eBusiness Weekly
Golden Sibanda
Central African Batteries (CAB), one of Zimbabwe’s only two automotive battery makers, has resumed production after a four-year financial distress forced hiatus in a development likely to improve competition, reduce imports and lower the automotive battery prices.
This comes as it emerged that the company, which is under judicial management of Tudor Consultants, has secured a new local investor identified by highly placed sources as Agri-circle. Indications are that the firm needs US$21 million in fresh capital.
Officials told Business Weekly that while prospects looked bright after the companies reopened, operations have taken a significant hit from rolling power cuts besetting the country.
Notably too, sources at the firm complain that while the company appears to have regained its footing from judicial management since last year, legal processes take off the “nursing bed” appear to have taken too long, stifling its new found momentum.
CAB produces the Lucas brand of tractive and automotive lead acid batteries and is Zimbabwe’s second largest batteries maker after Chloride Zimbabwe, which currently controls the lion’s share of locally made tractive and automobile batteries market.
Prior to its collapse, the company carried out its business of tractive and automotive lead acid battery manufacturing under the brands Lucas, duCellier Premium Plus and HI-Fase batteries and sold the products through Battery World (Private) Limited.
The collapse of CAB affected its subsidiaries including the holding company, New Corporate Investments and reopening raises hope the other closed companies can spring back to life.
The company, which ceased operations in 2015 after the break down of critical machinery and failure to secure a financial bailout, has resumed operations and has been scaling up operations since August, as it bids to reclaim lost market share.
CAB production manager Ngoni Chapurendima, said production resumed in August this year “although the company remains under judicial management and legal processes are underway that will see the firm being taken out of judicial management”.
“We are into automotive and deep cycle automotive battery manufacturing. Central African Batteries is now in operation. We resumed operations in August 2019 after some few years of non-activity,” he said.
Chapurendima pointed out that one of the main challenges after the company resumed production just about two months ago include the Zesa power supply issues.
“We have got processes that once we start; we need to run 24 hours continuously, like the furnace smelter where we recycle old batteries. Once we start, we cannot stop, it has to be a continuous process; 24 hours.
“So these interruptions where in a day we have less than seven hours of electricity continuously; we cannot produce. As Luca Batteries (CAB), we are happy that through the Ministry of Industry, we managed to secure an investor who is putting in money.
“But those efforts are not bearing the fruit that we desire because of the challenge of power. We also use scrap batteries, old batteries that we recycle, we have a challenge.
“While there is legislation that prohibits export of such, the batteries are being smuggled out, yet they are a major input into battery manufacturing, which creates challenges for us” he said.
Chapurendima said the batteries are the only source of lead, which the firm desperately requires in the manufacturing of new batteries.
CAB was also constrained by a “plethora” of court cases and the shareholders applied for liquidation.
However, the workers applied for the reversal of the liquidation order into provisional judicial management and their request was granted in March last year.
On the other hand, all the shareholders, except for one who owns 10 percent shares, passed a special resolution indicating that they no longer had an interest in the company.
While the company requires about US$8 million in the short, medium to long term, purchasing the company outright, which has US$7,7 million worth of assets and US$7,8 million liabilities, requires about US$21 million.
