Diversified agricultural business, Interfresh Holdings has secured a $5 million loan facility from the Industrial Development Cooperation of South Africa to shore up its operations that have remained in limbo as a result of liquidity constraints.
Interfresh chief financial officer, Tawanda Namusi told shareholders at the company’s AGM last week that the company had however since secured the loan under a six-year agreement.
“The $5 million facility took time to be accessible. We only got to access it this year in March,” said Namusi.
He said $2,5 million will be used as capital expenditure for irrigation system upgrade, agriculture equipment and delivery vehicles in order to restore and improve operational efficiencies.
It will also be used to boost capacity utilisation and reduce repairs and maintenance expenses.
“The other $2,5 million will be used as working capital, for agriculture inputs, chemicals, fertilizers and to import fresh products from South Africa,” said Namusi.
Interfresh chief executive officer Lishon Chipango said all business units experienced working capital constraints and operational inefficiencies deriving from old plant, machinery and equipment.
“The micro-economic environment is relatively stable but lack of external credit continued to cause liquidity problems,” said Chipango.
He said the company recorded a 30% growth in turnover. Gross margins fell from 29% to 25%.
Chipango said the citrus division continued on its recovery path after years of inadequate inputs during the period of hyperinflation.
He said the first phase of irrigation system was successfully completed in time for the 2010/ 2011 fruit set.
The first phase comprised laying new main and sub-main lines and conversion of dripper into new-jet irrigation system for the 75-hectare lemon section.
“The second phase of the irrigation upgrade is planned for 2011. A new management team headed by an experienced citrus production professional from South Africa is now in place,” he said.
The company noted that prolonged weak flower export prices and low yields from ageing bushes resulted in the greenhouse infrastructure being switched to vegetable production in December last year.