks bright, he said: “Recent statistics have shown that the paper industry in Nigeria is still very viable and sustainable, and is poised to continue growing.”
Despite the apparently enormous challenges, many shareholders expressed optimism in the capability of Osakwe and the management team to grow the paper industry and make it profitable again. Analysts believe that given their determination, the board members would be able to get Thomas Wyatt out of the woods in the next couple of years.
