ATC100223: Report on Oversight Visit to Companies in Distress

Economic Development

Report of the Portfolio Committee on Economic Development on oversight visit to companies in distress, dated 23 February 2010

 

1.                   The Purpose and Terms of Reference

 

The Portfolio Committee on Economic Development undertook an oversight visit to companies in distress on 3 and 17 – 19 November 2009. The purpose of the visits was to investigate how the specific companies in distress have performed after the Industrial Development Corporation’s (IDC) financial intervention. Four companies that were said to be in distress and financed by IDC’s intervention fund were identified. The committee specifically set out to check the authenticity of these companies and investigate the impacts of such intervention by the IDC.

 

The four identified companies are:

Ÿ         Vrede Textiles (Pty) Ltd  (Western Cape)

Ÿ         Laser CNC (Pty) Ltd (KwaZulu-Natal)

Ÿ         York Timber Holding Ltd (Mpumalanga)

Ÿ         Automotive Leather Company (Pty) Ltd (Gauteng)

 

2.                   Background

 

In December 2008, the Presidential Economic Joint Working Group, comprising organized Labour, Business and Government, and other social partners met to consider how South Africa should collectively respond to the existing economic conditions resulting from the international economic crisis. South Africa, therefore, agreed on a collective response to the economic challenges facing South Africa. The agreement to a collective response culminated into development of a ‘Framework for South Africa’s Response to the International Economic Crisis’ (Framework Response).

 

The ‘Framework Response’ has been internationally commended for bringing together social partners to forge a collective response. It has also been held up as an example of how countries can respond to the economic crisis in a sustainable manner.

 

The framework provides the basis for a wide range of actions needed to mitigate the impact of the crisis on the country and the citizenry. It was founded on the following broad principles:

 

Ÿ         avoiding unfair placement of the burden of the economic downturn on the poor and the vulnerable;

Ÿ         supporting and protecting, in as far as possible, activities aimed at strengthening the capacity of the economy to grow and create decent jobs;

Ÿ         maintaining the already planned high levels of investment in public infrastructure, while encouraging the private sector wherever possible, and to maintain and improve their levels of fixed direct investment and corporate social investment programmes; and

Ÿ         interventions must be timely, tailored and targeted as is appropriate. 

 

The Department of Economic Development has been assigned the responsibility to oversee the implementation of the Framework Response. The Department, therefore, briefed the Committee on progress made with regards to the ‘framework agreement’. One of the areas where progress has been made relates to addressing the problems of access to credit and working capital. In this area, the Industrial Development Corporation (IDC) made R6 billion available over the next two years to respond directly to the crisis.

 

3.         Delegation

 

The delegation consisted of:

Ms E.M. Coleman – Chairperson

Ms D. Tsotetsi

Ms P. Bhengu

Ms H. Line

Mr Z.C. Ntuli – Whip

Mr X. Mabasa

Dr S.B. Huang

 

Mr S. Ngonyama – (only attended the Atlantis (Western Cape) and Durban (KwaZulu-Natal) leg of the oversight visit)

 

4.       The oversight findings on the four companies

 

4.1.       Vrede Textiles (Pty) Ltd

 

4.1.1.    Background

 

Vrede Textiles (Pty) Ltd is located in Atlantis, Western Cape Province. It was one of the companies that was said to be in distress and the committee identified it for oversight and to assess the status quo and developments after the financial intervention by the IDC. The IDC had been financially assisting the Vrede Textiles since 1997. During the period of assistance to this company, nine different loan facilities to the total sum of R21, 6 million were approved to Vrede Textiles.  

 

The recent loan facilities were approved in June 2009. They comprised the following:

·         A working capital loan of R2, 5 million;

·         An unconditional loan of R300 000 to fund a marketing study and promotion grant; and

·         A guarantee of R500 000 to support the raising of Letters of Credit by Vrede’s bankers.

 

4.1.2.    The purpose of the visit

 

To investigate and examine the progress made by Vrede Textiles (PTY) Ltd. after the financial intervention of the IDC. 

 

4.1.3.    Factors that influenced the IDC to fund the company

 

After exercising due diligence with regard to financial intervention, the IDC approved the support to the Vrede Textiles because of the following factors:

Ÿ         The company has the potential to turnaround,

Ÿ         It has sufficient management capacity,

Ÿ         Intervention may result in saving of jobs (59 employees),

Ÿ         The company has the potential to become 100% black owned.

