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Sasini Tea, an agricultural firm majority owned by the family of the late Kenyan tycoon Naushad Merali, has purchased fixed-income securities valued at Ksh755.6 million ($6.1 million) amidst improved cash generation in the year ended September 2022.
According to figures obtained from Sasini’s recently published financial statement, its net profit in the fiscal year ended September 2022 was Ksh1.17 billion ($9.45 million), more than doubling the Ksh573.2 million ($4.63 million) posted in the previous comparable period.
During the period under review, the company invested in infrastructure bonds and short-term bank deposits, which amounted to Ksh288.5 million ($2.3 million) and Ksh467.1 million ($3.76 million), respectively. This investment helped contribute to a significant increase in finance income for the company, and a 36.3-percent surge in sales revenue also boosted earnings.
Sasini and other firms leverage fixed deposits and treasuries for growth
With the purchase of the fixed-income securities, Sasini joins a growing number of Nairobi Securities Exchange-listed companies that are utilizing fixed deposits and treasuries to generate supplementary income outside of their core operations. Other firms that have adopted this strategy include WPP Scangroup and Carbacid Investments.
The move is in response to rising interest rates across various debt instruments, which is partly attributed to the effects of higher inflation. By investing in fixed deposits and treasuries, these companies are able to capitalize on these rising rates and earn additional income.
Long-term government bonds have been generating significant interest in recent sales, with interest rates reaching new heights. Specifically, the most recent auction saw interest rates for these bonds topping the 14-percent mark.
Sasini posts highest profit in seven years, but no dividend for Merali family
Despite achieving a seven-year-high in profits, the family of the late Kenyan tycoon Naushad Merali will not receive a single dollar in dividends from their investment in the firm this year, as the board of the Kenyan agricultural firm opted not to declare a final dividend.
The family of the late Kenyan tycoon is the majority shareholder of Sasini, owning a 65.46-percent stake in the company worth over $25 million.
The family’s investment vehicles, Legend Investments Limited, Yana Towers Limited, and East Africa Batteries Limited, make up this portion of ownership, making it one of the most valuable portfolios on the Nairobi Securities Exchange.
