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Enacy Mapakame
Business Reporter
Agriculture and earthmoving equipment supplier Zimplow Holdings Limited says it will leverage Barzem’s property portfolio to secure another original equipment manufacturer (OEM) after buying out Barloworld from the joint venture
This follows Barzem’s exit from the CAT dealership last year in September. The Barzem business was established over 70 years ago as the local Caterpillar (CAT) dealer.
Now, Zimplow is buying the 49 percent stake held by Barloworld in Barzem, which has been weighed down by the negative impact of the termination of CAT) Caterpillar distributorship due to retrenchment costs.
Barzem’s exit from the dealership has forced Zimplow to set up new businesses to offset the impact of the move on the business.
The group has set up a new structure for heavy equipment and earthmovers, transitioning from Barzem to a new entity known as Tractive Power Solutions (TPS), which has already started securing affiliations and accreditations with key suppliers to continue servicing main clients’ massive earth moving fleets.
Group chief executive Vimbayi Nyakudya said having control of Barzem’s infrastructure positions the group well for recruitment and selection of another (OEM) as it seeks to cover the gap left by CAT.
“Having access to Barzem infrastructure 100 percent means we can now position or pivot that portfolio to be able to take advantage of it for our other business,” he said responding to questions during the group’s analyst briefing last week.
“We have used that property solely for caterpillar business. We can now utilise that infrastructure for other businesses, which are within the group.
“Having infrastructure like that means you can position yourself in the recruitment and selection of the right OEM.
The group is acquiring the Barloworld stake in Barzem at a 20 percent discount, and negotiations are underway on the price.
Mr Nyakudya said concluding that transaction alone would give the group the much-needed lift to conclude on the acquisition of an OEM.
While the CAT brand was mostly a high end brand, indications are that the group will engage a premium brand that caters for all market segments. The business model is anchored on three pillars namely distributorship, which constitutes 80 percent of the business, and manufacturing capacity accounts for the remaining 20 percent.
The third pillar is the property portfolio – housing the factory and backup facilities – valued at US$13 million and accounting for 30 percent of the group’s assets.
Meanwhile the group has indicated it is spearheading several measures to boost volumes for both the local and export market, while offsetting the impacts of the CAT dealership discontinuation.
Among the key initiatives are the launch of new business units – Valmec and TPS as well as increased resource allocation into Scanlink and Trentyre units to boost performance and overall contribution to the group.
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