Starafrica woos Tongaat Hulett

settle the debt.
Finance director Mr Regis Mutyiri was speaking after the firm’s annual general meeting where shareholders approved US$10 million borrowed above the group’s debt to equity limits. Mr Mutyiri said starafrica’s Harare refinery has been inactive for some time due to challenges around raw sugar supply.
“The refinery is closed because of lack of raw sugar. The challenge with raw sugar is that we suffered some losses. Because of the losses our facility with the raw sugar supplier is utilised.  With the work that we have done we are confident that if we get raw sugar supply we will be able to run viably,” he said.
The country’s sole sugar refinery requires between 1 500 tonnes and 2 000 tonnes of raw sugar per week and most of that comes from Tongaat’s Triangle and Hippo Valley operations. In a trade update, new chief executive Dr Sam Mushiri said the company would address the high cost structure at the refinery plant with a view to returning starafrica to viability by 2014.
“Harare Refinery has been operating with very old plant and equipment. The technology associated with the plant was now obsolete and in need of upgrading or replacement.
“This, together with the low capacity utilisation  resulted in the refinery being a high cost production operation whose finished product could not compete with other brands,” he said.
“A plant has been since been commissioned and this will be done in two phases. Sixty percent of the refinery upgrade will be completed in the first phase between now and July 2013,” he said.
The refinery posted losses that weighed on group profits resulting in the  group slumping to a US$8,5 million loss in the full year to March 31, 2012 from a worse off loss position of US$17 million in the comparative period last year.
Bluestar Logistics, the transport business, continued with its long-term contracts to ferry platinum for Unki and Zimplats.
Zimbabwe Stock Exchange-listed diversified group’s packaging division’s volumes remained static as the country continues to import finished products already packaged.
Disposal of non-core assets is continuing and has taken longer than anticipated due to the lack of liquidity in the economy.
Management is in the process of identifying an independent professional adviser to                    assist with the disposals, but the group has raised US$10 million of the targeted US$20 million.
It is expected that the appointment of the professional adviser would have been completed by the end of this month.
Starafrica is actively pursuing improvements in productivity and operating efficiencies in all the business units.
This includes the re-examination of headcount, improvement of controls, interrogation of key costs and revision of the budget for the remainder of the current financial year.
The group has also successfully restructured to longer tenure some short-term loans while interest rates on certain loans was also renegotiated to about 12 percent from over 30 percent.