KENNETH MATIMAIRE
Mutare Bottling Company (MBC) has been making losses for the past five years forcing its major shareholder Econet Wireless Zimbabwe to occasionally bailout the soft drinks manufacturer, a senior manager revealed.
Finance manager David Kanengoni said Econet, which holds a 67 percent shareholding majority in MBC through its investment vehicle Pentamed, has been offering routine bailouts to the manufacturer to service loans and sustain operations.
He was responding to a question by Industry and Commerce Minister Mangaliso Ndlovu on the company’s financials in terms of profit.
Kanengoni indicated that the bulk (52 percent) of the company’s income pays suppliers with 24 percent to banks, staff costs (13 percent) and 11 percent government remittances which have now risen to 13 percent following the 2 cents per dollar Intermediary Monetary Tax.
“We have been running at a loss for the past five years Honourable Minister. Nothing goes to the company. We have been bailed out by Econet to service our loans and finance working capital,” the finance manager responded in a detailed Operations Overview Report during a tour of the distressed company.
Mutare Bottling acquired a $20 million loan in 2014 used to acquire and install an automated bottling plant the same year.
Kanengoni said the unit had not been remitting Capital Tax for the period under review as the company has not recorded any profits.
He largely attributed the challenges to low foreign currency allocation from the central bank – Reserve Bank of Zimbabwe (RBZ).
MBC currently imports 80 percent of its raw materials from glass, caps to concentrate used to manufacture soft drinks.
The shortage of foreign currency had resulted in subdued production that has seen the company’s regional market share plunging to 67 percent this year from 87 percent in 2017.
“Our production volumes have been greatly affected. If you look at our production figures in 2014 we recorded an all-time high production of 2,22 million cases. However, this dropped to 1,2 million cases last year. This year, we are currently on 944,000 cases and expect activity to peak during the festive season,” he said.
Kanengoni appealed to the Industry Minister to ensure that government allocates enough foreign currency as the company has been getting way below the required threshold.
MBC requires close to $900 000 per month but has been getting between $200 000 and $600 000 this year with the most foreign currency allocation of over $1 million having been recorded in May.
Technical manager Bill Clegg indicated that the company is operating at 33 percent capacity on one shift. The bottling company has 162 employees.
Clegg said capacity and production can peak provided there is sufficient supply of foreign currency and glass, which is currently in short supply.
MBC, which has pegged its 300ml bottled soft drinks at 50 cents since 2009 appealed to government to ensure that they maintain an environment where the company is not coerced to hike its prices.
