Uganda-based conglomerate Sarrai Group, which won a leasing tender to operate the ailing sugar company Mumias Sugar, has announced that it has set aside Ksh1.1 billion ($9.7 million) to kick-start operations at the company.
According to Business Daily, Sarrai Group said the $9.7-million capital injection will serve as the first batch of capital in the ailing miller.
The group noted that the cash infusion will play a key role in Mumias Sugar’s initial operations. Subsequent capital injections will see the company move back to the path of sustainable growth as a going concern.
Sarrai Group is a leading conglomerate of diverse and interrelated agro-manufacturing companies, which maintains active operations and investments through its subsidiaries in Uganda, Kenya and Malawi.
The conglomerate is led by Kenyan businessman Sarbi Singh Rai, who is the group chairman.
It has already commenced operations at the Mumias Sugar Complex and has been plowing the miller’s cane plantation after taking over the assets of the sugar company on Dec. 23, 2021.
Its recent move to inject the initial $9.7 million into the miller’s operations comes off the backdrop of a court case by Kenyan businessman Julius Mwale.
Mwale recently requested a stay order against the receiver-manager Ponangipalli Venkata Ramana Rao from executing a lease agreement or contract in respect to the leasing and operations of Mumias Sugar’s assets.
The court case is hinged on the argument that Sarrai Group is not qualified to win the Mumias Sugar leasing deal after his company Tumaz and Tumaz Enterprises emerged as the highest bidder in the leasing tender to control the sugar company.
The Ksh17-billion ($150 million) leasing fee offered by the Ugandan conglomerate will be used to settle with Mumias’ creditors. The sugar company owes more than Ksh3 billion ($26.5 million) to banks such as KCB, NCBA and Stanbic Bank.
It also owes Proparco Ksh1.84 billion ($16.2 million) secured through its electricity generation plant and Ecobank Ksh1.77 billion ($15.6 million) through its ethanol plant.
