Indian steel manufacturer Aarti is quitting Nigeria’s manufacturing sector, joining a lengthy list of corporations that have left the nation due to economic hardships.
BusinessDay has reported that large parties have already placed tentative bids ranging from $50 million to $100 million for the Ota, Ogun State-based steel manufacturer, which has previously been put up for sale.
Following Microsoft Nigeria, Total Energies Nigeria, PZ Cussons Nigeria PLC, Kimberly-Clark Nigeria, and Diageo PLC out of the most populous country in Africa, this will make it the sixth giant business to leave Nigeria in the first half of 2024.
According to a source who spoke to the media on condition of anonymity, the steel maker’s decision is based on several concerns, including a high debt rate, a difficult economy, fluctuating currency, rising inflation, and expensive energy costs.
A reliable source from one of the bidding companies, who is not authorised to speak on the issue, said,
The source claimed that Bharti and African Industries are submitting bids to purchase the Indian-owned steel company for between $50 million and $100 million. The process is anticipated to be completed in a few months.
According to a second source, the company is requesting investor profiles, indicating that the management of the business wishes to transfer ownership of Aarti to a reliable investor.
Experts opined that the withdrawal of Aarti will further harm the nation’s reputation as an investment destination and its goal of a $1 trillion GDP.
They noted that the country’s $1 trillion GDP ambition and reputation as an investment destination will suffer even more from Aarti’s departure.
The chief executive officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, stated that the implications of multinational corporations’ persistent withdrawal from the economy are significant and warrant considerable concern.
Yusuf added,
Aarti spent millions of dollar
Aarti invested $20â30 million to build a 120,000-seat cold-rolled mill in Ota, Ogun State, in 2017.
The factory aimed to supply Nigeria’s downstream industry, which used steel to make filing cabinets, tables, chairs, roofing sheets, and household appliances. However, the investment doesn’t seem to be as important now.
Aarti Steel Nigeria’s director, G C Tripathi said that he is unaware that the company has been put up for sale and that important operational decisions are made in Indian, which is the home base of the company.
However, according to Tripathi, the company is attempting to secure additional funding and bank guarantees to boost output.
In March 2024, a senior management representative of the company disclosed that it was looking for investors.
According to the official, suppliers were concerned that the company was heavily indebted and that multiple delivery deadlines had been missed.
Meanwhile, growth in the manufacturing industry’s basic metal, iron, and steel subsector decreased every quarter from 1.1% in the fourth quarter of 2023 to 0.57% in the first quarter of It increased from 0.46 to 0.57% annually, a gain of 0.11%.
