Hi skerians,wud like to buy mumias with an exit b2n 4-6 months.what's your advice with issues like the one below?
Mumias MD faces biggest challenge yet
Published on
By Luke Anami and Peter Atsiaya
Since he first took over as CEO of Kenya’s biggest sugar miller,Dr Evans Kidero is facing his sternest ever test yet.
The Mumias Sugar Company MD now finds himself facing off against entrenched interests in the multi-billion shilling industry,as he struggles to return the company that controls 60 per cent of the local market,back to profitability.
At times,his perceived powers are stretched to amazing lengths by rumours and innuendo.
When one of our writers sought an interview with Agriculture Minister William Ruto last week,over the unrest and arson in Mumias,and the row over the pricing of cane,he was told by an aide that Ruto was not keen to meet him.
When he asked why,he was told that Ruto believed Dr Kidero had the ears of most writers in the mainstream media,a claim the writer found both ridiculous and incredible,considering he only met the Mumias CEO for the first time last week.
Privacy policy
New Comesa rules
Part of the reason for those claims may stem from the fact that Dr Kidero worked for a local media firm,before taking up his present position at the sugar firm. But Kidero only has kind words for Ruto. 'I acknowledge the reforms the Agriculture Minister (William Ruto) has brought in the sector,especially newly introduced rules on Comesa. I expect that the public-private partnership is the way to go in the privatisation process that has now kicked off,' said Kidero.
Mumias is seen as the only sugar miller capable of surviving competition expected from Comesa after 2012,when the special Comesa sugar safeguards that limit imports duty free sugar to 220,000 tonnes annually,expire.
Mumias Sugar had teamed up with the Tana and Athi River Development Authority (Tarda) to develop fast-growing cane project within Tana delta,but it has been held up by a court case filed by civil groups opposed to it. Now,politicians and other interested parties,including sugar importers,seem to have ganged up to incite farmers within the sugar belt,not only to boycott cane deliveries,but also burn the crop.
'In the nucleus estate,we lost about 1,600 hectares and 5,000 hectares belonging to outgrowers,which is about 10 per cent of our production,following the burning of cane by arsonists,' said Dr Kidero.
'The politicians are playing into the hands of sugar importers to incite farmers to burn cane,when some of the issues are beyond Mumias as a company.'
Kidero said factors such as high fuel costs,inflation,poor yields,and lack of a business attitude towards farming of cane had held back the competitiveness of the industry.
He said that due to high taxes on sugar and high domestic prices,sugar importation has,over the years,evolved into a multibillion shilling business,and those involved would like to 'kill' local production,in order to enrich themselves.
Sources,including several within the Kenya Revenue Authority,confirmed that huge quantities of sugar are smuggled into the country by traders through the country’s porous borders,mainly through Somalia. Sugar meant for export is also diverted into the local market,making local sugar uncompetitive.
Cheap imports
'We have to look into ways to stop cheap sugar imports,in order to protect our farmers,' said Dr Kidero. Mumias Sugar is yet to fully recover from the effects of the post-election violence early last year,that affected cane production as well as marketing channels.
When the political interference witnessed early this month is added to the matrix,it paints a gloomy picture for an industry that is preparing to come out of the woods,and compete with other producers within the Comesa region.
Mumias Sugar’s pre-tax profit for the half-year dropped by 73 per cent,from Sh864 million in the in 2007/08 to Sh230 million in the current financial year.
Gross sales dropped by eight per cent from Sh6.7 billion to Sh6.2 billion. Earnings Per Share (EPS) declined by 70 per cent to Sh0.11 compared to Sh0.37 in the same period last year.
'There was low factory performance,due to low cane availability,arising from very heavy rains in August to October 2008 and the annual plant maintenance in August 2008,' said Kidero.
CRIPPLING STRIKE
'This was further exacerbated by disruption of harvesting and transport operations. Cane harvesting and cane hauliers went on strike leading to unplanned factory stoppages.' According to Kidero,sugar barons and politicians have taken advantage of the situation to incite farmers to stop cane deliveries,and cripple the factory.
A fortnight ago,politicians led by area MP Ben Washiali,Bonny Kalwale (Ikolomani) and Lands Assistant minister,Silvestor Wakoli led farmers in demonstrations in Mumias,calling for Kidero’s removal.
'If Mumias collapses,the farmers and their MPs would suffer from the effects of unemployment and the resultant increase in crime,' he said.
'The MPs should be supporting the factories to push for a reduction of taxes and levies on sugar production,right from farm inputs to transport of final product,' he noted.
winners never quit and quiters never win