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Business News of Sunday, 19 April 2015

Source: The Median Newspaper

Despite the noise, haste, Pamol is witnessing a miracle- Pamol Director

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Newspaper reports recently indicated that Pamol Plantations Plc was at the brink of collapse, marred by corruption, embezzlement and wanton mismanagement, requiring that government appoints a messiah to turn things around before the worst happens.

However, in the following interview with the Finance Director of the company, Mr. Kamadje Albert, we rather learn that Pamol is an agro-industrial giant on the go, scoring rather enviable results and aiming at a return to profitability in the nearest future. Below are excerpts of the exchange with the press.

You are the Finance Director of Pamol Plantations Plc; could you brief us on the financial health of your company, is it a structure nearing collapse?

I am surprised at this question because for a long time now, we have never heard that type of thing. Pamol is doing well; Pamol is not heading towards collapse, rather we are looking at the future with pride. May be there is something else on your mind, but Pamol has no problem for now.

So what is the financial situation of Pamol today?

It is good, but we need money to invest; we are approaching financial houses for that, especially as we look forward to acquiring a brand new oil mill to boost our production. The State which is the owner of Pamol is putting in money to foster our investment plans. The money coming in is not the running capital of Pamol. It is intended to enable us acquire fixed assets. To say the least, we are doing just fine and our plans are unfolding accordingly.

The Interim Management of Pamol has been in place since the demise of your GM on the 28th of December 2012; how was Pamol at the time of the GM’s passing and how is it doing today? We understand that you inherited a huge deficit? How have you coped with it?

It is true the Interim Management was put in place on the 28th of December 2012 when the late boss passed away, may his soul rest in peace, and the result as of December 2012 was a minus 2.6 billion CFA F. It was huge and it is one of the highest we ever had and since then it hasn’t been easy to bring down that deficit, but a lot of hard work and sacrifice has been made.

Firstly we have done all it takes to cut down costs. If you look at our financial statements as from the year 2012, you will realize that the labour cost; salary and other related expenses represented more than 50 percent of the turnover of the company. That is not the acceptable ratio; it should be around 20 to 30 percent. Once you get above 50 percent it means you are working just to pay salary which is dangerous.

So, the Interim Management had to sit up and bring down that cost. A glance at our records today reveal that from more than 3400 workers that were on our payroll, we now operate with about 2500, representing a reduction of almost 1000 workers. Note, however, that we did not lay off workers and at no time was such an option on the table because we had to protect jobs.

Our second strategy to bring down the deficit was the control of other costs. This is because if you don’t control costs you will not even know what’s happening. Thus, expenditure is generally looked at critically and approved only by the Interim General Manager himself.

Every single Franc going out has to be thoroughly looked at and approved by the IGM, which means that after it has been scrutinized right up to our own level, the Interim General Manager himself takes a final critical look at it and only what is essential is approved. That is very important; making sure waste is minimized and misappropriation is checked.

Another area the Interim Management focused on is human resource management; this is because man is at the centre of everything and the best way to manage your workers is to make them to sit up and work. I insist on these two words “to work” because when I look at the past when some people were working and others were loitering and they collected the same salary or even more in some circumstances; I simply congratulate Chief Mekanya for putting an end to a bad company practice.

You see therefore that one of the most important things the Interim Management did was to tell workers that “the salary you are earning, the counterpart of it is effective work done. So if you don’t work don’t expect salary”.

Now let’s get it right. From that deficit of 2.6 billion at the end of the year 2012, today we are in 2015 by the close of business year 2014 at what level could you place the deficit?

It’s not just easy to clear it like that, not at all. It required a lot of thinking and the weighing of several options. The best way should have been to hold the bull by the horn and say best company practices hold that labor costs should be between 20 to 20 percent of the turnover, so let us carry out massive retrenchments.

But instructions from hierarchy were clear on that; no redundancies, making the pill difficult to swallow because at the same time they asked for results, but warned against anything that could breach social peace. Again, the wage bill must increase every month as a result of what we call seniority bonuses and automatic increment sanctioned by law; it provides that if after three years an employee has not had increment by merit, he must be automatically promoted.

Therefore every month or every year the wage bill increases automatically, while turnover is not increasing because the price of palm oil is fixed by government at 450 CFAF less taxes. Even at that 450 CFA F, Pamol being in a remote area with earth access roads that are very during almost seven of the twelve months of the year, we must make a small discount to attract customers: So you see that it was not too easy to cut down the deficit.

