Job cuts at Castel Malawi: To lay off around 200 workers

Castel Malawi Limited, producers of alcoholic and non-alcoholic beverages, which took over from Carlsberg Malawi Brewer just a few years ago and is at risk of closure due to continued decline in sales volume, turnover and heavy excise tax rate, has officially announced that if will lay off about approximately 200 employees on Friday, August 23 2019.

Castel Malawi Limited to lay off around 200 workers

A short memo dated August 16 seen by Nyasa Times signed by Director of Human Resources Naomi Nyirenda, says: “Management wishes to inform all members of staff that the first phase of retrenchment will be done on 23rd August, 2019 in all three regions.

“All affected employees will be served with retrenchment letters and 23rd August, 2019 and this will be their last day of working. The retrenchment packages will be paid together with August 2019 salaries.”

The memo did not specify but an inside source says the company plan to retrench 200 people just for the first phase with the possibility of more layoffs in months to come and will affect staff in finance, logistics, auditors, some in production and some heads of department.

“The second phase will affect almost everyone from every department because the actual number they want to get rid of is 600 employees,” said our inside source.

In a memo on June 17 to its members of staff, Castel’s Managing Director Herve Milhade had said over the past few years, Castel Malawi Ltd has been struggling to maintain business profitability due to mostly unfair conditions set by Malawi Revenue Authority (MRA), who had since taken over the company’s accounts.

“In 2013, the Malawi Revenue Authority confirmed calculation of excise tax for alcoholic beverages be based on 90% of production cost,” Milhade had said in the memo.

“In 2013, the Malawi Revenue Authority confirmed the calculation of excise tax based on production cost. In September 2018, Malawi Revenue Authority advised the Company to start calculating excise tax based on ex-factory price (production cost + margin). At the rate of 90% this will adversely affect the performance, cash flow and survival of the Company.

“As recently as Thursday, 13th June, 2019, I met with top MRA officials, Mr. Tom Gray Malata, the MRA Commissioner General and Mrs. Nellie Jimmu — Commissioner of Domestic Taxes. However, these efforts have failed and the MRA has issued a final distraint notice against the Company.

“Today, Monday 17th June, 2019, the Malawi Revenue Authority has garnished Castel Malawi Ltd accounts. This action by MRA mean that Castel Malawi Ltd is at risk of closure and the withdrawal of Castel Groupe from the country due to unrealistic and unaffordable excise calculations.”

However, Milhade’s assurance to his employees in June that together with his management team he was to continue to put every effort to rectify the current situation to sustain operations and their commitment to employees, customers, consumers and the general public is the opposite as per the decision to retrench the 600.

During that period, our inside source confided with us that the MD had indicated at a staff union meeting they had that the owners are considering leaving the country opting for Zambia, citing unfavorable economic environment and unstable political environment.

The source had said the government milks the company by demanding payment on top of the excessive taxes it is being charged with.

Castel Malawi is rated as one of the top 10 taxpayers in the country, contributing to the development of the economy for over 50 years and are also the number one taxpayers of import duties.

The company employs a workforce of 1 284 people with a business network of over 100 000 stakeholders, customers, suppliers, distributors contractors, locally and internationally.

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Nchalo yourth
Guest

nsoknho unachuluka pa malawi tatsala ndife

Truth
Guest
Truth

This company is stealing Malawians money. Mowa wawo anthu ambiri akudwala nawo ma hemorroids. Anasiya kuphika bwino. Anzanga ngati mukudwala zinja zimatuluka, zimapanga magazi pobiba, chidule siyani mowa wa carsbelg. Uli ndi mvuto lalikuli. Koma company inzolowra katangale ku boma lolamura…….pano Henery Mussa anagwa nayo company yabalalika. Ichoke kubwere ma company ena….

Allahiminah
Guest
Allahiminah

This is the most welcome news from Castel Company to shut down opting for Zambia. Malawians we dont listen when we say that taxes in the Country are just huge. Let the Castel pack up TIYERE M’MASO MRA IKHAULE ndi DPP YAO . The closure is completely OVERDUE.

Nkhuzi
Guest
Nkhuzi

These are the negative effects of the bad politics, we have been talking about and yet the incapable are clinging to power with nothing to offer and feeling unashamed of. May God save our country

DRAKE
Guest
DRAKE

We are hearing this story basing from the point of Castels side, I dont totally believe the side of their story fully, they may be right to up to some point. In all Countries around the World companies pay taxes based on international formulas applicable. Malawi inherited their taxation systems from the British and some of these taxes are advised by IMF and World Bank to enable the Country generate more Revenue. Now if Castel wants to go and establish its operations in Zambia they are free to do so, but in Zambia the competition in stiff with MOSI and… Read more »

Allahiminah
Guest
Allahiminah

My friend you have better Understanding but missed the point. If you were to follow the whole story you will see that MRA was too much on them despite Castel MD tried to reason with them. Mind you to dismiss 200 people is a big loss for MRA as their collection will be reduced completely. Castel is not lost but rather MRA itself . You cannot find drinks in Zimbabwe today and if you are seen with any type of drink it means that it has been sourced either in SA or Mw or Zambia. Malawi will soon join Zim.… Read more »

Mutumwa
Guest
Mutumwa

Nanunso inu, nkhanizi mukuzimvetsa koma!
In Zimbabwe, the issue is about sanctions, we don’t have sanctions in Malawi. Tikamakhaula iwe udzakhala uli kuti! Woyamba kukhaula udzakhala iweyo Kaya!

Agenda Setting Theory
Guest
Agenda Setting Theory

Write them a letter my friend. They will listen

Maria
Guest
Maria

Ndiye mmene zikuvutira ntchitomo ife ndiye tilembedwadi?

Chule
Guest
Chule

Zokaikisa

Iantana
Guest
Iantana

We lost control of this company …so pathetic

Mitengo
Guest
Mitengo

This is where I see a total disconnect of political will from economic revitalization through domestic production. Why should our tax regime deliberately discourage this domestic production due to the unreasonable excise tax rates? Government should take stringent measures to create a friendly environment for FDIs if they are really serious to tackle the mass unemployment in this country. But it seems they don’t care about unemployment hence they don’t mention any issues concerning unemployment let alone show concern by releasing the unemployment statistics. So sad!

Wakum'mawa
Guest
Wakum'mawa

Good comment from a well read person. Knows what they are talking about. Not the nonsense we read by the government biased commentators, all they do is back mediocrity and nonsense of the current illegitimate government. Unemployment in Malawi has reached astronomical levels. The illegitimate DPP led government just don’t talk about issues which affect people directly. All they good at is the mediocre politics and thieving. Malawi is a failed state. Government deliberately discouraging companies to create employment through punitive tax regime is just dumb. MRA is the worst thing in Malawi. MRA has created an environment where people… Read more »

Ndakhuta@265
Guest

government should think of people and their families before involving politics in everything……… anthu oipa inu, tsiku ndilimodzi……………. zonse zizatha

Gogo mutharika
Guest
Gogo mutharika

It’s good akuchotseni, when we say tiyeni tiyeni tiyende panseu Pa zinthu zikuvuta in this country mumangokhala osapanga nawo…ndizimezitu….