Troubled Mumias Sugar sacks all its employees

Tuesday, November 5th, 2019 16:58 | By
Mumias Sugar staff want Sarrai Group out
Mumias Sugar revival. Photo/Courtesy

Troubled Miller, Mumias Sugar has sacked all its employees three months after being placed under receivership.

“Consequent to the company being placed under receivership, all employees contracts stand terminated from the date of receivership i.e. 20th September 2019,” a general notice from the receiver manager, P.V.R Rao, copied to heads of departments and KUSPAW Branch secretary notes.

Rao said any payment to affected employees shall be dealt with in accordance with the provision of the law.

“Accordingly, the Receiver shall engage the services of any employee on a temporary basis on mutually agreeable terms until the time when the operations resume,” the Rao.

Rao said priority will however be given to past employees while recruiting the staff on temporary basis until when the company operations are revived.

The cash strapped company was placed under receivership by KCB Group which executed the lender’s agreement dating back to September 2010 to protect its assets and keep operations running.

The move by KCB followed approval by the court and consultations between the bank and inter-lenders who are owed an estimated sum of Sh6 billion. The Kenya Revenue Authority is also demanding a Sh10 billion in outstanding taxes.

The company has been running on commercial debt for the past four decades from lenders who including Barclays, Stanbic Bank and Kenya Power.

In its half year 2019 financial results, sales in the six months to December 2018 dropped by 96 per cent to Sh25 million from Sh680 million recorded in a similar period the previous year.

Mumias Sugar attributed the decline to lack of products for sale during the period following shutdown of its production line between July and December.

According to the company, earnings were negatively affected during the review period due to reduction in sugarcane supply, which provides over 80 per cent of its earnings that saw the firm halt its operations.

Efforts by the national government to revive the company by injecting Sh3.7 billion have not borne any fruit.

The County Government of Kakamega has also tried saving the miller through a business turnaround structure which if successful would see the devolved unit take up a controlling stake in the struggling company.

More on Business