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Marshalls EA posts losses as queries over owners arise

Marshalls East Africa has returned to losses in the year to March on reduced car sales that has seen auto dealer lose market share.

The auto firm recorded a loss of Sh165 million compared to a net profit of Sh181.5 million a year earlier and a loss of Sh344 million in 2010.

Its sales dropped to Sh234 million from last year’s Sh263 million and Sh1.3 billion in 2007—highlighting the troubles facing the Nairobi bourse listed firm and extending the dealers loss making streak to five years.

The profit it posted last year was helped by the waiver of a Sh401 million loan borrowed from KCB by businessman Ketan Somaia, who lost the battle for control of the auto firm to tycoon Kamlesh Pattni in 2010 in a spat that lasted four years.

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Directors and executives friendly to Mr Pattni successfully went to court and argued that the loan was issued irregularly at a moment when Marshalls did not have a board to approve the monies.

The firm could have reported a net loss of Sh319 million excluding the one- off loan waiver.

Investors have taken notice of Marshalls poor show as its shares have become the least sought after at the Nairobi Stock Exchange and goes for weeks without trading at the bourse.

Controversy

Its share price has remained static at Sh12 a piece amid controversy over the ownership of the auto firm following the exit of Marshalls Investments Limited— Pattni’s investment vehicle-- from the list of top shareholders.

Marshalls Investments owned 50.7 per cent of the auto firm in March, but in June the shares had been spread among a consortium of nine investors -- including the dealer’s existing shareholders.

Three new investors -- Global Ltd, Azmaveth Investment and Kobos Ltd -- entered the car dealer’s top shareholder list with a combined stake of 28.4 per cent.

But sources familiar with on goings at the firm reckon that the new investors are associated with Mr Pattni, who had issued a public notice to shareholders in March 13 of his intention to sell up to seven million shares or 48.6 per cent stake in the company.

Analysts reckon that the shareholder spats, high executive turnover and a thin product line has helped rivals such as General Motors, CMC and Toyota munch its market share. It terminated the Peugeot franchise in 2007 ending the 47-year partnership Marshalls had with the France-based firm.

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