The Board of Ellies Electronics has taken the decision to halt financial support to its manufacturing subsidiary, Ellies Industries.
It will now make an application to the High Court for the liquidation of Ellies Industries.
Ellies Industries manufactures, sells and distributes products related to markets in which Ellies serves, including satellite dishes, terrestrial aerials, TV brackets, mounts, and shelving solutions.
“Arrangements will be made to ensure uninterrupted supply of these products to our customers,” Ellies said in a press statement.
This subsidiary has been underperforming for a while and has been severely impacted by the lack of movement on the Digital Terrestrial Television (DTT) programme by Government.
Trading volumes have not been sufficient to generate any profit and the low activity over the past year has not allowed the business unit to recover.
Ellies management engaged in numerous recovery efforts which included seeking third-party funding and selling the subsidiary.
The company also engaged the services of an external consultant during 2020 to assess the operations of Ellies Industries to assist in improving its viability.
“Unfortunately, this exercise did not find a scenario that would return the subsidiary to profitability,” Ellies said.
Ellies Electronics CEO, Shaun Prithivirajh said while they put every effort into its recovery, they have unfortunately not been able to turn the business unit around.
“It has not been an easy decision to make, but ultimately if this is allowed to continue the contagion will affect the entire group,” said Prithivirajh.
“Decisions that impact directly on people’s livelihoods are deeply painful, but as a board and leadership team, we have a responsibility to ensure the long-term sustainability of the entire Ellies Group.”
Ellies has started the engagement process with all relevant role-players.