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NATIONAL Blankets, one of the oldest blanket manufacturing companies producing a wide range of blankets of all qualities and various allied products, is stuck with over 3 000 blankets produced for government which is failing to pay for its order.

This has grossly undermined the company’s working capital after it had committed resources towards production of the blankets.

The company requires US$3 million to turn the corner, acting chief executive officer, Freedom Dube, said.

The blankets held by the company were earmarked for several government institutions, among them hospitals, prisons, the police and the army.

It could not be immediately established how much was locked in the uncollected blankets in the form of potential revenue.

Government used to be the textile company’s biggest customer but this had changed due to serious economic challenges bedevilling the country.

Treasury is currently concerned with the payment of monthly salaries for its nearly 550 000-g civil service, and has for the past three months even failed to remit money deducted from its workers’ salaries for payment of their creditors.

A visit to the Bulawayo-based firm’s premises revealed that a huge consignment of blankets produced for government between 2013 and 2014 was still lying idle.

Dube said government had failed to pay for the order.

“A lot of stock that we produced for the army, the police and hospitals is still here and we are waiting for the government to come and maybe pick up the stock,” said Dube.

“We really need that assistance.”

Dube said their main challenge was finance to take the judicially-managed company forward.

The company was placed under judicial management in 2012 due to viability problems.

The company received a US$500 000 loan facility from the Central African Building Society under the Distressed and Marginalised Areas Fund but this was insufficient to turn around its fortunes.

Last year, creditors agreed to convert their debt into equity. The creditors excluded the collapsed Capital Bank and service providers such as Bulawayo City Council, who were paid US$2,6 million from proceeds of property sold to the National Social Security Authority the previous year.

“We are not able to get the right level of finance to take us up really,” Dube explained.

“You know with blankets off-season, you should be producing so that come winter, we are selling but because of the issues of finance you find us producing and selling (in winter).”

Dube stressed that the company needed a lot of capital in order to produce.

“Being seasonal, we need money to ensure that we have got stocks when people come in and we need variety, no doubt,” he said.

“You can’t just have one blanket. We need a variety of blankets, so we need to have deep pockets.”

About US$3million was required for the recapitalisation of National Blankets, he said.

He said National Blankets no longer enjoyed that monopoly it used to have on the domestic market, with many players having come on board, some with cheaper imports.

This has threatened the textile company’s viability.

Currently the company has a staff complement of just 65 permanent employees yet it used to employ 5000 during its hay days.

“When I joined National Blankets, (in 2005) there were about 1 500 employees at this place but we have been shrinking since then,” explained Dube.

“At one point we actually employed over 5 000 people.”

Despite remaining under judicial management, Dube said the company had managed to clear a US$4 million debt which had forced them into judicial management.

“The debt which really put us into judicial management has been extinguished from the scheme of arrangement,” said Dube.

He added that as part of a turnaround strategy, the company had consolidated operations in order to reduce overheads, and this was already bearing dividend.

National Blankets was incorporated in 1939 as a blanket manufacturing company.

With over 70 years of operation in Zimbabwe, the company had become a market leader in blanket manufacturing.

On its website, National Blankets said its controlling shareholders were Zimbabweans who operate through a registered consortium.

Apart from a very small minority, it is “almost completely Zimbabwean owned”, the company said.

Traditionally, National Blankets supplied about 70 percent of its products into the local market, with 30 percent of its output being exported mainly into the Southern African Development Community region.

“We believe that we are now able to tackle the more sophisticated markets in the region given our access to world class manufacturing facilities and our investments into producing new designs and high quality products.

“The company currently sells through an established distribution network and whilst encouraging larger distributorships, it also accommodates smaller businesses and retailers,” the company said.

Source : Financial Gazette

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