Banks Fleece PBC

Astronomical interest payments on loans contracted by the Produce Buying Company (PBC) Limited from some commercial banks have negatively affected the operations of the company.

Due to the development, it recorded a net loss of GH¢8.831 million for the 2013 financial year.

For the 2012 financial year, PBC paid dividend totaling GH¢3 million to shareholders, representing six percent of interest it paid on loans to commercial banks.

In 2011, it paid GH¢8.3 million, representing 24 percent of interest on loans paid.

“How can anyone be operating a business and paying so much in loan interests to banks and expect to make profits?” Kojo Atta Krah, Managing Director of PBC, quizzed at the Ghana Stock Exchange (GSE) yesterday in Accra when his outfit took its turn to explain its performance to journalists and stock brokers.

He said the situation keeps exacerbating since buyers’ margin had remained static as a result of the increasing costs occasioned by increases in fuel price of late.

“Financing cost, which has increased six-fold over the last five years, has siphoned 46 percent of gross profits leaving less than enough to accommodate other operational costs. It has also created a downward valuation of its stocks on the market from 0.26 of a cedi in March 2013 to 0.17 of a cedi currently,” Mr Attah Krah said.

On the way forward, he noted: “We’ve planned to get the company re-capitalised to address the over burdened debt situation.

Furthermore, he said management of PBC was in talks with a financial institution which had offered to provide it with capital to the tune of $75 million via a revolving credit at the beginning of the cocoa season at a far lower cost.

Osei Manu, Deputy MD in charge of Finance and Administration at PBC, in a presentation, said PBC’s share of the cocoa beans buying market stood at 35.33 percent from 37 percent previously.

He also mentioned that PBC’s predicament was attributable to a reduction in national cocoa production due to unfavourable weather conditions, buyers’ margin per tonne and risky pure cash mode of cocoa purchasing.

The company intends to re-introduce the Akuafo cheque payment system despite some challenges associated with it to help address some of the problems.

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