Eastern Tropical Fruits Project (Industrial Development Corporation)

Company Description

The Industrial Development Corporation (IDC) Limited is a State-Owned Enterprise (SOE) charged with the mandate to spearhead the Zambian Government's commercial investments agenda aimed at strengthening Zambia's industrial base and job creation. The IDC was established to create and maximise long-term shareholder value as an active investor and shareholder of successful state-owned enterprises, as well as undertake industrialisation and rural development activities through the creation of new industries.

Countries of Operation

Zambia

Ownership of Company

Not indicated

Number of years since incorporated

10 Years

Project Pitch

Eastern Tropical Fruits Project. The Eastern Tropical Fruits Project involves the development and construction of a fruit and vegetable processing plant in Katete District in the Eastern Province of Zambia. ETF project will operate under the company Eastern Tropical Fruits Limited, a subsidiary of the Zambia Fruit Company (ZFC) wholly owned by the Industrial Development Cooperation. The Project is open for FDI through a minority or majority stake. ETF will cost approximately ZMW 94.03 million (USD 7.3 million) to cover key costs such as land acquisition, project development costs, civil works and construction, working capital requirements, equipment procurement and installation. ZMW 32.5 million (USD 2.5 million) has been secured through IDC, which is now seeking for approximately ZMW 61.5 million (USD 4.8 million) to close the financing gap. The Project is highly profitable and is expected to generate positive operating cashflows with a sustainable 55 to 60% Gross Profit Margin, 25 to 30% EBITDA Margin and 10 to 15% Net Profit Margin. ETF will generate positive free cashflows and have a project payback period of 4 years with a Return on Investment (ROI) of 24%. The IDC has already implemented the procurement process involving the identification, due diligence and contracting of primary contractors for architectural designing works, manufacturing and supply of equipment, civil construction works and project management. ETF site is located about 3 km east of Katete town Central Business District (CBD and covers a total area of 5.4 hectares. The project is expected to be commissioned in 2022.

Team

The Management structure will include senior management with vast experience from Zambia and foreign experts from the equipment’s manufacturing plant in India. The foreign experts will train the local employees on the running and maintenance of the plant equipment. Key personnel will also be sent for expert training on fruit and vegetable processing in India. The recruitment process for middle management and junior staff will harness the local labour to a greater extent. The company shall have a total of twenty-nine (29) employee-positions with eight (8) grading classifications. The project will employ a combined total of 134 employees in year one, 222 in year two and 290 in year three.

Stage

Preliminary | Initial studies completed | Feasibility study completed | Approval required and obtained

Annual Revenue (in EUR)

Not indicated

Number of employees

Not indicated

Total Project Cost (in USD)

USD 7,300,000

Financing needs (in USD)

USD 4,800,000

Type of financing needed

Not indicated

Planned allocation of fundraising capital

Greenfield (new activity for the company)