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Daily Nation : February 12th 2014
30 | BUSINESS HARD TIMES | Receiver managers hint at possible sale of the company Flower farm Karuturi sinks with Sh400 million in debt Among the reasons the firm is under receivership is failure to pay staff salaries BY MWANIKI WAHOME @mwanikiwahome email@example.com receivership for failure to pay debts. Naivasha-based flower farm T Karuturi Limited was put under receivership on Monday and The Business Advisory Group appointed receiver managers. The Indian-based Bangalore subsid- iary is in the red with at least Sh400 million owed to CFC Stanbic Bank and other creditors. The Kenya Revenue Authority is demanding Sh962 million for alleged tax evasion after the firm was found guilty of transfer mispricing. Failure to pay Mr Kieran Day and Mr Ian Small, the receiver managers said part of the reason for placing the firm under receivership was the failure by the company to pay salaries, which is three months in arrears, and the slow payment of trade creditors, which is adversely affecting flower producers in the area. The receiver managers will seek a way out of the financial troubles but also hinted at possible sale of the firm to other investors. “We are in the initial stages of assessing the state of Karuturi’s business. Over the coming weeks, we shall be working hard to fully 962 The alleged money in millions of shillings that the taxman is claiming from the firm he Kenyan subsidiary of the world’s biggest producer of cut roses has been put under DAILY NATION Wednesday February 12, 2014 US AND INDIA IN FRESH ROW ON SOLAR ENERGY America takes Asian nation to WTO seeking opening up of the sector. P.32 Nairobi seeks parking space for oil tankers BY NATION REPORTER Nairobi County has invited bids for provision of oil tanker parking space in a move that will see the government collect extra revenue and decongest roads leading to depots situated in Industrial Area. According to a tender notice published yesterday, Nairobi is seeking properties of a minimum of 10 acres from individuals that will be converted into parking space, which will be run by the county government. “In promoting sustainable and orderly development, the Nairobi City County invites eligible individuals to express their interest in providing properties that would be used for tanker parking and ancillary facilities,” read the notice in part. The Energy Act 2006 requires analyse the company’s financial position and agree on the best course of action. Already, we have received enquiries from parties interested in acquiring Karaturi’s business and assets,” Mr Day said. In December, Cotu secretary- general Francis Atwoli appealed to President Kenyatta to intervene over workers’ plight after his letter to Cabinet Secretary of Labour Kazungu Kambi went unaswered. He claimed the 3,000 staff at Karu- turi, who had gone on strike several times, were working without water and electricity. He claimed the farm owners were involved in siphoning cash to overseas destinations. Malicious claims Karuturi Group chairman and managing director Sai Ramakrishna Karuturi, however, termed the allegations as “false, malicious and alarmist. A manufacturer of cartons and polythene bags, Allpack Industries also took the firm to the High Court asking that it be wound up for failure to pay its debts. According to company sources, its production is about 580 million roses every year on its farms in Kenya, Ethiopia and India. that safe parking spaces for petroleum tankers should be provided. Due to lack of designated zones, the vehicles end up parking along road reserves while waiting to make deliveries thus interfering with traffic flow and endangering lives of residents. The initiative comes almost three years after the Sinai fire tragedy occurred in Nairobi where over 100 people were killed following fuel leakage. THE ISSUES AT PLAY Reasons for the company’s woes Debt: The flower farm owes its creditors money amounting to Sh400 million. Pay: Among other problems is non-payment of workers’ salaries, which is three months in arrears. Taxes: There are also claims of Karuturi owing the taxman Sh962 million in alleged evaded dues. Credit: The flower farm is pay- ing those it owes money at a very slow pace. JEFF ANGOTE | NATION Not all rosy for Karuturi. The flower producer was placed under receivership over mounting debts and non payment of salaries to its staff. (Inset) Cotu secretary-general Francis Atwoli. Paynet enters merger to strengthen presence BY NATION REPORTER Payment services firm Paynet Group, which owns the PesaPoint brand, is deepening its presence in the financial services market after merging with a local firm that manages mobile money agency networks. The coming together of PesaPoint’s agency business and that of PEP Intermedius was approved by the Competition Authority of Kenya late last year. In a press briefing yesterday, the two firms an- nounced conclusion of the deal, which will now give PesaPoint a foothold in the agency network business in the banking and telecommunication sectors. “The merger is for us the beginning of the next stage of our journey to grow a more powerful, countrywide infrastructure of agency services with a wide range of financial services,” Paynet Group chief executive Bernard Matthewman said. Since its inception, PesaPoint’s core business has been managing a neutral ATM network that makes it possible to withdraw funds from the bank and mobile money accounts. The firm has been diversifying its services in establishing PesaPoint agents across the country, vending airtime and providing card cash-out services. This merger will see services offered on Pe- saPoint’s agency network expanded to include mobile money, agency banking, bill payment and eventually the sale of micro insurance. Insurer set to provide cover for the poor BY NATION REPORTER The intention to insure a ma- jority of Kenyans in the informal sector got a boost yesterday with a partnership between Jubilee Insurance and Citadel Micro Insurance Agency. The pair will introduce a series of life covers that will address the plight of an average consumer, especially those residing in slums, who seek inclusion, but do not have the financial muscle to achieve their desires. Citadel’s chief executive Elvis Ackel said the first product, which will be introduced next week, will cover against fire, disability and funeral. A consumer will pay a minimum of Sh450 for the insurance every year. “Risks in slums are vast and with this partnership, Kenyans will finally enjoy some piece of mind knowing they are covered against these calamities,” he said. The underwriters have ap- proached Umande Trust, a non-governmental organisation, Safaricom and Posta as distribution channels.
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