Vision Group in discussion to settle multimillion-rand levies

Vision Group, which bought the embattled sugar business Tongaat Hulett, is in discussions to settle its levy impasse with the sugar industry body while it works to rebuild credibility and stabilise the business. The company also plans to complete the transfer of assets in August to end Tongaat’s protracted business rescue process for the sugar business. 

The sugar producer was placed in business rescue in October 2022 after its funders pulled the plug when it emerged key former executives had allegedly manipulated accounts for years. The company owes banks about R10bn. 

The rescue process was mired in controversies including court cases related to, among other things, the R500m outstanding sugar levies Tongaat owes the SA Sugar Association (Sasa). Tongaat suspended its payment of industry redistribution and levy payments to Sasa for the 2022/23 season, resulting in the association successfully challenging this in court. Business rescue practitioners have appealed the court ruling. 

“There is a court case ongoing and we are trying to settle that. There is an ongoing discussion with Sasa on the matter,” said Gavin Dalgleish, group CEO of Vision Sugar. 

Dalgleish said the controversy around the business rescue process “made the process longer than it should have been. No doubt it's a very complex transaction. (But) in any transition there's always uncertainty and this process prolonged the uncertainty. I think (Tongaat) people are incredibly resilient. I'm very proud of the staying power and having gone the course with us.”

Vision was founded by businessmen Robert Gumede and Rutenhuro Moyo, who heads investment company Remoggo, and international partners Terris AgriPro and Almoiz Industries.

Dalgleish said Vision has been working to stabilise the business, rebuild operational efficiency and re-engage key stakeholders, including Sasa and regional grower networks.

“We are looking at restoring operations and credibility with suppliers, growers and stakeholders. Creating a working environment for our people that they feel proud of working for us and continue to grow as individuals within the company.” 

Tongaat operates in Mozambique, Botswana and Zimbabwe and works with 250,000 small-scale cane growers across the region. 

“We are running in all the countries and are very pleased with our performance. Our three sugar mills have the highest value recovery in the industry so far this year. This is showing the benefits of our investments. Our seasons are well under way in Mozambique and Zimbabwe.” 

Tongaat’s production facilities across Southern Africa have the capacity to crush 12.7Mt of sugar cane — 5.8Mt provided by third-party growers — to produce 1.5Mt of raw sugar, 750,000t of refined sugar, 400,000t of animal feed and 40-million litres of ethanol. It produces 146,000 tons of sugar per month and this is between 5% and 10 % better than last year.

Dalgleish said Vision’s goal is to modernise infrastructure and expand product lines where it makes sense: “I think the most likely additional diversification in the medium term might be electricity generation.”

Dalgleish called on authorities to address the import duty on sugar.

“We need to make sure changes to import duty are implemented very quickly and expeditiously. At the moment, we have an increase in the import duty, and there's been some lag at the department of trade, industry and competition and gazetting that. This creates opportunities for importers to create an arbitrage for importers to bring sugar into the company and country.

“The amount of imports from Swaziland is an issue for the local market. There is a lot of pressure on the sugar industry. I don't think we should look at diversifying as a way to avoid the challenges. Our business does well when sugar does well, and when sugar does well, we're able to fund diversification. You don't abandon sugar by diversifying. We have to focus on getting the sugar right.”