News / National
Ingwebu's remarkable turnaround
16 Jun 2019 at 09:38hrs | Views
BULAWAYO Municipal Commercial Undertaking (BMCU)'s beverages manufacturing unit, Ingwebu Breweries, which has close to a decade been reeling under massive losses, has had a remarkable turnaround.
Ingwebu Breweries managing director Mr Dumisani Mhlanga said the restructuring exercise, which has been carried out by the sorghum beer manufacturer since last year has seen it moving from being a loss making entity into profitability.
"On month on month right now we have grown by nine percent and if you look at our volumes on year on year we have actually grown by 39 percent," he said.
Ingwebu Breweries which has been run under BMCU, a wholly council business entity since 1996, has over the years been making losses of up to $2 million. Before it was run by the Bulawayo City Council. However, since December last year it has been realising profits with a profit of $1,1 million being recorded for the month of May. Prior to its latest turnaround, the local authority was contemplating privatising the unit owing to persistence losses.
"As it is we (management) are unpacking the privatisation issue. There is no need for us to talk about privatisation when the business has been turned around and is now profitable. What we need to do is to make sure the profitability is sustainable and we pay off our debts," said Mr Mhlanga.
The company has been reeling under a legacy debt, which had ballooned to $10 million.
"We opened this year with a debt of $8,4 million up to April, our debt has come down to $6,5 million but by December we are projecting our debt to be as low as $3,5 million and by this time (June) next year Ingwebu won't be owing anyone," said Mr Mhlanga.
The company would be forced to write off about $1,2 million it is owed by individuals that had franchised its beer halls due to improper paperwork and insolvency by the parties involved. Mr Mhlanga attributed the company's new lease of life to the company's restructuring strategy which led to the rejuvenation of its sales and distribution division as well as to the downsizing of its more than 70 redundant workforce.
"I attribute it (turnaround) to the restructuring that we have done in terms of sales and the focus we have given to sales and the competition that now exist among the sales team. There has been a big turnaround in terms of the attitude to push volumes because we have got a new team that has come in.
"Obviously as part of restructuring as well we have had to look at the numbers in the organisation because the organisation is overstaffed relative to turnover. We have had to right size the organisation. In actual fact the retrenchment process has been going on for some time," he said.
The company employed a new sales and distribution manager who supervises two regional managers both of which have two sales representatives under them. Mr Mhlanga said high levels of mismanagement and well-orchestrated theft syndicates had over the years threatened the brewery's going concern status.
"Ingwebu has over the years failed because of mismanagement and over and above that, the theft at Ingwebu was institutionalised to the extent that it had become a norm to steal at the company. The organisation has hit a turnaround but there's so much resistance from those who benefited from this rot," he said.
Mr Mhlanga said as part of increasing its product portfolio the company would next month re-introduce its non-alcoholic sorghum mahewu product. The company suspended its non-alcoholic sorghum mahewu production in 2017 after raising a paltry $6 143 in the fourth quarter to December 2016, which was 91 percent down compared to the budget.
The company started producing mahewu in February 2015 after investing more than $500 000 as a way of raising fresh income after its main source — the sorghum beer — took a battering from poor marketing, distribution and competition from other brands.
Efforts to re-introduce its five-litre packaged sorghum beer, Thwala 5 have hit a snag owing to the high cost of packaging material. Mr Mhlanga said there was a need to invest in retail outlets refrigerators as well as distribution trucks to enable it to grab a substantial niche market locally.
Ingwebu Breweries, which has been into the brewery business for over a century, has for decades now been operating under difficult conditions and stiff competition, in an industry dominated by Delta Corporation's Chibuku brands.
The company currently produces 300 000 litres of sorghum beer a day and markets it in Matabeleland region and the Midlands Province.
A committee member in the Bulawayo City Council business committee, Councillor Donaldson Mabutho said the turnaround of the company was an exciting development to the City Fathers as well as Bulawayo residents.
"We have started realising meaningful profits and these meaningful profits are a result of the reforms, which Mr Mhlanga and his management have brought on board, one being plugging or closing on all areas where theft was being done. I can tell you that by end of July we will realise a profit of $5 million basing on the state of accounts on the ground right now and as City Fathers we are happy because the residents of Bulawayo were concerned about the destruction of Ingwebu," he said.
