Zimpapers Logo

Business Reporter
Art Corporation’s ball pen manufacturing division, Eversharp, is expecting to increase production by 100 percent this year following the purchase of new equipment and technology by the group sometime last year, a company official said.

The new machinery will see Eversharp doubling its current capacity to eight million pens by the end of this year from the current four million. The group last year started drawing down on the $18 million facility offered by Taesung Chemical Company Limited that has enabled the company to purchase new equipment and machinery.

Speaking during a private tour of the new facilities yesterday, Art Corporation chief executive Richard Zirobwa said the company’s drive to purchase new equipment is aimed at improving economies of scale. “The group is currently trading in a considerably difficult operating environment characterised by tight liquidity conditions and poor market demand hence need for the company to be innovative through bringing in new technology that makes the company globally competitive.

“I’m pleased to advise that having fulfilled the terms of the facility, the group has now commenced drawing down on these facilities from our Korean partner,” said Zirobwa.

The Art Corporation board has already approved facilities offered by Taesung Chemical of up to $3 million to finance raw material purchases and up to $15 million to finance capital expenditure over a period of five years.

The diversified group last year acquired new equipment and technology for Eversharp, Chloride and Kadoma paper mill.

Total upgrade of phase one of Eversharp was at a cost of $400,000 and phase two will cost the same amount. “We’re talking about four million pens and we have doubled that capacity by also increasing production capacity of other products around the pen and the idea is to reduce our costs and achieve regional cost competitiveness.

“The machines we’ll be using now are the latest in the world today and that’s comforting. Eversharp should be a different company this year,” said Zirobwa.

He said the shareholder is ready for phase two of the projects and management is looking at the cash flows and this depends on the company’s ability to increase cash flows so that it matches the expectations of repayments. “Generally speaking we’re keen to see phase two completed again in the current year and that’s our aim. We eye a complete repositioning of Eversharp,” he said.

The commissioning of the new machine will see a significant reduction in cost of production which should improve margins and profitability further in the coming year.

He said Eversharp currently is failing to meet the market demand of about five million pens during peak periods as the current production capacity remains flat at four million pens due to lack of new machines and latest technology.

“December — January is the peak period and right now we’re sitting at orders of close to five million pens and we’ve the capacity of four million pens, which is one of the positive things and that has given us motivation to upgrade our production lines. So we’re trying to ensure that we’d be able to meet the demand after upgrading. Currently we’re failing to meet the customer requirements during the peak periods. We’ve three peak periods during the year,” said Zirobwa.

Production capacity is expected to double to eight million pens from four million pens following the installation of new machines and technology.

For the half year to September 2014 the group’s overall capacity utilisation declined to 59 percent from 65 percent recorded the previous year and sales revenues were lower across most of the business units with an average volume decline of 11 percent in batteries and 17 percent in tissue operations while Eversharp volumes grew by five percent.