The Monitor :: Delta Dairies: where did the P300 million go?
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Last Updated
Friday 22 June 2018, 06:00 am.
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Delta Dairies: where did the P300 million go?

Anthony Siwawa, the chairman of the first citizen-owned milk processing plant, Delta Dairies, tackles the collapse of the milk company.
By Staff Writer Mon 21 Oct 2013, 17:52 pm (GMT +2)
The Monitor :: Delta Dairies: where did the P300 million go?








The Monitor: We want to know the outcomes of the Tuesday board meeting, regarding the way forward for the milk processing plant.

Siwawa: Please note that board deliberations of private companies are confidential to the company and are not for public consumption. Therefore we are unable to discuss board issues with yourselves

The Monitor: Is CEDA continuing to inject more funds into the factory? And if so, how much has been decided to be invested to rescue the factory?

Siwawa: The shareholders in Delta Dairies will consider all information available to them in order to make the appropriate decisions.

The Monitor: What has been decided about the fate of the workers who have not been paid for two months now? Will they enjoy back pays, and how soon?

Siwawa: The company will seek to meet its obligations as soon as it is practically possible, and in particular to resolve its employees' hardships with respect to their earnings.

The Monitor: How much has CEDA put into the company as bail-out funds up to now?

Siwawa: The CVCF, as the shareholder, has invested appropriate capital into the firm since its inception as part of its developmental objective to sustain a fledgling dairy industry. This has involved investing in the dairy industry as a whole over and above the factory. The investment by the CVCF is part of sustained efforts by key stakeholders to develop this industry

The Monitor:  How many times has the company called upon CEDA for bail-out?

Siwawa: Delta Dairies like all start-up companies has gone through a development phase which usually requires sustained capital support to ensure growth. As a startup company, Delta Dairies, particularly where it experiences high growth, would fundamentally be in a phase that consumes significant resources including financial, human capital and supply chain. It was therefore incumbent that it had the requisite support from shareholders.

The Monitor: Some fingers are accusing CEDA for the collapse of the milk plant, especially reasoning that CEDA is in the habit of appointing its own management, kicking out investors like in the case of Delta Dairies, what is your reaction to this view?

Siwawa: As indicated above a business consumes significant resources including human capital. It requires strong effective specialist management at all times in order for it to survive. Different capacities of management are required at different phases of the development of a startup. It is normal that there will be management changes as the company develops. Delta Dairies was not an exception.

The Monitor:  Why exactly did CEDA have to kick out investors from management in 2009, was it something to do with mismanagement of resources?

Siwawa: Please note answers to question 5 and 6 above

The Monitor: The Monitor also wants to know the roles, if any of the original promoters of the milk plant today (i.e. Sigwele and his Irish/Zimbabwean partner)

Siwawa: Dr Sigwele and John O'Rahilly are directors and shareholders in the company.

The Monitor:  How true is it that CEDA's decision to appoint own management and eject the investors was seen as hostile, and opposed by the investors?

Siwawa:

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The value that different shareholders bring to the table is a variety of views and ideas. This is of great benefit and always ensures that different ideas can be assessed in order to identify one that is of optimal benefit to the company.

The Monitor:  Would you say CEDA has handled the milk plant well, looking at where it is right now?

Siwawa: The development of a startup company is a process and not an event. The company has over the last five years grown from zero revenues to where it is today, notwithstanding the current challenges which have nothing to do with the management of the company. This company supplies the whole primary student population with milk, has a well known brand of the highest quality milk in the country and has ensured the development of two other dairy factories employing a significant number of people. It has through its establishment ensured a secondary supply and infrastructure supply industry that was non-existent six years ago. Through its efforts it has resulted in the establishment of a supply chain of raw milk which in the next year will contribute towards sustainable development of the milk industry.

The Monitor: P300 million worth of tenders from government in the last five years, still no life for the milk processing plant, critics are saying if you couldn't emerge healthy from this level of support what else can ever bring the milk plant to profitability. What actually went wrong with this level of government support?

Siwawa: Delta Dairies has over the past five years met its obligations with respect to the above-mentioned value of tenders. Delta Diaries is the only factory in the country with the required equipment to supply the 350 ml cartons requested by the government. This was a substantial investment by Delta Dairies. The business performed as expected and we have received tremendous support from government.

The Monitor:  Is it true that VPB is considering selling the milk plant to interested parties to recoup its investments?

Siwawa: The CVCF is a Venture Capital Fund that invested in the establishment of a dairy business and took an equity share in the project. As a VC fund it will look to the sale of its shares in order to recover the investment in Delta Dairies. The expectation is that if the business does well then there would be an appreciation in the value of its shareholding. If the company fails to perform then the likely result is a diminution in the value of its shares. Hence the risk that is faced by all Venture Capital investors. Thus the primary focus of the CVCF is to ensure that the business performs as its capital is tied to the performance of the business.

The Monitor: Is it also true that VPB is currently in negotiations with potential buyer(s) for the milk plant?

Siwawa: The CVCF is always engaged to identify opportunities to better the performance of its investments as it is an active partner in the companies it invests in.

 

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