Mumias lowering operating costs, diversifying revenue sources as competition looms

Mumias Sugar Co., Kenya’s biggest sugar producer and the stock of which has risen 99 percent this year (almost triple the 35 percent advance in the country’s benchmark stock index) is in the midst of diversifying its revenue sources by reducing its reliance on its core business of sugar production as final selling prices of the commodity will be negatively impacted beginning this December by the expiry of regional trade concessions that will give way to a flood of duty free, imported stocks that sell at a discount due to their lower production costs.  In addition to increasing the amount of branded sugar to 70 percent from 30 percent, the company will launch a 120 million litre per year ethanol manufacturing plant in December 2011 (in late August it secured debt-financing amounting to $20 million (Sh1.6 billion) from a consortium of banks led by Ecobank Kenya to fund the plant), produce bottled drinking water from co-generation, a process whereby plants generate electricity from industrial waste or by-products such as gases, and refine its own sugar.  The newfound stable electricity supply from the co-generation project would already boost output of its sweetener by 15 percent this year, management touted back in April.