Company supplied gov’t with Tsabana,Malutu
We remain govt’ supplier-Osman
Sefalana, the diversified group has suffered a setback as government public procurement and awarding body, PPADB has not approved request by the local government to pay the listed its dues after a successful delivery, BG Business understands.
The company’s subsidiary which has a milling plant in Serowe, Foods Botswana, was chosen to supply 4020 metric tons of Malutu and 4920 metric tons of Tsabana to the Local Government ministry, which is ministered by Slumber Tsogwane.
At its sitting on the 31st of March 2017, Public Procurement and Asset Disposal Board (PPADB) did not approve the retroactive payment to the company, which its financial year ends next week. PPADB which is headed by Bridget John has not stated reasons for the rejection. The non-payment is likely to affect the BSE listed company’s financial results. Foods Botswana manufactures Malutu and Tsabana which government issues out to local clinics and health facilities across the country.
Meanwhile, Sefalana Group Finance Director, Mohammed Osman told BG Business that they have completed their 2015/16 government tender in April 2016 which was extended by six months to October 2016. “We are proud to have delivered all allocated volumes on time to the government. We now await the award of the 2016/17 tender, which is currently under consideration,” he said.
Although he could not disclose how much is the payment BG Business understands that the government had allocated P15.6 million for the supply of 1640 metric tons of Tsabana. “At this moment we can not share with you how much we are supposed to get from government.
We have, since the PPADB decision was made public in the newspaper, made enquiries with the respective department and are still engaging with them to find out what needs to be done to move forward,” said Osman. The Sefalana finance chief said he believes that the matter will be amicably sorted out in due course. Foods Botswana. “We remain a supplier to government and continue to supply the respective department,” he said. Announcing the 2015 results last year Sefalana Managing Director, Chandra Chauhan said they experience a net loss of P2, 5 to P3 million if they don’t produce for government. The group’s revenue is largely hinged on its contract/tender business than it is on its core segment of fast moving consumer goods (FMCG).
According to the group’s financials, the group recorded a turnover of P2.005 billion for the six months ended October 31, 2016 up from P1.8 billion in the prior period. The group’s overall profit before tax for the six month period increased marginally to P81.1 million from P80.4 million recorded in the previous year.
Sefalana Cash and Carry Limited Botswana operations contributed 60 percent and 48 percent of the group’s revenue and profit before tax for the reporting period.
Listing in the stock exchange market helps companies to increase their capital and expand their businesses, a property expert and also Manager Director of Prime Time has said. Sandy Kelly was speaking as one of the panellists at the recent listing conference organised by Botswana Stock Exchange. He told multitudes of delegates that being part of BSE has created a new business in the property market, as there is a pipeline for new investments in the company. “Listing has created a good value for the property business. We had an alternative to remain private and grow slowly so we decided to become a public entity by listing in Botswana Stock Exchange and this has been very profitable to us. However listing was never in my plans,” said Kelly. He explained that listing has created new businesses. “Listing was never my plans what we have done is that we have created a new business in terms of property asset management. Because we are the property investment company, we had an alternative of selling the property to the pension fund but this was going to result in slow growth,” said Kelly.
By listing in the stock exchange Kelly said they have grown Prime Time business from 175 million worth of assets to P800 million worth of assets. “We have listed to grow our capital and access more funds. If you know what you are doing you will gain more returns from the business,” he said. Kelly pointed out that among the challenges of listing includes strict regulations by Botswana Stock Exchange. “After listing there is a bit of slow for us to make adjustments in the company because you have to go to them every time you need to go to them, that’s a restriction,” said Kelly. He said listing in other markets will be determined by their performance in other countries. “Currently we have not yet planned to list in other markets but this will be determined by our property in Zambia which is still under construction. If the performance is satisfactory we will list in Zambia Stock Exchange,” said Kelly.
