Liquidity crunch delays starafrica upgrade

Livingstone Marufu
LISTED sugar refiner starafricacorporation fears that delays in the settlement of telegraphic transfers to suppliers of critical equipment needed to upgrade the company’s plant might scupper plans to commission it by next month. Sixty percent of the plant has been upgraded with assistance from South African, Indian and British engineers.

CEO Mr Regis Mutyiri said the works – which starafrica says will increase production capacity from 400 tonnes to 600 tonnes by November 2016 – would help the business reclaim its market share. “The commissioning has been delayed due to late arrival of equipment. The late arrival was partly due to delays in remittances of payments as result of the foreign currency challenges currently affecting the country.

“We have upgraded 60percent of the plant for now.  The 40 percent will be upgraded in the mid-term future, for example, in three to five years. “However, the un-upgraded 40 percent has gone through a refurbishment which is now coming to an end. The last batch of the equipment for the refurbishment has arrived from India,” said Mr Mutyibiri.

Early this year, starafrica increased capacity from 300 tonnes to 400 tonnes as demand for sugar from Delta Beverages and wholesalers spiked. Government’s decision to remove sugar from the general import licence in November 2015 helped lift starafrica’s performance.

The sugar refinery says sugar sales volumes for the five months through August 2016 improved by 300 percent compared to the same period last year on the back of reduced prices and implementation of Statutory Instrument 64. As a result, revenue for the full year ended March 31, 2016 more than doubled to US$18,7 million from US$9,3 million in the same period a year ago.

However, starafricacorporation’s loss for the year ended March 31, 2016 climbed to US$10,2 million compared to US$7,2 million a year earlier on high financing costs and poor performance by associates Blue Star Logistics and Country Choice Foods. Finance costs for the period rose to US$5,5 million from US$3,9 million in 2015.