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Sheba Investment PLC will pay 1.25 billion birr to own a 60 percent stake in the nation’s only tobacco company.
The company has come to terms with the Privatization and Public Enterprises Supervising Agency (PPESA), which is the public enterprises regulatory body, to own the dominant share of the National Tobacco Enterprise (NTB), the state monopoly for producing and distributing tobacco and related products.
In 1999 Sheba, a Yemen based company, purchased 22 percent of the tobacco manufacturer. Based on the current deal, the company will have an additional 38 percent of the company which has a factory and tobacco farms throughout Ethiopia.
Wendafrash Assefa, public relations head of PPESA, told Capital that the company has agreed to pay 1.25 billion birr to acquire a dominant share of the factory.
“They asked us to increase the share to 70 percent but 40 percent is what we felt comfortable with,” he added.
NTB has four tobacco farms, 20 hectares in Robe, 1,200 hectares in Blate, 25 hectares in Hwassa and 1.5 hectares in Wolyata. The factory is using three types of tobacco plants for its production; Virginia, Oriental and Berlet. Aside from its own plantation, the enterprise also collects products from other growers. For instance 65 percent of Virginia and 100 percent of Oriental type tobaccos are collected from other growers. It produces Nyala, Delight, Gisilla and Elleni cigarettes. It also imports two globally known tobacco types, Rothmans and Marlboro.
Nyala dominates the market, with sales of 258,220 cartons (of 50 sticks or 10,000 pieces) per year, followed by NTE’s Gisilla at 29,804, BAT’s Rothmans at 29,804, PMI’s Marlboro at 1,221, NTE’s Delight at 480, and Elleni at 115 cartons per year. But, while Rothmans account for 4.8pc of the total quantity of cigarettes sold, in terms of value, it accounts for 9.69 percent of the market due to the brand’s higher price. Nyala has the lion’s share in both quantity (at 50.4pc) and value (at 50.15pc), while Gissila shares 5.8pc of the quantity and 1.2pc of the value. The enterprise earned more than 127 million Birr net profit last fiscal year.
In a related development, PPESA is expected, place seven enterprises up for bid at the beginning of the fiscal year, which begins July 22, 2014.
The public relations head stated that the agency will float the Mineral Development Share Company, Bahir Dar Textile, Kombolcha Textile, Agricultural Mechanization Service Enterprise, Ethiopia Fiber Product, Bilito Sirao Farm and the Transport Construction Design Share Company.
Currently the government holds 29 enterprises and 13 of them will be transfered to the private sector next year, according to PPESA Schedules.