eBusiness Weekly
Business Reporter
Medtech Holdings says sales volume for the year ended December 31, 2021 increased by 110 percent largely driven by less stockouts and a reduction in competition from grey imports.
The group’s volume is derived from its Class A Portfolio which consist of consumer goods and the portfolio primarily includes 50.1 percent of Zvemvura Trading (Private) Limited, trading as MedTech Distribution, and Chicago Cosmetics (Private) Limited, a 51 percent subsidiary of MedTech Distribution.
The company’s financials show that the bulk of the volume was moved in distribution which grew 198 percent.
Muhammad Patel, the company’s secretary, in a statement of the financials said these businesses primarily sell goods to retailers and wholesalers, but credit demanded by supermarkets is generally 30 days from statement for slower moving products, which is onerous in Zimbabwe’s unpredictable and inflationary environment.
“Typically, these businesses aim to hedge the debtor’s book and unlock the working capital tied up in debtors through bank borrowings. Inflation continually erodes the real value of the facilities in place necessitating regular facility increases with the associated costs being incurred,” he said.
He noted that the businesses managed well on hedging mechanisms and this, along with a reduction in the real selling price of goods, less stockouts and a reduction in competition from grey imports and smuggled goods drove an increase in the volume of sales.
Patel said the worsening delays in the payment of successful auction bids have hampered operations and resulted in increased working capital demands.
“At the year-end successful auction bids to the value of US$465,000 were unpaid,” he said. He noted that the Group’s validated legacy debts amount to ZAR 23.4 million, with ZAR 5.9 million of this having been settled leaving a validated balance payable of ZAR 17.5 million which has been provided for in the accounts at the auction rate.
Patel said this legacy debt continues to hamper relationships with suppliers and timeous supply of goods.
On the Class B Portfolio, Patel said that whilst a transaction is pursued, the Class B portfolio continues to only reflect a receivable of US$100,200 relating to 50.1 percent of the land owned by MedTech Distribution and based on the US$200,000 valuation of this land.
In terms of the operating environment, Patel said this has deteriorated and become more unpredictable since the year-end with doing business becoming more difficult.
“Considerable management time is spent in reacting to and dealing with various issues which businesses in most of the rest of the world do not have to invest precious time in.
“The competitiveness of the informal sector is largely unhindered by policy pronouncements resulting in the informal players becoming an increasing threat to the formal economy.
“Unfortunately, we envisage this trend continuing, resulting in a smaller tax net and increasing pressure on formal businesses,” he said.
He added that inflation has accelerated rapidly during the year, most recently reported at 132 percent in May, and will probably continue to do so with a lack of positive policy pronouncements having been witnessed thus far.
“Should the various recommendations by organisations such as the Zimbabwe National Chamber of Commerce or the Confederation of Zimbabwean Industries be implemented then we anticipate positive developments thereafter,” said Patel.
He indicated that the company will continue to focus on looking for good opportunities, concluding private equity transactions and assisting underlying portfolio companies in achieving their goals.
