Auto Tyres retrenches as revival fails

Auto Tyres retrenches as revival fails
Published: 17 May 2018
AUTO Tyres Zimbabwe has retrenched its entire staff after efforts to recapitalise the company, which stopped operations in 2016, failed, The Financial Gazette reported.

A notice seen by The Financial Gazette informed employees of management's decision to curb costs through retrenchment.

"Management has made a decision to retrench staff in order to curtail costs. The effective date of retrenchment is April 30, 2018. Retrenchees shall be paid notice pay equivalent to three month's salary. They shall be paid a retrenchment package, calculated as one month's salary for every two years served," reads the notice sent to employees.

Management said efforts to recapitalise the company had not been successful.

It said the tax system and cheap used tyre imports continue to affect viability of the company.

"Recapitalisation efforts and initiatives to keep the company operating were made by management to improve the situation without success.

"However, the tax border systems still pose a challenge and second hand tyres continue to be a problem on the market. Funding from NSSA (National Social Security Authority), which was highly hopeful, failed at the 11th hour," it said.

The retrenchment notice listed shorter working hours, working during off-peak hours to reduce the electricity bill and slashing the price of tyres to compete with Chinese imports, as some of the management's efforts to maintain operations and viability over the years.

Auto Tyres, which closed in November 2016 due to foreign currency shortages, had been reportedly seeking assistance from several financial institutions, including NSSA.

At some point in 2017, the company was engaged in an ex-employee registration exercise in anticipation of high trading volumes in 2018.

In July last year, the company reportedly acquired modern tyre-making equipment which was envisaged to widen its range of tyres.

In e-mailed responses to The Financial Gazette, Benson Samudzimu, a company director, said management would continue seeking for capital while it remains in care and maintenance. He said the board was optimistic that the environment created by the new government will open up opportunities.

"The company is presently under care and maintenance while the directors are pursuing cost effective working capital funding options. The directors remain hopeful that the company will be back in business soon given the new impetus from government to reopen local companies and attract foreign investment. Government has already initiated several programmes to achieve those objectives," Samudzimu said.
- fingaz
Tags: AutoTyres,


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