The Sun News Online

To ease the cash crunch threatening the private sector, a lot of suggestions have been offered the government, which include outright financial handout. But to Chief Ajulu Uzodike, the Chairman/CEO of Cutix Plc, the solution lies in the long-term debt market. That is why, in this piece, he calls on the Federal Government to reconsider bringing it back.

Economy
The Yar’Adua administration should show more discipline and transparency in managing public fund or disposing public assets. The same level of discipline and transparency should be maintained in acquiring and using new domestic and foreign debts. The effort to punish and recover looted public funds from past high public officers who abused the public trust is commendable and should be conducted and concluded in a fair and comprehensive manner within the laws of the country so as to have a salutary effect on present and future high public Officers. Apart from this, the government should pay urgent attention and provide credible solutions to the lingering economic, social and political problems which include the large gap between demand and supply of power at generation, transmission and distribution levels; Niger Delta and other ethnic and regional unrest; dilapidated road transportation infrastructure and double digit unemployment.

The stability of the Naira and interest rates for some time now is commendable. There is, however, need to work harder at re-establishing the long-term debt market in the country. Pro-active action needs to be taken to ensure that the commendable robustness of Nigerian banks and foreign reserves impact quickly and robustly on the Nigerian people, industries and businesses. According priority to the retirement of debt owed domestic contractors would help make this possible.

Resource exploitation and revenue allocation are lingering destabilizing problems for this country. Nigerians should consider changing the tax system to allow each tier of government to tax every revenue item within its domain as a way of reducing if not eliminating these two problems. A coordinating body for the three tiers of governement should handle the collection and remittance of revenue on behalf of each government to reduce confusion.

The company
In 981, I left Raychen Corporation, a major international manufacturer of aircraft and military wire and accessories to set up an indigenous firm to manufacture electrical cables starting as a division of my venture capital and management firm- Adtec Ltd. Cutix Ltd was incorporated on November 4, 1982. And by mid-1983, after a private placement, 18 founding sharesholders emerged and N400 thousand was raised. Cutix raised a further N1.664 million through the Nigerian Stock Exchange in August 12, 1987 thus becoming the first private company east of the Niger to be listed on the Exchange.

Since then it has financed its growth chiefly by retention of internally generated funds. The first script issued in 1991 was one new share for every two held. The second script issued in 1993 was two new shares for every three shares held. Subsequent script issued in 1996, 1998, 2001, 2005 and 2007 were one new share for every one held. Cutix Plc currently has 528,396,624 issued and fully paid shares of 50 kobo per value and held by 4,775 shareholders. Recent market prices for shares have been around N15 per share giving Cutix Plc a market capitalization of about N8 billion.

Businesss environment
The government of Anambra State where we have our factory and head office has been unstable both at state and local levels, and at times, volatile since 1999. This instability has led to the decline in the quality of the moral, social and economic infrastructure of the state to the detriment of the residents including industries and businesses. The federal roads within the state are in bad condition and need to be rehabilitated or reconstructed urgently to augment the redevelopment efforts of the state government.

Products
Cutix began production of house-wiring electrical cables in May 1984. It currently produces several types of cables used in house-wiring, underground lines, overhead lines, earthing, automobiles, appliances, interconnections and telephones. They include house wiring cables, armoured and unarmoured cables, aluminium conductors, copper conductors, aluminium service cables, flexible cables and telephone cables.

The company started production with one extrusion line in 1984. And by 1986, several other extrusion and wire processing lines had been added to bring Cutix at integration par with leading cable makers in Nigeria and elsewhere in the world. As a deliberate policy, all machines were specified, installed and commissioned by Cutix staff which is 100 per cent Nigerian. The company also incorporated as much locally fabricated parts as she could without lowering overall quality and efficiency. Cutix’s belief in the value of integration was so strong that during the difficult days of import licensing, 1984-1986, the company used the bulk of the licences obtained to buy machinery for forward and backward integration.

