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Union Dicon suffers set back in dream to become largest cassava producer

Union-Dicon

Union Dicon, a Lagos-based wholesale processor of Crude Salt, notified the Nigerian Stock Exchange (NSE), last week, that its venture with private equity firm, CBO Capital, to expand into agribusiness, has not yielded the desired results.

According to the Salt Producer, the Certificate of Ownership of the land in Edo State for its Cassava production has been revoked over the non-payment of ground rent, a development it claimed was not made known to the Board by the past management led by CBO Capital.

In addition, it revealed that the $100 million Alape Staple Crop Processing Zone had not been achieved by the time CBO Capital left the Management of Union Dicon in 2017.

CBO Capital Partners had joined the Management of Union Dicon in 2014 after 41,000,000 shares representing 15 percent of the Consumer goods company was listed in favour of CBO Capital, with Chuka Mordi and Bex Nwawudu, both of CBO partners, announced as Managing and Deputy Managing Directors of Union Dicon.

The hope was to steer Union Dicon in the implementation of its transformation strategy to become a fully integrated Agro Industrial National champion.

In pursuit of the agenda, Management of Union Dicon in April of 2016 notified the exchange that it had signed terms to add 2,000 Hectares to its land portfolio in addition to its earlier agreement for the acquisition of 15,000 Hectares of land in Edo State.

The investment was expected to make Union Dicon the largest Cassava producer in Nigeria as well as facilitate the company’s goal ‘’to become cash-flow positive before the end of 2016.’’

Similarly, the consumer goods company partnered with the Delta state government on cassava cultivation which was hoped to help the state diversify away from oil dependence and help stem the economic challenges afflicting the state.

In June of 2016, the Salt Maker signed heads of agreement with PNG Gas in Delta state to supply gas to proposed starch processing plant in Umutu in Delta state and announced that it was in final stages of a negotiation to acquire the second largest rice farm in Nigeria.

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Around the same time, Union Dicon Salt announced that it would be replacing Cargill, a US-based agro-industrial giant, as the core investor in the $100m Alape Staple Crop Processing Zone in Kogi State to cultivate Cassava on 30,000 hectares of land in Kogi State.

The Federal Ministry of Agriculture and Rural Development (FMARD) expressed support, with Chief Audu Ogbeh, then Honourable Minister of Agriculture, articulating his enthusiasm about a Nigerian company taking over the very important project and ‘’championing the indigenous development of agribusiness’’

Union Dicon, chaired by Retired Lt. General T.Y Danjuma, has in recent times struggled despite the great prospects in the business. Since 2012 at least, it has not posted any revenues with negative shareholder funds as a regular feature in the company’s financials.

For period to 30 September 2018, Union Dicon did not post any turnover and top line items remained missing.

Other Operating income grew 20 percent to N38.07 million in the 9 month period of 2018 compared to corresponding period of 2017.

Administrative expense increased 15 percent to N111.65 million in the same period as Union Dicon made a loss of N73.58 million in 9 month of 2018.

 

SEGUN ADAMS