TINASHE MAKICHI
Milling giant, Blue Ribbon Foods Limited, has put on hold plans to expand into the region owing to high costs of production in Zimbabwe, Business Times can report.
The company is now focusing on the local market after shelving plans to service the Zambia and DRC markets, general manager Yusuf Kamau said.
“Our quest to go into the Zambian and DRC market failed to come into fruition due to production costs in Zimbabwe. Judging by just the cost of maize in Zimbabwe and that of Zambia, it means we cannot beat the Zambians so our focus is on the local market at the moment,” Kamau said.
“Therefore we are in the process of expanding our local capacity in Bulawayo where we are injecting some considerable money.”
Three years ago, the milling giant expressed its intention to venture into the regional market buoyed by an increase in production following the commissioning of its US$6m state-of-the-art wheat milling plant.
The plant was expected to add 9 000 metric tonnes per month.
The company ceased operations in 2012 due to severe financial constraints, and was placed under receivership the same year.
Grant Thornton Chartered Accountant managing partner Reggie Saruchera was appointed the judicial manager.
Tanzanian milling giant, Bakhresa Group took control of Blue Ribbon Foods RI in 2015,acquiring about 74% shareholding in the company.
The government approved the acquisition of Blue Ribbon Foods Limited by Bakhresa the same year after the milling giant agreed to inject US$40m to revive the Zimbabwean milling company.
However, Bakhresa’s takeover bid initially faced resistance from competitors, who were against foreign ownership of the business.
Bakhresa immediately injected US$20m into the company which went towards recapitalisation clearing liabilities to creditors and workers.
Blue Ribbon Foods Limited was saddled with a total of US$29.4m liabilities to local and regional banks and other creditors.
The injection brought relief to workers who had not been paid for years.
Bakhresa Group then had to acquire the entire shareholding in Blue Ribbon Foods Limited and its subsidiaries.
Shareholders in Blue Ribbon included a management consortium called Orchadrian Enterprises which owned about 74%, Cereal International Limited which had 16% and a 10% owned by employees share ownership.
They, however, lost their entire interest to Bakhresa Group.
The deal was approved by the Competition and Tariff Commission. The acquisition of the 100% ownership interest in the milling giant was implemented by Bakhresa Zimbabwe, a newly created wholly-owned Zimbabwean subsidiary of Bakhresa Holdings (Private) Limited.
Apart from its huge presence in Tanzania, Bakhresa Group, also has a strong establishment in other countries in east and southern Africa.
Blue Ribbon Foods Limited’s popular brands include Chibataura and Ngwerewere. The company also has considerable infrastructure, which puts it in a good position to recapture a significant market share, according to experts.
