TANGANDA Tea Company says it emerged from the Covid-19 pandemic period with a significant cash flow deficit, a position that has worsened due to a combination of global and domestic economic headwinds, prompting directors to propose raising US$8 million through a Rights Offer.
The agricultural export group said the lingering effects of the pandemic, along with climate shocks, depressed international crop prices and persistent energy challenges, had widened its cash shortfall to about US$6,36 million.
The deficit, the company noted, has been compounded by major global climatic phenomena such as El Niño, falling commodity prices and the shortage and high cost of power.
The company said these pressures had strained working capital and heightened the urgency for a fresh capital injection to sustain operations and support growth initiatives.
“If the company does not invest US$6,36m capital into timely and scheduled procurement of agricultural inputs and beverage packaging materials, anticipated business growth may not be realised,” the firm said in a circular to shareholders.
It added that its 13 year crop diversification strategy — now beginning to yield tangible results — had increased demand for upfront payments within its global value chains. The company explained that the working capital cycle in plantation agriculture can extend to as long as 15 months, covering flowering and fruit set, harvesting, primary processing, value addition, exporting and customer payments.
“If adequate cash cover is not provided for these inputs and operations, scheduled production for the coming seasons will be affected. Consequently, the anticipated growth in production volumes may not be realised.”
Tanganda said climate variability had become a structural risk for agricultural businesses globally.
“Changes in climate and weather patterns have resulted in a significant impact on the company’s production and cash flows. It has therefore become imperative that agricultural entities all over the world maintain a cash buffer that assists when weather-related headwinds affect the business.”
The company reported total bank borrowings of US$7,1 million as of September 2025, with monthly loan obligations — principal plus finance charges — averaging US$335 000.
“Should weather-related challenges continue to impact production, the probability of failing to settle debt obligations will increase.”
Failure to meet financial obligations, it noted, could undermine the company’s ability to secure further support from the financial sector. Directors said the Rights Offer is intended not only to stabilise working capital but also to unlock value across key operational areas.
“Cracking the nuts will enable the company to capture the kernel market, whose returns are expected to be better and mitigate potential loss of revenue.”
The company is also rolling out a turnaround plan aimed at improving operational efficiency through a suite of cost management strategies — initiatives that will require funding.
“In the absence of such funding, the company may be unable to fully execute the planned cost management initiatives, such as increasing the use of ride-on machines for tea leaf plucking.”
In its beverage operations, Tanganda highlighted ageing infrastructure at Tingamira Estate.
“The Tingamira water plant, purchased and installed 15 years ago, is now overdue for replacement. It has become inefficient and is constantly breaking down, resulting in intermittent failures to supply the market. If the company does not invest the US$350 000 to replace the plant, there is a risk of losing the premium brand’s market share, and any future recovery may be very costly.”
The group is also seeking to optimise returns from its renewable energy investments.
“To fully utilise the three solar plants installed at Ratelshoek Estate (1,8 MW), Tingamira Estate (1,2 MW) and Jersey Estate (1,4 MW), the company plans to grid-tie these facilities. Currently, at least 30 percent of generated solar energy is being curtailed due to the absence of grid-tie capacity.
“If the company does not implement the required grid-tie program, it may fail to realise the full benefits of the significant investment made in the three solar plants,” it added.
Value addition in macadamia production is another priority area. The company said that without a US$340 000 investment in a modular macadamia cracking unit, smaller nuts would continue to be sold at discounted prices, eroding value.
“In addition, the Company will be unable to access international kernel markets, and the growth potential of the local macadamia snack business may not be fully realized.”
Despite the current pressures, Tanganda expressed confidence in its long term prospects following years of structural transformation. The company said it had successfully evolved from a tea focused enterprise into a diversified agricultural exporter.
“The plantation development and diversification programme, which began 14 years ago, is now substantially complete. As the plantations continue to mature, resulting in increased yields, the company’s financial performance is expected to significantly improve.
“Cash flows are now more evenly distributed throughout the year, compared to previous years, when they were concentrated within the relatively short seven-month tea processing season.
“The macadamia plantation, with an average age profile of 12 years, is still below full maturity. The crop yields, which have peaked at an average of two tonnes per hectare over the past 12 years, are expected to continue increasing as the plantations reach full maturity.
“Similarly, the avocado plantation, with an average age of 11 years, has not yet reached full maturity. While yields were materially impacted by the biennial bearing phenomenon and hail storm damage in the year ended 30 September 2025, production is expected to continue improving over the next four to five years as the orchards mature and normalise.”
As part of its value addition strategy, the company entered into a joint venture with Trade Link Global BV of the Netherlands to establish an avocado oil extraction plant at Tingamira Estate. The plant began operations in May 2025 and the firm said oil exports to established markets are ongoing.
“Efforts to increase the sales and exports of value-added products within the Beverage Division, along with the introduction of consumer-relevant products, will further bolster earnings in this segment.”
Tanganda added that initiatives to improve operational efficiencies — including power usage, human resources and global procurement — are expected to support stronger performance going forward. – Herald
