Confectionery producer Bakers Inn is undergoing significant staff cuts following a major restructuring effort aimed at streamlining its distribution processes after incurring a loss of US$1.08 million.
According to the Zimbabwe Independent, Bakers Inn previously handled its logistics independently through Bakers Inn Logistics (Pvt) Ltd, a subsidiary of Innscor Africa Limited.
Simbisa Brands Limited, Bakers Inn’s parent company, was formerly part of Innscor before being unbundled into a standalone entity in 2015.
Simbisa has now decided to merge its sales and distribution operations with logistics under a single management structure within Bakers Inn.
This move has resulted in the redundancy of several positions, leading to a wave of retrenchments.
Documents obtained by the Zimbabwe Independent reveal that the restructuring was driven by escalating operational costs, which had severely impacted the company’s viability. The documents, dated July 1, read in part:
Bakers Inn Logistics division has been operating as an independent unit from the Bakers Inn Sales and Distribution division.
The business has consolidated them both and this has eradicated the need for parallel structures, especially in the finance and administration department and the human resources department.
The employer has undertaken a restructuring exercise, which has resulted in the posts of the selected employees being redundant, thereby necessitating the termination of the contracts of employment by way of retrenchment.
The move to restructure the company has also been necessitated by high operational costs in an increasingly difficult macroeconomic operating environment.
It has emerged that Bakers Inn has been operating at a loss for the past two years, primarily due to high exchange rate losses and the rising cost of doing business. The documents further state:
For example, the company realised an after-tax loss of US$1,08 million for the nine months ended 31 March 2024 and an audited loss of US$1,14 million for the year ended 30 June 2023.
This has been a result of high operational costs in an increasingly difficult macroeconomic operating environment where business performance was impacted by large exchange losses from the weakening of local currency on ZWL-denominated receivables, an increase in the cost of doing business arising from the change in VAT (value added tax) status for the baking industry from zero-rated to exempt.
According to the documents, the VAT change alone cost the company US$110,000 in the first quarter of the year.
As part of its restructuring efforts, Bakers Inn has handed over the operations of several depots to partners, who will take on the responsibility of supplying bread to those areas at their own expense.
This transition has resulted in the redundancy of numerous employees at those depots.
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