From the fire to high-flyer

2012-04-14 14:44

Patuxolo Nodada’s introduction into the world of business was a baptism of fire.

Within six months of making his first foray into the mining industry, the small company he had acquired together with his four partners hit rock bottom, wiping out the entire life savings the five-man team had used to buy the business. The business manufactured rock drilling equipment.

It was in 2003 when Nodada – 27-years at the time – was broke and the now defunct crime-busting unit, the Scorpions, was after his company’s tail because the man they had bought the business from turned out to be a crook. Thankfully, it wasn’t too long before the long arm of the law caught up with the said crook.

“He (the crook) would sell the rock drilling machines to the mining houses, but he somehow managed to get it (machines) back and sell it again to other buyers. Basically, he was selling the same equipment to many buyers,” says Nodada. “The Scorpions arrested the guy and the business was closed down.”

The young businessman, Nodada, who had quit his job at Transnet a year earlier, was dealt a hard lesson. He quickly learnt that choosing the wrong business partner can be catastrophic. “We lost everything. We had used our pensions and life savings to buy the business,” he recalls. “Our investment went down the drain.”

Today, he is an emerging manufacturer, producing anything from buses to flat-screen TVs and decoders.

“I like manufacturing because it is an industry that has the ability to create jobs.

“I am not in the business to create wealth for only myself and my family, but to create wealth for others and to create jobs,” says Nodada, who grew up next to the Butterworth factories in the Eastern Cape.

During its heyday in the 1980s, Butterworth was a small, bustling industrial town. It has since de-industrialised after hundreds of investors left in droves in the early 1990s after the government withdrew tax incentives.

“One day, I would like to build a factory in Butterworth and create jobs,” says Nodada, who has completed an executive development programme in mergers and acquisitions from Harvard Business School in the US.

Although Nodada lives in Johannesburg, he is invested in the Eastern Cape. In East London, about 100km from Butterworth, he is part-owner of Vektronix, a factory that produces flat-screen TVs and decoders.

His manufacturing investments include bus producer Busmark and Ulrich Seats, which manufactures seats for buses and trains.

In total, his manufacturing companies employ more than 2 000 people.

Business has been brisk for Busmark and the coaches produced by the company are roaming the streets of Johannesburg, Durban and Cape Town.

In Johannesburg, Busmark supplied buses to the Gautrain Management Agency, the operator of the Gautrain rapid-train system which connects Pretoria and OR Tambo International Airport in Kempton Park.

In Cape Town, the company recently won a R660 million tender to supply 190 buses to the City of Cape Town and in Durban, it is supplying 80 coaches to the eThekwini municipality for R108 million.

Nodada acquired 49% of Busmark last year through his investment company, Siga Capital, but he declines to say how much he paid for the acquisition.

Siga Capital has an advisory arm that advises clients in corporate restructuring and finance. The company also invests in commercial and residential property.

Government-owned lender Industrial Development Corporation has been his main backer to date.

After his rock drilling business went bust, Nodada met Nick van Rensburg, an executive at mining giant Anglo American, who advised him and his four partners to distance themselves from the rock drilling business and to look for other business opportunities.

In fact, Anglo American was among the victims of the very rock drilling scam.

Six months after his meeting with Van Rensburg, Nodada and his family moved to the small Free State mining town of Virginia, where he had bought a 26% stake in Kaltran Electrical Engineering, a manufacturer of power substations for mines and municipalities.

Three years later, the relations between Nodada and the family that controlled Kaltran Electrical soured after it refused his offer to buy them out and expand the business to North West.

“They had initially agreed to sell, but they changed their minds. We eventually settled and I sold my interest back to the original owners.”

But there was a sting in the tail of the contract. Nodada had to sign a restraint of trade agreement, which prevented him from operating in the industry for three years. “I was getting contracts every day. If they had allowed me to stay in the market (electrical engineering), I would have ‘killed’ them.”

In 2006, he returned to Johannesburg and invested in Siga Capital which was owned by businessman Bear Khumalo. Siga Capital had mining and industrial investments.

In 2007, Khumalo and Nodada decided to restructure the company, resulting in Khumalo parting with the mining investments and Nodada remaining with manufacturing investments.

His initial involvement with the mining industry was still fresh in his mind and it is an industry that he stays clear of to this day.

Says Nodada: “I did not have the patience for mining investments. They are capital intensive, take a long time
to mature and chow money.”

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