In 1992 the company went a step ahead to become the first cable manufacturer in Nigeria to integrate backwards into plastic compounding. In 1999 the company commissioned the first major complete production machinery fabricated internally. Cutix Plc started manufacturing at Nnewi from a facility it rented from Adtec Limited. By 1991, Cutix started moving its machinery to its own factory premises at Umuanuka, Otolo, Nnewi. The rate of expansion and integration continues at the first factory at Anuka now which covered space over 4,000square metres, while a second factory which a covered space of 2,000 suare metres is under construction close by. A modern four-floor head office building which is under construction shall be in use by mid-2008.

Cable technology
An electrical cable is a vehicle for transporting electrical power from a source to where it is used. Metals are the best carriers of electricity while plastics are among the least carriers. Electrical power is dangerous if a human being comes in direct contact with its carrires and so carriers are usually insulated from human contact by non carriers. Therefore, electrical cables have an inner core of metal, mostly copper and aluminum because of their cost effectiveness, and an outer casing of plastics, mostly PVC(polymerizing vinyl chloride) because of its cost effectiveness. Cable making is the process of shaping and sizing copper and aluminium wires and coating them with appropriately sized PVC so that the cables can transport the power required without posing any danger to people close to them.

A typical cable made to NIS standard issued by the Standard Organisation of Nigeria (SON) may be 70 per cent metal and 30 plastic by weight and 100 metres long. All Nigerian manufacturers who belong to the Cable Manufacturers Association of Nigeria (CAMAN) produce to NIS standards. Unscrupulous Nigerians brings in imported cables which do not meet NIS standards and deceive Nigerians to buy them. The deceit which applies to cables from Europe is that they are 100 yards long. Many Nigerians don’t know that the metre is longer than the yard. 100 yards is only 91 metres. The deceit which applies to cables from Asia is that the percentages of metal and plastic are reversed, with 30 per cent metal and 70 per cent plastic.

Thus a cable listed as 2.5 square mm which refers to the metal cross-sectional area may not be up to 1square mm. Plastic is bulkier than metal so the overall size of the cable might appear bigger. Since metal could be as much as six times costlier than plastic the cost of making the Asian cable is very low. They then sell the Asian cable at less half price of the Nigerian cable and make profit more than double the Nigerian cable. The danger is that the user would now use this cable to carry two and half times the load it ought to carry which leads to excessive heat generation. To make matters worse, the plastic is more than three times what it ought to be and would thus not allow speedy evacuation of the generated heat. In many cases heat and consequently temperature builds up and then fire follows. There are other variants of poor quality imported cables.

Cutix Plc has responded to the challenge posed by sub-standard and adulterated cables imported into Nigeria by building and sustaining Cutix brand of exclusive quality cables. This has been done by a dogged insistence on working towards excellence in product quality and business practices. The quality Assurance Service Department ensures best practices in raw materials procurement and production processes. The Enterprise Assurance Service Department ensure compliance with all the internally developed system. Accredited distributors of Cutix Plc are not permitted to deal in substandard and adulterated cables. The company’s products are sold through a wide network of distributors spread across the country. There are sales offices of the company at Aba, Abuja, Kaduna, Lagos and Nnewi which supply our products to the distributors. Products are sold directly to major organizations and government agencies.

The bulk of our sales are to non-government sectors as a delibrate policy because of poor payment habits of the government sector.The customer service department visits the market frequently to ensure adherence to this policy and that our products are not adulterated or that products imported from Asia are not being passed off as ours. The company also plays active and leading roles in CAMA, where policing of member companies on quality issues is done. The chief operating officer of Cutix is the current President of CAMA. Cutix has consistently won the NIS Quality Certificate Award of the Standards Organization of Nigeria (SON) for excellence in product quality every year in the following categories-gold since 2003; silver since 1998 and bronze since 1995. The company has won the Annual President’s Merit Award of the Nigerian Stock Exchange for Corporate Excellence for a record of seven times.

Listing
One of the reasons for taking Cutix to the Nigerian Stock Exchange was to help create a culture where good business practices on separation of ownership and management are followed so that the company would have a good chance of surviving the founder, the founding owners and stakeholders.