BY TAURAI MANGUDHLA
ART Corporation has lined up an aggressive restructuring plan to reposition the quoted conglomerate into a powerhouse across product ranges, with a big say on the foreign currency spinning regional markets, Standardbusiness heard on Friday.
Chief finance officer (CFO) Abisai Chingwecha, said after swooping on tissue products manufacturer, Softex early this year, the Zimbabwe Stock Exchange listed giant had added impetus to its African strategy, establishing added capacity in paper production, battery manufacturing and other interests.
Chingwecha was not keen to disclose timelines for the restructuring programme, which follows a surprise swoop on Softex in May, when ART acquired Nampak’s 50% shareholding in the business.
Softex has also benefited from the recapitalisation drive after being constrained by lack of capital before the deal.
Under the plan, the product range at ART’s paper making business will be broadened to mitigate challenges currently confronting an industry that is seen as one of the most promising.
The group would beef up working capital and retool its detergent manufacturing unit that has struggled to match steeper demand, while a high capacity mill would be commissioned at the Kadoma Paper Mill, giving the business fresh capacity.
“This will enable the unit to extend its locally manufactured product range to cater for the virgin tissue lines, which are currently being imported and traded from South Africa,” said Chingweda, speaking exclusively to Standardbusiness.
“The opportunity will result, within the next 18 months, in Kadoma Paper Mill doubling its capacity and increasing its range to include virgin paper, which is currently being imported,” he added, noting that the plan was to “restore the group’s diversified product base, re-establish a strong vertically integrated paper chain and ensure the supply of dominant brands to the region”.
The bold step is meant to address effects of deferred capital expenditure, which has impacted on profitability as inefficiencies increase.
He said ART’s retooling programme would see the business being streamlined and all units returning to profit, while loans from discontinued operations would be paid off.
The first phase of the programme involved restoration of profitability across units, while capacity upgrades were rolled out at Chloride, ART’s battery manufacturing operation.
“The second phase was focused on the battery business with the objective of enhancing competitiveness, reducing costs, improving quality and broadening the product range,” he said.
“Under this phase the factory has been upgraded to include the manufacture of battery cases, improved furnace capacity and setting up a separate industrial and solar battery unit.”
Increased capacity has underpinned growth into regional exports, the ART CFO said.
Further capacity upgrades will be rolled out at Chloride to boost volumes in maintenance free, industrial and solar batteries.
The ART CFO said the aggressive volumes growth was in line with the company’s plans to scale up exports into South Africa and the Democratic Republic of Congo.
A gel battery manufacturing plant is also on the cards.
At Eversharp, the pen production business, Chingwecha said the firm was working on its regional presence after capacity upgrade and automation of the factory.
Going forward, pen manufacturing will be supported by increased stationery trading in the short term as the group explores the regional markets and manufacturing of related products.
He said Eversharp export volumes into Zambia were steadily increasing.
However, Mozambique and Malawi continued to be affected by the flooding of counterfeit pens.
“The breakthrough listing of the Eversharp pen by retailers in South Africa was affected by the onset of the pandemic,” Chingwecha said.
“The group maintains that given the current volatility and uncertainty in the environment, its focus on a diverse range of low-cost manufacturing businesses will pay off especially in market segments where it continues to have brand leadership.”