BY MTHANDAZO NYONI
INGWEBU Breweries has returned to profitability following successive years of loss-making and is targeting to achieve revenue of US$24 million this year, the company’s MD Dumisani Mhlanga has said.
Ingwebu, a Bulawayo Municipal Commercial Undertaking (BMCU), has been making losses over the years, prompting the shareholders to consider privatising it.
However, following the appointment of Mhlanga in December 2018 who was tasked to implement a turnaround strategy, the company has emerged from the woods, posting profits and has since shelved plans to raise US$20 million working capital.
“The turnaround strategy has been very successful. We recorded a very good profit last year, the equivalent of about US$1,7 million.
“The first thing I did when I came in was to ensure that the business is profitable,” Mhlanga told Standardbusiness.
“As we sit today, I can tell you with confidence that we have closed all the major leaks which this organisation had and we have closed that by ensuring that we have put in the right controls and right people.”
The previous management was accused of corruption and mismanagement, which cost the business a lot of money.
Mhlanga said when he came in, the other thing, which they did was to retrench quite a number of employees to right-size the organisation.
“We were able to fund them; we didn’t have to borrow money anywhere,” he said.
“From our own profit we were able to fund retrenchments and pay everyone at the time that we retrenched them.
“There were a lot of issues around pensions over the years and pensioners were struggling to get their money.
“I can tell you that this is a thing of the past now,” he said.
“The turnaround has been very successful because in terms of our obligations, all our financial obligations and all legacy debts we have been able to clear that and we are up to date and really we don’t owe anyone because the business is quite in a sound state.
“However, the business still needs to grow.”
The turnaround strategy has seen Ingwebu introducing new product lines like the 1,5-litre and 2-litre calabashes of opaque beer and diversifying operations into mahewu production.
Mhlanga said their aim was to grow the business to become an employer of choice.
“We want our employees to be happy…and I think we are on the right track so far even though it’s not going to happen overnight but from what we have been trying to do, we are on the right track,” Mhlanga said.
In a bid to cushion employees against inflation, Mhlanga said they were paying them twice a month.
Turning to business performance, Mhlanga said their volumes had been growing steadily.
“If you look at our volumes last year over 2018, we actually grew by 5%. Now if you grow by 5% in this kind of environment, it’s good.
“The year 2019 was a huge success for us and, therefore, having grown last year, what we had planned this year was to grow our volumes by another 5%.
“But then Covid-19 happened and obviously that has had a very huge impact,” he said.
“January and February started very well and those two months we were actually above the same period last year by 8% in terms of volumes.
“So if there was no Covid-19 I have no doubt in my mind that we would be growing over last year.”
Mhlanga said in March they lost about eight days of production due to the lockdown.
“So you know when you lose eight days of volumes in a month that’s a disaster,” he said.
“We were also not trading in April, we started trading on the 17th of April, that’s when we were given essential service status.
“We started distribution around 28th of April.
“Because of that, if you look at our volumes right now, we are actually down about 15% to date,” he said.
The company is currently operating at around 70% of capacity.
“Up to half a year, we have done well, especially profitability-wise.
“Our target by the end of this year is to achieve revenue of about US$24 million.
“I am quite confident that we are going to end this year quite strong,” Mhlanga said.
“My fear, however, is that Covid-19 seems to be escalating, it’s getting worse and the impact of that now is it affects our distribution efficiencies due to the curfew and closure of shops earlier.
“That’s our worry but despite that, I still feel we will be able to do well.”
He said in this kind of environment, you either fold your hands and cry while the business sinks or you see an opportunity and be innovative around it.
“And we have chosen the latter,” he said.
As a way of giving back to the community, the company supports schools and less privileged children.
Besides traditional beer, Ingwebu produces maheu (original maheu and banana flavour).
“As Ingwebu, we have always been known for the calabash, but people are beginning to know that we are producing maheu.
“We have hit the market running and we are doing very well,” Mhlanga said, adding they might add more product lines in the next few months.
Ingwebu Breweries was established in 1946 as a department of Bulawayo City Council and in 1996, council established a wholly-owned business entity called BMCU.