Ingwebu Breweries managing director Mr Dumisani Mhlanga said the restructuring exercise, which has been carried out by the sorghum beer manufacturer since last year has seen it moving from being a loss making entity into profitability.
"On month on month right now we have grown by nine percent and if you look at our volumes on year on year we have actually grown by 39 percent," he said.
Ingwebu Breweries which has been run under BMCU, a wholly council business entity since 1996, has over the years been making losses of up to $2 million. Before it was run by the Bulawayo City Council. However, since December last year it has been realising profits with a profit of $1,1 million being recorded for the month of May. Prior to its latest turnaround, the local authority was contemplating privatising the unit owing to persistence losses.
"As it is we (management) are unpacking the privatisation issue. There is no need for us to talk about privatisation when the business has been turned around and is now profitable. What we need to do is to make sure the profitability is sustainable and we pay off our debts," said Mr Mhlanga.
The company has been reeling under a legacy debt, which had ballooned to $10 million.
"We opened this year with a debt of $8,4 million up to April, our debt has come down to $6,5 million but by December we are projecting our debt to be as low as $3,5 million and by this time (June) next year Ingwebu won't be owing anyone," said Mr Mhlanga.
The company would be forced to write off about $1,2 million it is owed by individuals that had franchised its beer halls due to improper paperwork and insolvency by the parties involved. Mr Mhlanga attributed the company's new lease of life to the company's restructuring strategy which led to the rejuvenation of its sales and distribution division as well as to the downsizing of its more than 70 redundant workforce.
"I attribute it (turnaround) to the restructuring that we have done in terms of sales and the focus we have given to sales and the competition that now exist among the sales team. There has been a big turnaround in terms of the attitude to push volumes because we have got a new team that has come in.
"Obviously as part of restructuring as well we have had to look at the numbers in the organisation because the organisation is overstaffed relative to turnover. We have had to right size the organisation. In actual fact the retrenchment process has been going on for some time," he said.
The company employed a new sales and distribution manager who supervises two regional managers both of which have two sales representatives under them. Mr Mhlanga said high levels of mismanagement and well-orchestrated theft syndicates had over the years threatened the brewery's going concern status.
"Ingwebu has over the years failed because of mismanagement and over and above that, the theft at Ingwebu was institutionalised to the extent that it had become a norm to steal at the company. The organisation has hit a turnaround but there's so much resistance from those who benefited from this rot," he said.
Mr Mhlanga said as part of increasing its product portfolio the company would next month re-introduce its non-alcoholic sorghum mahewu product. The company suspended its non-alcoholic sorghum mahewu production in 2017 after raising a paltry $6 143 in the fourth quarter to December 2016, which was 91 percent down compared to the budget.
The company started producing mahewu in February 2015 after investing more than $500 000 as a way of raising fresh income after its main source — the sorghum beer — took a battering from poor marketing, distribution and competition from other brands.
Efforts to re-introduce its five-litre packaged sorghum beer, Thwala 5 have hit a snag owing to the high cost of packaging material. Mr Mhlanga said there was a need to invest in retail outlets refrigerators as well as distribution trucks to enable it to grab a substantial niche market locally.
Ingwebu Breweries, which has been into the brewery business for over a century, has for decades now been operating under difficult conditions and stiff competition, in an industry dominated by Delta Corporation's Chibuku brands.
The company currently produces 300 000 litres of sorghum beer a day and markets it in Matabeleland region and the Midlands Province.
A committee member in the Bulawayo City Council business committee, Councillor Donaldson Mabutho said the turnaround of the company was an exciting development to the City Fathers as well as Bulawayo residents.
"We have started realising meaningful profits and these meaningful profits are a result of the reforms, which Mr Mhlanga and his management have brought on board, one being plugging or closing on all areas where theft was being done. I can tell you that by end of July we will realise a profit of $5 million basing on the state of accounts on the ground right now and as City Fathers we are happy because the residents of Bulawayo were concerned about the destruction of Ingwebu," he said.
Source - sundaynews