 

In addition to the funding approval, the IDC’s Business Support Unit has commenced interacting with Vrede Textiles to assist the company with establishment of a viable marketing plan, one of the major weaknesses in the company.

 

4.1.4.    Factors that led to distress

 

Two factors that led to the distress were as follows:

 

Ÿ         There has been a slow erosion of Vrede’s market share over the last few years because of the entry of new competing products, fashion changes and cheaper imports from many other countries, for example, China. Due to the influx of Chinese products, Vrede’s sales dropped from R16.6 million in 2004 to R13 million in 2008.

Ÿ         The effects of the world economic meltdown gravely exacerbated Vrede’s position with decline in turnover, including substantive decreases in exports to some of its traditional customers in the United Kingdom and the United States of America. The resultant operational losses depleted Vrede’s cash reserves.

 

A commonly held view was that, unless additional funding could be raised, the company’s shareholders would have had to consider closing the company down, hence support to Vrede Textiles (PTY) Ltd through financial intervention fund of IDC.

 

4.1.5.    Jobs saved

 

The Vrede Textiles employs 61 employees on a permanent basis, 48 of them are wage earners and 13 are salaried workers. All of those jobs would have been lost had the company closed down. With the financial aid, Vrede Textiles have not yet had to retrench workers. However, they applied to the Department of Labour to be placed on the labour lay-off scheme.

 

4.1.6.    Participation by the Vrede Textiles in the Employee Training Labour Lay-off Scheme

 

As indicated above, Vrede Textiles Ltd had applied to the Department of labour to be placed on the labour lay-off scheme. The committee is still awaiting the outcomes of the application process.

 

4.1.7.    Turn-around strategy

 

The Managing Director of Vrede Textiles informed the Committee that the loan which Vrede Textiles received from the IDC managed to pay off their Accounts Payables (creditors). Vrede Textiles further applied for exemption from wage increases and annual bonuses for 2009 due to the difficult position they found themselves in. If they were to pay annual bonuses, bonuses alone would amount to R400k (excluding holiday pay). Vrede Textiles do not foresee having such funds available in view of their losses in 2009. It was only in October 2009 that Vrede Textiles exceeded R1m turnover for the month and that was the most for 2009.

 

Indicators of a turnaround in sales comes from the fact that they have received a first order from China after exhibiting their product in China during August/September 2008 as well as repeat order from the Philippines. They have also received orders from the USA, UK and Australia, which initially dried-up when the economic crisis started.

 

With the future in mind, Vrede Textiles have started their own assembly line, where they could make up their own finished blinds. The Managing Director believed that the approach gave Vrede Textiles an additional opportunity as a supplier on the Government database.  He further reported to the committee that Vrede Textiles have never gone the procurement route before and this was considered a new source of income for Vrede Textiles.

 

According to the IDC, the turnaround plan of Vrede Textiles includes:

Ÿ         Strengthening the marketing structure of the company through, inter alia:

        employing a dedicated sales and marketing person;

        engaging a market consultant to develop a comprehensive marketing plan;

        pursuing new export markets through participation in international trade fairs;

        subscribing to the Proudly SA campaign and by being listed on the Government Supplier database; and

        product enhancement initiatives, for example, DIY.

Ÿ         Ensuring strict financial oversight with company auditors,

Ÿ         Pursuing the establishment of a Workers’ Trust to increase worker motivation, support and morale.

 

With regard to development of the Workers’ Trust, Mr V. Jacobs (Managing Director) stated that the major shareholder, Mr B Lipschitz, indicated to him that he “wants out”, on condition that Mr Jacobs takes the liability of the company (R5m). The committee was briefed that Mr Jacobs would take 60% shareholding while 40% would go to the Workers’ Trust. Mr Jacobs, however, said that this process was still at an early stage of discussions and that it had not been discussed with the workforce.

 

The performance monitoring mechanisms put in place by the IDC include the following:

Ÿ         Quarterly management accounts to be submitted to the IDC,

Ÿ         Submission of audited annual financial statements to the IDC,

Ÿ         Regular personal contacts by the IDC accounts manager,

Ÿ         Participation of the IDC Business Support Unit in engaging a marketing consultant and developing a marketing plan,

Ÿ         IDC assistance in setting up a Workers’ Trust and share transfer.

 

4.1.8.    Committee observations

 

Ÿ         Vrede Textiles had very little information regarding the labour lay-off scheme, even though they applied to the Department of Labour to be placed on the scheme. No feedback, however, was received from the Department.

