HEAVY LOSSES

KDF bullet factory requires additional land —auditor

The firm requires 900 acres more to enable it attain required international safety standards

In Summary
  • Auditor General Nancy Gathungu says the firm’s management requested the government to allocate it additional 908 hectares.
  • This was to enable it attain the required safety distance for the factory, subsequent to which an allotment letter for additional land was issued.
The Bullet Factory in Eldoret also known as the Kenya Ordinance Factories Corporation. Photo KOFC
The Bullet Factory in Eldoret also known as the Kenya Ordinance Factories Corporation. Photo KOFC

The bullet factory in Eldoret owned by KDF requires an additional 900 acres to attain required international safety standards.

Auditor General Nancy Gathungu in her latest report on the firm says available information indicated that the corporation has title documents for land measuring 727.7 hectares on which the factory stands.

She says Kenya Ordinance Factories Corporation requested the government to allocate it additional 908 hectares to enable it attain the required safety distance for the factory, subsequent to which an allotment letter for additional land was issued.

“The process of surveying the additional 908 hectares started in February 2011 but stalled due to informal settlers who could not allow surveyors access to the land in the buffer zone, which is necessary to ensure safety of the people in the neighbourhood and security of the factory in accordance with International Standards,” says Gathungu in the report.

However, she says all the parcels of land including land registration numbers Kakamega/Sango/1970, LR No.27206/1 and LR No.27206/2 measuring 0.48 hectares, 2,545 hectares and 727.1 hectares respectively have not been valued and included in the financial statements as part of assets of the firm.

She says the firm’s property, plant and equipment net book value balance of Sh2,986,420,609 as at June 30, 2019 comprises buildings and civil works, water lines, work in progress, plant equipment and machinery, motor vehicles, furniture and fittings and computers.

However she says the assets register is incomplete and hence the assets value of about Sh2.9 billion can not be ascertained fully.

On the company’s financial operations, Gathungu said it budgeted for revenue totalling Sh1.4 billion during the 2018/19 financial year but Sh1.3 billion was realised.

“This resulted in a revenue shortfall of Sh118,130,498 or 8.4 per cent of the budgeted amount,” she said.

The corporation also had an expenditure budget of Sh1.4 billion while the actual expenditure was Sh1.5 billion resulting in an over-expenditure of Sh88 million.

The audit report indicates that the corporation recorded an overall trading loss during the period under review which ended June 30, 2019.

The financial statements reflect sales of Sh590.9 million against the cost of sales of Sh1.3 billion resulting in a trading loss of Sh694.1 million which is 117.5 per cent of the total sales.

“The management explained heavy losses incurred was due to ineffective, old and worn-out machines whose performance stands at 40 per cent, hence could not meet the domestic demand of the products,” said Gathungu in the report.

The firm is located next to the Moi Barracks Recruits Training College along the Eldotet-Kitale road.

-Edited by SKanyara