GB Holdings sees increase in capacity after $1 million Dimaf funding

Published: 26 June 2013
GB Holdings expects an increase in capacity utilisation, sales volume and an overall cost reduction after the group accessed $1 million funding from the Distresses and Marginalised Areas Fund (DIMAF).

MD Wilbroad Tsuroh told the AGM this morning that the Dimaf facility has been the first major step in addressing the working capital challenges of the company.  He said the group had turned to Dimaf after failing to get attractive offers for the Cernol Chemicals industrial buildings under a sale-lease to buy arrangement.

"Due to the prevailing economic environment we failed to secure a buyer for the property," Tsuroh said. At last year's AGM shareholders approved that the company proceeds to raise funding using its land and buildings in order to fund the business's requirements. They expected to raise $4 million from the disposals.

He said the Dimaf facility came with strict conditions, the major one being that funds would be used for raw materials procurement. The cost of funds had gone down as a result to around 16% from average 30%. Tsuroh said Dimaf was at 10%.

He said the facility together with policy support initiatives form the basis for an improved out turn in the later part of 2013.

The group anticipates improved procurement efficiencies and would now buy to the best of their advantage and improve on their gross margins.

Tsuroh said gross margins were currently at 26% but when raw materials are in place performance should level off at 35%.

He said at the moment the group had experienced improved sales and had been able to turnaround orders at the same time been able to keep significant stocks. Since raw materials started trickling in there had been a significant improvement in the last two months with volumes increasing 50-60%.

 "Going forward, the group expects the facility to enhance market competitiveness and convince the market that we are able to meet orders."

However additional funding is required to address other operational inefficiencies so that profitability is enhanced.  "We are still challenged and not out of the woods as yet since we only managed to secure $1 million out of a total requirement of upwards of $2 million."

At the moment contribution from Cernol and General Beltings was almost tied by the Cernol products had better margins. However the group had decided to discontinue candles due largely to the shrinking of the market as more people are now using solar lambs and other rechargeables.

At the AGM, directors fees for the past year were approved at $72 222 and auditors fees at $33 593.
- finx
Tags: GBHoldings, Dimaf,

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