Sefalana in cautious growth 

SHARE   |   Tuesday, 01 August 2017   |   By Kabelo Adamson
Sefalana Group Managing Director Chandra Chauhan Sefalana Group Managing Director Chandra Chauhan

With the Fast Moving Consumer Goods (FMCG) market saturated in Botswana, Sefalana Group says it will not be making any unnecessary investments in the market; doing that only when it sees a real opportunity. The group Managing Director, Chandra Chauhan said on Friday during the presentation of Sefalana financial results that the FMCG market in Botswana has become saturated and therefore it would not make sense to open more retail supermarkets. Sefalana has during the course of the just ended year opened just one store to take the number of its stores across the country to 51. The group aims to open another store, a cash and carry in Mogoditshane before the end of this year. With a huge number of retail stores across the country which has resulted in increased competition together with other market dynamics, Sefalana has reported that this year has been its most difficult one in many years. The group, which consists of a number of portfolios such as manufacturing, says the economy as a whole has been somewhat depressed. This is said to have in turn impacted on consumer confidence and ultimately on spending patterns. The effects are reportedly being felt across the market in the FMCG sector as well as other sectors of the economy with a large number of groups reporting a drop in earnings. Sefalana management is pinning its hope on the believe that the current level of spending is somewhat temporary and expects the business to bounce back.

While still waiting for business to grow to satisfactory levels again, Sefalana says it is using the moment to further diversify its product offering by way of introducing new products and services into its stores, by focusing on the entire supply chain to extract efficiencies and through continued focus on expansion into the region where the respective countries are at different stages of their economic cycles. The group is continuing its drive to enter the regional market and has in November last year debuted in Lesotho through the takeover of the largest cash and carry in that country which is located in Maseru, Lesotho capital. The transaction is said to be paying off as in the first six months of trading increased the group turnover by P155 million. The Lesotho segment has however made a loss of P1.1 million in the current year but the expectation is that it will generate profit in the forthcoming year as the business stabilises. Overall during the current year, Sefalana realised Profit before Tax (PBT) of P173 million but that is a 16 percent drop when compared with the previous corresponding period. The group says it continued to focus on its core segments, being FMCG businesses, though a downward trend was observed across most Botswana businesses. The Namibian business, which was acquired in 2014, is reported to be doing well and proving to be a successful acquisition, contributing substantially to the current year results.