Mumias Sugar Company has seen a sluggish activity at the Nairobi Securities Exchange for close to a month since it received Ksh1 billion state bailout. NSE data shows Mumias share price has traded at an average of Ksh2.16 since the bailout issued on June 23.
The stock has seen a high of Ksh2.50, which was recorded soon after President Uhuru Kenyatta made the announcement of the bailout funds, and a low of Ksh1.85 over the period. The stock losed at Ksh2.10 on Friday.
“The market is giving Mumias the benefit of the doubt after the (injection of) Ksh1 billion. The bailout funds have stabilised the share price and if we continue getting more positive news there is room for it to go up,” said Rich Management chief executive officer Aly Khan Satch.
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The sugar miller has been facing financial crises which, according to an audit by KPMG, occurred due to massive corruption by former managers. Errol Johnston, who previously headed the company from 1998 to 2001, has been appointed the new managing director starting August.
“Mumias is a solid company and the shares are trading because the investors have confidence in it,” chairman Dan Ameyo said. He said they are currently verifying and paying debts owed to cane suppliers.
Mumias outgoing Managing Director Coutts Otolo said the factory has closed temporarily for a month to undergo maintenance and improve its output. It has been operating at a crushing capacity of between 2,000 to 4,000 tonnes daily compared to the factory’s standard cane crushing capacity of 7,000 tonnes per day.
“This has been a very poor crushing capacity in the history of Mumias. The factory has not had consistent maintenance since 2013 and had developed leaking pipes and faulty storage tanks. We shall resume to full-throttle operations when we open the factory again after one month,” he told said last week.
The audited financial accounts show Mumias posted a net loss of Ksh2.7 billion in 2014 up from Ksh1.6 billion in 2013. Over the period the turnover increased to Ksh13.07 billion up from Ksh11.95 billion while cane purchases from farmers stood at Ksh6.38 billion in 2014.
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