In the wake of persistent sugar cane shortage and the ever decreasing area under the raw material in the country, Mumias Sugar has announced plans to diversify its operation to shield it from competitive pressures.

Part of the strategy includes expansion of its product range and reducing over reliance on sugar product.

The company's managing director Evans Kidero said the firm will venture into alcohol industry as part of its diversification programme after successfully commissioning electricity generating projects.

Speaking during the firm 40th annual general meeting in Kisumu yesterday, Kidero said construction of the distillery is in progress and is expected to be commissioned by next year. The distillery will have the capacity to produce 22 million litres of ethanol annually. The company has already established an electricity co-generation plant that earned it over Sh353 million in the last financial year.

Other diversification project includes water bottling plant that will also be commissioned early next year alongside the ethanol distillery. "It is anticipated that the introduction of water will provide another revenue stream to the company as part of product diversification", said the company chairman John Bosse. The water bottling plant will put into use water derived from the co-generation plants operations.

Kidero said increased interest and use of bio fuels globally as a replacement of fossils fuels has been strengthened by erratic global oil prices thereby making it easier for production of ethanol. Mumias reported a 21 per cent increase in its pre-tax profit for 2011 to Sh2.6 billion up from Sh2.1 billion in the previous year.

Kidero told shareholders the results were attained despite tough operating environment and challenges in the second half of the financial year. "The operating environment has become more challenging than before, whereas the first half witnessed the perennial adverse weather challenges, the second half of the year witnessed a disruption in cane supply occasioned by political agitation for higher cane prices", said Kidero.

The company crushing capacity subsided by 3 per cent from 2,318,080 tonnes in 2010 to 2,245 281 this year. The decrease in the crushing capacity contradicts the last year high performance that saw the firm increase its crushing by 7.3 percent from 2,161,031 tonnes to 2,318,080.

source: allafrica

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