The parent firm of a cable manufacturing company, Sierra Cables EA, has been placed on a watch list by the Colombo Stock Exchange (CSE) after the company’s auditor raised doubts over the poor performance of its Kenya subsidiary and its local Sri Lankan arm.
Sierra Cables set up its Kenyan business in 2015, but is yet to break even. “The securities of Sierra Cables Plc has been transferred to the watch list with effect from September 7 as the audited financial statements for the financial year ended 31 March 2018 contains an emphasis of matter on going concern pertaining Sierra Cables Plc’s subsidiaries’, Sierra Cable East Africa and Sierra Industries,” said the firm in a regulatory filing seen by the Business Daily.
The parent firm in the regulatory filing linked the troubles of its Kenya subsidiary to huge capital investments in setting up its local factory, which was operationalised last year.
The firm said it earlier secured sufficient orders from Rural Electrification Authority (REA) of Kenya to run the factory profitably, but had been unable to operate at optimum capacity and recover the fixed overhead.
By December 31, 2017, Sierra Cables East Africa had accumulated losses of about Sh10.5 million and its current liabilities exceeded its current assets by Sh56.7 million.
Sierra Cables East Africa CEO Ruwan Fernando said that the firm had introduced new cable products and was banking on the improved political environment to fast track its turnaround.
(Business Daily Africa)
“We are confident about the Kenyan market and the region … 2018 will be better,” he said.