Retail anchors steady Sefalana results
Mbongeni Mguni | Friday August 1, 2014 16:20
Figures unveiled by group MD, Chandra Chauhan yesterday, indicated that the 40-year-old firm’s pretax profits had more than doubled in three years, while revenues were up 25 percent over the same period.
Sefalana’s wholly or partly owned divisions include consumer goods – a portfolio consisting of 28 wholesale stores and 16 Shoppers’ retail shops – Commercial Motors, Mechanised Farming, a manufacturing wing comprising Foods Botswana and Kgalagadi Soap Industries as well as a property portfolio locally and in Zambia.
Sefalana also controls 13 stores across Namibia acquired between January and July this year.
According to Chauhan, the consumer goods division contributed 89 percent of the group’s revenue and 58 percent of pretax profits in the full year under review.
However, Commercial Motors and Mechanised Farming’s revenues were down 33 percent, while the manufacturing wing’s revenues were down eight percent over the year. The property sector bucked the trend to report a nine percent increase in revenues at P31 million. “Conditions have been difficult in consumer goods over the last two to three years affecting consumer spending and we have also witnessed lower government spending,” Chauhan said.
“We are a bit disappointed with the vehicles and mechanised farming because we were working on a large tender that did not happen.
“In manufacturing there was a delay of about four months before the Tsa Bana and Malutu tender kicked off. Whenever there’s a delay, instead of making a profit that month, we make a loss of up to P1 million.
“These are things that are out of our control, but we are in constant communication with government on these matters.”
Despite the depressed performance of some divisions, Chauhan said Sefalana had “very good news” for shareholders in the current year and going forward.
The news includes the forecast of an P800 million contribution to group turnover from the 12 new Namibian stores in the first 10 months of trading and a P30 million contribution to profit.
In addition, Commercial Motors has a P150 million order to be fulfilled before the end of the current financial year as well as further government orders for vehicles in the 2015/16 financial year.
At Foods Botswana, Chauhan said performances in the current year would be boosted by record regional grain production – the highest in 30 years – which would enable competitive tendering and enhanced profitability. Kgalagadi Soap Industries has also experienced an upsurge in orders from Zimbabwe – amounting to P4 million per month – as authorities in that country have slapped an import tariff on all soaps except those from Botswana and Malawi.
Chauhan said property would be one of Sefalana’s focus areas going forward, having realised capital gains of 11 percent in the just ended financial year. The group has secured P100 million loan funding for the development of several properties in Botswana, including its new multimillion headquarters in Broadhurst.
The group will also develop its 42,000 square metre holding in Setlhoa village near the Airport turnoff, into a mega retail centre.“We are planning a very large hyper Shoppers with in and out drive through, ample parking near the store and this will be our flagship store,” Chauhan said. “Puma Energy will be developing a large station with six or seven bays there as well.” Sefalana is also finalising a joint venture with a South African company for the supply of 99 fruit and vegetable lines for Shoppers stores and 38 lines for the hyperstores, with a distribution centre to be established in Gaborone North.