Ÿ         The delegation observed that there was confusion with regards to the intention of the funding.

Ÿ         Vrede Textiles applied to the Department of Labour to be exempted from paying holiday bonuses (December 2009) to its employees.

Ÿ         The company did not have a permanent employee responsible for marketing.

Ÿ         Little or no interaction between the various departments (for example, Department of Trade and Industry, Department of Labour) and the IDC.

Ÿ         The R300 000 loan allocated to Vrede Textiles to fund a marketing study and promotion grant (unconditional) would not be sufficient for this purpose.

Ÿ         Without the IDC intervention, 61 employees would otherwise have been unemployed.

Ÿ         The viability of Vrede Textiles is questionable. The delegation observed that the Managing Director is focused more on operations and had little knowledge on the financial aspects of the company.

Ÿ         The issue of the Worker’s Trust was still at the early stages of development.

Ÿ         The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on Labour to Vrede Textiles during the 3rd term in 2010.

 

4.1.9.    Recommendations

 

The committee makes the following recommendations:

·         The IDC should submit a report regarding the marketing grant to the committee two (2) weeks after the House has considered the report.

 

4.2.       Laser CNC (Pty) Ltd

 

4.2.1.    Background

 

Laser CNC (Pty) Ltd, one of the identified companies in distress, is located in Durban, Kwazulu-Natal. The committee sought to enquire on the latest developments after the financial intervention by the IDC.

 

The IDC has approved a R3 million term loan facility and a revolving credit line facility with a limit of R3 million to bridge its short and medium term working capital requirements respectively.

 

4.2.2.    The purpose of the visit

 

To investigate and examine the progress made after the financial intervention of the IDC. 

 

4.2.3.    Factors that influenced the IDC to fund Laser CNC (Pty) Ltd

 

Prior to the economic slowdown, both the automotive and capital equipment sectors experienced unprecedented growth which was incidentally characterised by a general shortage of critical components. Suppliers such as Laser were compelled to commit to pre-production runs schedule. This was done with the intention to shorten lead times on certain key components in anticipation of a continuing stronger demand. However, the sudden global economic slowdown has compromised the group’s liquidity and left the company in an overstocked position. Hence, the R3 million term facility is required under the auspices of the companies in distress fund to improve the company’s liquidity position.

 

4.2.4.    Factors that led to distress

 

Since its inception, Laser’s financial performance has been sound and consistently achieving positive year-on-year turnover growth. However, as from the last quarter of 2008, the company has been experiencing declining turnover and suppressed order book from its traditional major customers including amongst others Bell Equipment Ltd (contributed 65% of 2008 Turnover). The slump in demand: volumes were attributable to the sudden global economic slowdown, particularly within Laser’s targeted market sectors namely, capital equipment, automotives and construction were heavily affected by the slump. The downturn coupled with the pursuant recession caused a working capital funding shortfall.

 

4.2.5.    Jobs saved

 

Initially, Laser CNC employed around 200 employees. Between March to May 2009, Laser CNC had to close down two production centres and reduced the employee costs, by retrenching 72 workers before the implementation of the labour lay-off scheme.

 

4.2.6.    Participation by the Laser CNC in the Employee Training Labour Lay-off Scheme

 

The committee was informed that the retrenchments took place during March – May 2009 before the implementation of the labour-layoff scheme.

 

4.2.7.    Turnaround strategy

 

In response to the challenges in the market place, Laser’s management formulated a survival and turn around plan that entails the following:

Ÿ         Broadening of its product offering with a view to further diversify its markets and customer base outside its traditional markets.

Ÿ         Working capital optimisation through implementation of improved demand forecasting tools and reducing stock holding levels.  

Ÿ         Right-sizing the business: This has been achieved by closing down two production centres and reduction in employee headcount by having retrenched 72 workers. This happened between March and May 2009 before the implementation of the labour lay-off scheme. However, Laser CNC reported that they had contact details of those who were retrenched and if the need arose to re-hire some or even all of them, they would do so.

Ÿ         Exploring alternate business opportunities, which include for example Navistar (a manufacturing company in Johannesburg). Laser noted that the first order for Navistar will be during February – March 2010.

