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Forex shortage: Innscor looks within

By Natasha Chamba

Diversified group, Innscor Africa Limited says it is now leveraging on its domestic fast-moving consumer goods line to cushion itself from high foreign currency requirements.

Innscor Africa
Innscor Africa

The company said although it needed between US$15 million and US$18 million per month for its import requirements, the support it was getting from the Central Bank was not enough.

As such, Innscor board chairman Mr Addington Chinake said the company was capitalising on import substitution approaches.

“We require forex because a lot of inputs we use are imported. Our requirements vary between US$15 million and US$18 million per month for packaging materials and production,” he said.

“We do get support from RBZ, especially for wheat, soya flour and packing but RBZ has its own difficulties, which impacts on the level of support we get and the support is inadequate.

“Obviously we have initiatives to cushion ourselves. In the last four years, we have spent US$200 million to US$300 million in capex (capital expenditure) to domesticate the production of fast-moving consumer goods. We believe import substitution is the way to go.”

The group said it has set aside a new capital budget on expansion and maintenance but did not reveal the amount. Mr Chinake said Innscor will continue to invest domestically so that raw materials requirements will be substituted.

“Lately you have seen us in agriculture dealing with soya farmers and wheat farmers. We are investing so that raw materials requirements will be substituted or reduced. We have a capex budget, which will be impacted by the environment. We have an expansion capacity. We opened Probrands Dairy and we also have a maintenance budget to ensure that we continue existing,” he said.

The group said its gross profit margins during the first quarter of 2019 financial year remained under pressure due to foreign currency and inflationary pressures, resulting in cost increases for both local and imported materials. The Chronicle