Mumias Sugar Company #ticker:MSC is technically insolvent to the tune of Sh6 billion after sinking further into losses that has seen its total liabilities surpass total assets.
In the financial report released Wednesday, the firm’s losses in the year ending June 2018 rose to Sh15.1 billion from Sh6.8 billion in the previous period.
The miller’s total assets as at June 30 last year stood at Sh15.7 billion against total liability of Sh21.6 billion, the statement says.
The miller, which in the recent years received billions of shillings in form of bailout from government, blames the losses on shortage of sugarcane for milling.
The firm also attributed the steep rise in losses, a 101 percent increase, on impairment charges to the plant and machinery to Sh4.9 billion from Sh2.6 billion earlier.
“The acute cane shortage significantly hindered the plant throughputs with cane delivered dropping by 32 per cent to 283,435 tonnes compared with 417,347 tonnes in the last financial year,” said board chairman Kennedy Ngumbau.
The Treasury has pumped more than Sh3 billion in the last couple of years with the view to turning around the fortunes of the once vibrant miller, but the strategy has not worked.
The turnover for the year under review declined to Sh1.37 billion down from Sh2.09 billion.
The firm says it reduced its administrative expenses by 17 percent due to prudent cost management that saw overheads drop from Sh2.3 billion to Sh1.9 billion last year.
The board is looking for a strategic investor in its turnaround goals.
“The board is seeking to enlist the support of the lenders to identify a suitable and competent strategic partner to enhance the financial capabilities to enable full business recovery,” said the board chairman.
Its results delayed for 15 months, leaving investors in the dark as the last release of results was in November 2017.