1. Inspired By Our Desire To Succeed
Reg. No. 2013/112031/07
2A Cachet Street, Ventersburg 9050, Free State Province
Inspired By Our Desire To Succeed

2. Inspired By Our Desire To Succeed
Discussion issues
About Lethabo Milling
Company Resume
Our Reason to enter the Market
Our Vision and Mission
The Purpose of the session
Our Learning’s to date
Support we received as small scale millers
Milling Industry structure and dynamics
Our Road to success
Our thoughts on the development of a milling franchise model
Challenges faced by small scale millers
Inspired By Our Desire To Succeed

3. About Lethabo Milling…
Lethabo Milling (Pty) Ltd is a 100% South African black owned maize milling business and a new player in the maize milling industry. The Lethabo concept was conceived in 2010
All 2 directors are black with one being female
Xolani Ndzaba is the CEO
Lethabo Milling (Pty) Ltd is positioned in the market at the same competitive level with the industry's main players on price, product quality and customer service offering.
Lethabo has created 44 jobs in Ventersburg – an area that has a high unemployment and other social challenges . 40% of these employees are women and over 75% of the workforce is under 35 years old
1. Off Take Agreements
Masscash Group
To supply 10,000 tons per annum of Lethabo Super Maize Meal to Masscash
Our pricing to the Masscash Group is based on the best market price less 3%
FABCOS
To supply 7,200 tons per annum of Homegrown – FABCOS house brand
United National Breweries
We also have a sales volume commitment with the United National Breweries for 300 tons per month
2. General Trade
We plan to access the general trade with our brands once when we increase production capacity
3. We believe in building customer value propositions and lasting business relationships driven by good service, mutual beneficial trust and integrity.
The milling plant is situated in a small town of Ventersburg in the Free State Province. The plant is built next to the N1 Highway giving us access to all the provinces in RSA and Lesotho
The location of the milling plant and the distribution centre is the ideal location because of its accessibility to raw materials and to the market. We are in the quality maize triangle
Mill full capacity is 16,500 tons per annum.
We deliver directly to agreed locations as per customer requirements.
We also have a depot in Johannesburg to service the Gauteng market.

4. Our reason for Market Entry
To progress the economic liberation agenda post the apartheid era in South Africa, there is a need to access and own industries that are largely reliant on black consumption but lack black supply from the production value chain side
This in itself presented a business opportunity for us.
Our mission and objective of market entrance are
To increase the choice of company buyers for BEE suppliers in this industry
To broaden consumer choices for quality black produced products in this case South Africa’s favourite staple diet
With more varied players in the market, price points will be managed downwards which in turn will favour consumers
To increase route to market options to black farmers for better pricing terms and profitability
Inspired By Our Desire To Succeed

5. Inspired By Our Desire To Succeed
Vision & Mission
Our Vision To be one of the top South African black owned milling companies within 5 years of operation through the following measures
Commercial Performance
Organizational Performance
Sustainable Social Development.
Our Mission
Is to consistently provide high quality products to our customers in a commercially viable manner so as to create shareholder and stakeholder value.
The long term objective of the business is to expand our product line and acquire a much bigger mill and to create more jobs in a region that has extremely high unemployment.
To consistently meet and exceed customer, consumer and supplier, expectations.
To develop and create upstream value chain partnerships with local black farmers
Inspired By Our Desire To Succeed

6. Our purpose in this session
Lethabo Milling is invited to provide input on the following issues around :
Development and implementation of a small-scale maize milling programme embedded in a franchising business model.
Introduction of a support programme to facilitate the market entry of small-scale maize mills.
Development of a milling skills development programme in collaboration with the Food and Beverage Sector Education and Training Agency.
Inspired By Our Desire To Succeed

7. Support for small scale miller
Imperatives
Dependency
Support Provided
Stakeholder
“Where to play and How to play”
Market research
Business Case
Research data
Gap analysis
Market Area
Product segmentation
Profit Pools
Incubation training by ABSA and Masscash through their ED programme
Start up Capital
Business Gearing
Margin analysis
Business Loans
Financial training
Business Modelling
ABSA
Masscash
Plant and Machinery
Business Plan
Funding to procure milling plant / silo’s etc.
DTI
Staff Development
Milling skills
Training of staff
NCM recommended by DTI
Basic Business Skills
Basic business knowledge
Tertiary training
Business Management training programmes ( GIBS)
Grain procurement and supply
Pricing fluctuation
Storage
Reliable suppliers
Funding to procure Storage Silos
Route to Market
Established customer base
Off take agreements
FABCOS
Compliance issues
Inspired By Our Desire To Succeed

8. 9. Business Systems and Job Creation
The current industry value chain structure favours big established players
They control :
Market access
Value Chain price economics
Access to unprocessed produce
9. Business Systems and Job Creation
Consumer
Farmers
Cooperatives
Commodity
Traders
Retailers
(Proprietary and House Brands )
Ideal
Millers
Emerging farmers have tied agreements due to lack of resources
Value chain pricing and margins is dictated by the Cooperatives , Traders and Retailers
Emerging or small scale Millers are also subjected the industry structural dynamics
Inspired By Our Desire To Succeed

9. Inspired By Our Desire To Succeed
OUR ROAD TO SUCCESS
The road we have travelled so far has not been a bed of roses.
It was full of potholes and speed humps
However we were determined to reach our destination despite all the challenges we were facing
Challenges we had to overcome
There are barriers to entering such a competitive industry which has big and dominant players mainly white
The high cost of acquiring machinery
Lack of access to capital due to stringent requirements from the financial institutions which affect most start up businesses especially SME
Non availability of sales contracts from the big customers
Lack of trust or confidence in our idea from identified market and financiers
Finally the transaction was facilitated by Massmart in partnership with ABSA after we had signed an off-take agreement with Massmart
Through the SDF:
our business is able to enter the tough and competitive maize milling industry and deliver a quality product to our customers and consumers
We will be able to create 40 + new jobs in the next six months
Above all those challenges Lethabo Milling would like to take this opportunity to THANK Massmart and ABSA Bank for believing in our business idea and enabling us to MAKE IT HAPPEN
Inspired By Our Desire To Succeed

10. Development of a milling franchise business model
Element
Model
Benefits
Development of Regional Maize supply chain
Recruitment of farmers with offtake agreements with regional millers
Employment creation
Wealth creation
Reducing number of players in the value chain enables the following
Price reduction of basic food commodities to consumers
Lowers barriers to market entry
Increases margins for Millers and Farmers
Farmers business sustainability
Capacity Building
Tandem franchising model wherein the state owns the equipment and land with a progressive buyout of the equipment and land over an agreed period
Enforces asset care and management
Capability building
Use attendance of training programme and outcomes implementation as an incentive
Increase off take agreements
Procurement of equipment
Provide Mentorship Programme
Use an industry compliance standards for licensing
Skills development
Monitoring mechanism
Establish a ‘Board” to manage the process or
Use current institutions to manage process
Develop universal standards
Overseer and monitoring mechanism
Inspired By Our Desire To Succeed

11. Small scale millers challenges
Access to Finance
Grain procurement
Price fluctuations ( SAFEX)
Access to credit
Transport costs
Access to established retailers
Reduced margins
Retailer’s set selling price points
Rebates
Competencies
Milling Skills
General and Basic business skills
Mentorship
Inspired By Our Desire To Succeed

12. Inspired By Our Desire To Succeed
Xolani Ndzaba
Xolani Ndzaba and ABSA Board Members 27 June 2014
Inspired By Our Desire To Succeed

13. Inspired By Our Desire To Succeed
Our Product
Inspired By Our Desire To Succeed