Fiji Hardwood Corporation Ltd (FHCL) faced significant financial challenges when the current administration took over in 2021, with a trust account balance of just $50,000 alongside an outstanding debt of $8.7 million. General manager Semi Dranibaka expressed his astonishment at being appointed to the role and recognized the scale of the work ahead, noting that the debt stemmed from loans obtained from the Fiji Development Bank, Fiji National Provident Fund, and other institutions back in 2007 and 2011, including additional arrears owed to landowning units.
In response to these challenges, the company undertook a comprehensive internal overhaul between 2021 and 2022. This included restructuring efforts supported by internal audits and the Office of the Auditor-General. These initiatives led to a remarkable turnaround in FHCL’s finances, turning a meager account balance into a profit of $3 million in less than a year.
Despite the 2022 profits, the company had commitments to fulfill, including paying off significant loan repayments and arrears. Mr. Dranibaka reported that the company settled a total of $1.2 million in lease arrears, effectively eliminating the $8.7 million debt by the end of 2023. He credited the transformation to the value derived from mahogany logs, achieved through adherence to the necessary procedures and regulations that promote transparency and accountability in governance.
Moreover, the company implemented cost-cutting measures and improved monitoring of financial flows to ensure responsible management during its transition. In 2023, FHCL began prepaying lease payments, having allocated $800,000 on an annual basis, and settled additional arrears including around $875,000 to TLTB for stumpage and lease rentals.
Looking toward the future, Mr. Dranibaka indicated that a draft of the Annual Business Plan and Statement of Corporate Intent for 2025-2027 has been presented to the Ministry of Public Enterprises and the Ministry of Forestry for further discussions, aiming to solidify the company’s recovery and continued growth.
In summary, FHCL’s story represents an inspiring tale of resilience and strategic management, showcasing how diligent restructuring and financial responsibility can lead to positive outcomes even in the face of daunting challenges. This turnaround positions the company not only to maintain its financial health but also to contribute positively to its stakeholders and the broader economy in Fiji.
This success story offers hope to other struggling enterprises and highlights the potential for companies to overcome adversity through effective governance and strategic financial planning.
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