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Mumias Sugar Fires All Employees

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Mumias Sugar factory
Mumias Sugar factory and headquarters. [Photo/ Courtesy]
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Troubled Mumias Sugar Company has laid off all its employees just over a month after the firm went into receivership under Kenya Commercial Bank (KCB).

The contracts were terminated by KCB which put the Company under receivership on September 20 with the implementations of the layoffs backdating to the date. However, KCB’s appointed receiver for the crisis strapped miller Ponangipalli Rao said that there will be a temporary hire of new staff to hold until the resumption of the miller’s operations.

“The Receiver shall engage the services of an employee on a temporary basis on mutually agreeable terms until when the operations resume,” reads part of a notice sent to media houses early on Tuesday. Me Rao also insisted that the new hiring will give priority to past employees.

A total of 732 employees are expected to be affected by the retrenchment at the debt-ridden miller. 433 permanent staff and 319 contracted staff are expected to be laid off as per the firm’s disclosure on September 30, 2019.

The firm has been on a crisis in the recent years as it continuously faced heightened demands from its shareholders and lenders. The firm’s long documented woes have persisted as it has continuously been in debt in addition to an escalation of litigation.

Mumias Sugar’s last full financial disclosure in 2018 revealed how the company has been struggling as it showcased a net loss that expanded to Ksh.15.1 billion from Ksh.6.8 billion in June 2017.

In its annual report, the company’s auditor highlighted the expanded outstrip of current liabilities and current assets to Ksh 21 billion saying it poses a risk to the company’s continuity. Further to the material concern is the weighted credit risk on the firm’s operations which saw the company’s largest customer in 2018 carry 21 percent of the net miller’s sales.

At the time when it was releasing its report, the firm faced Ksh 12.6 billion in short term debt maturities of up to 12 months as at the end of June 2018. Mumias Sugar Company owes its lenders an estimated Ksh.12.6 billion in outstanding credit including Eco Bank and the Kenya Sugar Board.

Reportedly, the company requires a minimum of Ksh 5 billion to resume operations fully. The miller looks for a strategic investor who will be willing to input the required working capital to have it back up and running.

A recent report by Kakamega County revealed what the company needed to resume normal operations. The County has resolved to curve out a piece of the company by having the national government relinquish part of its 20 percent stake in the miller.

Written by
Kevin Namunwa -

Kevin Namunwa is a senior reporter for Business Today. Email at [email protected].

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