The troubled liquor trading arm of the Harare City Council, Rufaro Marketing (Pvt) Ltd plans to diversify into real estate business in a move aimed at unlocking shareholder value.
Rufaro Marketing chairman Philip Mataranyika said Rufaro had a big property portfolio, which they could leverage on in the absence of adequate capital.
We think converting our operations into real estate business would help unlock shareholder value while preserving the assets that have been built over years, said Mataranyika.
Besides this model does not require any more working capital than we already have.
Rufaro Marketing had disposed of one of its outlets and leased out 25 to TN Financial Holdings and a substantial amount was raised from TN and disposal deals.
He said the disposal of Telford Bar helped reduce part of their Delta Corporation debt and the remainder was cleared through other financial arrangements with them.
Other creditors remain unpaid and efforts are underway to clear outstanding amounts. The amount raised from the two transactions was not applied to working capital as it was inadequate to pay off all debts accrued since the advent of dollarisation, he said.
Mataranyika said the revival of Rufaro Marketing in its current form and state would be difficult. He said the business was premised on an outdated and tired model. The public bar concept in which the company was strongly entrenched was gradually dying.
We are working on revolutionising the business model. The current business model requires the injection of a huge amount in capital which we dont have, said Mataranyika.
As it is, the business is seriously undercapitalised and chances of recapitalising are slim given the liquidity crunch in the market.
Mataranyika said workers who stood to lose their jobs at Rufaro Marketing might get better chances of employment with TN Financial Holdings.
He said any change in a business model brings with it some uncertainties, which may include the creation and loss of jobs, adding in the case of Rufaro, the long-term benefits which would result from the decision that has been made far outweigh the immediate pain.
More employment opportunities will be created once TN starts rolling out their business model in the 25 outlets, said Mataranyika.
He said the numbers of those who would be retrenched were yet to be determined as TN was yet to start recruiting.