DEFUNCT textile firm, Merlin is set to tap into the Special Economic Zones model following its proposal to establish a ginnery expected to add impetus to the firm's survival when it re-opens.
Under the Special Economic Zones (SEZs) initiative, which is in sync with the value addition and beneficiation thrust under Zim-Asset, the Government has earmarked Bulawayo for clothing and textile and the leather sectors.
Responding to written questions from Business Chronicle recently, the judicial manager of the Bulawayo-based company, Mr Cecil Madondo said:
"Merlin is not only focused on napkin production but also producing a range of high quality and high demand products such as face towels, morning gowns, bed sheets, baby carriers, bath mats, wrappers and kitchen towels.
"In addition, we have also proposed that the company sets up its own ginning plant, which will create a complete production cycle and also synergise with cotton growers."
In developing Merlin's business rescue strategy, he said they noted suggestions from some stakeholders regarding the company's products in the market due to technological innovations and changes in trends.
"The setting up of a ginning plant would reduce production costs while increasing the value of the business through additional revenue from lint sales and by-products such as seed oil and animal feeds," said Mr Madondo.
Through the proposed ginning plant, the textile concern intends to produce and sell yarn, which was also on demand locally and in the region.
During her tour of Bulawayo industries, which began on July 24 and ended on August 30, Industry and Commerce Deputy Minister Chiratidzo Mabuwa challenged clothing and textile companies in Bulawayo to invest in cotton spinning and ginning plants to enjoy larger economies of scale under the SEZs.
Once Zimbabwe's industrial hub, Bulawayo was renowned for heavy industries in different sectors including clothing and textile firms.
The Government expects a bumper harvest of cotton this year on the back of heavy rains the country received in the last season.
Merlin, which was placed under judicial management in 2012 for the second time in 10 years needs about $2.1 million in the short-term.
In the long-term, the defunct company requires at least $30 million to operate at full capacity.
Mr Madondo is on record saying due to some technical delays in securing an institutional investor to inject the required $30 million, a resolution has been made to resume operations with a minimum capital.
The firm is ready to resuscitate production after it recently identified a joint venture partner to invest additional capital.
As a result of the Non-Disclosure Agreement with the partner, the textile company was at present not able to reveal the investor.
It is envisaged that within 12 months of re-opening, Merlin would move out of judicial management.
Meanwhile, the judicial manager is expected to convene a third creditors and members meeting in Bulawayo on September 27.
During the upcoming meeting, among other issues to be discussed, Mr Madondo would present details of the Non-Disclosure Agreement.
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