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Tinashe Makichi Business Reporter—-
Surface Wilmar Private Limited will inject about $30 million into Olivine Industries as capital to improve capacity utilisation and resuscitate contract farming for raw material supply. Surface Wilmar acquired the 49,3 percent shareholding in Olivine, which was previously owned by AICO Africa now Cottco Holdings.Surface Wilmar’s bid to invest in Olivine Industries was accepted this year although it is still subject to approval by different Government departments.

According to a source close to the transaction, the cooking oil manufacturer is now awaiting approvals from two Government authorities before the $30 million capital injection is made this year.

“The transaction has already been approved by the Competition and Tariff Commission and is awaiting clearance from the Zimbabwe Revenue Authority on issues to do with tax assessment.

“Surface Wilmar will inject an initial $30 million towards recapitalisation and this will see Olivine expanding its contract farming programme in bid to develop the base for raw materials,” said the source.

The source said Cottco Holdings has for sometime been scouting for an investor for its shareholding in Olivine estimated to be worth $10 million.

Government and Cottco Holdings each had 49 percent in Olivine Industries with the remainder being held by the Industrial Development Corporation.

The source said Olivine has been failing to procure adequate raw materials due to shortages of working capital and the coming of a new investor is expected to change the face of the company by the end of this year.

“Surface Wilmar Private Limited jointly owns Surface investments with IDC and the transaction is expected to expand Surface’s footprint in the local cooking oil market.

“Considering that Olivine has been failing to secure an investor for a long time, this is a positive way forward towards the revival of the largest cooking oil producer in Zimbabwe,” said the source.

Olivine has been in the market for $30 million in working capital to boost output and increase export margins.

The source said Olivine wants to increase the contribution of its margarine and bath soap brands to overall exports to 33 percent of turnover from the current levels of below 12 percent.

By last year Olivine had borrowings and payables in excess of $34 million against current assets of $21 million, $17,2 million being inventory.

The source said large debt, obsolete machinery and huge working capital required to resuscitate the company made it difficult for the company to attract investors.

Poor performance of Olivine also saw its employment capacity dropping to 568 workers in 2014 from 2 286 in 2001.

“The company has also been struggling due to the shortage of soya beans and the influx of imports and that is the reason why the new investor is looking at injecting huge start-up capital to expand the source of raw materials,” said the source.

Efforts to get a comment from the Wilmar and the Industrial Development Corporation officials were fruitless at the time of going to print.