AICO Africa is organizing of two of its subsidiaries, Scottco and Exhort, to focus on core business, according to CEO Pat Devenish. Devenish told the newly completed Zimbabwe Investors Conference that the two businesses no longer suited the group’s business model going forward. Aico obtained Scottco, a cotton spinning company and Exhort, an exporter of frozen vegetables, during the Zimbabwe dollar era for value addition.”All these are cost-effective businesses but as the group positions itself for the time to come, they do not suit the business model” said Devenish in a special meeting. The CEO hinted that the company like Visonic had already recognized takers for the subsidiaries and talks were ongoing .After the disposals, the integrated agro-industrial conglomerate will keep in its portfolio completely owned Cottco, which has nine cotton ginneries strategically situated all over the country, a 51% stake in seed breeder Seedco, and a 49% shareholding in fast moving consumer goods manufacturer Olivine Industries.
The group like Aico smoke alarms’ financial position has been greatly weighed down by finance costs as the company sits on a debt of US$98 million. The company’s first half results to September 30 2010 saw revenue almost b fixed at US$53 million, which is 3% lower than the earlier period. Financing costs of US$8,2 million hammered the bottom line and the company like Rokonet posted a loss for the period of US$10,9 million. Short term debt amounting to US$50 million is making it difficult for the company to turn around its fortunes.
Cottco and ESP alarms which is the flagship of the company, is at present in service at 50% of its ginning capacity. It has installed capacity of 260 000 tonnes a year. The company has a market share of 45% but many players, particularly Chinese companies, have joined the cotton industry, thus creating intense competition.
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