This will be the second bailout that the debt-saddled Mumias will be seeking from public coffers, having received a Sh1 billion rescue package last June to pay off farmers’ debt and buy spare parts for the factory.
The miller posted a Sh1.58 billion after-tax loss in the half-year period compared to Sh1.45 billion net loss in the six months to December 2014.
Mumias Sugar is seeking an additional Sh2 billion bailout from the government after falling deeper into the red in the six months to December 2015.
The troubled sugar miller posted a Sh1.58 billion after-tax loss in the half-year period compared to Sh1.45 billion net loss in the six months to December 2014.
Sugar sales grew by a tenth to Sh2.9 billion, bottled water sales dipped by more than a third to Sh8.6 million, while the energy generation unit recorded zero revenue as the miller did not sell any electricity to Kenya Power.
Ethanol sales increased by nearly a fifth to Sh435 million compared to Sh376 million generated in the half-year to December 2014.
Mumias chairman Dan Ameyo said one of the strategies meant to turnout the sugar miller’s fortunes was “Collaborating with GoK for additional funding of Sh2 billion”.
“There have been no exports to the national grid since December 2014, hence no power export revenue earned since that time,” said Mr Ameyo, adding that the miller was engaging Kenya Power on the matter.
This will be the second bailout that the debt-saddled Mumias will be seeking from public coffers, having received a Sh1 billion rescue package last June to pay off farmers’ debt and buy spare parts for the factory.
Mr Ameyo said Mumias is also seeking to restructure long-term loans by lengthening their repayment period to seven years, including a two-year grace period. Mumias’ current liabilities — debts and obligations due within a year — were recorded at Sh10.2 billion as at December 2015.
The heavy uptake of short-term debts saw Mumias Sugar’s finance costs double to Sh732.5 million in the period under review.
Mumias closed the half-year period in a negative cash flow position, even as it battles other challenges such as raw material shortage, delays in factory maintenance, and slower development of new cane fields.
“The cash flow challenges over the years saw the factory suffer long delays before undergoing annual maintenance,” the firm said in a statement. Mumias blamed stiff competition from new sugar millers for eating into its supply of raw materials and market share.
“The effect of proliferation of mills created competition for the available cane in the Western region, while the general impact of the financial pressures on farming led to inadequate inputs to obtain optimum cane yields,” the company said.
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