Mumias Sugar Company plans to retrench more than half of its employees and cut workers pay by 50 per cent to reduce operating costs.
CEO Nashon Aseka yesterday said the move is part of the firm’s restructuring plan. The company has 1,500 workers with a monthly wage bill of Sh40 million.
Aseka said they want to reduce the workforce to about 600 employees.
“We’re working out modalities of retrenchment because you cannot just wake up and send workers home. The process will require a lot of money and we’re hoping the government will support it,” Aseka said.
The plan has been discussed with the government, Aseka said. The restructuring is expected to cost Sh400 million.
By June last year, Mumias had a debt of Sh15.2 billion.
The government has paid the miller Sh3.7 billion. The cash has been consumed with no improvement in earnings or capital position.
Farmers are owed Sh600 million for cane delivered while most suppliers remain unpaid. The firm also has Sh9 billion in bank loans.
In January, three commercial banks recalled Sh2.6 billion loans. Ecobank Kenya, KCB and Commercial Bank of Africa demanded to be paid Sh1.7 billion, Sh480.1 million and Sh364.5 million, respectively.
Aseka said they were hoping for government support to cover the liabilities.
The miller is also unable to maximise capacity because of cane shortage. It has blamed poaching of contracted farmers by rival millers.
“We have agreed workforce be reduced by half and those retained will take a 50 per cent pay cut or resign,” Mumias East MP Ben Washiali said.
He spoke at Khabukoshe ACK church on Sunday. Washiali said there was no point in paying huge salaries to managers when the company was not producing.