ZIMBABWE – The government of Zimbabwe is considering selling of its stake in Olivine Industries to an external investor to get more capital for reviving the firm’s operations, reports the Herald.
The revival of the fast moving consumer goods company is also anticipated to reduce the import bill for cooking oil and some groceries.
Olivine Industries produces oilseed products, laundry and toilet soaps and industrial products.
It is owned by Surface Wilmer, the largest producer of edible oils in the country in partnership with the government of Zimbabwe.
The government holds a 35% stake in the entity while Surface Wilmar is the main investor.
“Government is considering selling part of its stake in Olivine Industries to an external investor to raise foreign currency towards recapitalising operations,” said the Ministry of Finance in an update.
“The tour of the cooking oil manufacturing giant Surface Wilmar by the Minister of Finance and Economic Development, Professor Mthuli Ncube, today (yesterday) created a platform to assess the challenges affecting the sector.”
The manufacturer is said to be faced with a myriad of challenges including low capacity utilisation, high costs and limited foreign exchange.
“We are just looking at the possibilities of selling the shares to maximise production,” he said.
“It is now about those that can be of greater interests to the needs of the firm.”
Huge working capital required to revive the business, debts, obsolete equipment, size of the markets are some of the factors standing in the way to reviving the business.
By 2013, the company had borrowings and payables in excess of US$34 million debt against assets of US$21 million, US$17.2 million being inventory.
This has triggered lack of interest from investors who highlighted that the projected levels of profitability of between 9% and 11.75% and could be lower given that these were projected back in the year 2013.