KENYA: Mills report further financial losses
Published: 04/21/2017, 8:27:58 AM
Financial woes facing local sugar millers have deepened further with three factories reporting more than KES3.3 billion (US$31.9 million) in losses, the latest Auditor General's report shows, according to Kenya's KDR TV.
The report shows Nzoia Sugar Company reported a KES2 billion loss in the 2014/15 financial year while Sony and Chemelil sugar companies made KES748 million and KES640 million loss respectively.
This is up from the KES2.8 billion loss the three millers had posted in the 2013/14 financial year. The Auditor General Edward Ouko noted that the worsening financial situation in Nzoia Sugar Company meant the miller will continue to depend on the support of the Government and creditors.
During the 2013/14 financial year, Nzoia reported a KES2 billion loss and had an accumulated loss of KES35 billion following years of decline. However, the miller's revenue increased from KES3 billion to KES5 billion during the period under review.
But high financing costs which rose to KES1 billion and administrative expenses that hit KES2 billion, forced the company into the KES2 billion loss territory.
The miller during the year under review defaulted on a KES34 billion loan from the National Treasury and another KES2 billion loan from the Agriculture Food and Fisheries Authority (AFFA).
The loans were advanced in the 1980s and have been outstanding for several years, after the sugar miller defaulted on the repayment of principal.
Sony Sugar, on the other hand, blamed high taxes and levies on sugar for its worsening financial position, which the management said in the financial report had impeded growth and expansion of the industry.
In a report to the Auditor General signed by Board Chair Ambrose Weda, the miller reported a KES1.2 billion pre-tax loss after its gross sales dropped from KES5.3 billion in the 2013/14 financial year to KES4.5 billion.