Source: Ingwebu on brink of collapse, loses US$250 000 a month – herald
Sunday News Reporter
INGWEBU Breweries is technically insolvent and losing about US$250 000 every month, with the City of Bulawayo warning that the struggling municipal-owned company could collapse unless it urgently secures private investment of up to US$5 million.
The revelations are contained in a confidential council report submitted by the Town Clerk to council on July 13, detailing the deteriorating financial and operational position of the brewery.
According to the report, Bulawayo mayor, Councillor David Coltart revealed that the City was not in a financial position to inject the capital required to rescue Ingwebu and directed the company’s board to urgently engage potential investors,
“He (Clr Coltart) directed the Board to urgently engage with both Mutapa and Innscor and obtain formal written investment proposals without delay to facilitate informed decision- making.
“He advised that, should the company fail to secure satisfactory investment proposals, the Board should immediately initiate corporate rescue proceedings to safeguard the business and its stakeholders. The Mayor cautioned that the company had only a narrow window of opportunity to secure its future and stressed that urgent action was required,” reads the report.
The mayor further revealed that the company is now insolvent and is incurring losses of approximately US$250 000 per month.
He said the brewery required a substantial capital injection of approximately US$5 million to restore operations, adding that cost-cutting measures already implemented were insufficient to reverse its deteriorating financial position.
The revelations come as Ingwebu struggles with ageing machinery, unreliable production equipment, inadequate working capital, poor distribution and declining product quality, while employees have reportedly gone without salaries.
The brewery’s board chairperson, Mr Kalani Ndlovu told the meeting that the company was facing “significant operational and financial challenges”, with previous investments failing to be strategically co-ordinated and ageing machinery severely affecting production capacity.
“He emphasized the need to attract private equity investment and recommended actively engaging potential investors. He informed the meeting that Mutapa, Inscor and Delta had expressed interest in investing in the company. However, he noted that progress with Mutapa had been delayed due to Government processes. Despite the institution having requested the company’s documentation and indicating its willingness to provide funding.
“The board chairperson further recommended that a forensic audit be undertaken before any investment transaction proceeded. He proposed that a comprehensive investment proposal, supported by evaluated cash flow projections, be prepared within 30 days,” reads the report.
The board chairperson revealed that Ingwebu had failed to secure additional funding from Ecobank and that its weak financial position meant shareholders would need to inject fresh capital.
The brewery’s managing director, Mr Dumisani Mhlanga painted an equally bleak picture of the company’s production capacity.
Of the six boilers the brewery originally operated, only one remains functional, with the remaining unit described as unreliable.
The boiler reportedly operates for about two days before breaking down and requiring between three and four days of repairs, severely disrupting brewing operations.
“As a result, production capacity has declined, leading to poor product quality He noted that customers had increasingly complained about the quality of Ingwebu products, with many switching to competing brands
“The managing director also identified poor distribution as another major challenge, explaining that the company’s delivery trucks frequently broke down, affecting product availability He emphasized that distribution challenges should be addressed as a priority. He also noted a shortage of refrigeration equipment despite customer preference for chilled products,” reads the report.
Despite the challenges, management believes Ingwebu can still be revived.
A two-phase recovery plan has been developed, with the first phase requiring an estimated US$2,7 million.
The funding would include about US$180 000 for a second-hand boiler, among other interventions.
Management also proposed the installation of a pasteurisation plant to improve the shelf life of the company’s Cream Tataa product, which currently lasts only 15 days because Ingwebu does not have pasteurisation facilities.
“Regarding phase two, the managing director stated that it would require substantial capital investment and would focus on the company’s long-term sustainability. He informed the Committee that both Delta and Mutapa had expressed interest in investing in the company.
“He further advised that representatives from Mutapa were expected to visit on Friday, with the intention of concluding discussions by August 2026. He emphasized that external investment represented the most viable long-term solution for the busıness, reads the report.
In the ensuing debate, councillors warned that the collapse of Ingwebu would have wider economic and social consequences.
Councillor Mxolisi Mahlangu said all efforts should be made to secure investment, particularly from Mutapa, before considering closure of the brewery.
He called for a stakeholder engagement plan to address concerns among paid and unpaid employees and improve strained relations between workers and management.
In response, the managing director said the company had secured US$13 000 on the previous Sunday, allowing it to make a once-off payment of US$100 to some employees.
However, he said the funds were inadequate to meet the expectations of all workers and that the company also lacked sufficient money to buy raw materials, further hampering production.
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