Mara Phones has funding lined up – local management team

JOHANNESBURG, SOUTH AFRICA - JUNE 22: Gauteng MEC

Mara Phones at a Gauteng government handover event, in 2020. (Photo by Sharon Seretlo/Gallo Images via Getty Images)

The local management team of the now-defunct Mara Phones, a smartphone maker, which was launched with great fan fair by President Cyril Ramaphosa at the Dube Trade Port near Durban in 2019, says it has secured funding to revive the venture.

The local management team is currently negotiating with its senior funder, the Industrial Development Corporation (IDC), which provided Mara with R238 million loans, to take over the group.

The group’s lenders moved to liquidate it last month and sell off its assets after Mara Phones said the Covid-19 pandemic forced it to close its doors. It has subsequently emerged that there was a lot wrong in the group, aside from the impact of the pandemic with workers complaining about ill-treatment.

The phone maker could not turn a profit despite Mara saying it had spent about half of a planned R1.5 billion total investment in South Africa in setting up its factory near Durban.

There is now, however, new funding in the wings, says Sylvester Taku, the former MD of Mara Phones and the person now heading the Management Buyout (MBO) team. Without elaborating, he says, “the MBO Team has secured funding since 2021.”

Taku says the hold-up regarding a possible takeover has been the negotiations with the group’s creditors, the IDC and Standard Bank, on payment of the group’s outstanding expenses like salaries.

Same boat

Workers at Mara Phones have sharply criticised the group in how they were treated. Several have claimed wages were still owed to them, and though there were deductions like tax and UIF on their salaries, they were not passed onto the respective state agencies.

Taku says he was in the same boat. Despite getting promoted in January 2021, he became “suspicious” about how the group was run when his salaries for November and December had not been paid.

He initially joined as Head of Growth in December 2019 but asked to be promoted to MD as he saw that only 3,000 of about 10,000 devices were delivered three months after they were ordered. Taku thought he could do something about it if he were in charge.

No real power

Taku, however, soon discovered that he had no real power as the MD.

“Myself, as the MD since 25 January 2021 and the MBO team, had no visibility of the finances nor general ledgers of the entity with major discoveries only made once the MBO process commenced in July 2021.”

On the claims of ill-treatment by Mara’s employees, the buyout team had not known of this.

“As of the allegations from the employees, the MBO team first learned of them in the media last month,” he says.

Even if they did know, they did not have the authority to act. “My employment contract as the MD was never signed nor was the delegation of authority ever given with all decision making still retained by the Group CEO [Ashish Thakkar] and board.”

If the MBO team were to take over Mara Phones, Taku says it would “absolutely” be committed to abiding by the country’s labour laws.

“The real value of the company lies in it living the values of a proudly local manufacturer, and this can only be possible when employees are true and genuine ambassadors and its customer’s enthusiastic advocates. This would be impossible if mere basics like compliance with laws and regulations or bare humane treatment are absent.”

Bright future

Despite the trouble the group is in, Taku and the MBO team believes it is well-positioned to prosper. He says there is “exceptional interest” in locally manufactured smart devices and that there was support from the channel partners.

There was also support from the government in terms of “prioritisation of local content within the sector,” and it also got a boost by securing “a tier-one supplier” as a partner for raw material sourcing significantly improved its margins.

He is hopeful the company can be saved because the offer made to the Business Rescue Practitioner is “comprehensive” and aimed not only at restarting the venture but to enable the company to employ more people, as is required.

It was also looking to launch marketing campaigns and put in place operational requirements like after-sales and repair capabilities.

New name

The one thing that also seems destined to change is the company’s name.

“Given the current situation of the company, it will be sensible to rebrand.”

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