Proplastics Limited requires at least US$2,5 million per month for its recently constructed US$8 million factory to operate at installed capacity.
The company successfully commissioned its state-of-the-art new factory and automated mixing plant housed in a complex spanning over 6 000 square meters of PVC and HDPE pipe manufacturing facilities.
The manufacturing facility is expected to improve production capacity from the current 9 000 metric tons to 15,000 metric tons per annum and the new setup will allow Proplastics to meet domestic demand as well as exports into the Sadc region.
Proplastics chief executive, Mr Kudakwashe Chigiya, told The Herald Finance and Business that the factory is now fully functional, and the attention has shifted towards beefing up working capital to sweat out the investment to its installed capabilities.
“Our monthly requirement is US$1,6 million and currently we are getting 24 percent of this coming from the Reserve Bank of Zimbabwe (RBZ) auction,” he said.
Mr Chigiya said it is expected that demand for the company’s products will continue to grow buoyed by the various sectors of the local economy.
He noted that the RBZ foreign currency auction system while meeting 24 percent of the foreign currency requirement has not been able to meet the company’s foreign currency needs hence it is looking at expanding its export market base to generate more foreign currency for working capital.
“We are looking to expand our exports to countries such as Zambia, Malawi, Mozambique and Botswana,” he said.
Mr Chigiya noted that during the 2021 financial year, the company’s exports grew by 6,3 percent. According to the company’s chairman, Mr Gregory Sebborn, due to shortage of working capital, the company’s borrowings for the year increased significantly with the debt to equity ratio now sitting at 16 percent.
The Zimbabwe Stock Exchange (ZSE) listed company manufactures and markets plastic pipes and fittings, specializing in the production of polyvinyl chloride (PVC), high-density polyethylene (HDPE), low-density polyethylene (LDPE) pipes and related fittings.
The pipes and fittings are manufactured for various applications in irrigation, water and sewer reticulation, mining, telecommunications and building construction.
Sebborn said there is an upsurge in demand, especially from the mining sector as well as other sectors. He indicated that the optimisation of the Group’s working capital, in particular raw material stocks, will depend on foreign currency availability on the Auction platform as current allocations are well below the Group’s requirements.