By Ronald Owili
Mumias Sugar Company is seeking additional funding from the exchequer. The Board of Directors of the miller want the government to provide 2 billion shillings to help turn around the company which has been facing financial challenges over the last five years.
This follows the Company’s loss of 2.3 billion shillings in half year pretax results.
Last July, following the President’s intervention to pull out the country’s largest miller, Mumias Sugar Company out of the financial crisis it was facing, the firm received a one billion shillings bailout package from the government.
The cash was to help pay dues owed to farmers for cane supplies and finance its restructuring.
The Board of Directors of the Company says the firm will use the additional funds from the government for its medium and long term turnaround strategy.
The strategy comprises restructuring of existing long term loans, involving repayments to seven-year inclusive of two-year memo, controlling cost of production, administration and marketing.
It also involves streamlining the organization’s structure to make it lean and efficient as well as engage farmers to boost loyalty and enhance sugarcane supply.
In its half year results, administrative expenses increased to 1 billion shillings from 820.9 million shillings even as marketing and distribution costs reduced more than half to 106 million.
Coupled with high operating costs which increased to 1.04 billion shillings from Ksh 281.5m, the firm sunk deeper into losses posting 2.26 billion loss for the six month period ending December 2015.
This is down 9 per cent on the 2.08 billion shillings pretax loss that Mumias Sugar reported for a similar period a year ago.
This comes as the government is streamlining the sugar industry before COMESA safeguards expires in February next year.