Russian, Chinese companies show interest in CSC

21 Sep, 2014 - 00:09 0 Views
Russian, Chinese companies show interest in CSC Cde Paddy Zhanda

The Sunday News

Cde Paddy Zhanda

Cde Paddy Zhanda

Dumisani Nsingo Senior Business Reporter
STRUGGLING meat processor and distributor Cold Storage Company might get a lifeline following indications that Russian and Chinese companies have expressed interest in injecting capital to revive production which has gone down to below five percent in the last 15 years.Government has made a deliberate move to court investors from China and Russia to partner local companies as a way of reviving industry and encourage new investment.

This follows a visit to China by a high-powered Zimbabwean delegation led by President Mugabe early this month and visit by senior Russian officials to Zimbabwe last week where a number of possible deals were discussed.

CSC chief executive officer, Mr Ngoni Chinogaramombe, said indications were that Government, which is in possession of the company’s turnaround strategy, presented last year was courting companies from the two countries to help revive operations.

“We sent our restructuring strategy to the Ministry (of Agriculture, Mechanisation and Irrigation Development) last year and part of its contents was the need to have a strategic foreign investor to partner us and in turn the Government approached various countries through their embassies as the nature with such deals.

“We are, however, made to understand that there are companies from China and Russia that have shown interest. There is a need for massive capital injection to revive the company’s operations,” Mr Chinogaramombe said.

He, however, could not be drawn to divulge how much was needed to revive the company’s operations although reports indicate that it is saddled with a $22 million debt.

Deputy Minister of Agriculture, Mechanisation and Irrigation Development responsible for livestock production, Cde Paddy Zhanda, could not shed more light pertaining to the latest development towards the resuscitation of operations at CSC but hinted that plans of seeking a strategic investor for the firm were at an advanced stage.

“Government is seriously working hard through the Ministry of Agriculture, Irrigation and Mechanisation Development to revive CSC. It is very important that CSC becomes operational for the welfare and well-being of the livestock industry particularly in this (Matabeleland) area . . . We are, however, making headway and I can safely say there is a buy-in,” he said.

The need to capitalise the company comes after revelations that the levels of undercapitalisation at one of the country’s biggest companies, had reached alarming levels as production had fallen by a massive 98 percent in the last 15 years.

Investigations by Sunday Business also showed that the company, once a leader in cattle ranching and advancing support to farmers has seen its cattle population going down by 93 percent, at a time the Government has been struggling to find a strategic partner to inject life into the company.

The Bulawayo headquartered company used to slaughter more than 50 000 cattle per month, supplying both local and international markets.

“The situation is really bad. We are only slaughtering between 1 000 to 1 200 at our Bulawayo branch and about 600 a month in both Marondera and Chinhoyi but our focus is really on Bulawayo,” he said.

The company once got a life line to run its blades in 2011 when under a Government brokered deal, it slaughtered more than 60 000 cattle in two years that were coming from Botswana.

However, even the deal failed to spur the company which quickly recoiled into its shell once the cattle from Botswana were stopped.

Most of the business, which was done by CSC, is now in the hands of private abattoirs.

CSC used to slaughter 90 percent of the cattle in Matabeleland and would charge $40 per beast of which $2 would go to the Department of Veterinary Services.

Statistics from Zimbabwe Abattoirs Association indicate that more than 7 000 beasts were now being slaughtered by private abattoirs.

The investigations also revealed that CSC, which used to run some of the biggest cattle ranches across the country, was failing to run them, while cattle numbers have gone down drastically.

CSC has seven ranches. These are Charter Estates and Darwendale, Chivumburu, Mushandike, Dubane, Mapaneni, Winterblock and Willsgrove.

The company now owns just over 700 cattle down from 10 000 that it used to have at its ranches.

“We are leasing all our ranches dotted in various parts of the country and we are accommodating about 7 000 cattle in all of them. We are, however, facing a dilemma of overgrazing at Winterblock as the ranch had four of its paddocks destroyed by a veld fire. The ranch is accommodating over 700 cattle of which 300 of these belong to CSC.

We had to move some of our cattle owing to depletion of pastures at Mapaneni three years ago,” said Mr Chinogaramombe.

During its peak CSC also used to buy cattle from farmers and offered highly competitive prices.

However, it stopped doing so about a decade ago due to lack of finance. It also had a number of programmes which benefited both the company and the cattle producers such as the heifer or oxen exchange.

Through these schemes the company exchanged heifers and productive cows for slaughter stock.

Through its custom feedlotting the company provided feed to farmers in possession of cattle that were in very good condition so that the animals could be fattened in order for the farmers to receive better prices.

The company is now surviving mostly on slaughter fees and rentals it receives from leasing its properties.

Earlier efforts to revive the company failed.

Four years ago an Indonesian firm Ostrindo International cancelled plans to revitalise CSC Bulawayo plant.

The CSC board had granted Ostrindo a 15-year lease to run the Bulawayo abattoir in an effort to revive beef production but the Indonesian company opted out of the deal citing the country’s diminishing livestock herd.

CSC has its biggest abattoir in Bulawayo which is one of the biggest in Africa and then others in Masvingo, Chinhoyi, Marondera and Kadoma.

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