- He said that based on the sugarcane crushing capacity, West Kenya would control at least 41.95 per cent of the total sugarcane in Kenya per day if they were awarded the lease.
- On Wednesday, West Kenya through their Lawyer Paul Muite told court that they had promised to pay Sh900 million as security and a further Sh150 million monthly.
Mumias Sugar Company has accused West Kenya Sugar Limited of dominating the industry in a bid to take over control of sugar mill.
In their response in court yesterday, Mumias Receiver manager Ponangipalli Ramana Rao and KCB through lawyer Kiragu Kimani said the only reason why West Kenya placed a bid was to dominate the sugar industry.
Rao said he has seen numerous reports on the Rai family increased dominance in the industry in Kenya and he was aware that they own West Kenya.
He said that based on the sugarcane crushing capacity, West Kenya would control at least 41.95 per cent of the total sugarcane in Kenya per day if they were awarded the lease.
Kiragu said his client’s assessment on the possibility of a bidder becoming a dominant player was based on their sugarcane crushing capacity and not in the distribution.
Even the inclusion of imported mill does not change the dominant level of West Kenya as none of the local sugar factories are involved in direct importation of sugar in the recent years.
Sugar mills within the western region are in competition over cane and other resources and West Kenya factories are close to Mumias Sugar plant.
Successful bidder will have to work towards reviving Mumias Sugar while competing with West Kenya for cane and other resources needed in milling process.
He further question how a company can bid Sh36 billion for a company worth Sh15 billion.
On Wednesday, West Kenya through their lawyer Paul Muite told court that they had promised to pay Sh900 million as security and a further Sh150 million monthly.
However, Kiragu told Justice Alfred Mabeya that West Kenya did not did not demonstrate how it makes monthly payments which translates to Sh1.8 billion per year yet they are running into losses.
It was further claimed that TJS Argo Limited an alleged West Kenya holding company that owns 99.9per cent shares has no operations and does not produce financial statements which was a basic requirement.
Kiragu said in 2020, the annual profitability of Sh491 million was achieved after crushing 1,464 tons of cane, it would therefore require them to crush 5,373,134 tons per annum to achieve the Sh1.8 billion yearly repayment plan.
“This is impossible because the optimum capacity of Mumias Sugar assets is 2,920,000 tons crushing per annum,” he said.
Kiragu said, Rao concluded that the most suited successful bidder would be the one who is not already in direct competition with Mumias Sugar.
The court was also told that Sarrai Group who were given the lease, gave a Sh69.6 million cheque which was part of the initial security deposit to enable them take immediate possession of the assets for purposes of rehabilitation.
They urged the court to allow the lease to proceed saying the quick revival of operations of Mumias is important as the court had noted that it is not just an ordinary business enterprise in the Western region.
The court took judicial notice that Mumias collapse would have dire social and economic consequences to the sugar belt.