BRICK manufacturer, Loti Brick, has temporarily laid off the majority of its 150 workers on account of crippling cashflow challenges, a company source has said.
The source this week attributed the cashflow challenges to the company’s failure to sell its products.
So bad is the situation that the company has only left skeleton staff to manage the premises and sell its inventory. The company is also considering to retrench all its workers and close shop, the source said.
Established in 1978, 73, 6 percent of the company is controlled by the Lesotho National Development Corporation (LNDC). Its operations cover manufacturing, sales and distribution of clay brick products.
Loti Brick has the capacity to produce over a million units of high-quality clay and limited stock of plaster bricks per month. Other types of bricks manufactured at Loti Brick are paster and paver bricks.
But the relatively high price of its products and failure to market the products among other operational challenges have hampered the company’s progress.
“The company temporarily laid off the majority of its staff at the beginning of this month due to serious financial challenges,” the source said.
“We have a huge unsold inventory produced over several months and the company is failing to raise adequate revenue to run its operations. It is therefore, considering to retrench staff permanently.”
United Textile Employees (UNITE) secretary general, Solong Senohe, whose labour union has members working at Loti Brick, this week said they were exploring alternative options to manage costs with the Loti Brick management instead of retrenching.
“We are trying to convince them not to retrench the workers as that would spell doom for the retrenches given that the Lesotho job market has been shrinking in the last few months,” Mr Senohe said.
Among others, Mr Senohe said they have encouraged the company to aggressively market its products to generate the much-needed revenue.
Robert Mokhahlane, the secretary general of the Construction, Mining, Quarrying and Allied Workers Union (CMQ) confirmed that their members employed by Loti Brick were currently on temporary lay-off.
Loti Brick’s woes are not new. According to acting Auditor General (AG), Monica Besetsa, report on the audit of the government’s 2019/2020 financial statements, Loti Brick failed to settle its M12 million loan from its majority shareholder, the LNDC during the 2019/2020 financial year.
At the end of the 2019/2020 financial year, the company had an accumulated operating loss of M20 million, the audit report said.
“The company incurred a net loss of M2 183 974 for the year ended 31 March 2018 and has therefore accumulated a loss of M20 523 888. As of March 2018, the company had not paid (serviced) the LNDC’s loan of M12 599 991 for 24 months,” Ms Besetsa said.
She said Loti Brick was among the 13 parastatals that had failed to pay dividends to the government during the 2019/2020 financial year.
The company posted a M 11, 9 million loss in the 2015/16 financial year and M9, 4 million loss during the 2014/15 financial year, according to its audited financial statements.
“These events indicate a material uncertainty, which may cast significant doubt on the company’s ability to continue as a going concern,” Ms Besetsa said.
Earlier this year, the LNDC tried to sell the company to a private operator but failed.
Efforts to obtain comments from both Loti Brick and LNDC were unsuccessful until the time of print.