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Faiz Khan And The Growing Success Of Our Pine Group

Let’s talk about success. Let’s look at leadership. Let’s look at what the right people- regardless of ethnicity- can do. Look no further than the Fiji Pine Group and its
08 Dec 2018 10:05
Faiz Khan And The Growing Success Of Our Pine Group
Pine Group of Companies executive chairman, Faiz Khan and Acting Prime Minister and Minister for Economy Aiyaz Sayed-Khaiyum during the bonus payout at the Tropik Woods Complex at Drasa, Lautoka on December 6, 2018. Photo: DEPTFO News

Let’s talk about success. Let’s look at leadership. Let’s look at what the right people- regardless of ethnicity- can do.

Look no further than the Fiji Pine Group and its executive chairman Faiz Khan.

Eight years ago, the Pine Group of Companies had accumulated a debt of $56.5 million owed to financial institutions both at home and abroad.

Insolvency was the next scenario as none of these institutions wanted to lend any more money to the group.

It was a downward spiral for the pine industry and no-one wanted to put the brakes on.

Except. Prime Minister Voreqe Bainimarama and his Government saw this and instead of turning a blind eye and watching the industry collapse, they decided to intervene and fix the problem.

Enter Faiz Khan, the Lautoka lawyer with a strong background in commercial law and finance.

A man with an early background in his family’s business and a‎Bachelor of Commerce majoring in Accounting and Finance as welll as a Law degree from Bond University in Australia.

His selection and support from the Government-led to the transformation of the company from what it was to today looking at a $35 million operating profit for 2018, which ranks amongst the best financial performances for such companies in Fiji.

An amazing feat considering the company had been on the verge of financial collapse.

Everything had been gloom for all stakeholders in the pine industry including the landowners who had received no bonuses for their land which had supplied the mills with pine timber.


Mr Khan disclosed that if the company added back the record $7 million paid to landowners for lease bonus, the 2018 operational profits would have been $42 million.

Bad management levels had been a contributing fact that added to the detriment of the industry.

The aging machines at its complex at Drasa in Lautoka added to the already gloomy state of affairs.

During those troubling times, commercial banks did not want to lend money to salvage the industry from the doldrums.

“In 2010 the company’s debt stood at $56.5 million with loans from the European Investment Bank, Westpac, FDB and FNPF,” Mr Khan said.

 

Today is different

Today is different. “The Fiji Pine Group is debt free for all intents and purposes.

“Interest free Government debt of $12 million borrowed from 1990 to 2001 has been reduced to $7.8 million, with $600,000 repaid every 6 months,” explained Mr Khan.

This turnaround did not go unnoticed by both the Prime Minister Voreqe Bainimarama and Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum.

Mr Sayed-Khaiyum  said: “I cannot over emphasise the fact that under his leadership, the company has made phenomenal success.”

 

Right people

Mr Khan seems to have the midas touch as he has also displayed his leadership qualities with Fiji Airports where he holds the same position.

Mr Sayed-Khaiyum said along with this was putting the people in the right place as opposed to selection to positions in the past, where such selections, including those on the board were picked on ethnic lines.

Such working in cohesion was evident where the pine landowners received that $7 million payout compared to their first bonus payout of $350,000 in 2013.

 

Biggest payout

The biggest payout last year went to the Mataqali Ketenaratu of the Yavusa Nasolo from Vitogo, Lautoka who received $375,913.67, compared to $40,000 the previous year for the 5020 acres under pine cultivation.

At the same time, in Vanua Levu, landowning units in the provinces of Bua and Macuata were also given bonus payouts totalling $2.8 million.

Prime Minister Voreqe Bainmarama while officiating during the $7 million payout said the company had spent an unprecedented $67 million in capital expenditure.

This included building and upgrading its mills and purchasing state of the art machineries expected to catapult the company to new heights with a much brighter look on the horizon.

“Because of that visionary agenda, combined with your steadfast commitment to replanting and sustainability, we can all rest assured that this Industry will continue to serve and benefit our people for generations to come,” Mr Bainimarama said then.

He was also pleased with the news that almost all the Fiji Pine leases had been renewed, which he said would bring more revenue, and put more money into the pockets of landowners.

During this past few years, the company opened a new timber facility at its Drasa factory, a wood chipping facility at Wairiki and new sawmill.

Mr Khan said the group currently holds around $15 million in interest bearing deposits but with liquid high levels of inventory due for imminent sale the group is forecasting to have far more than $30 million cash at bank by the end of 2018.

“From where we were only eight years ago, to where we are today, that is a complete transformation of the Pine industry,” elaborated Mr Khan.

With success comes the flak from those who have forecasted doom for the industry, the same people who preached the demise of the sugar industry.

 

Fake news

Mr Khan said 2018 had been a year of fake news over social media, and Fiji Pine was not spared from it.

“In April this year when we announced the record breaking $7 million bonus payout to our landowners, a remarkable achievement for Fiji Pine.

“Social media was questioning how Fiji Pine could pay such a large sum to our landowners, incorrectly claiming that our accounts were not audited for over a decade.

“When we clarified that Fiji Pine’s books were externally audited every year, we were told that Fiji Pine was feeding scraps to its landowners.

“We invite people to criticise our performance.

“But when people through fake news try to undermine the transformation that you have brought about in the pine industry, the distinction between your star performance and mediocrity is lost.”

“When that distinction is lost it becomes easier for companies to perform poorly whilst saying that they are doing well because it goes unnoticed.

 

Infrastructure

“That is fundamentally wrong because if we cannot distinguish between fact and fiction we no longer aspire to be great, as a nation.”

Mr Khan told the workers not to let people through fake news tell them that paying off $50 million of debt in the last seven and a half years to European Investment Bank, Westpac, FDB, FNPF and other creditors and becoming debt free was no achievement.

“Do not let people tell you that carrying out more than $60 million of successful infrastructure upgrades in the last seven and a half years to our previously obsolete factory assets – most without borrowing a single cent but through generating excess operating cash flows – is no achievement.

“Do not let people tell you that renewing around 25,000 hectares of expiring leases and replanting all available productive land with pine in the last seven and a half years to return the industry to sustainability for the security of the future generations of landowners – is no achievement.

“Do not let people tell you that holding more than $20 million in term deposits today, from a position of insolvency facing imminent closure seven and a half years ago – is no achievement.

“The term deposits will grow to $30 million in next one month.”

 

No to Government subsidies

He said the company achieved all of this and more without any Government subsidies.

“Seven and a half years ago we decided to throw a $10 million bailout grant paper done by our predecessors in the rubbish bin because here we believe that subsidies are inherently bad for the long term.

“When our financial position became healthy we even started paying off the interest free $12 million Government debt borrowed in the 90’s.

“Stand proud of what you, all of you, have achieved in a short period of time,” Mr Khan told the workers.

“Let’s aspire for greatness, yet let’s maintain our feet firmly on the ground as we don’t know what challenges tomorrow will bring.

“We look forward to 2019 trying to grow upon what we have learnt thus far, but also starting afresh to cope with new challenges as they come.”

Green gold, as they often refer to the pine industry, is now reaping the rewards for pulling up their socks, tightening their belts and looking beyond the nose rather than today.

Having a leader like Mr Khan backed by the right people and motivated workers makes a difference.

charles.chambers@fijisun.com.fj

 



Five Square


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