 

The slump in demand from traditional markets led to Laser seeking new business opportunities. Some of the new business secured includes work on the Durban International Airport, Moses Mabhida Soccer Stadium and the new King Shaka International Airport, which were under construction at the time of the visit. The proposed revolving credit facility was distinctly earmarked for this type of ad hoc projects.

 

On how to address the issue of seeking potential customers in Africa, Laser reported that they would be attending a trade show in Kenyaon 29 November 2009. Laser also briefed the committee about their efforts to contact DTI on how to attract potential customers in Africa. However, at the time of the visit, all efforts did not yield any successful results.

 

According to the DTI, companies that are within the automotive sector might get further assistance via the Manufacturing Incentive Programme (MIP), which is a cash back grant and the New Industrial Development Programme. The programme may fund interventions to a maximum of R30m.  

 

Laser acknowledged that there was no union representative on the management team. Members of the Committee raised concern around this matter but also encouraged the management of Laser to explore a positive relationship with trade union members and non-trade union members.

 

Laser noted that they are in the process of working on their BBBEE compliance. They had a meeting scheduled with a consultant to discuss how Laser can obtain BEE status.

 

4.2.8.    Committee observations

 

·         Laser CNC is in the process of obtaining BEE status. However, this is at a very early stage.

·         Too much emphasis was placed on one major client (Bell Equipment).

·         The retrenchment of workers was done before implementation of the labour-lay scheme.

·         Little or no collaboration and communication between the Departments of Trade and Industry, Department of Labour and the IDC.

·         Without the IDC intervention, a further 128 workers would have been without work.

·         There was no labour (union) representation on the management team.

·         There was little or no communication with the labour movement within the company about funding.

·         In the event that demand increases, those employees retrenched would be re-hired.

·         Some of the workers retrenched, have been employed on a temporary basis.

·         Within DTI, there are other means of financial aid to SMME’s.

·         The larger share of Laser CNC’s business comes from one client, Bell Equipment.

·         The IDC representative came unprepared to the meeting.

·         The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on Labour to Laser CNC during the 3rd term in 2010.

 

4.2.9     Recommendations

 

·         Laser CNC should consider those workers retrenched, to be re-instated, once the company becomes viable.

·         Collaboration and communication between the Departments of Trade and Industry, Department of Labour and the IDC need to be reinforced and strengthened.

·         Laser CNC, with the assistance of the DTI and the IDC must explore potential clients in Africa.

 

4.3.       York Timber Holdings Ltd – Sabi (Mpumalanga)

 

4.3.1.    Background

 

York Timber Holdings Ltd is found in Sabi, Mpumalanga Province.  The Committee identified this company because it was considered to be in distress and had received financial aid from IDC. The committee therefore sought to determine the latest developments and assess progress made after the financial intervention by the IDC.

 

Since early 2008, demand for all timber products declined steadily in line with the global economic recession. The decline in demand resulted in a subsequent stock build-up across the sawmilling industry.  Market conditions deteriorated further during the beginning of 2009 with the demand for lumber declining significantly by 25% to 35% followed by discounting of prices, further increases in stock levels and increased pressure on working capital.  In this period, York’s profit margins also declined as Komatiland Forests (“KLF”) increased log prices (bi-annually between 35 & 40% per annum) directly affecting not only York’s retained earnings, but also all other long term contract holders.  York’s interim and final year-end June 2009 results were therefore well below budget (reduction in sales of ca 25% and EBITDA with 100%) and for the first time York has breached some debt funding covenants based on the year-end June 2009 reporting period.

 

4.3.2.    Purpose of the visit

 

To investigate and examine the progress made after the financial intervention of the IDC. 

 

4.3.3.    Factors that influenced the IDC to fund the company

 

The following funding was approved by IDC’s Special Credit Committee (17 September 2009) and Board of Directors (Board meeting 07/2009 on 29 September 2009):

IDC follow its rights including those of the BEE SPV’s to the extent of R213 million and retain the existing equity stakes of 29.8% and 12.8% for IDC and the BEE SPV’s respectively. The total “fresh” injection of equity, in the form of ordinary (IDC) and preference shares (BEE SPV’s), will thus amount to R213 million.  Due to the proportional repayment of all lenders, IDC will receive a payment of around R28.5 million with the capital balance of the loan facility reduced to R42.7 million.  Although it is proposed that some of the terms of the loan funding will be relaxed, the security position is improved as original capital security taken remains in place after the R450 million reduction in the total syndicated debt package.  The current shareholder value of York is R721 million, which will increase to R1.1 billion after the partial debt repayment.