Thus, in the area of labour, when someone goes on retirement or resigns for one reason or the other, there is no immediate replacement. That one reduces the labour cost. Secondly, expenditure is clearly defined and tied to justifiable needs.

Thirdly, we have cut down on gifts, we have cut down on facilities to managers, we couldn’t cut down from salary, but we have cut down on a lot of things concerning socials. In the past we had big cars that we were using to go and play veteran matches in Bamenda, Buea and so on. So the deficit of 2.6 billion by the end of 2012 went down to 1.5 billion CFAF by December 2013 and in December 2014, we brought it down to less than 1 billion CFAF.

From what you have said, we understand that much work has been done to streamline spending, but perhaps the sensitive drop in the deficit is due to the inflow of resources from the Contrat-Plan Etat/Pamol because we know a lot of billions CFA F have been coming in.

No, investment is not cost control because to results it is revenue on one side and expenditure on the other side; that is what gives you the result; investment from the Contract-Plan is not revenue at all and so it cannot contribute in reducing our standing deficit. It is money that we take to increase the capital.

That means the State is bringing in money to enable us acquire fixed assets that will help to improve the wellbeing of the workers in the medium and long terms. Take for example that you acquire a caterpillar, it is not increasing your revenue, you have taken that money and invested, it’s not like turnover when you sell palm oil. Now when you acquire a caterpillar, it is depreciated.

It therefore means that when you invest, you increase your cost in return, because your turnover doesn’t increase. So, there is no link between the money brought in by the Contrat-Plan and the current results. You will only begin feeling the result of the money brought in by the Contrat-Plan in the long term.

For example, we are doing extension, meaning you take the money, you acquire land, you open the forest and you plant. Your turnover is not increasing because the quantity of palm oil you sell is not increasing. You can only have the effect of that investment after five years because the palm tree starts producing after five years. It is only from that time that your revenue will increase.

To what do you attribute this positive result because to move from 2.6 billion at the close of 2012, and then 2 years after you are already at some 800 million only, that’s a spectacular performance?

You may think that what I was saying is flattering somebody, but in my position I know that it’s not easy. I wish to thank our Interim General Manager, Chief Mekanya Okon Charles. Frankly speaking, he has a very strong heart and I am saying so comparing to mine. If I see what we are going through in terms of blackmail, in terms of fake reports, in terms of attacks; just because you are strict in management, it is not easy at all; if you are not careful you can have hypertension.

So when I look at what we are facing as senior managers and I think of what he is facing, and we are still holding firm to the objective we seek, to carry on with the strategies put in place, I say thank you to him. May God bless him, let him go ahead.

This is the strategy we are putting in place; to cut down costs, to make sure that we keep improving our productivity; that is the yield of the plantation, to make sure that the factory at any given time should be producing palm oil. All these things put together have contributed to the drop in the deficit. Our labour cost has already dropped to around 30 to 35 percent; it was between 55 and 60 percent.

Referring to the Contrat-Plan, about how much has the government disbursed to Pamol this far?

In 2013, we had 1 billion CFA F from the Ministry of Finance and 500 million CFA F from the Ministry of Agriculture. That helped us to improve put fertilizer in the plantations in 2014 because the money came late. In 2014, we were to have 2.1 billion CFA F, so far we have received 1.9 billion CFA F and much of it came in 2015, but we post it under 2014.

We talk of 2.1 billion CFA F with 1.6 billion paid in by the Ministry of Finance and 500 million from the Ministry of Agriculture. That means we had 1.9, so remaining 200 million. When you add up these figures you have about 3.4 billion CFA F effectively paid in to us.

What about the 1 billion CFA F from the Ministry of the Economy, Planning and Regional Development for the Bakassi extension project?

This has to be well explained so that whoever reads this interview must understand. The Bakassi oil palm development project which was conceived at the behest of government because it is seen as one of the most important strategies to take Cameroonians to the Peninsular, by creating labour intensive activities in that area, like oil palms plantations,. Pamol being nearer, they the government instructed us to open new plantations there in order to get Cameroonians to settle in Bakassi in huge numbers.

We were asked to invest on 1000 hectares and that would cost over 2 billion CFA F and the government said Pamol should put in slightly over 1 billion CFA F and the government will put in 1 billion CFA F and the condition was that the government will start and then Pamol shall follow because starting is very difficult.

It took a long time for the government to act. So of recent Bakassi was reclassified and become a security issue because of the numerous pirate attacks. It thus became an emergency to launch the plantations works. I told you earlier that the Ministry of Finance made available 1.6 billion CFA F and the Ministry of Agriculture gave 500 million, making 2.1 billion in 2014, but we have actually received 500 million from the Ministry of Agriculture and 1.4 billion from the Ministry of Finance.

