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IDC struggles to sell subsidiaries

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THE Industrial Development Corporation (IDC) is still struggling to attract investors for subsidiaries it put on the market months ago.

VICTORIA MTOMBA
BUSINESS REPORTER

IDC general manager Mike Ndudzo said the poor economic activity was hampering the selling of subsidiaries to investors.

“As you are seeing in the economy things are not well. Nothing has changed so far in the uptake of our subsidiaries.

“Investors are making inquiries to buy the subsidiaries,” he said.

The corporation expects to raise substantial amount of money from the sale of the assets, but $100 million would be required to approve some of the applications.

An application for the funds has been made to treasury. IDC plans to dispose of Sunway City residential area, IDC House, Stone Holdings, Zimbabwe Grain Bag, Allied Insurance and Zimbabwe Copper Industries and others.

According to documents from IDC the shareholder equity of the corporation stood at $107 million as at December 31, 2012 with $89 million being the corporation’s share.

The company’s shares have been declining since the country adopted the multi-currency system due to overall net losses, impairments, uneconomic capacity utilisation, import parity competition and thin equity.

IDC profit generation is not adequate to cover debt servicing on short term and debt and to refurbish plant and equipment or sweat its assets that are old and insufficient to raise capacity utilisation to economic levels.

Ndudzo told Parliament last year that the corporation had been self-funded for a long period of time as the government could not fund it. Ndudzo also told Parliament that since 2009 the corporation had been paying its staff half salaries to date in a move to sustain its operations.

The challenges of low capacity utilisation are market wide challenges with the country’s capacity utilisation level now standing at 30% according to the Confederation of Zimbabwe Industries figures.

IDC subsidiaries include Almin Metal Industries, Amtec, Sunway City, Allied Insurance, Zimbabwe Copper Industries, Deven Engineering, Willowvale Mazda Motor Industries, Sable Chemicals and Zimphos.

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