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Disagreements between partners and US dollar shortage drive sales of EATC down - Daily News Egypt

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Disagreements between partners and US dollar shortage drive sales of EATC down

Problems include the decline of the company's market share as well as the worsening dispute between MEATCO and Naggar over stocks since 2012


Sales of the Egyptian Automotive and Trading Company (EATC), the local dealership agent for Volkswagen and Audi, have been impacted by the US dollar shortage and the difficulty of meeting domestic demand. Moreover, the worsening of repercussions from the conflict between the two main shareholders on increasing capital has hindered sales.

The dispute began five years ago between Middle East and Africa Trading Company (MEATCO) and the businessman Karim Naggar who owns, along with his family, 65% of the company’s shares—which is the core of the problem.

EATC’s market share fell from 1.7% in 2013 to 1.2% in 2014. The company stopped announcing its indicators in 2015 and the first five months of 2016.

In 2014, Volkswagen sales amounted to 1,979 units, while Audi sold 499 cars in Egypt. The total sales registered 2,478, an equivalent to 1.2% of sales that year of 207,973 cars.

The dispute was exacerbated recently when MEATCO filed a lawsuit demanding the seizure of the company due to a lack of confidence in the current board of directors. The case has not yet been scheduled for review.

The roots of the dispute date back to 2012 when Naggar proposed the capital increase for expansion in service centres and showrooms. The Board of Directors approved the increase; however, MEATCO delayed its payment. Naggar’s families upheld the increase, bringing up their contribution to 60%. MEATCO demanded the abolition of these transactions and began litigation between the parties to prove the disputed quotas.

According to papers within the case file; MEATCO shares amount to 42%, Engy Ayad to 37.5%, Karim Naggar to 10%, and Mai Estefno to 8%. However, Naggar provided documents proving his ownership of 65% of the company’s shares.

The dispute did not stop at equity. MEATCO filed a lawsuit against Naggar claiming he committed financial violations during his chairmanship of EATC. When Naggar was removed from the board, Miral Basil was appointed as chairperson. But even then, the board unanimously agreed to appoint Naggar as general manager of the company.

MEATCO took all legal actions against the Board of Directors at the time. Based on the moves, the Egyptian Customs Authority decided not to deal with both Naggar and Basil with regards to EATC, even though their names were still in the commercial register of the company and were liable to sign documents and paperwork.

Every now and then, the disputes remerge without reaching any solutions, which casts a shadow over the clients of the company and its future as one of the 10 largest automotive companies in Egypt.

Topics: Automotive EATC

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https://www.dailynewsegypt.com/2016/06/05/disagreements-partners-us-dollar-shortage-drive-sales-eatc/
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