Mangudya says unhappy with Cottco’s bad management, ropes in Corporate Rescuers

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Business Reporter

MUTAPA Investment Fund (MIF) this week openly told Parliament that they were not happy with the performance of the Cotton Company of Zimbabwe (Cottco) executive and management board’s performance owing to a US$25 million debt exposure and poor corporate governance.

This comes in the wake of Cottco’s failure to service debts as well as its financial incapacity to pay farmers on time, with record indicating that in the last two seasons no payment was extended to cotton producers.

Speaking before the Parliamentary Portfolio Committee on Lands, Agriculture ,Fisheries and Rural Development , MIF CEO , Dr John Mangudya said he was not happy with the manner in which Cottco is being run.

“We are not happy with board and management at Cottco that is why we are at this stage. By putting the company under Voluntary Rescue Business Processes, we are protecting Cottco as opposed to destroying it.

“The issues at hand are critical. There is poor corporate governance. The financials are not in order. When you look at US$5 million exposure for loans and within that figure there is US$11 million debt from Mutapa. From a business perspective would you continue injecting more funds or you say let’s see what’s happening because otherwise you end up having good money chasing after bad money,” he said.

He said despite the government injecting US$60 million to farmers through the Presidential Input Scheme through Cottco , input costs have remained higher than the value being generated raising more questions requiring urgent Voluntary rescue.

“Whenever we go to Cottco the top management there see the challenge as monetary. They believe that if they get funds all will be well.As Mutapa Fund we believe that it is not about money. Let’s go back to the basics,” he said.

He said just recently, there was risk of banks attaching assets, prompting urgent intervention by the shareholder to divert the US$6 million meant for payment of Cotton farmers to offset the debts.