Castel speaks on Property disposal

 Castel Malawi Limited, producer of alcoholic and non-alcoholic beverages, says its business is on a positive trajectory and plans to invest in new infrastructure that will, among others, house its head office in Blantyre.

In a written response on Friday, the firm’s marketing manager Twikale Chirwa, who could not indicate how much they will invest in, said the new head office will be technologically advanced and built close to its brewery.

His explanation followed a memo by Castel Malawi human resources director Naomi Nyirenda that company’s management will be selling the head office administration building at Makata Industrial Area in Blantyre and Mzuzu Depot premises.

Said Chirwa: “The new head office building will be at Castel Malawi Blantyre premises close to the Castel Malawi Brewery. The project is estimated to take 12 months to complete after date of commissioning.”

In an earlier statement, Nyirenda said management will use the proceeds from the sale of the building to build a modern office complex, which will have all the facilities required for a head office in Blantyre and a distribution centre

 in Mzuzu.

“The plans are already in place,” she said.

In a published tender notice, Castel Malawi indicated that the sale of the three-story office block is subject to compliance with the Land Act and the company is inviting bids in excess of K1.3 billion, value added tax inclusive.

According to the 2020 Press Corporation plc (PCL) Annual Report, Castel Malawi holds 91 percent of the market share of the clear beer market, 34 percent of the soft drinks market and 11 percent of the bottled water market.

Earlier this year, PCL indicated that it planned to divest a 20 percent stake in Castel Malawi Limited after assessing various operational and regulatory issues that continue to negatively affect the beverage manufacturer.

In a statement accompanying the financial

 results for the year ended December 31 2020, Malawi Stock Exchange-listed PCL said the board of directors concluded that it would be in the best interest of the group to divest the remaining 20 percent stake in its subsidiary.

Reads the statement in part: “Negotiations to that effect have now been concluded at a price of $12 million [about K10 billion], and the proceeds will be realised in 2021.

“The investment has been disclosed as held for sale in the financial statements.”

In the year under review, Castel Malawi recorded an increase in sales volume of four percent compared to 2019 after several years of continuous decline.

While beer volumes increased by 23 percent, the situation remained fragile on soft drinks and water, with volumes declining by 14 percent compared to 2019.

As a result of this, Castel Malawi closed one more line of production in Lilongwe, in addition to the already closed factory at Mzuzu to fit current volumes, leaving the firm with three lines of production from the five lines in 2018.

Castel Malawi said it had been making losses for the past three consecutive years.

In 2018, it reported a K1.16 billion loss before it peaked at K6.24 billion in 2019 and K9.74 billion last year.

But the financial statement showed that the firm’s total contribution to taxes rose between 2019 and 2020 from K19.61 billion to K20.51 billion.

In his 2021/22 Budget Statement, Minister of Finance Felix Mlusu said to align with excise tax rates on opaque and malt beer as applicable within the region, government will reduce excise tax on opaque beer from 30 percent to 10 percent while excise tax on malt beer will be reduced from 60 percent to 40 percent.

Castel Malawi is rated as one of the top 10 taxpayers in the country and employees more than 1 000 people