• Revenue up, despite currency fluctuations
• Namibia operations improve
Sefalana Holdings Limited, the first company to trade off the Botswana Stock Exchange (BSE) has said that its retail division is now gaining traction in the Botswana market as the number of stores increases and awareness of the Sefalana brand improves.
The retail supermarket group, headed by Chief Executive Officer Chandra Chauhan, has been under a vigorous expansion drive lately, pushed by the quest to increase its market share and boost earnings.
At the beginning of the financial year, Sefcash operated three Hyper Stores (Sefalana Hyper), 25 Cash and Carry stores (Sefalana Cash and Carry) and 20 supermarket retail stores (Sefalana Shopper) across the country. During the reporting period Sefalana, the biggest competitor to Choppies, increased its market presence by opening additional Sefalana Shopper supermarkets in Mogoditshane and Hukuntsi, bringing its current total of retail outlets to 22 and total number of Sefalana stores across Botswana to 50.
“We have seen an increased level of loyalty and support from our customers despite the ongoing pressure on disposable income,” Chauhan said. On November 1, 2015, Sefalana also acquired its 14th store in Namibia, Swakopmund, and said that other potential sites in Namibia are also being considered for additional store openings.
Despite the ongoing challenging economic conditions Sefalana Group realised an 18 percent upward tick on revenue, closing at P1.8 billion for the six months ended October 31, 2015. Chauhan said that they faced a number of challenges which included foreign exchange volatility. He stated that the weakening of the South African Rand over the period had resulted in a loss in the translation of the net investment value of the Namibian business amounting to P15 million. He also indicated that their Zambian property was fully let. However, the discontinuation of the use of the US Dollar as a second currency, leading to a significant weakening of the Kwacha against other currencies, has resulted in a significant P25 million foreign exchange loss. He further indicated that the strengthening of the US Dollar had made it expensive to acquire grain for Food Botswana.
Delay in award of government tenders for Tsabana and Malutu resulted in almost four months out of the six-month period where the business was reliant only on private customers.
“Water and power shortages have been a significant challenge,” he added. He said that they had to build capacity of about 120 000 litres of water and invested in a lot of generators costing them a significant amount of money and hence affecting their EBITA.
He further added that the delay in award of government tenders for Tsabana and Malutu resulted in almost four months out of the six-month period where the business was reliant only on private customers.
Chauhan indicated that they have purchased a UHT milk plant from Delta Dairies, creating extra 76 jobs for citizens and have hence commenced production of milk and were already supplying the A Star brand of milk to Sefalana stores and were hopeful that they would be awarded the children’s milk scheme tender. He added that they also acquired Golden Fruit plant in Ramotswa. He further indicated they were looking to start bottling water under their house brand, A Star.
“Refreshing our brand has been one of the most exciting projects we undertook, and we have done a successful rebranding,” he stated. He indicated that they had extended their A Star house brands which cut across a wide range of products produced by Foods Botswana He further stated that they had partnered with Botswana Post to deliver their online shopping orders and were working on solutions to address the problems they had ecountered with the service especially regarding purchasing of liquor.
Chauhan stressed that they had no intention of moving completely away from wholesale to retail, as they were about to open a 800m2 wholesale in Mogoditshane. He added that they were the dominant wholesaler in Namibia. However, he indicated that they were working on a few transactions that may see them exiting some businesses to focus on Foods Botswana and Manufacturing.