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November 17, 2018

Nakumatt admits financial crisis, seeks aid to stay afloat

Nakumatt Staff in Mombasa. /FILE
Nakumatt Staff in Mombasa. /FILE

Nakumatt Holdings has assured the public that its business is stable despite it facing financial difficulties occasioned by a harsh operating environment.

In a statement on Thursday, Nakumatt Holdings managing director Atul Shah admitted that the chain was facing financial challenges that had affected its cash flow.

“These challenges range from a depressed economy, higher operating costs and extraneous factors including enhanced risk management due to prevailing security threats,” he said.

The MD said the factors have impacted negatively on the business although support from staffers, suppliers and customers has helped it to remain operational.

To this end, he said that they have embarked on a re-organizational strategy, including renegotiating contractual agreements with suppliers, to enable the retailer to safely wade through the turmoil. 

“We have been actively engaging our suppliers to review current supply terms. We are also undertaking a management enhancement programme that involves recruiting and retaining management personnel to handle specialized units including commercial, supply chain, finance and marketing,” said Shah.

According to the MD, the company has also integrated an advanced warehouse management system that will allow the business to hold optimum stocks based on daily demands of individual branches to cut on losses.

“Such a system allows us to streamline supplier payment system by ordering stocks based on actual consumption trends while reducing on shrinkage,” he said.

Read; Nakumatt rues Sh1.6bn losses

Shah further revealed that the retail chain is currently engaging a number of local and international partners for possible capital injection to subvert further turbulence.

He said that the financial aid, which is expected to be concluded in the coming days, will help offload existing debts like bank loans and other related funding tools.

“We are confident that the process will allow us to gain our footing with full supplier settlement and sustainably continue the aggressive expansion plan we have set in our five-year business plan,” said Shah.

Customers at the retail chain have over the recent months raised concerns over missing items from shelves, pointing to a possible financial crisis at the family-run business that boasts of 65 branches in the region.

It is estimated that Nakumatt Holdings requires an estimated Sh5 billion shillings to regain its market stability.

 

 

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