Home Business Seriki’s death, huge debt burden haunt Omatek

Seriki’s death, huge debt burden haunt Omatek

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Mrs Florence Seriki

By OKEY ONYENWEAKU

Two years after the death of the founder of Omatek Nigeria Plc, Mrs Florence Seriki, the company has been groping and struggling to survive. The first tech company to list on the Nigerian Stock Exchange (NSE), Omatek which has remained on the bourse since 2007, has once again however showcased a poor performance for the year 2016.

Omatek Nigeria Plc which posted a huge loss of N1.05billion for the year ended 2016 also had last month made public a loss of N1.1billion for the year ended 2015. The results which came three years late were all in the red.

Looking at its five -year performance from 2012 to 2016, analysts observed that Omatek’s books were also painted in red. For instance, after posting a profit of N236.82million in 2012, the company plunged into the red region.

Its five -year performance has also not been impressive as the company has posted losses for four years consecutively.

For instance, the last time the company posted any profit was in 2012 with a profit of N236.82 million. The company’s profit stream plunged into the red in 2013 at –N342.27 million. In 2014, the company drifted deeper into the red with –N892.43 million and slid even deeper southwards with losses of N4.409billion in 2015 and –N1.066billion in 2016.

The company has not released its results for 2017, 2018 and 2019. Its turnover has also been on the decline in the last five years: from N1.385 billion in 2012 to N277.03 million in 2016.

Omatek was one of Nigeria’s leading indigenous computer companies, which competed for a prime spot in the marketing of computers and its accessories.

To its credit, Omatek had tended to out-compete several rivals in the sector during its heydays. They include Courteville Business Solutions Plc, NCR Plc, Chams Plc, Computer Warehouse Group (CWG) Plc, Tripple Gee & Company Plc, and eTranzact. But the story has changed for the company which once had the Nigerian computer market in its grips. And for some commentators, its fortunes started dwindling long ago and it continued on this loss trajectory even after its management secured a loan that went bad from BOI.

Omatek has for some time now been bogged down by a huge loan burden of N5.953,044,966.54 (Five Billion, Nine Hundred and Fifty-Three Million, Forty-Four Thousand, Nine Hundred and Sixty-Six Naira, Fifty –Four Kobo)

Things got real bad after Omatek had taken a loan on December 10, 2012 of N3,909, 310,000 from Bank of Industry (BOI) to enable it procure assembly components to produce 20,000 units of laptops for the Nigeria Police Force (NPF).

There were however uncorroborated insinuations that Omatek didn’t use the fund for the said purpose and also could not service the loans subsequently. Despite its restructuring the loans because it could not repay in due time, the legal battle that ensued between it and BOI has since stalled the company’s operations.

At the end of the day, the arrangement for the loan which was to enable the local OEM to procure assembly components to produce laptops for the Nigeria Police Force (NPF) seemed not to have been realized. When BOI noticed very low tenor of activities from the company long after the restructuring of the loans, it raised the alarm.

Obviously, the death of Seriki made BOI take the legal route by instigating a lawsuit that eventually led to the taking over of the company’s facility.

The lawsuit was on the ground that the OEM could continue to hold on to the money it had borrowed from it which was at that point definitely looking like what would end up as a financial loss to the bank. This is not forgetting that the property was used for the mortgage agreement.

The Bank of Industry had claimed that the company wasn’t ready to liquidate its indebtedness. And the bank had no other feasible means of getting back the funds except the mortgaged property.

However, the future of the company still depends on how it handles the loan crisis. At the moment, BOI is pushing for the appointment of a receiver manager via a lawsuit, as part of its attempts to recoup its loan.

Mr Okezie Boniface, a shareholder in Omatek believes that an amicable resolution of the loan crisis would be in the interest of both firms and engender economic growth.

Besides the loan burden, analysts have blamed the company’s poor performance on the weak economy and a quantum of security challenges from the religious sect, Boko Haram and the various assaults on farmers by Fulani Herdsmen.

Stakeholders say deep challenges emanating from a tough macro-economic environment in Nigeria have been hard on businesses and manufacturers. Analysts believe further problems faced by local manufacturers include, but are not limited to, the volatility of the forex market, and high lending rates which hover between 25 and 30 per cent. Other challenges include shrinking sales income, unemployment, high inflation which has gradually come down to slightly over 11.28 per cent. More worrisome to the company is the unfair competition with china which products are much cheaper in the market.

Another analysts who does not want his name in print told Business Hallmark by way of a telephone interview that the weak economy has not only affected the purchasing power of Nigerians, the company was facing the same challenges of harsh operating environment as other manufacturing firms in the country. He advised the company to watch its source of funds and borrow less.

‘’The economy is bad and the competition is becoming very high for the little money in circulation. Not many organisations can do much in such an environment’’, he added.

Omatek Ventures PLC is a Nigeria-based holding company. The Company has interests in subsidiaries and associates involved in manufacturing, distribution, selling and servicing of computer equipment, and it also provides engineering services.

The Company operates through two segments: Omatek Computers Limited and Omatek Ventures Distribution Limited.

Omatek Computers Limited’s principal activities include the assembly and manufacture of various types of computers and home entertainment products, uninterruptible power supply (UPS), inverters and solar systems.

On its part, Omatek Ventures Distribution Limited is a computer company, which was formed to take over the distribution and sales of all products of the Company, including various types of computers and home entertainment products, UPS, inverters and solar systems. Its products include accessories, notebooks, tablets, power products, desktops, plasma televisions and speakers.

Efforts to reach BOI to respond to the story proved abortive as emails to the corporate communication department were not responded to.