Chemco set to shut down ailing Agricura

Matsaira said Agricura would move away from manufacturing to distribution where the group would source products from an overseas supplier but package and retain the brand to preserve it.

Matsaire, who was speaking on behalf of management, told shareholders at the company’s annual general meeting on Tuesday that the group would focus on outsourcing products from an overseas supplier because manufacturing was no longer viable.

However, the product would maintain the Agricura brand to leverage on its competitiveness.

Matsaire said that Agricura was a strong brand, which only needed an economic platform. 

He said the group would expand to agro-inputs by leveraging on the strength of its brand. Focus would be on timely product availability at the right price, he said.

“The unit was not making money and does not fit with the overall strategy of the group,” Matsaire said.

Matsaire said that it would be costly to resuscitate the timber business, adding US$480 000 would be required.  However the unit would run until it finds a buyer, he said.

He said after careful consideration, TSL realised that Chemco’s losses were not sustainable, prompting the group to redirect the group’s operations. 

“Chemco’s costs were a burden on the group. As a result, management will be moved to the TSL head office and the company will delist from the stock exchange,” said Matsaire.

“The boards of both TSL and Chemco are convinced the approach is to the best advantage of shareholders.”

Matsaire said Chemco’s revenue, in the first quarter, was at US$1,29 million with operating costs of US$1,27 million resulting in a pretax profit of US$22 235. The group reported losses of US$2,58 million last year.

He said after reviewing the organisational set-up of Chemco, the group had taken a decision to delist the company from the Zimbabwe Stock Exchange, adding this was still subject to the regulatory approval. 

Group chairman Anthony Mandiwanza would not be drawn to give specific details, saying processes to do “with the law have to be respected”.

Chemco’s shares are currently trading at a year-to-date loss of 95% at a share price of US0,5c. The shares are generally illiquid, a development Matsaire said did not support its continued listing, adding the stock lacked critical mass to remain on the market.

Asked whether shareholders would not just empty the group and sell Chemco as a shell, Matsaire said they had looked at all the options, saying a decision had been taken after various considerations.

Matsaire said the objective would be for the group to increase shareholder value through sustainable earnings and returns.

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