Companies

CAPS revival hinges on new board

TINASHE MAKICHI

The revival of state-ownedpharmaceutical company, CAPS Holdings and finalisation of the entity’s ownership wrangles is now hinged around the impending appointment of a new board of directors after Indian investors who expressed interest in the company pulled out, Business Times can reveal.

The comes after the proposed takeover of state-owned pharmaceutical, CAPS Holdings by a top Indian health firm, Ajanta Pharma has been thrown on the rocks following revelations that the investor which had engaged the firm was considering pulling out of the deal.

The Indian investor in 2018 signed a letter of intent with the government to take over CAPS Pharmaceuticals and revive its operations. Further, the company intended to set up a top-notch hospital and medical college to train health practitioners.

Ajanta officials were lured into investing in Zimbabwe’s health sector by Vice President Constantino Chiwenga when he visited India two years back and the company’s top officials including co-founder and vice chairman, Madhusudan Agrawal  then CAPS Pharmaceuticals as part of the due diligence exercise.

The investment was expected to be one of the biggest foreign direct investments in Zimbabwe in recent times but since the visit of the investor, there hasn’t been little movement thereby seeing government lining up other initiatives to revive the pharmaceutical manufacturer.

Contacted for comment, Industry and Commerce Minister Sekai Nzenza said the revival of Caps was under massive consideration as part of government’s pharmaceutical products import substitution strategy.

“We are in the process of setting up a new board and the list that I have drawn up is undergoing vetting. The revival of Caps is a priority as part of government’s strategy to substitute imports and the revival of the Caps means some dugs that we are importing right now will be manufactured locally hence saving us a lot of funds. The issue of an investor will be addressed by this new board,” Nzenza said.

The coming of the Indian investor in2018 came after the government had delayed inviting investors for the country’s largest pharmaceutical manufacturer in order to have ample time to sanitise operations at the company for it to reflect value.

At its peak, CAPS Holdings used to manufacture 75% of essential drugs in the country and was once listed on the Zimbabwe Stock Exchange.

Government through the Reserve Bank of Zimbabwe has to date managed to settle outstanding debts with banks and other individual creditors.

The pharmaceutical manufacturer shut down its operations five years ago due to undercapitalisation, an unsustainable debt and allegations of management malfeasance.

In 2016, the High Court ordered the sale of CAPS Holdings head office through a private treaty after an initial disposal of the property was reversed following a $1,5 million bid by Chinese investors.

CAPS Holdings used to be one of the largest pharmaceutical companies in Sub-Saharan Africa before it plunged into a financial crisis. Units under the group include QV Pharmacies, Caps Pharmaceuticals, Geddes Limited and St Annes Hospital.

The company also runs CAPS South Africa and CAPS Botswana. Reports say Cabinet at one time recommended that the Industrial Development Corporation would save the company from collapsing by taking over its debts but had been unable to bail out the pharmaceutical firm.

Various schemes proposed by shareholders to revive operations have failed to take off.

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