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Ingwebu seeks $20million for recapitalisation

by Staff reporter
13 Jan 2019 at 07:52hrs | Views
Bulawayo Municipal Commercial Undertaking (BMCU)'s beverages manufacturing unit Ingwebu Breweries is seeking about $20 million to recapitalise its business operations.

Speaking after a tour of Ingwebu Breweries by Industry and Commerce Deputy Minister Raj Modi, the company's board chairperson Mr Concern Sibanda said the sorghum beer manufacturer needs a capital injection of $18,6 million for retooling with the major chunk of the funding going towards replacing its packaging plant, while part of it would be utilised as working capital.

"The infrastructure here is very dilapidated, some parts are not operational anymore. We want to re-equip the whole plant although it's at the packaging we need to focus our attention on as that's where the bottle-neck is. The production area here has got the capacity but unfortunately when it comes to packaging it is lacking.

"We can package only so much and those volumes are so limited at this point in time. That packaging plant is key to the operations of this place to a certain extent, should that plant stop for any reason whatsoever and it's likely to do so when you consider its age, then this whole Ingwebu plant will come to a standstill," he said.

Plans are underway for the company to procure a new packaging plant in South Africa. The company is also seeking investment to set up an effluent plant.

"There's another big area, which will want quite a lot of capital as well - our effluent plant. We are in danger to some extent of transgressing certain laws by Ema (Environmental Management Agency) so we would like to attend to that area as well in the near future," said Mr Sibanda.

He said the company was in the process of soliciting for funding through an Initial Public Offering (IPO) on the Zimbabwe Stock Exchange.

"We are busy at this point in time trying to go to the Stock Exchange and raise an amount of $18, 6 million. We are in the process of identifying a project facilitator for that process and we will go to the Stock Exchange and try and raise capital that way, by just doing an IPO," said Mr Sibanda.

IPO or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors. He said there was a need to ensure the revival of the company as it has and continues to play a pivotal role in the economy of Bulawayo.

"We would like to go back to those former glory days as Ingwebu and revitalise Bulawayo by so doing. Bulawayo had so much to get from Ingwebu, a lot of the townships around here especially most of the infrastructure like schools and so forth were direct products of Ingwebu and in that point of view its obviously in the interest of Bulawayo as a whole to have Ingwebu operating as well as it can," said Mr Sibanda.

The company is currently refurbishing one of its packaging line used for the production of one of its sorghum non-alcoholic beverage product, Royal Mahewu in South Africa at a cost of about R250 000, which is equivalent to about $18 000. Royal Mahewu disappeared from the market in 2017, barely two years after being introduced.

"Our plant failed, as we talk right now it's in South Africa, it had to be shipped back, actually it's in Durban to be done again. In fact our engineer and MD (managing director) are going down to South Africa to see the progress on the refurbishment of the plant and we still hope to produce Mahewu once that plant is shipped back here. It is being refurbished at a cost of about under a quarter of a million Rand, it's quite heavy and I think we have paid most of that amount," said Mr Sibanda.

He said the plant's bottle capping mechanism is continuously failing, culminating in the suspension of the production of Royal Mahewu.

"There were certain challenges and there were adjustments that needed to be done to that piece of equipment. The challenge with that machine is usually with the caps; how you cap the bottles, so that the product is not contaminated. So that's what they are working on," said Mr Sibanda.

He said the company, which had also introduced its sorghum meal, the Royal Sorghum meal at almost the same time with its Royal Mahewu, but the product also vanished from the market, was looking forward to introducing a number of products as part of its diversification strategy aimed at growing its business.

"We are still very much interested in going for other product lines as well," said Mr Sibanda.

Recently, the company mooted plans to re-introduce its five-litre packaged sorghum beer, Thwala 5 as a blind test of the product, which it stopped producing about two decades ago. Mr Sibanda said the company's production capacity was currently hovering around 50 percent and it employs about 500 people.

Dep Minister Modi said the tour of Ingwebu Breweries was part of his many tours he has been embarking on at most firms in Bulawayo with a view of ascertaining their operations and challenges.

"The purpose of this tour was to find out how the company was operating and the challenges, which they are facing so that the Government can assist them. The main challenge, which is being faced by Ingwebu, just like most companies, is the issue of foreign currency to recapitalise its operations.

"So we are going to work on it but I talked to them that the country was constrained by the shortage of foreign currency but it doesn't mean we are not going to do anything. We will consider their application and obviously we work towards unveiling capital for them," he said.

"It's employing nearly 500 people from Bulawayo and that's great news for us (Government) and they said if they are to get foreign currency requirement to buy new machinery the capacity of production is likely to double, which means the employment side will be doubled, which is very good," he said.

Source - chronicle