Tanganda Tea Company says it emerged from the Covid-19 pandemic period with a significant cash flow deficit, which got worse due to a combination of global and domestic headwinds, prompting directors to propose raising US$8 million through a Rights Offer.
Zimbabwe’s largest producer, packer and distributor of tea, which also dominates coffee and agricultural products like macadamia nuts and avocados, said without the funding, growth will not be realised.
Tanganda said the lingering effects of the pandemic, coupled with climate shocks, depressed international crop prices and energy challenges, have widened its cash shortfall to about US$6,36 million. The deficit has been exacerbated by significant headwinds, namely global climatic phenomena such as El Niño, decline in international crop prices and the shortage and high cost of power.
The company said these pressures had strained working capital and heightened the urgency for fresh capital injection to sustain operations and fund 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.
“The crop diversification strategy successfully undertaken in the past 13 years, which is now bearing fruit, has, however, brought with it increased demand for upfront payments from the Company’s global value chains.
“The working capital cycle for plantations can extend to as long as 15 months, encompassing flowering and fruit set, harvesting, primary processing, value addition, exporting and collection from customers. 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 was now 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.
“Tanganda’s total bank borrowings were 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 could significantly affect the company’s ability to secure further support from the financial sector in the future, it noted.
Directors said the Rights Offer is designed not only to stabilise working capital but also to unlock value across several 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 implementing a turnaround plan focused on cost containment and operational efficiency.
The company is implementing a turnaround plan aimed at improving operational efficiency through various cost management strategies. These initiatives will inevitably 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 realize the full benefits of the significant investment made in the three solar plants,” it added.
Value addition in macadamia production is another priority.
The entity said that if it does not invest US$340 000 into the modular macadamia cracking unit, which will add value by beneficiating nut-in-shell production, small-sized macadamia nuts will continue to be sold at discounted prices, resulting in value erosion.
“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 current pressures, Tanganda expressed confidence in its long-term prospects following a major transformation drive.
On the prospects, Tanganda said it had successfully transformed from a solely tea-focused business into a diversified agricultural export enterprise.
“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 twelve 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 normalize.”
In pursuit of its value-adding strategies, the company entered into a joint venture with Trade Link Global BV of the Netherlands in establishing an avocado oil extraction plant at Tingamira Estate.
The oil extraction plant commenced operations in May 2025 and oil exports to already 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.”
Additionally, initiatives aimed at improving operational efficiencies in areas such as power usage, human resources and global procurement are expected to enhance the company’s performance. – Herald
