Art Corp seeks $15m capital to retool operations

Published: 19 December 2013

HARARE- Art Corporation CE Richard Zirobwa told analysts yesterday that the Group is seeking $15 million capital to fund its operations over the next five years, adding that one of the shareholders has committed to arrange the funding.

He also said the same shareholder will organise $3 million working capital.

On batteries he said $3.1 million capital will enable Chloride to produce maintenance-free batteries in line with current technologies and lower the cost of production.

They also want to automate the production of Eversharp pens which is currently manually and labour intensive. Zirobwa said 70 people currently work on the assembly lines compared to just two when it's automated.

He said; "If we reposition and automate the business we will be able to reduce unit cost from 6c to 4c per pen. At 4c given our brand we will be competitive."

On the paper business he said they face three strategic challenges namely poor quality product emanating from the poor waste paper they are getting locally; lack of economies of scale and the marginal nature of the business which caused it to suffer more from rand weaknesses.

"We have looked at the tissue business in 2 ways; first to put money to improve product quality using the current waste paper we are getting and this will cost us $500k," said Zirobwa.

The second priority is to address scale issues by bringing in a new 30 tonnes plant in the next 18 months.

"The 15tonne plant we are using is too small and we require $5.4 million to put up a 30 tonne mill, to bring the total to 45t," he added.

He said problems in the printing industry impacted negatively on the quality of paper available locally and they were forced to import from South Africa.

"All these initiative will remain a pipe dream unless we get funding," he said before disclosing that a potential deal with a South African company went sour recently.

The company is also negotiating with the banks to restructure the tenure and rate of loan facilities.
- zfn