4.3.4.    Factors that led to distress

Since early 2008 demand for all timber products declined steadily in line with the global economic recession, resulting in a subsequent stock build-up across the sawmilling industry.  Market conditions deteriorated further during the beginning of 2009 with the demand for lumber declining significantly by 25% to 35% followed by discounting of prices, further increases in stock levels and increased pressure on working capital.  In this period, York’s profit margins also declined as Komatiland Forests (“KLF”) increased log prices (bi-annually between 35 & 40% per annum) directly affecting not only York’s retained earnings, but also all other long term contract holders.

4.3.5.    Jobs saved

York has already implemented the closure, mothballing and reduction in operations as per one of its work stream strategies. It resulted in the retrenchment of 791 people.  The approved funding would, however, save a further 4060 existing job opportunities provided in several rural locations in the Mpumalanga province, i.e. 1,983 in forestry and 2,077 in sawmilling division.

 

4.3.6.    Participation by the York Timbers in the Employee Training Labour Lay-off Scheme

 

York Timbers indicated that they did apply to be placed on the labour lay-off scheme, but still had to retrench employees.

 

4.3.7.    Turn-around strategy

 

Several strategies were identified and task teams established to implement the turn-around strategies based on the approval by the Board of Directors. The IDC was also notified about the strategies and worked closely with the Sub-Committee and the various task teams.

 

One of the strategies was a decision to close three operations and reduce throughput at the Sabie sawmill in order to re-align current market conditions with the processing capabilities of York’s sawmilling operations. This however resulted in significant retrenchments. York’s overhead cost structure was also scrutinised and reduced. The reduction included an average reduction in salaries of 10%, mainly for senior managers, and the remaining wage staff received an 8% increase and to date York has not experienced any strike actions.

 

The start-up of the Driekop sawmill after the destruction of its Wetmill in 2007 by extreme forest fires has also been completed and will improve York’s sales mix thereby increasing the average selling price and enhancing gross profit margins.

 

Due to the re-alignment of processing facilities, 791 people had to be retrenched.  The wage-earning staff was consulted through processes that involved CEPPAWU & DUFUAWA while the salaried staff was consulted on an individual basis.  York had also embarked on a remedial action plan to assist all retrenched individuals through interventions, such as re-skilling of existing and retrenched staff and facilitation of counseling to promote skills and abilities of retrenched staff.  York and IDC have been in discussions with DTI with regards to possible funding to support the above mentioned actions.

 

Cost cutting and restructuring initiatives at head office level have also been completed with a 10% reduction in salaried staff remuneration.  Current performance is ahead of plan with actual retrenchment costs amounting to R11 million compared to the original budgeted figure of R17 million resulting in a saving of R6 million.  Cost savings with regards to mill closures and downsizing will also have a positive impact going forward.

 

The total outcome after retrenchments and restructuring initiatives is that York will reduce its overheads by R85 million for the financial year ending 30 June 2010. York also reported that they have approached the Premier of Mpumalanga, where they informed the Premier that they are willing to supply wood to the province in order to assist in the province’s housing developments.

 

4.3.8.    Committee observations

 

Ÿ         Without the financial intervention of the IDC, 4060 employees would otherwise have been unemployed.

Ÿ         Even though York Timbers applied to the Department of Labour to be placed on the labour lay-off scheme, they still had to retrench employees.

Ÿ         In the event that demand increases, those employees retrenched, would be re-hired by York Timbers.

Ÿ         Strategic partnerships have been forged with Indian companies, to address the increase in demand.

Ÿ         There is a good working relationship between the management and the labour movement.

Ÿ         Mr Meer, an IDC Divisional Executive, is a non-executive on the board of York Timbers. 

Ÿ         York Timbers continues with their corporate social investments in Mpumalanga.

Ÿ         The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on Labour to York Timbers during the 3rd term in 2010.

 

4.3.9.    Recommendations

Ÿ         York Timbers should consider those workers retrenched, to be re-instated, once the company becomes viable.

 

4.4.       Automotive Leather Trim (Pty) Ltd T/A Automotive Leather Company (ALC)

 

4.4.1.    Background

 

The Automotive Leather Company is found in Rosslyn, Gauteng Province. It was one of the identified companies in distress which the committee sought to oversee its work in order to determine what were the latest developments are after the financial intervention by the IDC.

