Elso Holdings says its working on minimizing likely job loses that will emanate from its recent decision to outsource its logistics and distribution.
This comes as the cleaning materials manufacturer, which was acquired by private equity firm Eos Capital in 2016 on behalf of the firm's Allegrow Fund for an undisclosed amount, this week announced as part of its restructuring, it will outsource logistics and distribution to supply chain company, CIC Namibia.
“This will optimise operational efficiencies and improve customer service through faster and more reliable deliveries. Elso will focus on the core of its business – manufacturing great Namibian cleaning and tissue products and ensuring customer service through its Elso Ambassadors around the country,” Acting Managing Director, Nicole Maske told the Windhoek Observer.
Asked about the number of staff to be affected by the company’s decision which will also see Elso stores outside of Windhoek now being co-located in CIC depot facilities, she said the company was currently holding negotiations with those to be affected by the company’s restructuring.
“We are busy with negotiations with staff so this is still being determined. We have however arranged alternative employment for many of those affected – either within the company, within CIC or with other companies we are in contact with. We are trying in every way to minimize the impact on our employees, “Maske said.
She said the company did not envisage any further job losses moving forward.
“There is no further restructuring planned, so no further job losses,” Maske said.
Quizzed on the rationale and benefits to the company of not having its own distribution and logistics unit, and the impact it will have on the business, she said, “optimised stock holding, faster and more reliable delivery to customers, improved efficiency for the business.”
Asked if the company had any regrets in buying the business, Maske said the fund was confident of its investment decision.
“Elso’s revenues have been resilient during the recession as cleaning materials and toilet paper are not luxuries, and Elso offers an affordable range of products. Additionally, Elso has a number of product offerings catering for those on a tighter budget - our Elso stores offer economy range cleaning products for refill which are cheaper than Elso’s retail products, and we have introduced refill packs for our dishwashing liquid and multi-purpose cleaner, which are cheaper than the original pack sizes,” she said.
“The current restructuring will only make the business stronger.”
Eos Capital has been on an acquisition spree funded by an N$460 million war chest and in May acquired AVBOB Namibia Holdings (Pty) Ltd from its South African parent, AVBOB Mutual Insurance Society for an undisclosed amount.
The deal, which is still subject to regulatory approval, will see the fund assuming 100 percent ownership of the funeral business, which boasts of 25 branches countrywide.
To date, the fund is invested in Heat Exchange Products (HEP) and Namibia Aqua Mechanica (NAM), both players in the water sector; Elso Holdings; Panel To Panel Insulated Panel Manufacturers (Pty) Ltd, a 35 percent stake in Fabupharm, a pharmaceutical manufacturer and Welwitchia Private School, among others.
Eos Capital was ranked by Emerging Markets Private Equity Association’s (EMPEA) as one of the top deal makers in Sub-Saharan Africa in 2016.
Eos Capital’s Allegrow Fund mandate is investing in companies, which have the potential for rapid growth through the right capital and strategic support, while providing equity, debt and mezzanine finance to fast growing unlisted Namibian businesses.
Last year the fund manager partnered with international firm, Phoenix Infrastructure, to set up the Investment Development and Investment Company (IDICON), which will finance infrastructure projects in Namibia, with a targeted funding capacity of up to N$1.5 billion.