LISTED manufacturing concern General Beltings Holdings has reported a 153% jump in volumes in the first five months of 2017 driven by growing demand for local products following a ban on selected imports without prior notice under Statutory Instrument (SI) 64, CE Wilbroad Tsuroh has said.
By Taurai Mangudhla
“Volumes to May have gone up 153% compared with same period last year and revenue has gone up 57%. This is attributable to the fact that the thrust that we drove towards the end of last year and this year was that the statutory instrument on its own was a temporary measure,” he said, adding that: “So what we needed to do was become a preferred supplier of our products so we reduced our prices cumulatively by 38% so that our prices were in line with import parity. This is why when you compare the increase in turnover and that of volume there is a disparity.”
Tsuroh said the company received short-term financing from its bankers and South African partners Nuvo Rubber Compounders.
“So we sought a technical partner during the course of last year. We are happy to report that we have managed to partner with a South African company, which supplies us with rubber compounds which we use to manufacture our products,” he said. “The advantage with that is that it shortens our working capital cycle and we are also riding on their ability to buy in bulk and that has also helped us reduce our costs.”
Nuvo has made available a R5 million (US$386 176) facility while FBC Bank made available US$100 000 order financing.
“The market has responded positively in terms of taking our product. And what we are hoping to achieve is to upgrade our plants. We expect the equipment to arrive by end of July and that is going to enhance our factory efficiencies,” Tsuroh said, adding the plant upgrade on the mixing and milling plants is expected to cost a maximum of US$100 000 based on initial due diligence.
Its unit Cernol Chemicals, the group reported, saw a 27% revenue reduction, mostly as a result of working capital constraints emanating from the foreign currency controls that started towards the end of last year.
“That’s affected our stocking levels and generally the uptake downstream has been lower,” Tsuroh said.
Volumes at Cernol Chemicals were 11% down and this was attributable to the fact that the company partnered a German supplier of high value specialised lubricants, Klubber, as the official local agent .
“In terms of overall volumes we are more in line with last year, there has been a compensatory effect where we lost volumes in Cernol Chemicals and it is compensated by increases in General Beltings so overly revenues have gone up 20%,” Tsuroh added.
He said the company remains in a loss-making position although the losses are narrowing. Going forward, the company’s focus is on improving operating efficiencies and streamlining operating costs.
In 2016, General Beltings reported a US$936 119 loss compared to a loss of US$1,8 million in 2015.