CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
The success of a business is generally attributable in great measure of the ability of its management personal to cope with probable conditions of the future. Short range as well as long-term plans must be made accomplished through sound management evaluation. However, many aids have been controlling and co-ordinating the function of their business. One of the tool which encompasses vital and needed information in guiding companies profit path is the Break Even theory. This is an extension of marginal costing; basically. It is concerned with the point at which revenue and costs intercedes, hence the term “Break – Even”. Break-Even system is a simple and easily understandable method of picturing to the management the elect of changes in volume on profits. It predicts the eects of managerial actions today on future profits and company survival. Business people do not view costs outputs and profits may be acted by their actions. With the aid of Break-Even theory, they will be able to understand more and data revealed by the Break-Even analysis. This system involves the marshal-ling of the cost – volumer – profit data and other data to guide manager in its day-to-day decisions. Some of the data are best seen in a chart form for management to get a perspective view of the profit structure. Moreover, at the beginning of the century a planning tool was developed by WALTER RAUTENSTRAUCH called the Break-Even chart. This development made a major contribution as a management aid in profit planning, forecasting and decision-making. The concept show the significance in a firm between it’s costs, volume and relationship between the costs, illustrate the relationship between the cost, that-the selling price is constant irrespective of the volume.
HISTORICAL BACKGROUND OF NIGERIA HOECHST PLC
On the 18th of December, 1963 the company was formed under the name “Hoechst Nigeria limited”. The company was registered as a private limited liability company with an authorized share capital of $10000 divided into 100 ordinary shares of $1 each on the 10th of January, 1964. August 4th, 1971 the PVA plant at Ikeja commissioned for use. The major and company sold their 40% shareholding to E.O Ashamu and sons (holdings) Ltd. The same day the name of the company was change to “Nigerian Hoechst. The authorized share capital was increased to N2 million by the creation of additional 600,000 ordinary shares of N2 each in 1977. On October, 1978 the paid – up capital was increased to N3 million by public issued of N1 million which implies that the whole authorized capital of the capital issued and fully paid-up. A, year later, Nigerian Hoechst shares were quoted on Nigerian stock Exchange at 30K per share of 50k. The pharmaceutical factory and central warehouse at Ottah was commissioned on November 4th 1982. Three years aer, the authorized share capital on the company was increased from N10 million to N15 million while the paid-up capital increases from N7 million to N10.5 million by bonus issue of one ordinary share for every two ordinary shares held. In 1991 the authorized share of the company was increased from N15 million to N25 million by the creation of additional 20 million ordinary shares of 50k each and paid-up capital increases from N14 million to N17.5 million by bonus issue of one ordinary share for every four ordinary shares held. Nigerian Hoechst Plc has been engaged in pharmaceuticals and industrial chemicals for years. The pharmaceutical factory is located at Otta while the PVA (Industrial chemical Division) is located at Ikeja. Among their pharmaceuticals in market are the reformulated Daga, Tabalon (an anti-rheumatic analgesics), fastaquine (a malaria preventive), Tarivid and Lasix etc. However, Nigerian Hoechst Plc is also engaged in high quality textile dyes, veterinary products, herbicides and paints pigments. The registered oice is situated at Ikeja.