Think outside the box: CSC board told

Prosper Ndlovu Senior Reporter
THE Government is no longer prepared to continue nursing ailing parastatals such as the Cold Storage Company (CSC) and it was time management and boards of such parastatals think outside the box and come up with strategies to turnaround the companies, Government Ministers said yesterday.

The Deputy Ministers of Agriculture, Mechanisation and Irrigation Development Cdes Paddy Zhanda and Davis Marapira implored the CSC management and board in Bulawayo to think outside the box and restructure their operations to remain viable as Government was no longer prepared to “nurse” the parastatal.

In a no-holds barred meeting at the company’s boardroom, the Deputy Minister responsible for livestock development Cde  Zhanda and Deputy Minister responsible for cropping, mechanisation and irrigation Cde Marapira were told that CSC which last year made a loss of $10 million, requires $58 million for recapitalisation.

The ministers heard that the parastatal made a $3 million loss in the first half of this year.  Speaking after a presentation on the state of affairs at CSC by the company’s chief executive officer, Mr Ngoni Chinogaramombe, the visiting ministerial delegation said it was sad that

CSC has been overtaken by private operators when it was expected to be the country’s strategic livestock development engine.
CSC is swimming in debt of about $22 million and owes its workers $2,1 million in salary arrears.

The company is operating at seven percent capacity utilisation and has a skeletal workforce of about 500 workers compared to 1 500 in 1999.

Cde Zhanda said the Government would not continue to pump money into underperforming parastatals that were failing to declare a dividend.

“Government has no money and would not continue to pump money in companies that cannot declare a dividend at the end of the year. The board and management must come up with strategies to turnaround the companies as opposed to waiting for funding from Government,” said Cde Zhanda, a former deputy board chair of CSC.

He said what was happening at CSC now was a sad story that must be changed as soon as possible.
“This requires a strong board that will transform the company so that it becomes viable. You should think outside the box and look at ways of unlocking private sector engagement. Consider what values you are putting on the table for the successful turnaround of your company,” he said.

Cde Zhanda said although the economic environment was harsh for all companies, CSC management and the board should shoulder much responsibility for their fate.

He said the company should have forged partnerships with private players way back in order to preserve its viability instead of enjoying the comfort of monopoly.

Cde Zhanda said Government will not protect CSC just because it is owned by the state as it has a broader mandate to protect all citizens including downstream industries.

He challenged management to utilise the assets it has to turn- around its fortunes.
“You need to change your mindsets and restructure yourselves quickly rather than wait for the Government to think for you because you are the ones who feel the heat. There is no need to live in history because you have a business to run,” said Cde Zhanda.

He said several people have approached his offices soon after appointment to the ministry saying they have submitted proposals seeking to work with CSC but have not found any joy.

Cde Zhanda ordered the CSC management to immediately open wits doors and engage private players who would enhance the company’s operational efficiency.

“The issue of joint ventures is the way out and first preference must be given to locals in line with the indigenisation drive. Engage the small holder producers because your competitors are reaping from them,” he said.

His counterpart, Cde Marapiri also said CSC should  overhaul its operations to fulfil its mandate. In his presentation Mr Chinogaramombe said CSC was struggling to raise working capital to support farmers and cited loss of export market, decline of the commercial herd and underutilisation of its assets as major challenges.

He also said the company was failing to service its debts, a situation that has led to mounting litigations. The major creditors are utilities, statutory bodies, cattle suppliers and banks that provided loans for capital expenditure.

Mr Chinogaramombe said although the company was commercialised, it was not privatised hence it was difficult for it to enter into joint ventures with potential investors.

Acting CSC board chairman Mr Peter Baka Nyoni said CSC was on the throes of decay and appealed for Government intervention in recapitalisation the company.

He also called for the setting up of a single body dealing with meat and livestock issues and allocating enough money in the budget for livestock production.

The ministry’s technical advisor in the department of livestock and veterinary services Dr Welbourne Mudziwa said there was a need to adopt an industrial approach through developing vibrant beef marketing strategies and establishing forums for regular debates on issues affecting the sector.

CSC was formed in 1937 as a parastatal that was 100 percent owned by the Government to promote growth of a vibrant beef industry.
The meeting was also attended by senior  ministry officials and representatives of farmers’ organisations.