The Metals & Engineering Corporation (MetEC), which is heavily indebted and has lost consumer and public trust, is waiting for final approval from the Council of Ministers to change its name to start afresh. The Corporation will repurpose itself as an engineering group with new capital.

As the last option for rescuing the company from its flurry of financial crises, the management of the company has been working on a reform document and regulations for the reestablishment of the Corporation that was tabled to the Council of Ministers.

"We can't ride a dead horse," said Daniel Kitaw (PhD), the board chairperson of the Corporation. "The best strategy is to get off."

The company has weathered one crisis after another over the past couple of years, obtaining a large debt load in the process, delaying mega projects and receiving bitter criticism for the poor quality of its products. The company carries a total of 74.2 billion Br in total debt, of which over half is registered in its book of account. It is currently operating at only 40pc of its capacity.

"On top of its weak capacity to service its debt," reads the company's financial report, "the interest rate accumulated over years threatens the existence of the Corporation. However, the Corporation can be rescued through financial restructuring."

Due to the heavy debt stress, the management has asked the Ministry of Finance for debt restructuring. It asked to pay 7.7 billion Br of the debt itself and convert seven billion Br and 13.7 billion Br into capital and bonds, respectively. It also requested that 16.4 billion Br be written off.

Along with revitalising the company, the management has designed a five-year strategy that aims to generate 17.5 billion Br in revenues in the next five years. The strategic document was approved by the board of the Corporation in June and is currently waiting for a green light from the Public Enterprises Holding & Administration Agency.

The company, which had been in a dilemma with its marketing strategy on whether to be market-driven or customer-oriented, has now decided to put customers at the centre of its goals and strategies.

The management's plan for revenue generation over the next five years has been put forth despite the last fiscal year's below target performance. During the recently ended fiscal year, the company was able to achieve 38pc of the plan. It intended to generate 9.5 billion Br but was able to amass only a little over one-third of that figure.

Out of the revenue, the largest share of it was made from sales revenue amounting to 3.4 billion Br. It also generated 39.1 million Br, 38 million Br and 1.2 million Br from property disposal, receivables and rent, respectively. During the past fiscal year, the company serviced close to one billion Birr of its debt.

The gross profit of the company stood at 195.1 million Br, which is a quarter of the target.

This is a very significant underperformance, according to Abdulmenan Mohammed, a financial statement analyst with close to two decades of experience.

"This reveals that either there is a problem with planning or failure to attain the goal," he said.

When we compare the actual gross margin to a planned one, it is much less. MetEC planned a gross margin rate of 26pc but only achieved 18pc.

"This shows that the cost of sales went up significantly," said Abdulmenan. "The management should explain why the cost of sales went up without a parallel increase in prices."

MetEC also has a poor balance sheet. Its total assets stand at 41.6 billion Br with a very close value of liabilities at about 41.5 billion Br. This puts the company's asset-to-liability ratio at 108pc.

While evaluating the performance of the Corporation, the board identified enormous debt, high staff turnover and limited capacity as the major limitations of the company.

The performance will hopefully be improved during the current fiscal year, according to Hiwot Mosisa, MetEC's new CEO, who also predicts that the reforms completed in the last two years will start bearing fruit.

During the reform, different teams and committees were formed to diagnose the problems, explore scenarios on how to resolve them, and how to go forward with the reforms, according to her. The major thing the Corporation did during the reform was to identify its assets and liabilities.

With the current reform, the Corporation is working on restructuring its organisational setup, debts and human resources. Once the regulation is approved, it will operate nine industries. It already handed over four industries that produce military armaments to the Ministry of Defence.