He said Prime Time properties in Gaborone are performing satisfactorily. PrimeTime currently owns the Sebele and South Ring shopping malls in Gaborone, Nswazwi mall in Francistown as well as shopping centres in Ghanzi, Lobatse, Serowe and Ramotswa. PrimeTime now owns three buildings within Prime Plaza in the CBD comprised of Barclays House, Marula House and CEDA House. Kelly said the Prime Plaza location had attracted an equal calibre of tenants with Cresta, Stockbrokers Botswana, South Africa Express Airline and GIZ already renting out at Marula House. Prime Time portfolio stood at P764 million by the end of August 2015, which is an increase of four percent. Prime Time is currently in the process of completing the sale of two properties in Francistown - Blue Jacket Square and Barclays Plaza - to Botswana Public Officers Pension Fund (BPOPF) at a cost of P71 million. However Kelly said while these properties have “proved to be cash cows,” their impact on growth is likely to be limited going forward. Speaking during the Botswana Stock Exchange listings conference, RDC Properties Managing Director Guido Giachetti said listing in the stock exchange is an opportunity for business growth but expanding into other African countries is a challenge due to political issues and currency ratios. G4S Managing Director Michael Kampani said primary listing in Botswana Stock Exchange is limiting as there are lot of regulations and this discourages start-up companies.
“Abiding to Botswana Stock Exchange regulations limits most companies and this hinders expansion to other African countries,” said Kampani.
☛Pays special dividends
☛Reduces production at Ghaghoo
Mining junior, Gem Diamonds this Tuesday presented a strong set of financial result in the midst of a downward trend in prices for rough and polished diamonds.
A decision taken by the board, which emphasised focus on ‘maximising revenue from core assets through enhancing operational efficiencies’, is now paying dividends, said Non-Executive Chairman Roger Davis.
For the year ended December 2015, the British-based company made a profit of $67, 4 million (about P741 million), a jump of 12 percent when compared to the year before. The group, which owns Botswana’s Ghaghoo diamond mine, has posted improved profits, shining above diamond stalwarts such as De Beers and Alrosa which are currently huffing and puffing as a result of a historic decline in diamond prices.
Chief Executive, Clifford Elphick is thrilled that his company continues to sail far away from troubled waters. Muted global economy has affected the multi-billion Pula diamond business the world over. “Although 2015 was a challenging year for the diamond mining industry, it is encouraging to report that the group has delivered strong set of operational and financial results. The group continued to implement its strategic objectives of capital discipline by investing in low cost high return capital projects,” said the former Personal Secretary to Harry Oppeinheimer of De Beers’ group.
The London Stock Exchange-listed group said key objectives for the development of phase 1 of Ghaghoo mine have been achieved.
The average grade recovered during the year under review met the expected reserve grade.
This has led to the achievement of 2000 tonnes per day, said Elphick in an emailed statement. Ghaghoo is the company’s flagship project located right at the centre of Central Kalahari Game Reserve (CKGR). The group said it will cut production at Ghaghoo mine for 2016 in a bid to conserve cash consumed during its final development stage.
“It is important to note that Ghaghoo remains a key future option for the group and its expansion opportunities, when diamond prices improve,” said the company. Meanwhile, shareholders of Gem Diamonds are also smiling as special dividend of $0, 35 has been declared. This is in addition to the ordinary $0, 05 dividend that has been recommended. Going forward, Gem Diamonds said there are signs that there will be improvement in prices in the short to medium term.
This is amid weak economic growth prospects across most economies. Letseng mine in Lesotho was a star performer for the period under review. Diamonds at the mine contributed to the strong results at an average price of $2,999 per carat.
Sefalana Group Managing Director, Chandra Chauhan announced that they would be focusing on growing their property portfolio this year.
Presenting the group results last week, Chauhan said they have placed a lot of focus and emphasis on growing and developing their Botswana property portfolio, which is currently worth around P500 million.
Speaking to BG Business Chauhan said they are currently in the process to buy an eight-hectare plot that will be developed for a new store. “We have been looking at a number of other sites for purchase or development and this has resulted in a time cost recovery charge relating to senior management that is greater this period than in the comparative period.