 

The Automotive Leather Company’s capability extends to the manufacture of all related Interior Trims which includes: Seat covers, trim inserts; steering wheel covers as well as gear and handbrake grips and bellows.

From design and development to finished production, ALC employs class leading technology; for example, automated CNC sewing, coating of leather used in PIP processes, airbag sewing, micro perforation, in-house CAD capabilities, e-data transfer, video conference facilities and storage, right through to delivery worldwide.

 

4.4.2.    Purpose of the visit

 

To investigate and examine the progress made after the financial intervention of the IDC. 

 

4.4.3.    Factors that influenced the IDC to fund Automotive Leather Company

 

The stress on liquidity led to ALT falling in arrears with its trade creditors. The company immediately embarked on a restructuring program which included retrenchments of 231 employees and cost reduction exercises in order to adjust to a lower intake of customer orders

 

Despite the restructuring, the company still required funding to finance its immediate liquidity needs and therefore approached the IDC for finance. The IDC has provided ALT with total funding of R25 million to assist with working capital to execute future orders.

 

The IDC reported that the funding approved for ALT is what is termed, a quasi-equity loan (where the loan is split). The IDC indicated that each application is considered case-by-case, in other words the needs and circumstances of the different companies are taken into account, when approving the funding.  

 

4.4.4.    Factors that led to distress

 

The global economic downturn negatively impacted Automotive Leather Trim (ALT) which experienced a 30% reduction in sales year to year since October 2008. The drop in sales resulted in a reduction in cash flow. The burden on liquidity was further impacted by overstock of raw materials in relation to reduced sales level.

 

4.4.5.    Jobs saved

 

The intervention funding resulted in the retention of 447 jobs. Manpower was budgeted to increase by 100 people over the next 6 months due to the expected increase in sales with the prospect of increased sales as a result of the expected launch of the new car models.

 

ALT noted that retrenchments started in June 2008, where 231 employees were retrenched. At that stage, ALT had lost the E-class business, which formed a bigger part of its turnover, from Mercedes Benz. ALT also indicated that the NUMSA was informed of this at an early stage and various informative meetings were held with employees.  ALT Management further indicated to the delegation that they envisaged employing 200 people till March 2010.

 

4.4.6.    Participation by ALC in the Employee Training Labour Lay-off Scheme

 

ALC noted that they are not part of the labour lay-off scheme, since retrenchments already started during June 2008 (before the implementation of the scheme).

 

4.4.7.    Turnaround plan for the company

 

Due to the loss in sales, ALT embarked on an intense marketing drive which had seen them being awarded a contract from BMW for the new 5 and 7 series. ALT has also been awarded contracts by Lear and Nissan which would assist them in turning the company around.

 

The IDC would analyse the client’s monthly management accounts to monitor and ensure the business’ success.

 

4.4.8.    Committee observations

 

Ÿ         Without the intervention of the IDC, 447 employees would otherwise have been unemployed.

Ÿ         In the event that demand increases, those employees retrenched, would be re-hired by ALT.

Ÿ         The majority of ALT’s business is dependent on one major client, BMW.

Ÿ         ALT will be employing 200 workers till March 2010.

Ÿ         There is a good working relationship between the management and the labour movement in the company.

Ÿ         The Committee envisage scheduling a joint oversight visit, with the Portfolio Committee on Labour to the Automotive Leather Company during the 3rd term in 2010.

Ÿ          

 

4.4.9.    Recommendations

 

Ÿ         ALT must explore opportunities to expand its client base.

Ÿ         York Timbers should consider those workers retrenched, to be re-instated, once the company becomes viable.

 

5.         Conclusion

 

One of the main objectives of the IDC’s financial funding to these companies in distress was to save jobs. The evidence from the oversight visit on the four identified companies in distress shows that the financial assistance of the IDC had managed to save 4 696 jobs.

 

The Committee was pleased to note the assurance by all the companies visited that they would in future rehire those employees retrenched, once the respective companies became viable and self-sustainable. However, the delegation was concerned that there was little or no co-ordination between the activities of the IDC, the Departments of Trade & Industry and Labour.

 

The committee/delegation wishes to note that even though there were successes with those interventions reported above, the IDC still needed to strengthen and reinforce its interventions so that the intentions and objectives of the interventions could be fully realized.

 

The committee would like to thank the management of the four companies that were visited; the Industrial Development Corporation and the Department of Trade and Industry for making the oversight visit a success.

 

Report to be considered.