Fiji Hardwood Corporation Ltd (FHCL) faced significant financial challenges when the current administration took charge in 2021, with $50,000 in its trust account and a staggering $8.7 million in debt. Semi Dranibaka, the general manager, expressed his surprise at being appointed to the role under these circumstances.
The corporation’s financial burdens stemmed from loans acquired from the Fiji Development Bank, Fiji National Provident Fund, and various financial institutions between 2007 and 2011, as well as outstanding lease and stumpage payments owed to landowning units. In response to this situation, a major internal restructuring was initiated from 2021 to 2022, involving a thorough review of operational processes by internal auditors alongside the Office of the Auditor-General.
The efforts proved fruitful, as the company’s financial situation improved dramatically within one year, achieving a profit of $3 million. This turnaround allowed FHCL to pay off pending loan obligations and arrears, including a substantial $1.2 million in lease arrears. By the end of 2022, the company successfully eliminated its debt, raising questions among the board about the turnaround methods employed.
Dranibaka attributed the success to the value of mahogany logs sold under transparent and proper processes, adhering to both the Company’s Act 2015 and the Public Enterprises Act of 2019. The commitment to good governance and accountability was emphasized as central to the recovery.
As of 2023, the company initiated advance lease payments, contributing $800,000 annually, with an initial payment of $875,000 made towards stumpage and lease rental arrears in March. Additionally, provisions for previously unfiled taxes have been accounted for. To foster continued growth, a draft of the Annual Business Plan and Statement of Corporate Intent for 2025-2027 has been submitted to the relevant ministries for further discussion.
In summary, FHCL has successfully navigated a challenging financial landscape to emerge debt-free, signifying a commitment to transparency and fiscal responsibility. This turnaround not only strengthens the company’s foundation but also sets a hopeful precedent for sustainable growth in the future. The approach taken by the management reflects a determination to build a resilient and accountable enterprise, showcasing the potential for recovery even in the face of adversity.
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