RYAN CHIGOCHE
Diversified firm, Padenga Holdings, is struggling to clear a huge stockpile of less desired crocodile skins with its customers saying the market dynamics have changed.
Of the 26 871 skins recorded by its subsidiary Nile Crocodile, at the end of the financial year, Padenga is stuck with 18168 skins that are not in demand anymore.
As a result of the accumulation of stocks the crocodile business made a fair valuation write down of US$3.6m in 2021 resulting in a loss before taxation of US$2.8m.
Padenga is now targeting to sell the less desired skins in other markets at a discounted price.
Padenga CEO, Gary Sharp, told Business Times that the company was looking to dispose of the stocks by 2023.
“… Our biggest challenge right now has been the Covid induced reduction in sales volumes. When the market dips, they start becoming (strict). With the grading standards you end up with a larger proportion of skins that are just slightly not fit for their market. We didn’t move those skins for some time, we got quite a lot of stock,” Sharp said.
He added: ‘’What we have done is recognising that the market is weak so we discounted the prices of the stock skins that we have and we are slowly moving those steadily. We believe by the middle of 2023 we would have moved all the stock skins. We have four month worth of stock.”
While the quality of the skins Padenga produced in 2021 greatly improved, the corporation and the unit’s financial performance was below average due to poor demand and low sales volumes.
The skins industry is thought to have growth potential as it develops in step with the larger luxury goods market, but its losses have put a strain on the company.
As the crocodile business is currently struggling, Sharp said they will be diversifying into plantations in 2023.
“We are going to venture into plantations next year. We have looked very closely at different crops in different areas and done a couple of due diligence on properties that we would particularly be interested in,” he said.
“We have a significant amount of knowledge about those crops that we want to go into and what the right mix of crops is and what the climatic and soil conditions are. So it’s a question of taking all that information and then going out to find parcels of land for that.”
