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Companies

Sony Sugar eyes Sh400m bailout

Sony Sugar
Sony Sugar is facing cash flow problems. FILE PHOTO | NMG 

The Sony Sugar Company management has said it requires Sh400 million to turn around the fortunes of the miller as it faces acute cash flow problems and called on Parliament to help it secure the funds from the Treasury.

“If we get an injection of Sh400 million our cash flow will increase between 50 and 60 percent and we shall not ask any cent from the public coffers,” Mwita Nyange, who chairs the finance committee of the company’s board, told the Agriculture Committee of the Senate last week.

Mr Nyange assured Parliament that a turnaround of the miller is possible and challenged MPs to help the company access the funds as has been the case with the revitalisation of Eldoret-based Rift Valley Textiles (Rivatex).

The company board and management had appeared before the committee to brief MPs on the status of the factory.

Acting Managing Director James Oluoch blamed massive poaching of its cane in the last five years for a cumulative loss of more than 900 hectares of cane valued at Sh2.3 billion and direct investment in terms of input and services rendered to farmers amounting to Sh288 million.

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Mr Oluoch told the committee that the company’s total debt as at October 2018 stood at Sh4.3 billion, which comprises farmers’ arrears, staff emoluments, staff welfare organisations, outstanding payments to service providers and suppliers, statutory remittances, unremitted pension contributions and retirees’ dues, tax arrears and loans from the government.

He said fluctuating and unpredictable revenue flows and failure to maintain the factory since 2016/17 financial year has severely affected the plant.

The factory has experienced frequent breakdowns resulting in high downtime, inefficient milling, low throughput, discontinuous processing, poor extraction and ultimately reduced production of sugar.

“Milling capacity has reduced from an average of 2, 750 tonnes of cane per day to an average of just 1,500 tonnes of cane per day, which translates to 45.5 per cent reduction,” Mr Oluoch told MPs.

“Sony Sugar just like any other state miller is facing cash flow problems.

“We need funds to maintain the plant and there are chances that we may close down if things don’t improve,” he said while challenging the committee to intervene and save the company from cane poaching.

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