By Adedapo Adesanya
Indian steel maker, Aarti, is looking to exit the Nigerian manufacturing sector, a new name to a long list of companies leaving the country amid a tight operating environment.
According to BusinessDay, the steel manufacturer based in Ota, Ogun State, has already been put up for sale and big players in the sector have submitted unconfirmed bids ranging between $50 million and $100 million.
The decision to exit the Nigerian space is based on issues ranging from a high rate of indebtedness, the challenging economy, Nigeria’s weakening currency, surging inflation at over 33 per cent and the mounting cost of energy.
As per the report, an anonymous person privy to the deal said, “We are aware that Aarti Steel Nigeria has been put up for sale but we are yet to make our bid.”
According to the source, African Industries and Bharti are bidding to buy the Indian-owned steel manufacturer for $50 million to $100 million.
The process is moving quickly and is expected to be completed in a few months.
Business Post could not independently verify this at the time of filing this report.
The company is asking investors to submit their profiles, another source noted, saying that the management of the company wants to hand over Aarti to a credible investor.
In 2017, Aaarti invested up to $30 million to build a cold-rolled mill with a capacity of 120,000 in Ogun State. The purpose of this mill is to provide Nigeria’s downstream players with steel, which they use to manufacture various products such as home appliances, roofing sheets, metal furniture, file cabinets, tables, and chairs.
However, it looks like seven years later, this is no longer the reality.
This will make it the sixth company to exit Nigeria this year alone. It will join the ranks of Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo Plc, who have in one way or another made for the door.
It also raises more worries about the Nigerian business environment as the nation’s manufacturers are suffering and experiencing growth hindrances from growing energy prices, foreign currency (FX) volatility, accelerated inflation, and deteriorating insecurity.
In a related development, Africa’s richest man and business mogul, Mr Aliko Dangote, said recently he was mulling an interest in steel manufacturing as his next business venture.
Modupe Gbadeyanka