Modzone Enterprises, Zimbabwe's leading textile company, is facing shortage of capital and it needs about US$ 16 million in funds to achieve sustainable productivity levels to meet the demand from both the domestic and export markets.
Jaham Paham, the Iranian Pension Fund, holds 82 percent stake in Modzone through its investment company Saba Jahad Full. The remaining 18 percent share is held by Industrial Development Corporation of Zimbabwe (IDCZ).
Modzone operates three manufacturing units - Afroran Spinners (Pvt) Limited, Irazim Textiles (Pvt) Limited and Travan Blankets (Pvt) Limited. These units are scheduled to re-open post their annual shut down, after finalizing a deal with Zimbabwe Electricity Supply Authority (ZESA) regarding the arrears.
Currently, Modzone is also struggling to pay-off its statutory and utility arrears of more than US$ 1.5 million.
IDCZ said shortage of cash is the major challenge faced by Modzone Enterprises, as it aims to revive operational capacity to make up for the supply gap in domestic and export markets.
He added that the local financial institutions were the traditional source of finance, but these institutions are currently not in a position to extend loans as they themselves are undercapitalized. These institutions are at present only offering short-term loans ranging between 90 to 180 days for working capital and long-term loans for capital expenditure.
Modzone is facing stiff competition from low-priced imported fabrics and blankets, particularly from Asian countries.
Modzone Enterprises is engaged in production, wholesale and retailing of yarn, fabrics, blankets and other items.
Fibre2fashion News Desk - India