The cash deficiency currently experienced by government means that local businesses that rely on their pockets for survival are suffering but that seems not to be the case for the local mass retailer Sefalana.
Speaking at the retailer’s financial results briefing last week Friday, Sefalana Group Managing Director Chandra Chauhan said that in recognition of government’s cash challenge the Group had accommodated the insufficiency.
Normally government pays businesses contracts services from within a specified period of time.
However, Chauhan said that Sefalana had extended credit to government. This means that the retailer has given government an allowance to pay it later than the normal period.
He said that the flexibility given to government is due to the nature of the industry Sefalana operates in.
“Ours is a little more resilient because people have to eat and drink,” he said. In other words, Sefalana is able to extend credit because of consumers’ consistent spending patterns especially related to food and beverages which consumers need for survival.
Despite the resilience of Sefalana to government’s crumpled budget, Chauhan also mentioned that the retailer encountered a challenge in between government tenders.
He cited a gap between November and January in which Sefalana had not secured any tenders which he said resulted in a gross loss.
It seems, however, that the downside will be offset as Chauhan said that the retailer secured a P100-million tender in January.
He said that the three months tender came in as a double order due to the drought that the country is reeling from which caused a shortfall in food.
A tender that Chauhan is confident Sefalana will secure is that of the milk feeding scheme.
According to Chauhan, Sefalana was not able to secure the tender in 2015 because at the time they had not acquired the milk plant. The tenderer whom the tender was awarded to, he said, failed, however, to deliver which resulted in Sefalana being roped in to supply part of the contract which amounted to two months of production.
He said that Sefalana delivered on the contract in less than the time that had been specified by government. The tender, he said, was not issued in 2016 but when it came out this year Sefalana submitted its bid in the hope that they would win it given that they demonstrated capability to government.
The milk plant that Sefalana is operating was bought from the liquidated Delta Dairies business. Now under the brand Delta Fresh Chauhan, reported that it is making headway into the market.