13 October 2017

Zimbabwe: Turnall Seeks U.S.$4 Million in Working Capital

Buildings and associated industries concern Turnall Holdings Ltd says it needs in excess of US$4 million in working capital to finance its operations.

The funding is expected to be part of a balance sheet restructuring scheme that the group is currently working on, which is expected to be completed by year-end.

Injection of the working capital is also expected to increase capacity utilisation at its plants

As at June 30 2017, Turnall had net liabilities of US$12 million, which posed a working capital challenge for the group whose focus was to manage the working capital in order to continue production and achieve profitability.

Speaking on the sidelines of the group's analyst briefing recently, acting financial director Samson Mavende said their scheme of arrangement included a portion of the working capital fund, but was not at liberty to give more details.

"I have talked about our net current liabilities of US$11 million to pay off those debts from whatever we make.

Putting it into working capital, we would be okay. But in terms of operation, we would say with a minimum of US$3,5 million or US$4 million we should do well," he said.

Mavende said the group's operations have been characterised by low stocks due to working capital constrains but injection of that capital is expected to boost the company's efforts to raise production levels.

"Our outlook on plant capacity utilisation is good as demand is very high. Right now the problem is working capital which is preventing us from doing better. If we are able, we should be able to get to 100% capacity utilisation at the Bulawayo plant by year end if our plans work well. We just introduced the Harare plant so once we have utilised the Bulawayo one, we will begin working on it," he said.

Mavende said during this period there is high demand for tiles and this should be able to increase the capacity utilisation to 80%.

Meanwhile, Mavende also said the company had also pinned its hope on US$1 million worth of unfunded projects that it has.

These projects are expected to increase the pipeline plant capacity utilisation to 10% from the current 5%.

"There are four or so projects that are awaiting funding. They are awaiting funding so that they come and place orders worth about a million dollars unfunded projects, but I'm not at liberty to say which ones. Customers have to get funding. We don't sell on credit," he said.

The group reopened its pipe plant in 2014 after securing US$2 million worth of projects

Currently, Mavende said the projects from municipalities were sustaining the plant.

During the half year, the group had a turnover of US$47,7 million which is a 12% decrease from the prior year turnover of US$8,7 million.

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