THE government has ordered a forensic audit of state-owned meat processor, Cold Storage Company’s (CSC) operations before approving an $80 million injection from a Botswana investor.
CSC used to play a leading role in the processing and marketing of Zimbabwe’s beef since its inception in 1937. The company, however, fell on hard times from 2000 owing to a myriad of challenges among them inadequate working capital, cattle diseases, decline in the commercial herd, huge foreign debt, high staff turnover and an old transport fleet.
The company which is currently operating at about 10 percent capacity, has 692 animals.
Speaking before the Parliamentary Portfolio Committee on Lands, Agriculture, Irrigation and Mechanisation yesterday, CSC chief executive Ngoni Chinogaramombe said the company has been making different turnaround proposals since 2009 but some of them have not been approved by the government.
“In 2012, we submitted a proposal to dispose of non-core assets where we could have raised about $9 million but it was never approved. We submitted another one in 2013, which included the disposal of non-core assets to raise $15 million and the possibility of a joint venture with a foreign investor. The proposal is still under consideration,” said Chinogaramombe.
“The government has however asked for a forensic audit before Cabinet can approve any transactions pertaining the parastatal.”
Chinogaramombe said the company had secured investors from Indonesia in 2009 who pledged to inject $57 million into the operations but a deal could not be structured after the government turned down the proposal.
He said CSC was in negotiations with a Botswana based investor but the transaction is subject to the government approval.
“The investor is willing to invest $80 million and once the transaction is approved, $40 million will be channelled towards the Chinhoyi operations while the remainder will go towards capitalising Bulawayo operations,” said Chinogaramombe.
CSC suffered a major setback when the EU suspended beef exports from Zimbabwe following an outbreak of foot-and-mouth disease.
The company had an annual quota of beef exports to the EU of 9,100 tonnes.
During that time the company had a $15 million revolving payment facility with the EU, under which it was paid in advance.
CSC used to earn Zimbabwe at least $45 million per year.
Chinogaramombe said the company currently owes $25 million to various creditors and some of the creditors are taking the legal route.
“All our performance indicators are deteriorating and capacity utilisation is very low with market share nose diving since 1995.
“We’ve failed to pay creditors and some have even started taking the legal route. We owe about $25 million in arrears rising from fixed costs, interest rates and taxes,” said Chinogaramombe.