Triangle, Hippo Valley embark on staff rationalisation

Triangle Limited and Hippo Valley Estates, the local units of Tongaat Huletts, have started a process of staff rationalisation to cut costs and ensuring the long-term sustainability of operations.

Describing the move as “extremely difficult,” managing director of Triangle Mr Tendai Masawi said the retrenchment process was a necessary step to safeguard the future of the two sugar milling entities.

Tongaat owns 100 percent shareholding in Triangle and 51 percent in Hippo Valley Estates.

Rising operational costs, including fertiliser, fuel, and maintenance expenses, coupled with inflationary pressures have significantly eroded the company’s profit margins.

“Since 2022, our profit margins have declined by 55 percent, while manpower costs have increased by 133 percent as a proportion of revenue,” said Mr Masawi.

“These realities have placed immense pressure on our ability to generate positive cash flows.”

The company has also faced challenges stemming from the exemption of sugar from Value Added Tax (VAT), which has prevented the recovery of VAT on inputs as well as competition from low-cost, duty-free imported sugar.

“Despite efforts to enhance operational efficiency and increase sugar production, the production remained significantly higher than regional benchmarks,” said Mr Masawi.

“Our inability to generate sufficient cash flows to reduce debt and reinvest in the business underscores the urgent need for corrective action,” continued Mr Masawi, adding that the retrenchment process was part of the broader Project Zambuko strategy to restructure and stabilise the company.

The retrenchment would be implemented in three phases, with the first expected to be concluded by the end of February 2025.

Subsequent phases are scheduled for completion by May and August 2025, respectively.

“This phased approach allows us to manage the transition with the utmost sensitivity and care,” the managing director said.

“We understand the significant personal and professional impact this decision will have on our employees and their families, and we deeply regret the need to take this step.”

Triangle and Hippo has committed to provide fair severance packages based on years of service, as well as access to emotional and psychological support programmes for affected employees.

The companies will also engage closely with union representatives and employee committees to ensure transparency and fairness throughout the process.

Mr Masawi however, pointed out that the retrenchment exercise was not related to the ongoing business rescue process of Tongaat in South Africa or its acquisition by Vision Consortium.

“This retrenchment exercise, while difficult, is necessary to ensure the company continues to play its vital role in the economy and the livelihoods of our communities,” said Mr Masawi.

Despite the financial challenges, Mr Masawi acknowledged the efforts of its employees in sustaining operations.

The company recently awarded a discretionary production bonus to recognise their contributions, particularly in improving agricultural and milling performance, which exceeded budget by 14 percent.

“We are profoundly grateful for the hard work, loyalty, and dedication of our employees,” Mr Masawi appreciated.

“This decision is not a reflection of their commitment or performance but a response to the economic realities we face.”-newsda