Companies

Mumias creditor seeks scrutiny of accounts

mumias

Mr Ponangipalli Venkata Ramana Rao during a May 2020 briefing. FILE PHOTO | NMG

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Summary

  • Mr Rao has filed the accounts in court as directed by Justice Alfred Mabeya in November last year, following his appointment as the interim administrator of the ailing miller.
  • The receivership accounts dated June 29, 2020, November 10, 2020, and November 12, 2021, show that the company has received revenue of up to Sh1.4 billion.

A creditor has filed an application seeking to question KCB Bank #ticker:KCB -appointed receiver-manager Ponangipalli Venkata Ramana Rao over the accounts of Mumias Sugar Company for the last two years.

Mr Rao has filed the accounts in court as directed by Justice Alfred Mabeya in November last year, following his appointment as the interim administrator of the ailing miller.

The receivership accounts dated June 29, 2020, November 10, 2020, and November 12, 2021, show that the company has received revenue of up to Sh1.4 billion.

Lawyer Jackline Kimeto, who successfully applied for Mr Rao to be appointed the interim administrator, says if it is true Mr Rao has made the money then the amount is enough to pay off KCB’s debt. Ms Kimeto is claiming Sh76 million as legal fees from the miller, making her one of the company’s creditors.

She told Justice Mabeya that Mr Rao should also answer questions surrounding professional and legal fees, which run into millions of shillings, donations captured in the statements and public relations expenses.

Others are security costs amounting to more than Sh150 million, repairs and maintenance of the distillery and the factory.

The application will be heard on March 7.

Ms Kimeto also wants the court to order a forensic audit of the company’s accounts arguing that despite being appointed the interim administrator, Mr Rao has failed to effect the administration process in accordance with the Insolvency Act as well as directions issued by the court.

Mr Rao through Irene Kashindi has opposed the application saying the case will further delay efforts to revive the company.

He said he concluded the evaluation of bids in December and awarded the 20-year lease to Sarrai Group, which emerged the winner and handed Mumias to the Uganda-based company.

“The leasing process is the only viable option to undertake the revival efforts,” he says.

While appointing the interim administrator last year, Justice Mabeya allowed Mr Rao to proceed with the leasing of the plant but said the manager will be required to do it in compliance with Competition Act and file regular updates to the court.

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