Lominat takeover of national liquor factory in limbo

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The Ministry of Public Enterprise (MOPE) is looking at the financial statement of Lominat Beverages Plc, to precede with the privatization process of the National Alcohol and Liquor Factory (NALF) which attracted a record bid from a local firm.
Lominat Beverages Plc owned by the prominent business personality Binyam Berhane and Brook Worku, who is also well known in the spirit industry, has offered  3.62 billion birr to fully own NALF, the biggest alcohol and liquor industry in the country.
According to sources at the ministry, for the final board approval the company needs to submit a financial statement indicating they are competent enough to own the business.
In the bid opening held in late June Lominat, Pure Alcohol and Beverages Manufacturing and Metadim Manufacturing tabled their offer. The last two companies, both are local, offered close to 1.7 billion birr and over 1.5 billion birr respectively.
Lominat’s offer was higher  than the two other competitors and the initial price tagged by MOPE. Information from MOPE indicated that the floor price was 1.27 billion birr.
In June Brook, CEO of Lominat, told Capital that NALF is worth what his company offered. “To be frank the company is one of the most profitable public enterprises, and has a huge market in the country,” he said.
He added that he and Binyam, owner of Country Trading, created this partnership since Binyam has ample experience in local distribution and trading alcohol and sprits, and he has many relationships with multinational producers.
Experts said that it is a good move for the business community, who has been engaged in trading, with the manufacturing industry. The government has wanted the business community who had focused on wholesale and distribution businesses to manufacture products which are currently imported.
The major shareholder of Lominat, which was formed in 2014 by the two businessmen with the goal of joining the beverage and sprit industry, Binyam is well known in the import and distribution of various commodities including distribution and trading alcohol and sprits over three decades.
Lominat aims to develop the local market at an international standard. Brook stated that Lominat would provide import substitution and export products.  Currently NALF has the export market. The products of NALF are prominent in the region mainly the South Sudanese market.
“We can produce the alcohol products and different brands that are imported from abroad and substitute exports by 90 percent,” Brook told Capital in June.
NALF is the collection of four factories three in Addis and one in Sebeta, 25km west of Addis.
Since the beginning of the first GTP the government has asked  business actors, with capital, to invest in the manufacturing industry as per the industrialization policy. However the strategy was not fruitful. Lominat’s decision may change this as it is considered a big move that may attract other traders  to join the sector.
Sources at MOPE said that the Ministry is waiting for the company to submit the expected documents for final approval. Experts said that owners of Lominat have ample capacity to show their financial competence.
In the 2016/17 budget year NALF’s sales were 607 million birr with a growth of 132 million birr compared with the 2015/16 budget year.
The net profit of 122.4 million birr after tax, which has showed a 30 million birr increase within a year, is also a record amount registered by the liquor factory. Their latest expansion is expected to significantly increase their profits further.