eBusiness Weekly
Kudzanai Sharara
Zimbabwe Stock Exchange listed entity Seed Co, has received an expression of interest for the acquisition of its 40 percent stake in Quton’s Tanzania and Malawi-based operations that have been earmarked for disposal, chief executive officer Morgan Nzwere has said.
Nzwere told Business Weekly on the side-lines of the pan-African seed giant’s results briefing last week that Maharashtra Hybrid Seed Co Ltd (Mahyco), India’s biggest private seed firm, had written to the Group expressing its willingness to acquire the stake.
He, however, said there was no timeline as yet on when a deal can be struck.
“Mahyco wrote to us expressing their interest to buy our stake in those two territories, but I cannot say when a deal will be struck, but our intention is to sell,” Nzwere said.
At the results briefing Nzwere said Quton’s “Tanzanian and Malawian operations are still struggling and we are actually trying to offload our remaining 40 percent in those businesses.”
Mahyco already owns a majority stake in those businesses after acquiring a 60 percent stake in Quton in October 2014.
Mahyco was brought in as a technical partner with Seed-Co hoping at capitalising on technology and skills transfer, a process which is still in progress.
At the time of the deal, Nzwere said the technical partner was expected to bring capital and expertise that will see the company expanding and consolidating its business locally as well as in the region.
While the partnership had flourished in some areas, Malawi and Tanzania had continued to struggle.
The overall Quton business had, however, continued to perform and had got Government’s order of over 800mt resulting in a $1,3 million contribution to Group profit.
On the vegetable side, Nzwere said the rolling out of the joint venture business is continuing saying the business had reached breakeven point for the year to March 2018.
“The business, which is a joint venture with HM Clause is now operational in most markets and has been capitalised in order to develop the new markets,” he said.
Nzwere said the business was also pursuing one or two acquisitions in the vegetables business.
“We are quite bullish about that unit, it has taken a bit of time to completely blend into the rest of the Group but the turning of the market and the growers beginning to adopt hybrid vegetable seeds which are now improving margins in that business it’s really exciting for us,” Nzwere said.
Meanwhile Seedco reported a 5 percent growth in profit to $21,4 million buoyed by increased other income from commission based sales and exchange gains, reduced finance costs at $2,5 million from $4,1 million and strong performance of the associate cotton seed business.
Financial director John Matorofa, said income from associate company Quton had also improved due to increased volume of cotton seed sales to the Zimbabwe Government inputs programme.
With the increased profits, the Group declared a normal dividend of 2,95 cents at three times cover plus an additional special dividend of 1,48 cents to bring overall cover to 2 times.
This was despite a 5 percent revenue drop to $128,5 million from $134,6 million in the prior year comparative. There was however growth in the other lines of income, namely commission, non-seed sales, doubtful debt recoveries, up to $4,4 million from a negative $98,379.
