Rufaro boss dismissed

appointment.
Rufaro Marketing is the liquor trading division of Harare City Council.

Mr Chigumadzi, who joined the division in March 2010, packed his bags in a huff about a fortnight ago.
This followed the company’s board of directors’ vote of no confidence in his ability to steer one of the country’s oldest liquor businesses through turbulent operating conditions.
The holder of a Masters degree in Business Leadership, Mr Chigumadzi had replaced Mr Caleb Mutsai, who, along with his entire management, were shown the exit in 2009 after a string of poor results.

Before he joined Rufaro Marketing, Mr Chigumadzi had worked for Hunyani Pulp & Paper, Art Corporation, Twine and Cordage, Standard Chartered Bank and chartered accountants, KPMG.
Sources said his takeover of the division could not bring the desired change as Rufaro Marketing persistently continued to trade below the red ink.
Its fortunes took a turn for the worst after Delta Beverages, Rufaro Marketing’s largest supplier, terminated supplies to force the Harare City Council unit to reduce its arrears.

Delta is the largest creditor, owed in excess of US$1 million.
The division’s precarious financial health has been a source of friction between Mr Chigumadzi and his board, which has been pressing to improve industrial relations, strained for the last two decades.
“While the board had initially resolved to give Mr Chigumadzi more time to prove his worth, it became alarmed with management’s failure to produce tangible results, without necessarily depending on shareholder support,” said a source close to the developments.

With the council operating on a shoe-string budget, Rufaro Marketing could not extract funding from its 100 percent shareholder.
The business has, therefore, been self-financing.
Contacted for comment this week, Mr Phillip Mataranyika, the board chairman, said he could not discuss contractual matters in public.

“There is no way I can divulge contractual issues to the public,” he said. “Regarding operational issues, I advise you to talk to our management. They would be in a position to assist you in the shortest possible time.
“All I can say for now is that Rufaro Marketing, just like every other business operating in Zimbabwe, was badly affected by the economic recession of the last decade. The good thing is that we have workable plans that are already in motion to turn around the business. Management is currently working flat out to implement these plans,” he added.

At the top of the company’s troubles was poor capitalisation as evidenced by the poor state of its infrastructure,
particularly liquor outlets numbering about 90; an ageing fleet and rapidly declining stock.
To get the business out of the woods, it is being recommended to the city that Rufaro Marketing dispose of some of its loss-making beerhalls and lease out a few of them to the private sector, including part of the head office.

The idea, to be complemented with aggressive cost-cutting measures and staff rationalisation, is to slash maintenance costs and remain with a small and leaner portfolio of about 40 profitable beerhalls.
Yet another option being explored is to convert the division’s current liabilities in excess of US$1 million into long-term debt instruments, preferably debentures.
A debenture is a type of debt instrument not secured by physical assets or collateral.

Another plan being mulled by the board is to dispose of non-core assets to raise the much-needed cash.
While the plans are quite convincing, bureaucratic sloth at Town House – the administrative centre for the City of Harare – could scupper them.
In the past, the council has resisted plans to restructure the business. It has also taken its sweet time to approve recommendations from Rufaro Marketing, causing severe financial haemorrhage at the division.

Insiders at Rufaro Marketing said fresh capital to the tune of US$1,2 million was required urgently to expunge debts, with US$500 000 going towards the company’s working capital needs.
Of immediate concern to the board is the need to retire expensive bank loans and reactivate supplies from cash-rich Delta.
As it is, the company’s stock levels have dropped to US$500 000, which cannot go beyond November.

Worker morale has also hit rock-bottom with employees threatening to down tools, if nothing is done to pay them on time.
Rufaro Marketing was founded during the colonial era to supply liquor to high-density suburbs and industrial sites around the capital city.

At its peak, it operated about 144 beerhalls.
But over the years, the business has been swamped by competition and required remodelling to move with the times and suit changing consumer tastes where revellers now prefer open-air entertainment and

exquisite environs, among other attractions.
The feeling is that the market has become saturated as a result of too many outlets at a time when there is cut-throat competition from bottle stores and imports.