NAIROBI, Kenya- Eldoret-based textile manufacturer Rivatex is grappling with severe financial challenges, having posted a Sh347.6 million loss for the fiscal year ending June 2023.
This latest figure pushes its cumulative losses to a staggering Sh3 billion, placing the company on precarious ground as it continues to operate below factory capacity.
Auditor-General Nancy Gathungu’s recent audit paints a grim picture for the State-owned agency.
The company is failing to meet its financial obligations, including paying suppliers and remitting employees’ pensions and Sacco deductions.
“The statement of profit or loss and other comprehensive income reflects a net loss of Sh347,592,549 and the statement of financial position reflects an accumulated loss balance of Sh3,041,471,831 as of 30 June 2023,” said Gathungu.
The report highlights that by the end of June last year, Rivatex owed Sh56.9 million to its suppliers and had payables for goods and services amounting to Sh10.9 million outstanding for over 18 months.
Such delays risk the company falling out of favor with businesses, potentially starving it of essential raw materials and other operational necessities.
Rivatex’s woes are compounded by its inability to collect debts owed to it.
By the end of June 2023, the company was owed more than Sh111 million, with Sh29.1 million of this amount being overdue for more than a year.
“This implies that the company is unable to collect its debts as and when they fall due,” noted the audit report.
Despite these challenges, the company remains heavily reliant on goodwill and support from the government, bankers, and creditors to continue operations.
Rivatex’s struggles come just five years after a Sh6 billion upgrade aimed at revamping its production processes and targeting the African market.
Despite this heavy investment, the company continues to suffer from low cotton production in the country, with prices for cotton seed reaching a five-year high of Sh5,993 per 100kgs last year.
Moreover, the audit reveals significant human resource issues, with 580 out of 738 workers belonging to one community, a situation that is contrary to the law and exacerbates the company’s operational challenges.
