12 Jul 2016 PepsiCo’s new Zimbabwean plant: to open with a presidential twist
India’s Varun Beverages, a division of RJ Corp, headed by billionaire founder, Ravi Jaipuria, runs more than 20 bottling plants for PepsiCo in Asia and Africa — including operations in Mozambique, Zambia and Morocco.
The company will build the Zimbabwean plant with local partner Glaciem and Adam Molai, a businessman with interests in fuel logistics, lubricants and cigarettes, who is married to President Robert Mugabe’s niece, Sandra Mugabe.
Zimbabwean media said the president had “saved” the deal during the India-Africa summit on the subcontinent last year, and that Jaipuria had requested a meeting with him to complain about excessive red tape as well as the requests for documentation from multiple government departments that were frustrating the deal.
Local media also reported that Jaipuria had a further $250m lined up to invest in the Zimbabwean agro-industry, solar power and health-care sectors.
Molai’s stake — believed to be 15% with an option of being increased — helps Varun Beverages comply with the Indigenisation & Economic Empowerment Act, which requires companies to be 51% held by Zimbabwean shareholders.
PepsiCo Africa CEO Krishnar Shankar says the transaction was approved “at the point of application” and that the company has an approved indigenisation plan and certification.
According to Shankar, the plant — expected to be completed in the first quarter of 2017 — will employ 600 people directly, and an estimated 3,000 jobs will be created upstream and downstream from it.
Shankar says Jaipuria’s intervention secured the necessary authorisations during his visit to Zimbabwe in April this year and that Jaipuria was told the project would be fast-tracked.
Molai admits Zimbabwe’s ranking of 155th in the World Bank’s Ease of Doing Business survey — 27th in Africa — threatens investment from foreign destinations and makes it harder to deliver on the country’s economic potential.
However, he says that thanks to the dollarisation of the Zimbabwean market, it is “no longer subject to the vagaries of the exchange rate”. He rates Zimbabwe’s geographic position and resources as advantages that can be used to drive a “growth spurt” if administrative delays and red tape can be dealt with.
Jaipuria’s commitment is surprising, given that Varun Beverages already operates a bottling plant in neighbouring Zambia. The stated intention with the Zimbabwe plant is to serve the markets of Zimbabwe, the DRC and Namibia, all of which are within striking range of Zambia.
The 8,125m² manufacturing facility and 1,330m² utility area with boilers will be built on 7.3ha of land, and will make use of Linker automatic filling and crowning machines from Poland and other equipment from India and Europe.
The operation will be able to fill 600 glass bottles a minute in the launch phase and 400 cans a minute.
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