Cairns set to hit 80 percent of production capacity

Business Reporter
CAIRNS Holdings’ production is seen hitting 80 percent of capacity when incoming investor Takura Capital injects fresh funding.

The company’s current level of capacity stands at an average of 35 percent.

Judicial manager Reggie Saruchera said in an interview last week that Takura Capital will invest a total of $15 million on taking over Cairns.

The new investor will, however, invest a total of $33 million for a controlling interest, including clearing debts amounting to $25 million.

Mr Saruchera said that capital injection will be invested in new equipment to enhance the company’s production capacity and efficiency.

At the height of its financial and production crisis in 2012, Cairns had slumped to an all time low production level of about 5 percent of capacity.

“Investment in plant and equipment will be critical to ensure that we get efficiencies and increase our production,” Mr Saruchera said.

“The capital expenditure will go into plant and equipment and capacity will go up to between 80 percent and 90 percent,” he said.

The new investor is expected to inject new funding by October.

The company was able to undertake minimal plant replacement and refurbishment using funds from Government’s DIMAF facility.

Cairns obtained $1 million under the DIMAF facility, which was used to acquire new state-of-the-art equipment and procurement of raw materials.

This helped sustain and gradually grow operations as well as save loss of jobs.

The company currently employs a total of 829 workers.

It produces a range of fast moving consumer goods under the broad categories of fruit and vegetables, chips and snacks, groceries and beverages.

Cairns was placed under judicial management in September 2012 after running into serious financial challenges.

The company delisted from the Zimbabwe Stock Exchange last year to facilitate the process of seeking an investor without too many controls.

Mr Saruchera said the company was now looking at ways of capacitating farmers with technical know-how on the inputs the firm needs.

This will see the company increasing its hectarage for seed production and training of farmers from 200ha last year to 800ha this year.

“That is where we want to partner the Government to provide the farmers with funding.

“When they produce, they are guaranteed that there is market,” the Cairns judicial manager said.

Industry and Commerce Minister Mike Bimha said the recovery of Cairns demonstrated the impact that even small funding can have on companies provided the resources are applied for the correct purposes.

It is against this background that he said Government would ensure that DIMAF is “bigger and more accessible” to deserving borrowers.

He, however, pointed out that in all instances where funding is made available, it must be complemented with good management.

And Cairns has been one of the few success stories about companies that were about to collapse, but were turned around using limited resources from the Distressed and Marginalised Areas Fund.

“If we have more of these (results), support (from Government) will always be forthcoming,” Minister Bimha said.

Cairns acting chief executive Mr Jeremiah Kwenda urged Government to maintain its policy support, including through tariffs, to prevent dumping of cheap imports and ensure fair competition.