SUGARCANE miller, Hippo Valley Estates Limited (Hippo) has set aside US$11 million as capital expenditure for its current financial year ending March 31, 2026, with this spend earmarked for improving production.
In the prior year ended March 31, 2025, the group spent between US$11 million and US$12 million in capex, which went towards retooling its plant and improving the movement of sugarcane.
Consequently, sugar production rose 13% to 219 112 tonnes during the period from the prior year.
In June, the company revealed it remained focused on advancing its strategic growth plans, with priorities centred on increasing sugar production, expanding the revenue portfolio, containing costs, and generating positive cash flows.
The plans were announced amid significant challenges such as water availability, electricity supply interruptions, and a complex operating environment buoyed by liquidity constraints and exchange rate volatility.
“Last year, when I did my presentation, I told you we were going to spend between US$11 million and US$12 million retooling the plant and also trying to retool our movement of products in terms of cane haulage,” Hippo chief executive officer Tendai Masawi told NewsDay Farming in an interview.
“This year, the plan is to spend about US$11 million; that is what we intend to do. By the end of October, we would have finished our crushing season for the mill.
“That is when we start doing our re-capex. We run for three months on off-book capex, replacing all the auxiliary equipment in the factory, and so far, we are geared for that.
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“We have got the forex, skills, technical consultants who we have onboard, so we are confident we will be able to do it. That is why our efficiencies have gone up.”
Through its business continuity framework, Hippo has completed a successful off-crop maintenance programme and commenced retooling its agriculture operations with adequate harvesting and haulage equipment.
These initiatives are expected to support improved milling uptime and operational efficiency in the coming season.
“We have got a lot of capital projects. We have got offtake maintenance where we have to strip everything and retool the plant,” Masawi said.
Part of the plan to raise the capex is for Hippo to increase its offerings to the informal sector and export market, the United States and Europe, all to generate foreign currency.
The informal sector is estimated to generate US$14,2 billion annually and has US$2,5 billion in circulation at any given time, according to the central bank.
“We have supplied to the informal sector; you cannot ignore them. They are here to stay; you cannot ignore them, and reality tells us that they are here to stay and they’re thriving,” Masawi said.
“So, we need to find a way of saying, apart from the informal sector that is there, which I think the government has helped in stabilising the currency and some of them are coming back in terms of business, we continue to find ways of feeding them directly, whether through the wholesalers or direct supply to them.”
He said the firm had minimum thresholds of what they could supply the sector.
“Right now, I can safely say about 30% of demand is going through the informal sector.
“You cannot rule out that come the end of the year it will be 50/50. Why? Because the government is also trying to clamp down on illegal imports that have been coming in.”
In terms of exports, Hippo has agreements to export into Botswana, Kenya and South Africa, quotas that they must meet according to the group’s parent company, South African agriculture and agri-processing firm, Tongaat Hulett Limited.
“We have Sugar Industries Botswana. It’s held as 33%, 33% and 33% by three players, so we export there based on our quota. We have quotas that we supply, so we have an agreed quota for that. We are also supplying into South Africa,” Masawi said.
“We have got quotas for that. And, we are also having to supply Kenya and the Democratic Republic of Congo, we have got quotas for that, so we are supplying efficiently.
“Apart from that, we also have the US tariff quotas that I have told.
“We have done 12 000 tonnes (exports) as of last week (September 14 to 20), and we have another 36 000 tonnes that is going to be going to Europe.”
