This archive report was first published on 5 November 2019.
Kenya Commercial Bank (KCB) placed Mumias Sugar Company under receivership on September 20, 2019, marking the beginning of a tumultuous period for the firm. The move led to the termination of all employee contracts, effective from the date of receivership.
However, in a notice sent to media houses, KCB's appointed receiver, Ponangipalli Rao, stated that temporary hiring of new staff would occur until the resumption of operations. Rao emphasized that priority would be given to past employees in the hiring process.
According to the firm's disclosure on September 30, 2019, a total of 732 employees are expected to be affected by the retrenchment. This includes 433 permanent staff and 319 contracted staff.
Mumias Sugar's financial woes have persisted for years, with the firm facing heightened demands from shareholders and lenders. The company's debt and litigation issues have escalated, posing a significant risk to its continuity.
As revealed in the company's 2018 annual report, the net loss expanded to Ksh.15.1 billion from Ksh.6.8 billion in June 2017. The auditor highlighted the significant outstrip of current liabilities and current assets, amounting to Ksh 21 billion, which poses a substantial risk to the company's continuity.
The company owes its lenders an estimated Ksh.12.6 billion in outstanding credit, including Eco Bank and the Kenya Sugar Board. To resume operations fully, Mumias Sugar requires a minimum of Ksh 5 billion in working capital.
