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.
Retail behemoth, Sefalana group continues to bolster its property division by acquiring more assets in the just ended financial year. At the close of April 2016, the company has added the building which previously housed Golden Fruits to their portfolio.
In a statement signed off by Chairman Ponatshego Kedikilwe and Managing Director, Chandra Chauhan, the owners of Shoppers and Sefalana said the property is prime location for customers for a large cash and carry business. Sefalana has also purchased the property that used to be owned by Delta Dairies in Broadhurst. The company will use the area to produce milk for its customers.
The company will carry the necessary developments on the site ahead of the relocation of its juice plant from Ramotswa to Gaborone. At Kgalagadi Soap Industries, the company has constructed 4 warehouses each measuring 1000sqm. Sefalana has also bought a 40 000sqm site at Setlhoa, where early indications are that a large Shoppers stores and a petrol station will be housed.
Currently, the Botswana property portfolio is valued at P500 million. It was not all glossy for the company’s property in Zambia. Zambian government discontinued the use of US dollar and replaced it with Kwacha. This exposes the company revenue to foreign exchange risks.
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.