Mumias Sugar Company Limited was incorporated on July 1st 1971 by the Government of Kenya. Mumias Sugar was to hold majority shares of 71 percent and the minority interests being held by the Commonwealth Development Corporation with 17 percent, Kenya Commercial Finance Company with 5 percent, Booker McConnel with 4 percent and the East African Development Bank with 3 percent.
At one time, Mumias Sugar Company was the largest sugar manufacturer in Kenya producing about 250,000 metric tonnes which used to be about 42 percent of the estimated 600,000 metric tonnes annual national output.
In 2013, the company started facing some financial turmoil, one that was described is the “toughest financial moments since its inception” with its net revenue falling to 5.4 billion shillings the same year.
Profit/Loss of Mumias Sugar Company since 2009
Mumias Sugar Company Limited has been making profits since the year 2009 but 2014 and 2015. In 2009, the company registered profits of 1,609,972 shillings and 1,572,383 shillings the following year.
In the year 2014, the company hit the news headlines when it plunged into a loss of 2,706,595 shillings and further 4,644,801 shillings in the year 2015.
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Reasons for Losses At Mumias Sugar Company Limited
The company has been blaming its losses on sugarcane poaching as well as the influx of cheap sugar in the country from other countries.
During the month of June this year, the miller suspended the operations for some time citing sugarcane poaching as the main reason behind the decision. The company also blamed the availability of cheap sugar from other countries which was being packed in Mumias Sugar packets and then sold.
Analysts as well as politicians, however, blamed poor management as well as corruption as the main reason that was driving the once vibrant miller into financial oblivion.
Mumias Sugar Company has been posting some mixed performances at the NSE. At some point being among the top gainers of the day and at times, being among the top losers.
On the 8th of September this year, for instance, the company was the top gainer of that day with 10.00 percent at the price of 1.10 shillings per share. The same happened on the 3rd of June with a gain of 7.69 percent at the price of 1.40 shillings per share.
On the 25th of May, however, it was the top loser with 7.14 percent at the price of 1.30 shillings per share but featured among the most traded in shares with a volume of 1.73 million.
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B- Gain/Loss in %
P- Price in shillings
On the way to Recovery
Mumias Sugar Company is on a massive recovery program helped by the government which gave out one billion shillings last year as a bailout for the ailing miller.
The management has also said that it is working on the issue of paying sugarcane farmers on time so as to prevent them falling prey of the competitors in the same field who pay on time and at times even before cutting the cane.
Solution for the Sugar Industry woes in Kenya
According to an article on one of the local dailies, a UN agency said that the solution to the problems facing the Kenya’s sugar industry lied in the lowering of production costs and not in the protection of sugarcane farmers.