Zimbabwe’s traditional air and road rescue services, Medical Air Rescue Service Pvt Ltd (Mars), has been placed under provisional judicial management after succumbing to a myriad of operational challenges, businessdigest can reveal.
Mars is a unit in Zachary Wazara’s Spiritage group of companies, which includes Broadacom and Medix Pharmacies.
High Court Justice Nicholas Mathonsi in February granted Mars, the applicant, a provisional judicial management order for an indefinite period as operational problems resulted in the company creditors’ book amounting to US$256 000 as at September 30 2012.
At the time, the troubled company had company assets of US$2,3 million and total equity and liabilities of US$217 000 while current assets of the company stood at US$772 000 and total current liabilities of US$7 million at the end of November 2012.
The High Court subsequently directed the master of high court to appoint Christopher Maswi of Fairvalue Management Consultancy (Pvt) Ltd as the provisional judicial manager of the applicant.
“It is ordered that the applicant will show cause to this court sitting at Harare on the 8th of may 2013 why an order should not be made in the following terms….,” reads part of the court documents.
In an affidavit, Monochrome Private Limited director Matthew Wazara, said Mars is being prevented from being a successful concern because of lost revenue due to the liquidity crunch and the increase in competition that exists from companies that offer the same services such as CIMAS and Necstar, but it has the potential to turn around its fortunes with the right captive base to anchor the business.
For the past 21 years, Mars has been the only ambulance service providing advanced life support services.
It has also carried out 3 000 air evacuations from sources such as Angola, the Democratic Republic of Congo, Madagascar and Zambia.
“However, the emergence of competition in the provision of ambulance services has led to health funders shifting the relationship with ambulance services from capitation to fee for service business models. This has led applicant to lose revenues amounting to 45%,” reads part of Wazara’s affidavit.
Capitated payment systems are based on a payment per person or group over a period of time, rather than a payment per service provided.
Apart from the loss of capitation funds from health services, Mars was also affected by hyper inflation which negatively impacted the health delivery industry.
This has seen deterioration in services provided as there is a depleted capacity to replenish ambulances, medical equipment and other critical resources.
“Nevertheless, there is a strong possibility that the company will surmount its difficulties if it is placed under judicial management as the company has already put in place turnaround strategies which will be complimented by specific management skills from the judicial management system and moratorium on creditors,” added Wazara.
A major highlight in the proposed turnaround strategy is that Mars is currently in negotiations with an unnamed telecommunications company for all the subscribers of the network to have access to Mars service for US$0,20 a member.
This venture, according to Wazara, will help replace lost revenue from the withdrawal of Cimas capitation agreement.
The applicant also plans to implement a business remodeling strategy that will see the revenue centers operate as separate business units.