KCC could lose Sh500 million to three collapsed supermarkets
What you need to know:
- New KCC incurred Sh255 million loss in 2019/2020 fiscal year, latest audited financial statements show.
- The report did not provide any update on latest developments past the June 30 last year.
Government milk processor, New KCC, is on the brink of losing over Sh500 million in bad debt for products it supplied to three fallen supermarkets namely Uchumi, Nakumatt and Tuskys.
The loss will take a huge toll on finances of the processor, which is already struggling with declined revenue. It incurred Sh255 million loss in 2019/2020 fiscal year, latest audited financial statements show.
In Auditor-General Nancy Gathungu’s report, of the Sh1.68 billion goods KCC had sold but not received payments in the 12 months to June 30, 2020, Sh764.7 million was owed by some four local retailers.
The report further indicates that of the four, only Naivas supermarket, which owes the processor Sh217 million, still has a strong market presence, while two, Nakumatt and Uchumi, have since collapsed, and Tuskys status remains uncertain.
Bad debts
"Available information indicates that Uchumi Supermarkets Ltd is undergoing receivership, while Nakumatt Holdings Ltd is in liquidation. The status of Tuskys Supermarkets Ltd has not yet been determined and only Naivas Supermarkets Ltd is currently operational," Ms Gathungu said in the report signed on October 27.
The report did not provide any update on latest developments past the June 30 last year, which are always available in case changes happen on reported information.
Questioning New KCC’s credit policy, Ms Gathungu also recognised that the company in its financial statements for the year made a provision for bad debts amounting to Sh419.4 million, an indicator that much of debts owed to it risked being lost. The provision was a 39.7 per cent increase on the Sh300 million amount set aside during the previous year.
