120 JOB LOSSES AS TEXTILE FACTORY SHUTS DOWN

MBABANE – At least 120 jobs will be lost at Davinscot Clothing Swaziland (Pty) Limited, as the company has filed for liquidation.

Judge Sabelo Masuku, on Friday, granted an order that the company be placed under final liquidation, as per the Companies Act No.8 of  2009. This would be on condition that the textile company provides a certificate to the master of the High Court, that sufficient security has been given for the payment of all fees and charges necessary for the prosecution of all winding up proceedings. This will include all costs for administering the company in liquidation and the master of the High Court thereafter file the assessment report within 10 days of the grant of the order.  Davinscot Clothing Swaziland (Pty) Limited is situated at Matsanjeni, in the Shiselweni Region.

In the application filed in the High Court last week, the Director of the company, Roy Mann, told the court that in the recent past, the company has experienced a serious downturn in its business.  Liquidation means that the business is not able to pay its debts. When a company goes into liquidation, its assets are sold to repay creditors and the business closes down.
“The applicant is a company which carries on business as a textile and clothing manufacturer, with factory premises at Matsanjeni in the Shiselweni Region. The applicant manufactures clothing for export to the region and also to overseas markets.

The applicant has been operating in the Kingdom of Eswatini for a number of years and has been carrying on business at Matsanjeni. It presently has about 120 people in its employ,” said Mann in his founding affidavit.  Mann said production costs have continued to escalate, to the point of making the business unsustainable. He said efforts to try and improve efficiencies and to make the company viable, have all been unsuccessful.

He said in the years 2023 to 2024; the company has experienced a steep decline in orders from existing clients and has also been unable to attract new clients. It has also had the misfortune of having its orders rejected by clients on the basis of poor quality and workmanship. Generally, garments produced by the company have not met market expectations.
Mann mentioned that there has been serious supply chain disruption, with production materials sourced from elsewhere not arriving in time or at all, with a result that the company was unable to fulfil its order obligations in a time effective manner. This inability has seen the company lose its market share.

In addition and owing to the fact that trading conditions were poor, the company experienced cash flow challenges. Mann told the court that as a consequence, the company was unable to meet its recurrent expenditure, most notably, being able to pay salaries for employees on time and making timeous payments to suppliers.  He said the failure to pay salaries on time has given rise to a series of industrial relations problems, with employees embarking upon industrial action. He said the industrial relations problems have resulted in an intervention of the Labour commissioner, who travelled from Mbabane to Matsanjeni, in order to gain first-hand knowledge about the problems that engulf the applicant.

The problems include having to implement short time for employees as a means of reducing costs and to deal with the decline in demand.  “We also explained the cash flow problems that prevented us from paying salaries on time. Frequently in the last few months, employees have been paid a portion of their wages due to the financial constraints. The employees have also resorted to lodging a complaint to the Conciliation Mediation and Arbitration Commission (CMAC) over their delayed and sometimes unpaid salaries,” said the director.  Mann added that in the month of October 2024, the company experienced a 12-day strike, meaning that production had to come to a standstill. He said the consequence of the strike, was that the company was unable to meet its production targets, resulting in the cancellation of orders.

“This was the last straw, as without those orders, the company was no longer sustainable, averred the director.  He said over the past few months, the directors of the company have aggressively pursued the option of securing investors for the business. He said discussions with various investors took place, but the last offer which had looked promising was withdrawn on October 25, 2024. Mann further told the court that for the period of January to September 2024, the total revenue for the company was a sum of E11 066 488.97. The expenses stood at E14 221 094.86. “This means that the company is insolvent and given the decline in trading conditions occasioned by the loss of customers, it is evident that the company can no longer be able to trade,” he said.

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