JOHANNESBURG – ELLIES has determined to liquidate its embattled manufacturing section, Ellies Industries, with 148 jobs lost in one other blow to South Africa’s shrinking manufacturing sector, as it continues to flip across the group’s fortunes.
Ellies stated the key strains produced by Industries, and that are largely bought to Electronics, encompass merchandise associated to satellite tv for pc connectivity and related electrical merchandise, which Electronics is now in a position to procure externally at a decrease value than if manufactured by Industries.
Shaun Prithivirajh, the chief govt of Ellies, stated in an interview at the weekend: “It had been a very painful decision which affected 148 jobs. However, they could no longer carry the loss making unit.
“The company will be in a stronger position. No one knows the full impact of Covid-19 and we are swinging from one lockdown to the next. Now there is talk of a third wave.”
Prithivirajh stated the manufacturing unit had battled on regardless of being loss-making ready for the federal government’s swap migration from analogue to digital terrestrial tv to materialise, which might have made the distinction. However, that had not occurred.
Ellies makes and installs DStv satellite tv for pc dishes.
Ellies Holdings stated on Friday that it had been monitoring the buying and selling operations of Industries and made each effort to comprise prices and restore a stage of profitably to Industries.
“Of particular concern is the fact that trading volumes have not been adequate to cover much of the fixed cost or to generate sufficient profit to sustain the business,” the group stated.
It stated it had tried to return the manufacturing section into profitability prior to now 5 years by offering monetary help and partially subordinated its mortgage account to allow Industries to proceed working by its wholly-owned subsidiary Electronics.
However, after appreciable dialogue and thought by the board, it had decided that with impact from final Friday, the group by Electronics would now not present monetary help to Industries.
“This has resulted in the Electronics board resolving to commence with an application for the liquidation of Industries,” the group stated.
During the course of 2020, Ellies Holdings engaged the companies of an exterior marketing consultant to assess the operations of Industries with the target of figuring out each inefficiencies and efficiencies so as to help in bettering Industries’ viability.
However, Ellies stated this train didn’t discover adequate positives to persuade it that its continued monetary help of Industries was justifiable or in the very best pursuits of the company and its shareholders.
The group additionally tried to get rid of Industries as a going concern however one potential purchaser accomplished a complete due diligence and declined to make a binding supply.
“The other potential buyer required significantly more security and vendor funding than was currently being provided and thus that potential transaction also fell through,” the group stated.
The group stated it supposed to present extra particulars to its shareholders when it grew to become accessible.
Looking forward, Prithivirajh stated the group was specializing in renewable power and uninterrupted energy provide options as extra individuals had been working from house and did on-line education.
Last year Ellies restructured its logistics business by centralising its operations and paring off its warehousing and logistics operations to a third-party supplier. The group stated in a buying and selling replace in December for the six months to end-October, it anticipated headline earnings a share of two.37c to end-October, from a lack of 2.91c beforehand.
Ellies’ share worth closed unchanged at 10c on the JSE on Friday.