Published by the government of Zimbabwe
Perry Kaande
14 July 2008
Harare — CAPACITY constraints are posing serious challenges to Olivine Holdings, Zimbabwe's main manufacturer of fast moving consumer goods.
Cottco, which holds 49 percent stake in the company, said Olivine operated below capacity in the 2007 financial year owing to a myriad of factors linked to the harsh operating environment.
At the time of the acquisition, Olivine was expected to add critical mass to the group and mitigate against seasonality of cash flows.
The Industrial Development Corporation owns the remaining 51 percent, but Cottco has the management contract.
Cottco chief executive Mr Happymore Mapara last week opted not to delve into the details throwing the gauntlet to the Olivine management.
On Thursday, Olivine managing director Mr Phineas Chingono said he was not at liberty to disclose the constraints affecting operations at the firm.
He also opted not to speak on current operating capacity saying, "there are competitors to consider, we wouldn't want them to know what we are up to".
A shortage of foreign currency, coal, electricity, water, and other raw materials affected production volumes and stocked unit costs.
As a result, the company achieved a modest profit in the year to March 31 helped by firmer regional exports.
The plant on the whole requires about 90 000 tonnes of soyabeans to use in the manufacture of margarine and fats.
Olivine said margarine and fats had a better market than cooking oil, but the biggest drag on capacity utilisation was the soap factory.
The plant and equipment age was between 38 and 40 years, which was the acceptable world standard.
The company contributes 31 percent of Cottco's asset base.
Olivine replaced the Heinz brand with the "Olivine" brand of canned products to build a hedge through product differentiation and price discrimination.
The group said the brand had been well received.
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