Concerning the 1.4 billion CFA F from the Ministry of Finance, an instruction was handed down to us, and it was covered by a letter from the Ministry of the Economy, Planning and Regional Development to the Ministry of Finance, to redirect 1 billion to the investment in Bakassi.

That means in the 1.4 billion from the Ministry of Finance, 1 billion should be used for the investment in Bakassi and 400 million for other investments earlier earmarked. This was done with the understanding that in 2015 when the Ministry of the Economy, Planning and Regional Development shall make available the 1 billion that was to be used in Bakassi, that money will be redirected to what was to be done with the money given by the Ministry of Finance.

This far about how many hectares are being prepared for planting?

It is not long since we started our operations there because as I told you, that money was not available in January 2015 but we started in February and as of now, the number of Cameroonians working in that area on this project, because we want to start this year with 300 hectares, is over 200. No village in Bakassi can have up to 200 people. So, we already have over 200 workers in the area and before the end of the year you will certainly see the arrival of many more.

To address your question directly, you have to understand that the development of plantations takes years. You first of all have to underbrush and before under-brushing we have to do demarcating and blocking, you make blocks.

So far we are already on 160 hectares and we have been applying the new techniques. As we are under-brushing, we are doing the clearing, we are doing the lining, we are doing the pegging, we are doing the holing and we are doing the planting. I don’t know if you understand this language. It means that at the same time, all the operations are going on virtually at the same time.

So Felling will come after?

Yes felling will come after, directional felling. That’s why I said it’s a new technique. We are doing planting, and we will do directional felling.

We also understand from some reports across the board that you are unable to pay salaries to your senior staff. How many months of wages do you owe the senior staff of Pamol?

No, this kind of thing used to happen in the distant past; sorry to say so, but it should be more than 10 years that we have not heard of that. For now, everybody is paid on time. The company does not owe anybody. I don’t know where that rumour came from. Everybody is paid on time. You can go to the company, investigate and you will find out. The company does not owe anybody at all.

How has the production curve of Pamol been since the start of 2013? I ask because we heard from reports towards the end of 2014 that you attained some of the best production levels in at least 5 years.

That’s true, even though we were not expecting it because if you look at our budget, we are felling and replanting at the rate of 500 hectares per year, meaning we should rather have been facing tough times.

But to stay afloat, management thought of something very simple, to intensify plantation practices. Simple and elementary plantation practices to make sure that if it’s weeding it’s weeding, if it’s harvesting it’s harvesting, if it’s pruning it’s pruning. Of course, we made sure that everybody does his work.

And by doing this, our production went up. I will give you an example to elucidate this point; we visited Ndian and discovered that in one of the divisions, one area was simply abandoned without harvesting. As simple as that, it was abandoned and wasn’t harvested. When we asked the manager what was happening he said he did not have labour. It’s a matter of simple management. Those are the simple things management rectified and reinforced discipline and it has changed the face of the company.

Again, over the years we have been asking ourselves, our plantations are getting old, there is no financial support, even the banks don’t want to finance plantations, what do we do ? So it took us a long time, a lot of study to come around a beautiful solution.

When we are going to Lobe Estate from nganjo up to the bridge, there are palms on both sides of the road and inside. It means that if you take the surface area of the oil palms cultivated around there, it could be more than that planted by Pamol. So where is that crop going to?

We reflected on ways to encourage them to increase production and sell their crops to us, some of them had even abandoned their farms because they didn’t see the need. So we sat down and put in place a strategy, to make smallholders see the need to keep their farms by introducing greater incentives.

So we held a meeting with them and proposed to buy the fruits right from the farms, to raise the cost per kilogram from 50 to 55 CFA F and took a resolution to pay them promptly and then finally we went ahead to open feeder roads for them to facilitate the evacuation of crops.

To put the icing on the cake, we opted to assist them in diseases control through our research department and the result today is a boom in smallholder crops and they are beating our estimates each year, resulting to the spectacular results in production that you are talking about. In fact, it’s again management, best plantation practices.

Your final word for our readers Mr Finance Manager

In Pamol today, there is no problem, there is security, work is going on smoothly, and investment is going on normally, things are progressing, things are going ahead and people are taking it for granted. In one of my interventions I told them that we think miracle is only happening in the Bible, but for us what is happening in Pamol now is a miracle and I want to thank the government of Cameroon for that and then our Interim General Manager for sticking to his guns when it comes to enforcing the strategy that is working, despite pressure and baseless attacks from all over.

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