Employees of AHL Group, formerly Auction Holdings Limited, have gone without pay for two months due to financial hardships facing the group.
In August the employees received their pay late while they are yet to be paid for September and October.
The company has attributed the situation to a hostile economic environment which has led to a significant drop in its revenue.
One AHL Group board member confided that the company has embarked on a restructuring process which will include retiring some members of the executive management.
In a written response to The Nation questionnaire, AHL Group public relations manager Teresa Ndanga yesterday confirmed that salaries for September and October had delayed and acknowledged the stress the development was exerting on employees.
She said: “Management has been working tirelessly to access bridging finance with our bankers, but the processes have delayed.
“Management continues to engage the bankers for a solution that will hopefully ensure that we pay all the salary arrears in the soonest time possible. Our bankers understand the urgency of the matter and we are hopeful of a solution soon.”
Ndanga attributed the financial challenges to a number of reasons, including 43 percent drop in revenue.
“The initial volumes projections on which revenue expectations were based were that a total of 173 million kilogrammes [of tobacco] would be sold, but we closed the season after selling 114 million kilogrammes. This, coupled with low tobacco prices on the auction market, has significantly affected our revenues.”
She also said the company has heavily invested in Covid-19 preventive measures, a cost which was not anticipated; hence, affecting the already fragile financial muscle.
Ndanga said: “It is important to note that tobacco, which has been the main business line for AHL Group, continues to face numerous pressures including anti-smoking lobby, falling demand and low prices, among others, which necessitated AHL’s diversification drive to ensure long term sustainability.
“AHL Group still believes the business, while not yet fully performing to their potential and contributing to the overall financial underperformance of the group, are strategic in ensuring this vision is achieved.”
In recent weeks, social media has been awash with posts allegedly from AHL staff expressing displeasure with the delay of salaries among other issues facing the company. There have also been posters flying around indicating that employees were planning to hold a vigil to force management to give them their dues.
AHL Group, which owns and manages the country’s tobacco marketing floors and a commodity exchange among others, is owned 42 percent by the Malawi Government through Agricultural Development and Marketing Corporation (Admarc).
Admarc acting chief executive officer Felix Jumbe, who by virtue of his position chairs the AHL Group Board, said they have managed to secure some bridging financing that is expected to improve things.