HomeBusiness DigestCafca streamlines operations

Cafca streamlines operations

Roadwin Chirara

CABLE manufacturer Cafca Ltd says it will retrench and outsource non-core activities as part of its turnaround strategy.

erif”>Managing director Eugene Turina said the company was looking at reducing its labour force by at least 33 employees.

“Currently we have managed to voluntarily retrench 11 employees and those that have not heeded our call to take up the offer will be retrenched in the next phase of the exercise,” said Turina.

He said the move was necessitated by the need to cut down on its wage bill, which he said was not economic in light of the current problems the company was facing.

He said the company had made a provision of $2 billion for the exercise and the cost would be reflected in the current financial year.

“We have made the funds for this exercise available totalling $2 billion and we feel this amount will be sufficient to cater for the completion of the retrenchment exercise,” said Turina.

He said the company was looking at outsourcing its non-core activities as a way of cutting down on its operating expenses.

“We realised that some activities are not our core business and we have resolved not to continue with these if they are not making any significant contribution,” Turina said.

He blamed Cafca’s woes on the current foreign currency exchange rate, which he said was not viable enough for the company mainly because it relied on the export market.

He said since the company was currently importing 90% of its raw materials – especially the main component copper – from Zambia, accessing the foreign currency for this was proving a challenge.

“We have been facing the problem that the auction system has been failing to meet our demands for foreign currency because of the high demand from other bidders that the central bank also feels have genuine cause in their bids for the funds available,” said Turina.

He called for the review of the exchange rate for exporters.

“As a company we feel the $824 (to US$1 exchange rate) should be looked into because it’s heavily impacting on our returns. A single, revised exchange rate will likely have a positive effect on our export business,” said Turina.

He, however, said the company was likely to move out of its current financial position after the restructuring exercise.

“We are not insolvent like what people want to believe, but constipated. Like all companies we are facing our share of the problems, but with the measures that we have put in, we believe we are going to be back to our normal position,” said Turina.

He said Cafca’s export markets continued to grow steadily and that significant inroads had been made to facilitate advance payment for orders.

He said this would make available working capital to meet demands for the product in the market.

“We are still negotiating advance payment with most of our export customers especially Botswana which has been a significant market for the company,” said Turina.

He said the company had an outstanding order book of $7,4 billion and currently $2 billion of the orders were overdue.

“We are still to meet orders from our customers especially those in the region and at the moment $2 billion is overdue in orders to these companies,” said Turina.

He said Cafca had also accessed the Reserve Bank of Zimbabwe’s productive sector facility to have working capital to meet market demands.

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