20 August 2010
Just like many other businesses in the country, Costain West Africa Plc, a wholly Nigerian owned Construction Company had its own share of the economic foul weather occasioned by the global economic downturn and the Nigerian banking sector reform. The banking crisis took its toll mostly on the private sector, and the company had a few of its clients running out of funds to continue with their projects. To stay afloat during this period, Costain had to leverage its projects in the public sector which was not really badly hit by the misfortune. Ayodeji Karim, the company's managing director, said his management team had to take steps to cushion the effect of the crisis by providing credit lines for some of the small companies in its chain to enable them fulfill those obligations that were strategically relevant to their own objectives.
"We have so far developed and deployed the most innovative business solutions and cutting edge technologies to sustain a suitable market share in the West Africa region," he tells BusinessDay, adding that there are plans to "double our revenue base to over N100 billion by the end of 2011 and triple it in subsequent years." Although the prevailing tenuous situation which makes it almost impossible to accurately predict the economic climate has been impeding growth, the company was still able to secure some reasonable number of businesses that have further brightened the prospect for success and profitability.
Costain is currently handling the construction of the 650 kilometre Jebba-Kano Railway project and has pledged its determination to complete the over N12bn project by December 25 this year. "In order to meet up with the December date, we have split work into six sections and have deployed our team of dedicated engineers, and cutting edge technologies to different sites." The company is also working on the construction of the Nigerian Stock Exchange building in Port Harcourt, construction of a multi-storey block for Cityscape in Rainbow City, also in Port Harcourt, as well as the expansion of residential buildings for the Watch Tower Branch Office, Igieduma, Edo State, and the water treatment plant in Kano State.
He adds that the operations at the new Ghana branch would soon come on stream, in line with Costain's growth aspiration of spreading its tentacles to other English speaking West African countries in due course. "The decision to open a branch in Ghana was informed by the need to strengthen the operations of the company as well as spread our wings outside the shores of Nigeria." Last financial year, the company recorded an increase in turnover from N3.81billion to N6.27billion representing an increase of 64.46 percent. The net asset also increased from N1.29 billion to N3.46 billion. However, following the decision of the directors and its advisers to make provisions for what some agents in the firm classified as doubtful debts, the company posted a loss of N615 million after taxes.
"We are on course to achieving better results in the next year where we expect higher profitability on our current projects and possible recovery of some of the debts we have provided for in this year's account," For this reason, Karim said the company decided to fill a void in the local construction industry, by making huge financial commitments to the development of masonry. The construction firm has not declared dividends for ten years, a situation which the management blamed on bad debts and heavy losses recorded by the company. However, the board is set to deliver returns to shareholders, hinging optimism on new contracts the company secured recently, top of which was the N12 billion Jebba-Kano rail contracts awarded by the Nigerian Railway Corporation.
The chief executive believes that it would go a long way towards improving the fortunes of the company and enable it deliver returns to shareholders. A graduate of Applied Design and Engineering from the University of Wales Institute, Swansea, U.K, Karim started his career as the production and packaging supervisor with Le Pain Croissant Limited from 1997 to 1998. In 1998 he rose to become Shift Manager where he served for four years. Karim also worked as a Team Leader at Charles Walden & Associates Company Limited with responsibilities in Information Technology Networking, software and hardware installation and migration.
In 2001, he joined Fortis Construction as executive director where he designed, constructed and commissioned facility enhancements for projects to improve customer services, safety of personnel and equipment efficiency and later held the position of Chief Executive Officer. In this role, he implemented and developed a profit strategy aimed at achieving the organization's profit generating objectives. He was appointed executive director, operations, of Costain West Africa Plc in February 2007. The construction industry is currently faced with the challenges of poor roads; a situation worsened by the presence of different agencies demanding for the payment of one form of permit or the other thus leading to delays in delivery of materials and equipment. Another area of need in the industry is the lack of skilled personnel in the local construction industry. But the Costain boss feels that a revolution is under way and the industry is poised to surmount the challenges bedeviling the sector.
For instance, as a team leader he has decided to tackle the issue of personnel head on by establishing training workshops in the various aspects of the company's operations. According to Karim, about $50,000 is required to bring in masonry personnel into the country yearly, as Nigeria still lacks the much needed capacity and quality in this area. To this end, the company has invested in the training of all manner of masonry through specialised workshop construction, where young Nigerians were trained to fill the gap.