Turnall eyes Govt,Nssa projects
TURNALL Holdings Limited is targeting government and NSSA business as it works toward a break even position by year end, acting managing director Roselyn Chisveto told shareholders at the annual general meeting held Friday last week.
“A $20 million facility towards housing is set to be allocated to the Civil Servants Trust Board so engagements have been done with the Ministry of National Housing for business opportunities,” said acting MD Chisveto.
She added that the company was also pursuing NSSA’s National Building Society, housing co-operatives and other housing projects for opportunities.
“Housing initiatives continue to be promising, and with the launch of NBS’s housing delivery plan, coupled with intensified moves by building societies, as well as the civil servants housing program, the company is poised for good business,’ she said, adding that partnerships with these organisations will see Turnall products on use on the upcoming projects.
Chisveto said the company’s management believes the business will see positive shift towards a break-even position by year-end.
“The year 2017 started on a subdued level of activity owing to the depressed business environment, but the second half has since witnessed significant improvements with enhanced cash flows supporting the business to build capacity for sustainable production,” Chisveto said.
“The group’s production volumes increased by over 10 percent while turnover also improved particularly for June and July”.
Chisveto stated that management also continues to position the business in a way that will enable the company to regain lost volumes in the second half.
“Sales volumes have been following an upward trend pointing to a good second half. We are also confident supply gaps will be addressed in the foreseeable future, with continued sustainable raw material availability particularly fibre,” she added.
The firm’s export growth strategy is being driven to mitigate on foreign currency shortages and for market growth.
“Plans are underway to aggressively explore export markets and a marketing launch of the Turnall brand and its products was done in Zambia to raise awareness and boost sales.
Turning to operations Chisveto said various strategies have been put in place by management to ensure that the business continues as a going concern.
“To ensure business continuity, we are engaging with suppliers for extended and better credit terms to manage and direct cash flows to business operations.
“Negotiations and engagements with creditors for extended payment plans as well as waiver on interest has provided the business with more life for a successful turnaround,” she said.
Chisveto said the company is engaged in a balance sheet restructuring process that will result in rescheduling of its debt to enable the company to reinvest more funds into current production.
The completion of the company’s balance sheet restructuring process is expected to release working capital into the business and strengthen the company’s efforts towards achieving profits and balance sheet growth.
“The restructuring will capacitate the business to fully attend to the old debt and to meet its obligations,” said Chisveto adding that the company is currently faced with high monthly loan repayments averaging 19 percent of total collections and in the process depleting cash flows for raw materials.
As part of the restructuring exercise, the company consolidated its asbestos cement operations in the Bulawayo plant to gain from economies of scale while the Harare asbestos cement plant was placed under care and maintenance and impaired to net realisable value.
Turnall has also not been spared from the ongoing cash shortages as failure to make payments to critical suppliers has resulted in reduction in production volumes due to erratic raw material supplies.
The company’s management says it has, however, continued to engage fibre suppliers to facilitate the release of fibre.
Chisveto said the company has been a victim of foreign currency shortages and had to exit the PVC pipes business in order to streamline the product portfolio.
“The company could not meet the competing foreign currency requirements for raw materials for PVC pipes,” she said.