Zi­masco ju­di­cial man­ager or­ders foren­sic au­dit

Chronicle (Zimbabwe) - - Business Chronicle - Ti­nashe Ma­kichi Harare Bureau

THE ju­di­cial man­ager for Zim­babwe’s largest fer­rochrome pro­ducer, Zi­masco has or­dered a foren­sic au­dit of the com­pany to trace the where­abouts of funds gen­er­ated by the com­pany since its takeover by Chi­nese share­hold­ers amid un­con­firmed al­le­ga­tions of ex­ter­nal­i­sa­tion.

Zi­masco, a unit of China’s Si­nos­teel Cor­po­ra­tion was put un­der pro­vi­sional ju­di­cial man­age­ment in June this year af­ter the com­pany’s in­debt­ed­ness to banks and cred­i­tors had grad­u­ally in­creased to about $65 mil­lion in 2015 from $38 mil­lion in 2009.

Mr Reg­gie Saruchera was ap­pointed the pro­vi­sional ju­di­cial man­ager for the fe­rochrome miner.

“Since the com­pany was placed un­der ju­di­cial man­age­ment, we have now opened bank ac­counts to sep­a­rate pre and post ju­di­cial man­age­ment trans­ac­tions. We want to carry out a foren­sic in­ves­ti­ga­tion on all the funds that were gen­er­ated by the com­pany.

“Ob­vi­ously the funds must have gone some­where and we want to as­cer­tain that be­cause money has a ten­dency of leav­ing a trail wher­ever it goes. Our aim is to have a fresh start on the com­pany be­cause we be­lieve that there is po­ten­tial in re­viv­ing it,” said Mr Saruchera.

The com­pany has been strug­gling since its takeover by the Chi­nese share­holder due to de­pressed fer­rochrome prices and in­creas­ing high op­er­a­tional costs.

The sit­u­a­tion saw Si­nos­teel Cor­po­ra­tion con­vert­ing out­stand­ing loans of $99 mil­lion into redeemable pref­er­ence shares at the op­tion of the com­pany and out of prof­its.

This re­sulted in Zi­masco sav­ing ap­prox­i­mately $6 mil­lion per an­num in in­ter­est charges. The loans had been pro­vided partly to fi­nance work­ing cap­i­tal with $22 mil­lion fund­ing the re­build­ing of fur­nace 2.

Mr Saruchera said there is staff from Grant Thorn­ton on site at the mo­ment over­see­ing the oper­a­tions of the com­pany while an of­fi­cer from the En­vi­ron­men­tal Man­age­ment Agency is also sta­tioned at the plant.

“We have made sure that some of our staff are on site to over­see the oper­a­tions of the com­pany and make sure that ev­ery­thing is be­ing done in a trans­par­ent man­ner. The aim is to get rid of any bot­tle­necks that may arise,” said Mr Saruchera.

On fi­nan­cial per­for­mance, the com­pany’s rev­enue de­clined by 38 per­cent to $120 mil­lion by the end of 2015 from $194 mil­lion recorded in 2011.

He said the de­pressed fer­rochrome prices neg­a­tively af­fected con­tri­bu­tions from the com­pany’s fur­naces due to the fixed na­ture of costs of pro­duc­tion.

Due to per­sis­tent losses, the com­pany suf­fered from an acute short­age of work­ing cap­i­tal.

The work­ing cap­i­tal gap de­te­ri­o­rated from a pos­i­tive $71,3 mil­lion to a neg­a­tive of $2,9 mil­lion in 2015.

Mr Saruchera said ever since he in­her­ited the com­pany’s oper­a­tions, op­er­a­tional costs have sig­nif­i­cantly gone down to match the cur­rent sta­tus of the com­pany.

The ju­di­cial man­age­ment im­ple­mented mea­sures which saw the com­pany ne­go­ti­at­ing re­duc­tion in con­tract prices for pro­duc­tion of con­cen­trates by ap­prox­i­mately 37 per­cent.

“We also ne­go­ti­ated re­duc­tion in con­tract prices for metal re­cov­ery by ap­prox­i­mately 29 per­cent and re­duced salaries of staff (ex­clud­ing NEC work­ers) by 50 per­cent,” said Mr Saruchera.

He said the Gov­ern­ment ban on the ex­port of chrome ores limited the com­pany’s op­tions for source of rev­enue. Zi­masco has, how­ever, se­cured an ex­port li­cence that will see the com­pany ex­port­ing 240 000 met­ric tonnes per an­num.

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