South Nyanza Sugar Company (Sony) is seeking a waiver on tax and penalties amounting to Sh657 million from the Kenya Revenue Authority (KRA).
This is after the ailing sugar miller posted losses totalling Sh764.8 million in the year to June 2016.
“We were faced with difficult decision to concentrate our milling on cane which has passed its maturity period. The company had 2,773.28 hectares covered with such cane at the beginning of the financial year,” Sony chairman Ambrose Weda said in the financial statements for the year to June 2016.
He said the management made the decision after the firm incurred Sh1.02 billion loss in missed revenue.
“Be that as it may, the decision has ameliorated further losses that would arise from possible litigation associated with contracted over mature cane.
“It was also important in repositioning the company for renewed farmer confidence and to safeguard our source of raw materials,” said Mr Weda.
He said the company realised Sh5.7 billion as compared to Sh4.4 billion in gross turnover as a result of the measures.
However, Auditor-General Edward Ouko says in Sony’s audited books of accounts that the miller has outstanding Sh657 million value added tax at June 2016, up from Sh337 million in the previous year.
He said the tax arrears span several months of non-payment during the year under review.
“The management has indicated that it has paid some of the outstanding obligations and intends to approach the KRA for waiver of applicable interest and penalties,” Mr Ouko said.
He said the miller’s current liabilities exceed its current assets by Sh2.2 billion up from Sh1.4 billion in the year to June 2015.
“This, along with other matters highlighted in note 2(a) to the financial statements indicate the existence of material uncertainty which may cast significant doubt about the ability of the company to continue as a going concern,,” Mr Ouko said in a report dated April 10, tabled in Parliament on Thursday.