- Botswana business units account for 64% of Group’s PBT, with an impressive increase in PBT from P192m in the prior year to P259m in the current year
In the fiscal year 2023, the Sefalana Group has reported a substantial recovery from the lingering effects of the pandemic that have shaped its trading activities and strategic decisions over the past three years, the Group’s Managing Director, Chandra Chauhan, has said.
“During that period, we have worked tirelessly to ensure we remain resilient and respond quickly and appropriately to the uncertain and continuously changing environment,” he remarks in Sefalana’s integrated annual report for 2023.
For the year under review, the Sefalana Group posted a profit before tax (PBT) of P403 million, marking a notable 21 percent increase compared to the previous year.
The effective tax rate for the year, at 25 percent, is significantly lower than the previous year’s 34 percent.
This decrease is attributed to the payment of accelerated withholding tax on dividends declared by subsidiary companies to Sefalana Holding Company Limited in 2022, preceding the increase in Botswana withholding tax rates on 1st July 2021.
“During the year, we invested significantly in inventory to ensure supply constraints were minimised,” Chauhan notes. “This has enabled us to avoid stock-outs and provide our customer base with a consistent product offering.
There have been a number of significant price increases from suppliers in South Africa over the last 18 months, and where possible we have increased procurement to mitigate against these increases.
“In doing so, we have been able to delay price increases to our end consumer wherever possible. Our cash position remains strong at April 2023, and was largely used to settle creditors shortly after the year-end.
“Overall, our working capital position remains strong and allows us to make quick and strategic decisions without the need to source additional funding.”
Botswana business units accounted for 64 percent of the Group’s PBT, with an impressive increase in PBT from P192 million in the prior year to P259 million in the current year.
“The most significant growth has been in the Trading Consumer Goods sector, with an impressive turnaround in both the Wholesale and Retail business.”
Furthermore, Chauhan emphasises that Sefalana’s primary focus in recent times has been on its core Fast Moving Consumer Goods (FMCG) businesses. The company has invested considerable efforts to enhance margins and their relative contribution to Group results.
In the report, Chauhan acknowledges the challenges posed by margin pressure, especially during inflationary times when disposable income is strained.
“We have noted this trend worldwide,” he says. “We are faced with constant price escalations from suppliers in South Africa who have experienced significant load shedding, which has impacted volumes produced and ultimately pricing.
“Through regular dialogues with our suppliers, and through strategic procurement, we are pleased to have maintained, and in many instances enhanced, overall margins despite these ongoing challenges.”