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Business Reporter
Olivine Industries Limited requires about US$32 million to increase capacity and retool its plant, a company official said. The fast foods consumer goods manufacturer’s production capacity plunged by 82 percent from about 202 330 tonnes in 2001 to the current output level of around 35 095 tonnes.
Olivine, a subsidiary of the Industrial Development Corporation, is struggling to raise working capital and to attract investors who would inject fresh funding.

Olivine Industries managing director Mr Jonasi Mushangari said yesterday the company has rolled out initiatives to make sure it returns to viability.

“Internal initiatives have been structured to raise US$32 million required as working capital for the company,” he said.

Mr Mushangari said of that amount, about US$4 million is required for retooling the manufacturing plant to increase volumes.

He said the management is looking at measures to ensure profitability and this includes influencing policies to create a balanced market for both imported and locally produced products.

Mr Mushangari said Olivine is negotiating with investors willing to inject capital into the company on a partnership basis.

“We are seeking investors and it is one of our internal initiatives. The company has engaged advisors to run an investment portfolio for Olivine and the process is already underway,” he said.

“The issue of imports has been another challenge to our operations, the country has been turned into a dumping ground for genetically modified products,” Mr Mushangari said.

He said the slump in production was due to lack of working capital and the liquidity crisis that is affecting the economy.

Mr Mushangari said the company is currently operating at 30 percent production capacity and they are focusing on increasing volumes to meet the demand of the local market.

Olivine’s biggest challenge is the lack of competitiveness due to use of outdated and uncompetitive plant equipment.

The majority of investors Olivine engaged believe the company requires new equipment and cost may be prohibitive and would not be justified by the resultant returns.

Its borrowings and payables are in excess of US$34 million against current assets of US$21 million, US$17,2 million being inventory.

It has recorded a cumulative loss after tax of US$20 million since dollarisation and capital would first retire outstanding debts to return the balance sheet to healthy position.

It has also become difficult for Olivine to compete fairly against imported products from South Africa, given that the imports are manufactured using genetically modified inputs.

Olivine has since suspended the production of some of its products such as Panol cooking oil and other margarine brands due to a shortage of crude oil used in production of the products.

However, the company has contracted soya bean farmers across the country in an effort to expand its raw material base.