Mumias Sugar warms up to water bottling to shore up gains

Mr Evans Kidero (right), managing director, Mumias Sugar Company. Photo/WILLIAM OERI

Mumias Sugar Company intends to enter the lucrative but competitive water bottling business as its seeks to increase its product range to shore up the firm’s earnings.

The company’s managing director, Mr Evans Kidero told shareholders during Annual General Meeting in Kisumu on Friday, that the projects that include ethanol distiller and a co-generation plant for electricity will assist in ensuring financial stability.

The three projects, that are to be implemented next year will increase the company’s financial streams and cushion its business from uncertainty of its core business of sugar processing.

Mr Kidero said the company was currently studying the marketing and distribution systems before rolling out the water bottling plant.

The company’s decision to diversify comes against the background of sugarcane shortage that has led to concerns over the future of sugar processing companies in the country.

Mumias sugar shares slumped 2.2 per cent to 4.50 shillings on Monday, the lowest close since June 2009, on concern that it may have to operate at lower capacity as cane supply in the country dwindles.

“We have seen cane supply dwindling so much, the company’s operating capacity may drop from 75 per cent now to even 60 per cent before the end of the financial year in June 2012,” said Ms Deris Mogoi, a research analyst at Standard Investment Bank Ltd.

Ethanol distiller

The sugar industry is also faced with pressure to improve its operations ahead of the opening up of the Common Market for East and Southern Africa in 2014.

The period initially set for next year was extended on request from Kenya, to enable government to privatise the financially troubled firms.

Mumias sugar produces 60 per cent of sugar in the country and is the most successful.  

The board of directors chairman, Mr John Bosse’s said the construction of the ethanol distillery was going on, with its commissioning scheduled for early next year.  

“The distillery will have the capacity to produce 22 million litres of ethanol annually” said Mr Bosse.

He said the project’s registration with the United Nations Framework Convention on Climate Change, which would enable the company to earn carbon credits was in progress.