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Send  Share  RSS  Twitter  18 Nov 2009

VENTURES: Global Market's Rich Contribution

 



Recent Western Cape Business News

JSE listed metals trader Insimbi Holdings enjoyed a profit fillip from a most unlikely source in the half-year to end August when its newly acquired Cape Town division donated a chunky R17 million to the revenue line.

More impressive was that the Cape Town division’s interim profit contribution was a sound R1.5 million – achieved at a time when the commodity cycle has turned for the worse.

Insimbi director Fred Botha says Insimbi’s Cape operation was formerly known as Global Material SA (GMSA).

He explains that GMSA, which has been in operation for over a decade, has been Insimbi’s agent in Western Cape for many years.

GMSA specialises in supplying to industries across sectors in iron and steel, ferrous and non-ferrous, aluminium smelters, petroleum, paper mills, sugar mills and electro platers. It also caters for smaller niche suppliers and markets. Its products include aluminium deoxidants, hydrated lime, bentonite, innoculant, calcium carbide, investment binder, calcium silicate boards, waxes, calcium silicon, iron remelt, carbon dioxidants, soda ash tablets and ferro alloys.

GMSA was previously based in Montague Gardens, but a few years ago they bought a very attractive property in Atlantis with ample warehousing and office and yard space.

Botha says GMSA’s re-location to Atlantis places the company very close to some of Insimbi’s large clients like the Atlantis Foundry and Saldanha Steel.

He adds that GMSA also has a little sandblasting and forming operation making tie bars specifically for the automotive industry. “This is a very niche little business…very simple with very nice margins.”

Botha says that before Insimbi listed on the JSE the group identified a need to improve its presence in Western Cape and also improve service levels in what is considered a strategic market.

We were also servicing PPC Riebeek West from Johannesburg as there was a lack of support and understanding as well as skills in the refractory business from our agent at that time.”

It made sense to service them from a base in Cape Town or Atlantis so we sat down with GMSA and explained that we needed to create a satellite office – much like we had done so successfully in KwaZulu-Natal.”

Botha says that after a long negotiation process, Insimbi finally agreed in early 2009 to buy the business for R680 000 and the building/premises for R6 million.

Botha describes the deal as a strategic move. “It was a move to ensure that we were ‘on the same page’…it removed any potential conflicts and ensured a cohesive and effective business unit whose primary interest is the success of Insimbi.”

Then, Botha continues, there is a ‘great’ premise and the ideal location, which gives Insimbi tremendous flexibility to service existing and new customers in its established business. “It also allows us to look at other opportunities as we have sufficient office space, yard and warehouse space to embark upon new ventures as and when they arise.”

As regards expansion plans, Botha points out that the market was only now starting to show some signs of recovery. “We have looked at some acquisitive opportunities in Cape Town, although we have yet to actually bed any down to pricing expectations of targets. But we are definitely on the look out to diversify in the Western Cape.”

Botha says GMSA has always been a profitable venture. “It has a very focussed management team in the form of Trevor and Sue Smith.”

They are well liked and respected in the respective industries. Now as employees, their transition from business ownes/agents to full time Insimbi employees, has been seamless and in many ways, their vision and commitment is even more aligned with the overall Insimbi commitment.”

We are optimistic about our prospects in the Western Cape. After many years experience via our agency agreement with GMSA, we know the market extremely well and are very excited to assume a more visible and proactive role via our new Western Cape division.”


 
 
 
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