eBusiness Weekly
Kudakwashe Mhundwa and Michael Tome
Proplastics’ latest factory upgrade will see the listed pipe-maker increasing production capacity by at least 99 percent to 32 000 tonnes per annum from the current 8 000 tonnes that is being produced per year, company management has revealed.
In an interview with Business Weekly Proplastics chief executive officer Kuda Chigiya, said the factory that was constructed in 1965, is no longer suitable for operations.
“The reason for us building the new factory is that the current factory setup that we have at the moment was built in 1965 and it is no longer suitable for our operations and we had to expand.
“The new factory is a brand new factory that we have started constructing on a 5 200 square metres area and its going to house the old equipment as well as the new equipment.
“From a tonnage point of view we are looking at increasing our tonnage from about 8 000 tonnes a year to about 32 000 tonnes per year and the efficiencies that are going to be derived at this new factory will make sure that our pricing and our competitiveness will remain relevant in the market.
“With additional investment that we want to do in 2019 precisely in the second half of the year, we want to buy the biggest pipe diameter extractor from Germany, which is going to be able to produce a 630 millimetre diameter pipe,” said Chigiya.
He said construction work, which is now 98 percent completed, is being done at a cumulative cost of about $10 million and is expected to be complete by the second half of the year.
“Works on the factory are 98 percent complete because we were building it from scratch. We need to put water, air, electricity, lighting, fire fighting equipment and the auxiliary equipment so we are expecting it to be operational by July this year.
“At the moment of cause there is a mixture combined value of RTGS and US dollars, we are looking at about RTGS$10 million that we have pumped into that factory, the machinery what we have put in total we are looking at about US$2,5 million of proper currency because we are importing this from Germany and Italy,” he said.
On performance, the firm’s profit after tax grew by 158,4 percent to 3,5 million from $1,4 million 12 months ago as revenue jumped by 50 percent to $24,1 million from $16,1 million recorded in the prior comparable period.
Gross profit recorded an 85,2 percent growth while sales volumes surged 5 percent to 5 261 tonnes from around 2 000 tonnes in 2017.
The concern attributed the buoyant revenue performance to procurement (sales) by local authorities, mining, borehole drillers, merchants, irrigation and exports.
Local authorities topped sales by 259 percent followed by mining whose uptake was 139 percent. The company indicated that exports contributed 4 percent to the turnover with 67 percent of the exports going to Zambia. However, the company bemoaned foreign currency challenges for the importation of raw materials and is yet to see the impact of the policy pronouncements made monetary policy, further stating that it had received less than $100 000 through the interbank exchange system.
In other developments the company is eyeing to venture into regional countries like Mozambique, DRC and Malawi despite risk associated with the countries.
