Loans secured by Nestle Nigeria Plc rose to N155 billion at the end of the 2022 financial year from N76.864 billion in 2021, indicating a 102.05 per cent growth.
This according to 2022 aannual report of the company.
However, stakeholders of the company had raised concerns about this during Nestle’s Annual General Meeting held in Lagos last week.
One of the shareholders of the firm had expressed concerns about the liabilities of the firm and the accrued interest on the loans, pointing out the intercompany loans taken by Nestle Nigeria.
According to the company's annual report, Nestle Nigeria said its unsecured bank loans as of December 31, 2022, stood at N8.293 billion from N431.943 million in 2021, while loans from related parties were N147.006 billion from N76.432 billion in 2021.
Providing details about the loans, Nestle said the bank the loans and borrowings were secured by a negative pledge on the company’s assets in line with their relative exposures with no fixed payment period agreed in the loan contract.
Responding to the concerns raised by shareholders, the immediate past Chairman of Nestle, David Ifezulike, said that forex needs had led to the borrowings.
“We need forex for machinery. We don’t produce any machinery in Nigeria.
"We need machinery, we need to replace parts. We need to get forex to do this.
“We take loans as well, from banks. But for us to be able to meet our forex needs, we get forex from the parent company.”
According to him, while Nestle has always helped to develop the local producers of raw materials by teaching them best practices, there is a need for forex.
“For most of the products we’re making, we try to use as much as possible to use local raw materials.
"Having said that, we still have some products that require forex.”
On its footprint in the dairy business, Nestle said, “Dairy business is not a small business, the country has to be in dairy business.
"The country has to realise that it needs to have a proper dairy industry, the cows have to be fed in one spot, they don’t have to walk around the place and they produce milk. Outside this country, their cows produce 10 litres per day but over here, we will be lucky if they produce up to one.
“It is a decision by the Central Bank of Nigeria to make sure that we show interest and we have shown a lot of interest in that even better than some companies that started ahead of us.
"Down the line, maybe the dairy industry in Nigeria will pick up and we will not import much of some of these materials we are importing.”
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