Wet Blue Industries seeks $4m for recapitalisation

Leather liming and tannery drums at Wet Blue Leather Tanning Industries at Donnington industrial area in Bulawayo

Leather liming and tannery drums at Wet Blue Leather Tanning Industries at Donnington industrial area in Bulawayo

Dumisani Nsingo, Senior Business Reporter
ONE of the country’s biggest tanneries, Wet Blue Industries needs about $4 million to recapitalise its operations and maintain its status as a going concern.

Wet Blue Industries’ judicial manager, Mr Crispen Mwete of C Mwete and Company Public Accountants said there was a need to inject capital into the company to enable it to purchase machinery, process raw hides and skins up to crust leather so as to boost its revenue generation. Wet Blue industries is a subsidiary of the Cold Storage Company and is located in Bulawayo.

“We are advocating for further value addition from wet blue leather to crust leather as we can afford to sell the (crust) product on the local market. As for wet blue, it’s solely for the export market and if the markets are flooded we are affected. We need $ 3,8 million to move further from wet bluing to crust and that amount is inclusive of operational capital,” said Mr Mwete.

Crust leather is the term applied to leather, which is dried after tanning but has not yet been dyed. He said the company has entered into an agreement to process 6 000 hides a month from Zambezi Tanners into wet blue.

“We have reached a tentative position with Zambezi Tanners, to process 6 000 hides per month for it and given that we have a client, which we process 1 000 to 1 500 hides for, that makes it good business for Wet Blue Industries. There are a lot of things that we can attain with the revenue we will be obtain from that business such as repairing of ancillary machinery. Our threshold is (processing) 4 000 hides and with more than 6 000 hides a month we are surely on the road to recovery especially if the contract (we entered with Zambezi Tannery) is sustained for a long period,” said Mr Mwete.

Wet Blue Industries was forced to embark on nominal operations at the beginning of the year after its power supplies were cut over an outstanding debt to Zesa Holdings.

“We had our power supplies cut due to an outstanding debt accrued prior to the company being put under judicial management and even when it was now under judicial management. We however, reached an agreement for a payment plan with Zesa (Holdings) and it has since reconnected us after partly payment of what it had allotted us to pay,” said Mr Mwete.

Wet Blue Industries was placed under provisional judicial management in September 2014 after business went down following shortage of inputs after the major supplier, CSC started experiencing problems.

This led to the closure of the company in 2011.

It owes its creditors about $1,5 million with its biggest creditor being its workforce which it owes about $300 000 in salary arrears.

At its peak, the tannery used to process 1 200 hides a day using 18 tannery drums and employed over 230 workers.

“We had put everyone on unpaid leave after the international price of wet blue fell which culminated in clients taking their hides before processing which made pure business sense as the cost of wet bluing then was now more than the market price.

The fall of international prices in 2016 also had ripple effects on the company’s imminent export deals with a South African company, African Hide Trading and another Italian company.

“Currently we have 33 workers for this project and when we had our electricity cut we resorted to using a generator and had to make use of only two tannery drums and now with the restoration of power we are looking at having up to five tannery drums,” Mr Mwete said.