Golden Sibanda Senior Business Reporter
TANZANIAN milling giant Bakhressa Group has invested $20 million initial capital in Blue Ribbon Industries, former judicial manager Reggie Saruchera has said. Bakhressa completed the takeover of BRI in September last year and promised it would immediately inject $20 million towards recapitalising the milling company, clearing liabilities to trade creditors, workers and banks.Mr Saruchera said that all creditors of the rejuvenated miller, which came close to closing shop indefinitely due to funding problems, have all been paid what was due to them.
All outstanding payments to creditors had to be completed before Mr Saruchera handed over the reins to the new investor, Bakhressa Group.
Mr Saruchera said that the Blue Ribbon is now in full production and prospects are looking bright for the firm, which had been operating in fits and starts due to funding issues.
As the funding problems persisted, BRI’s production declined, forcing one of Zimbabwe’s oldest millers to put workers on shifts. At times it would go for days without producing, until Bakhressa took over late last year.
“As we speak production is running, the company is already milling, and things are beginning to happen. The investor is now fully on the ground. All the initial capital which was supposed to be invested has been invested. The investor has taken over the operations.”
Blue Ribbon required $40 million in fresh funding for recapitalization, working capital and clearing over $30 million liabilities, including the cost of retrenching excess staff.
The $40 million investment was meant for capital expenditure ($6 million) and clearing liabilities ($30 million), which included PTA Bank, ZB Bank, Atlas Trading, preferred and trade creditors and statutory bodies.
This was being done in terms of a scheme of arrangement approved by the High Court agreed to with the creditors of the milling company.
Funding challenges at Blue Ribbon had seen production falling to between 11 percent and 29 percent. But despite the choking financial problems, BRI maintained its strong brand equity. Some of its leading products include its grain meal brands Chibataura and Ngwerewere.
It is expected that investment by Bakhressa would see BRI’s capacity utilization gradually increase to 100 percent by the time the Tanzania investor injected the $40 million.
Blue Ribbon needs to operate at about 40 percent to break even and over 60 percent to make good margins from the milling business.
Bakhressa Group vice president Ramesh Kumah last year said investment over the next five years would focus on plant and equipment with at least $20 million to be invested.
Blue Ribbon, which was put under judicial management in 2012, is Zimbabwe’s second biggest grain miller. It owns Nutresco, which produces corn soya blend, maheu and soya chunks.