Published: 11 December 2013

Closed Bulawayo based textile firm, Merlin, requires a minimum capital injection of $1,2 million to survive insolvency, the company's judicial manager has said.

The firm was placed under provisional judicial management for the third time in December 2011 since its establishment in 1954 after it failed to address working capital constraints and labour challenges, the New Ziana reported.

The company's woes were made worse by competition from cheap imports.

At the time, Merlin employed 253 workers and was operating at 20 percent capacity. Judicial manager Dr Cecil Madondo of Tudor House Consultants said the textile firm required a further $2 million in long term capital to bring the total investment needed to $3,2 million.

"Merlin requires $1.2 million in the short term and about $2 million," he said.

The breakdown of the short term expenditure shows that the company requires $755 000 for raw materials, $250 000 for operating costs, $97 730 for consumables, $73 260 for weaving plants, over $50 000 for repairs and $16 000 for plant spares.

The firm has since applied for a $1 million bail-out under government's $40 million Distressed and Marginalised Areas Funds (Dimaf) through the Central Africa Building Society.

A number of companies have been supported with working capital under Dimaf this year, with a total of $24,7  million having been disbursed between January and October.

- New Ziana

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