Following many years of endemic corruption and impunity, the neverending cycle of troubles at the broke East African Portland Cement Company (EAPCC) seems to have no foreseeable end in sight.
Hardly one month after the company registered a continued decline in revenues in their 1HFY21-22 results, employees at the Simon Ole Nkeri-led cement maker have come forward to protest the nonpayment of their salaries.
Trusted insiders within EAPCC have reliably informed us that most of the suffering staff members have gone unpaid for over five months.
The broke East Africa Portland Cement has not paid employees since January,” one source wrote to us.
Two years ago, EAPCC went Sh10.2 billion insolvent after it failed to repay a long-term loan owed to KCB bank.
The Auditor-General Nancy Gathungu’s report to parliament at the time showed that the current liabilities outstripped its current assets by 66% in the year ended June 2019.
It breached terms of its loan with KCB by failing to maintain a covenant on interest rate payment and positive working capital.
As a result, the bank reclassified its Sh3.3 billion non-current loans as a current liability as of June 30 2019, weighing on the EAPCC’s solvency.
By June 2019, the cement maker’s reclassified debt was at Sh5.53 billion against assets valued at Sh4.22 billion.
The company continued to operate at suboptimal capacity due to capital hitches, as well as the lack of essential spare parts and a dwindling market share.
As a result, it failed to pay its suppliers and relevant authorities including the taxman.
According to the auditor general’s report, Portland Cement did not remit Ksh 221 million in VAT principal and penalties, as well as Ksh 63 million in interest.
As of 2019, its debt to suppliers stood at Sh411 million, while claims towards terminated contracts, disputed deliveries, and breached contracts total Sh173 million.
EAPCC is owned by the Holcim Group, a Swiss multinational company that manufactures building materials.
It has been Kenya’s leading cement manufacturer since 1933. It currently ranks third in terms of market share behind Bamburi Cement and Mombasa Cement Limited.