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HomeBusinessTongaat Plays Down Parent Company Crisis

Tongaat Plays Down Parent Company Crisis

Zimbabwe Stock Exchange-listed sugar producer, Hippo Valley Estates Limited says the placing of its parent company- Tongaat Hulett Limited South Africa under business rescue has no bearing on its operations.

Tongaat wholly owns Triangle Sugar Corporation (Pvt) Ltd a duly registered Zimbabwean entity, which owns of Hippo Valley Estates and Triangle Ltd.

Tongaat which was recently rocked by allegations of mismanagement and financial mis-statements was placed under business rescue in October this year as a result of its debt burden of R6.3 billion.

This was followed by the resignation of the company’s board members which sent shivers down the spines of some shareholders of the group’s local subsidiary, Hippo Valley.

Speaking to local media editors this morning, Hippo Valley chairperson, Canaan Dube said the business rescue process at the parent company will not affect its operations.

“Regarding the Zimbabwean operations, the business rescue practitioners (BRPs) have confirmed that operations outside of South Africa are not under business rescue and are not impacted by the business rescue process of THL in South Africa.

 “Zimbabwe’s sugar operations are financially sound, and continue trading in the ordinary course of business. They remain self-funded, operational, and subject to the usual high level of sound corporate governance principles, policies, and procedures,” said Dube.

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Hippo Valley posted a ZW$ 23 billion interim profit in historical terms during its six months to September largely attributed to price reviews that were effected to hedge against inflation. The company however recorded a 5 percent decline in sugar sales owing to huge influx of imported sugar following the SI 198 which allowed duty free cheaper imports into the country.

On operations, Hippo Valley intends to increase its capacity utilization at its sugar mills.

“We are currently at 75 percent capacity at our sugar mills. Unit cost of production will go down when we increase our capacity to 100 percent,” said group CEO Aiden Mhere.

He also said starting in the next financial year, the group will invest in harnessing carbon dioxide from the ethanol production which it could sell to beverage making companies who are currently importing the commodity.

Hippo Valley Estates in partnership with its sister company Triangle Ltd, has various projects and initiatives it is undertaking. The Government and banks are progressing the cane expansion project, Project Kilimanjaro by developing a further 3 300 hectares (ha) to sugarcane in addition to the original 700 ha for the benefit of new indigenous farmers at an estimated cost of US$50 million.

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