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PROVISIONAL judicial manager of Modzone Enterprises’ two subsidiaries Mr Reggie Saruchera says he is assessing the capital needs of the two firms in order to bring them back on their feet.
The two subsidiaries, Travan Blankets and Irazim Textiles Limited closed down in 2012 due to viability challenges and were eventually placed under the provisional judicial management in October last year. Mr Saruchera said verification of the books of the two firms were underway to determine the resuscitation measures.
Mr Saruchera said that, at this stage, it was premature to determine how much in terms of working capital would be required to get the two companies back on their feet.
But in February 2012, Modzone said that it required US$16 million to recapitalise the two firms to achieve sustainable productivity levels to satisfy local and export markets.
“At the time the two companies were placed under judicial management, both (Travan Blankets and Irazim Textiles) had been mothballed while production capacity levels, prior to the shutdown in November 2012 were approximately 20 percent,” said Mr Saruchera.
“We are currently in the process of verifying the books and records of the companies in order to assess capital requirements,” said Mr Saruchera. “This verification will provide an indication of the level of capital injection that is needed.
“In the event that shareholders are unable to inject capital into the business alternative options will be explored including assessing whether or not potential investors can be engaged and the modalities to be followed.” At its peak around 2000 to 2001, Irazim was producing approximately one million metres of fabric per month.
Modzone Enterprises is a joint venture between the Governments of Zimbabwe and Iran.
The Chitungwiza-based company is jointly owned by the Iranian Pension Fund, Jaham Paham with 83 percent shareholding through its investment arm Saba Jahad Full while the Industrial Development Corporation of Zimbabwe holds 17 percent.
Zimbabwe’s textile industry, which at its prime was one of the major employers in the country, is on the brink of collapse as fears mount over the closure of more textile firms. While other sub-sectors of the manufacturing industry are going through extremely difficult challenges, the textile sector appears to be one of the hardest hit.
The textile companies are operating below 10 percent of their capacity due to inadequate working capital needed replace obsolete equipment and stiff competition from cheap fabric imports which have seen the country literally relying on imports.
Like other critical sectors of the economy, the industry has not been spared from power shortages, high labour costs and unrest and, in some instances, mismanagement.
Being a high volume, low margin industry, any factor that militates against these fundamentals has serious consequences on the survival of the sector, industry players say.
At its prime, the industry employed about 24 000 people but less than 4 000 are now under its payroll, according to Zimbabwe Textile Union. And in the past five years, about 8 000 workers were rendered jobless from the 12 000 the sector employed.
The downstream industries such as clothing and retail, which fed on textile firms, employed even more. Similarly, 94 percent of textile companies were operational but are now down to 34 percent.
Most textile companies are under judicial management, with wafer thin prospects of recovering.
David Whitehead Textiles, which used to be the largest textile firm, is under provisional judicial management. Also under court-directed reconstruction order are Merspin and National Blankets. Karina Textiles shareholders have applied for liquidation and the matter is before the courts. Cotton Printers, formerly owned by Meikles, was also liquidated two years ago.
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