eBusiness Weekly
Tawanda Musarurwa
Zimbabwean sugar manufacturer, Hippo Valley Estates Limited is putting in place strategies to minimise the impact of a Covid-19 that struck its parent company, Tongaat Hullet Sugar South Africa Limited.
South Africa has a significant number of confirmed Covid-19 cases, and a serious outbreak of the virus could disrupt business operations in that country.
Not only is Hippo’s parent company based in South Africa, but the former’s operations cannot run without some services and supplies from the parent company.
Tongaat Hulett’s sugar operations in Zimbabwe comprise of the wholly owned Triangle Sugar operation and its 50,3 percent holding in Hippo Valley Estates.
While Zimbabwe has recorded 132 cases of Covid-19 as at May 27, South Africa — notwithstanding a greater population — has recorded 24 264 cases as of the same period.
South Africa is shifting to a level 3 lockdown on June 1, which means increased movement and business activity, but attendant to the easing of restrictions is increased risk of a spread of the infectious virus. Zimbabwe is on level 2.
Hippo Valley commenced sugar milling for the season on May 5 following a successful off-crop programme.
The Zimbabwe Stock Exchange-listed company, which was declared an essential service when the Government imposed its initial lockdown on March 30, said it did not experience “any major disruptions to its operations”.
But with a treatment or vaccine yet to be developed for the novel disease, there is great uncertainty over the operating environment in the medium-to-long term.
“Although the country has recorded relatively few cases of infection and mortalities to date compared to other countries, the trajectory and impacts of Covid-19 are extremely uncertain.
“As part of its risk mitigation strategy, the company has developed a robust Business Continuity Plan (BCP) premised on the worst case scenario that the pandemic may take a turn for the worst and that the lockdown period maybe extended for most of the season with highly disruptive consequences for
the business,” said chairman Dan Marokane.
“Key considerations that have/are being factored into the BCP’s include: Adequacy of critical supplies for the duration of the lock down.
“This is particularly relevant considering the requirement of South African based services and supplies for the mill start-up phase and for the rest of the sugar milling season.
“This requirement has necessitated a close working relationship with procurement teams across the Tongaat Hulett operations in the region to ensure timeous delivery of key supplies particularly in relation to deliveries across borders.”
The chairman, however, said the company’s fundamentals are positive for the foreseeable future.
“Due to the special dispensation granted to the company as an essential service provider, the production and marketing of sugar in the local
and export market is progressing as planned.
“The demand for sugar in the local market has remained strong. As a result, the company is adequately funded and is able to meet its working capital requirements.”
Hippo resumed trading on the ZSE last December after it finally published its audited financial statements for the year ended March 31, 2019.
The trading suspension had been imposed by the local bourse after the sugar processor failed to meet three previous ZSE-imposed deadlines to publish the results.
Meanwhile the group said its financials for the year to March 31, 2020 would be published by the end of next month.
