Da Gama to raise its weav­ing ca­pac­ity

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

TEX­TILE man­u­fac­turer Da Gama Tex­tiles, which al­most went out of busi­ness in 2014, is plan­ning to sig­nif­i­cantly in­crease its weav­ing ca­pac­ity at a cost of about R150 mil­lion, re­sult­ing in the com­pany em­ploy­ing a fur­ther 200 peo­ple.

Greg James, the chief ex­ec­u­tive of Da Gama Tex­tiles, re­vealed this yes­ter­day dur­ing a Com­pe­ti­tion Tri­bunal hear­ing to con­firm a con­sent or­der en­tered into by the com­pany with the Com­pe­ti­tion Com­mis­sion for col­lu­sive ten­der­ing.

Da Gama ad­mit­ted to col­lu­sive ten­der­ing through bi­lat­eral agree­ments it reached with Monoge Min­ing and Mot­seng Trad­ing & Sup­ply Ser­vices for a Na­tional Trea­sury ten­der for the sup­ply of fab­ric used in the man­u­fac­ture of uni­forms for the De­part­ment of Cor­rec­tional Ser­vices, the SA Air Force and the SA Mil­i­tary Health Ser­vices.

James told Busi­ness Re­port af­ter the hear­ing that the plans to in­crease the com­pany’s ca­pac­ity were quite ad­vanced and prompted by its need to buy in wo­ven cloth from lo­cal spin­ners, which was rel­a­tively ex­pen­sive.

He said Da Gama’s plant had a ca­pac­ity of 1.8 mil­lion me­tres a month but weav­ing ca­pac­ity on only 600 000 me­tres a month.

The plan was to add 60 ad­di­tional looms to the fac­tory over about a year, re­sult­ing in the cre­ation of an ad­di­tional 200 jobs. James added that an ap­pli­ca­tion through the In­dus­trial De­vel­op­ment Cor­po­ra­tion’s (IDC) black in­dus­tri­al­ist’s pro­gramme was “90 per­cent there” and it al­ready had an in-prin­ci­ple agree­ment.

He said part of the R150m in­vest­ment would come from the IDC black in­dus­tri­al­ist pro­gramme and the bal­ance from nor­mal IDC or bank fund­ing.

James said Da Gama’s fac­tory was based at a small town out­side King Wil­liam’s Town in the Eastern Cape and the en­tire com­mu­nity was de­pen­dent on the fac­tory.

James told the tri­bunal the col­lu­sive con­duct had al­ready taken place when he joined Da Gama in Au­gust 2014, but was tasked with en­ter­ing into dis­cus­sions with the com­mis­sion to re­solve this is­sue. He said Da Gama had been go­ing through a slow and steady de­cline and been through mas­sive re­trench­ments from 2010, with the staff re­duced from about 2 500 to about 500 by the time he joined the com­pany.

James added that Cowie Trad­ing, which pur­chased the shweshwe African cloth from Da Gama and ac­counted for 60 per­cent of the com­pany’s sales, ac­quired ma­jor share­holder Claas Daun’s share­hold­ing in the com­pany be­cause it would have also closed down if Da Gama stopped oper­at­ing, which saved 500 jobs.

A re­struc­tur­ing plan was im­ple­mented in con­junc­tion with the IDC, which in­jected about R100 mil­lion into the com­pany.

James said the new man­age­ment and sales force that came into Da Gama in 2014 had moved on from there and man­aged to in­crease pro­duc­tion from 1 mil­lion me­tres a month to about 1.8 mil­lion me­tres, re­sult­ing in the cre­ation of an ad­di­tional 150 jobs in the past two and a half years.

“With the change in man­age­ment and hav­ing a share­holder that is di­rectly in­volved in the ac­tual end prod­uct of Da Gama has ac­tu­ally changed the whole dy­nam­ics of the com­pany,” he said. James re­vealed this in re­sponse to ques­tions from the tri­bunal panel hear­ing the case about the rea­sons for the pro­posed fine im­posed on Da Gama in terms of the con­sent agree­ment with the com­mis­sion be­ing so low.

The penalty Da Gama agreed to pay in terms of the con­sent agree­ment was about R2.1 mil­lion, which rep­re­sented 0.4 per­cent of the com­pany’s an­nual turnover for the fi­nan­cial year to De­cem­ber 2013.

The com­mis­sion has the power to im­pose an ad­min­is­tra­tive penalty of as much as 10 per­cent of an­nual turnover on com­pa­nies that are found guilty of con­tra­ven­ing the Com­pe­ti­tion Act.

Ma­todzi Sivhaga, ap­pear­ing for the com­mis­sion, told the tri­bunal that the com­mis­sion had ac­cepted Da Gama’s of­fer af­ter ini­tially propos­ing a higher per­cent­age that re­sulted in a penalty of about R9 mil­lion. He said in agree­ing to the lower penalty the com­mis­sion had taken into ac­count the gen­eral de­cline in the tex­tile in­dus­try.

The tri­bunal con­firmed the con­sent agree­ment.

PHOTO: BONGIWE MCHUNU

A va­ri­ety of shweshwe de­signs in dif­fer­ent colours on dis­play at Fash­ion Dis­trict Whole­salers in the Jo­han­nes­burg. Da Gama has ad­mit­ted to col­lu­sive ten­der­ing.

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