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IDC slashes annual loss to R33m from over R3bn - 'strict cash flow management'

28 September 2021 7:52 PM
Tags:
The Money Show
Job creation
Bruce Whitfield
Industrial Development Corporation
IDC
business funding
TP Nchocho
Tshokolo Nchocho
financial results
COVID-19
economic recovery
development finance
development financier

Bruce Whitfield interviews CEO Tshokolo ‘TP’ Nchocho about the Industrial Development Corporation's year-end financial results.
Image: IDC on Facebook @IDCSouthAfrica

The Industrial Development Corporation (IDC) of South Africa has posted its financial results for the year ended 31 March 2021.

The state-owned entity reported a R33-million loss for the year in its 2021 Integrated Report.

However, this is a marked improvement on the loss of R3.79 billion recorded during its previous financial year.

IDC Integrated Report 2021

CEO Tshokolo ‘TP’ Nchocho explains that the IDC achieved this loss reduction through a combination of measures enhancing the management of cash inflows and outflows.

With the advent of Covid we had to pay attention to liquidity, so in terms of incoming cash we spent a lot of time with our customer base evaluating their state of health - where they could pay we required them to pay and indeed our collections were higher than we had budgeted for.

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

In terms of the outflow we ensured that we paid our liabilities when they became due, but we prioritised our investment activities. With a lot of the businesses that could defer their capital expenditure... we said 'perhaps you don't need to expand now, maybe expand later'...

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

How many poorly performing companies is the IDC keeping on life support? Whitfield asks.

Nchocho notes that while big loss-making outfits like phosphates producer Foskor make the headlines, the IDC does lose some failing companies.

He uses Foskor as an example to illustrate their decision-making process.

Companies do fail. We do lose money... be it in the leisure industry, tourism and chemicals or other manufacturing businesses, but there are companies that we believe for good reason... we can live with a situation where their return profile is low.

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

If something wrong were to happen to Foskor, what would happen to the economy of Phalaborwa? It is about the only major employer standing there, but are we allowing it to suck the money out of the IDC?

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

No... The board has considered a proposal on the table from a strategic equity partner to buy that company, place it in competent industrial management hands and over time it will ensure that we don't lose it to the economy...

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

While he acknowledges that the IDC has some companies in its portfolio that are not doing well, Nchocho says there are many on the other hand that are performing.

I can't account for many decisions of the past, but certainly where I am sitting today we are acting to create value, sustain jobs

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

The future stars are still to emerge, probably in new emerging technologies and frontier areas... We have been designated to some work in the hydrogen economy...

Tshokolo 'TP' Nchocho, CEO - Industrial Development Corporation

Listen to the interview with the IDC CEO in the audio below:




28 September 2021 7:52 PM
Tags:
The Money Show
Job creation
Bruce Whitfield
Industrial Development Corporation
IDC
business funding
TP Nchocho
Tshokolo Nchocho
financial results
COVID-19
economic recovery
development finance
development financier

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