Rental streams remain strong and the property portfolio is now virtually fully tenanted,” said Chauhan. He said they have already submitted the plan to the City Council and they expect to start construction as soon as the plan is approved. “To increase our property portfolio and our stores we want to buy a plot in Mogoditshane.
This will be our new store. We have already submitted the plan to the city council and it is a beautiful plan,” said Chauhan. The group has recently purchased 42 000 sqm site in Block 10 (Setlhoa plots). “We intend to carry out a significant development in the forthcoming year.
Details of this development are still being finalised but are likely to include our largest to date Sefalana Shoppers Supermarket and a petrol station,” said Chauhan. During the period the group has purchased the building that previously housed the Golden Fruit juice business in Ramotswa, Delta Dairies Property in Broadhust.
Chauhan said this year they are planning to renovate the property in Ramotswa as it is in a prime location for a large cash and carry for the customers in that area. He said the delta dairies will allow the group to carry out the necessary developments to the sites to enable the group to move the fruit juice plant to this site from Ramotswa along with newly introduced beverages.
In Zambia Sefalana group property is on shaky grounds as that country’s government has discontinued the use of US dollar as a secondary currency and enforced the use of the Kwacha. Chauhan said this resulted in a significant weakening of the Kwacha against global currencies and rental leases will now have to be converted to Kwacha and this exposes the group to additional foreign exchange risks.
“The value of the net investment in Zambia is worth less than it was at April 2015 Pula terms. This has resulted in a significant P25 million foreign exchange loss for the period,” he said. However he said the Zambian property is fully let and continues to generate a very good rental stream. “We don’t know what the impact will be on the group profits as time goes on,” he said.
He added that they are also looking at potential property investments in Namibia to support their planned growth in the country. In November 2015 Sefalana acquired its 14th store in Namibia in Swakopmund and other potential sites are also being considered for additional store openings.
One of Botswana’s leading plastic manufacturers, Kgalagadi Plastic Industries is losing employees, Botswana Guardian has learnt. Impeccable sources from the company factory reveal that at least five people resign from KPI every month. Over the years, there have been concerns and complaints from staff members over pending issues that management is constantly accused of overlooking. In an interview with BG News employees listed the following as their cries.
The latest from the company is the labour dispute between the union representing workers, Botswana Textile, Manufacturing and Packaging Workers Union and management last month. The two parties have been at each other’s throat over staff salary increment since May this year. Contrary to the 10 percent that the Union had proposed, a six percent increase was announced this week, which employees had no choice but to accept. An irate staff member informed this publication that employees work on three shifts (eight hours) at P5.35 per hour. “We had asked for an increase of P1.50 because the money we get is not enough to help us with our daily living,” he said, explaining that management settled for 42thebe increase instead.
Staff members complain that the company is refusing to buy them a mini-kombi to assist with transporting them during the night. This, according to a union member, has been their request for over a decade. “We fear being attacked by criminals on our way to and from work,” explained one man, adding that they have resorted to going home in groups during night shift. One of the female employees mocked management for having not learned from a recent incident in Gaborone, Block 6 whereby a female staffer of Spar was murdered when walking to her house from work at night. There are also complaints over lack of safety equipment and worn out uniforms. “We only have mouth caps but the dust is too much. Some of us suffer from respiratory conditions as a result. Also our overalls are worn-out,” he added.
Tea-break time short
Unlike other companies, employees of KPI go for tea break for only 15 minutes (10am-10:15am), something they view as abusive. A former employee said efforts to get management to increase it to 30 minutes never worked. “We were worse than prisoners at that company,” he stated. However, lunch hour remains standard (1pm-2pm). KPI general manager Krunal Sinha had not responded to questions sent to him last month. Administration officer Neo Maje could not be drawn into an interview, saying KPI directors do not allow them to discuss the company with the media. She however said she was going to take it up with supervisors from the factory. KPI is a big company with close to 200 employees. Its headquarters are in Botswana and it has branches in South Africa and Angola.