In a bid to circumvent operational challenges in land locked Botswana, Northern Textile Mills (NORTEX), the premier towel manufacturing company, is in the process of setting up another manufacturing plant in its major export market, South Africa.
After more than 20 years of successful operation in Botswana, an upbeat Mukesh Josh, the Managing Director of Francistown based company confirmed to Sunday Standard that plans are afoot for the company to set up another manufacturing plant in the Western Cape in South Africa.
In an interview with The Sunday Standard, Josh, who has since applied for Botswana citizenship and awaiting government response, allayed fears that the move could in the long term upset the local operations.
“I am aware that this decision could unsettle some people and raise fears that I intend to relocate. I want to assure the government of Botswana, my employees and all other interested parties that the opening of a manufacturing plant in South Africa is not going to undermine our operations in Botswana. Botswana is my base,” explained Josh.
“I have heavily invested in this country and I am not intending to relocate. I am not going anywhere. I am just growing the company and getting closer to the major market. I am not going to allow the South African operation to undermine our local operation. It is just going to be complimentary. I have interest in both of them so I can’t allow that to happen”, he added Josh emphatically.
To buttress the point that he has no relocation plans, Josh explained that he is a co-partner at Matsiloje Portland Cement.
A Chartered Textile Technologist with The Textile Institute of Manchester in the United Kingdom, he started looking for investment opportunities in Botswana in the early 1980s while working for textile milling company in Zimbabwe.
“While in Zimbabwe and with an ambition to start my own textile milling company, I started looking for investment opportunities and identified Botswana because of its political and economic stability. The other advantage that I looked at when considering Botswana as an investment destination was that it is a member of the Southern African Customs Union (SACU). I visited Francistown a number of times before deciding to set up shop here. The hospitality I received all the time I visited attracted me to set up business in this country with the little savings that I had”, said Josh explaining that in 1989 he, in conjunction with an American investor bought the five hectare piece of land that he is currently operating from.
He explained that when he set up the company in partnership with an American investor, the government of Botswana through the now defunct Financial Assistance Policy came to their aid through a P290 000 unskilled labour grant to meet their wage bill over a five year period. He smilingly expresses gratitude over the government grant that has steered his company to greater heights with the work force increasing from 40 people in 1990 to over 500 to date.
Apart from the government support, Josh and his partner, who has since sold out his stake to him making him sole proprietor, also obtained a loan from the Botswana Development Corporation (BDC) that he has since paid off.
He explained that BDC extended a loan of P700 000 to NORTEX that was repaid over a three year period with interest and he now prides himself as the sole owner of booming company that apart from the southern African market, is planning to penetrate the larger west African markets of Nigeria and Ghana.
Despite various challenges that range from lack of skilled labour, bureaucratic bottlenecks in obtaining work permits for qualified expatriates and initial unwillingness of Batswana employees to work night shifts, Josh has not looked back and is beaming with excitement that from almost nothing, he has been able to grown his company into multi-million dollar company with potential to withstand stiff both local and foreign competition.
“Basically it was tough. At the beginning; with only six expatriates we did all the work in addition to training. The industry was new in the country and there was no skilled labour. There was a lot of resistance from Batswana to work night shifts. We had to inculcate a camaraderie spirit and inspire the work force to work shifts as we are 24 hour operation. We persevered and dividends are finally paying off. At inception our production was 1500 kilograms of towels per day and today we produce 7500 kilograms per day”, explained Josh as he took us on a guided tour of his plant.
With an investment of over one million British Sterling Pound in new equipment from Europe and a further $400 000 on new equipment from India, Josh explains that he is bound to upgrade his equipment very five years but the current biggest challenge he faces is that power cuts emanating from the Botswana Power Corporation (BPC) load shedding.
“The power cuts are impacting negatively on our production. Although we have a back-up generator, it services 60 percent our production capacity. The power cuts are affecting our electronic gadgets and this is a serious problem. We are losing money because of the load shedding. As we speak, our production has reduced by ten to 15 percent of the normal capacity”, said Josh who is just pinning his hope on President Ian Khama’s assurance that electricity supply will soon be guaranteed with the commissioning of the Morupule B’s 600 MW power plant.
Apart from shortage of lacked skilled labour, Josh said the other challenge he faces is in the obtaining of permits for expatriate staff who have to train and service equipment. In mitigation to high staff turnover, Josh explained that he has introduced a number of incentives including a funeral policy for his workers and their immediate family as well paying payment of school fees for their dependants.
A former chairman of the Botswana Exporters Association, Josh says the association has been very helpful as it has attended timeously to all the problems that they have encountered in the textile industry. “The association has always been there in time of need. They initiated the government textile bail out scheme following the global economic recession. Although the bail is not adequate we are grateful that government heeded our pleas for assistance. We appreciate it because we are aware that government was equally affected by the recession”, said Josh who has no kind words for BOCCIM which he lambasted over its failure to advance the case for textile industry bail out.
As an exporter, Josh is not worried over the Pula/Rand exchange rate link because his biggest market is currently South Africa. He acknowledges that although the Pula is about 15 percent stronger than the Rand, it is not affecting his operations because his exports are Rand denominated.
He also bemoaned high fuel costs that he said are negatively impacting on his profit margins.