Months before it was placed under administration effectively sealing the fate for Britania Foods Ltd, the biscuits maker was heaving under huge debts.
By the time PKF Consulting appointed Mr Peter Kahi as the baker’s administrator last week, there were no operations at the company after sending home staff and silencing machines.
The appointment was drawn by DTB for its unpaid debt of over Sh900 million and this is besides other creditors claiming about Sh300 million so far.
At the company’s production facility along Kampala Road in Industrial area, Nairobi, the premises were a ghost town on Friday last week, with only two security guards manning the gate, and inside few staff who have been retained to maintain production machines.
Far from the welcoming faces and books ready to record details of incoming visitors, guards rested metres from the gate knowing no client or visitor was expected.
“There is no work going on. We are not allowing visitors to enter until the appointed administrator reports next week,” a guard said.
Confectionery products
That is what remains of the once-giant biscuit maker, which banked on its popularity, with brands such as Britania Ginger nuts, ShortCake, Digestive, Chocolate cream, Family and Milky biscuits among others.
Desertion and silence that reigned at the premises, however, has been left to tell the sad story of the fall of one of Kenya’s most iconic biscuits and confectionery products company.
For many years, Britania had established a strong footprint in the Kenyan market and its products were consumed by many, including authoritative clients such as Kenya Defence Forces, World Food Programme, Unicef, and NGOs.
The company was founded in 1987 as a small bakery, before growing to become a household name with about 300 workers by 2017. When private equity firm Catalyst Principal Partners, acquired the business in 2017, its CEO Paul Kavuma was sure as dawn that Britania would only grow farther.
“The Britania brand has a strong heritage across Kenya with well-known products in the market. Our investment was anchored on the innovation platform consistently achieved by the brand within the biscuits category, as well as positive market fundamentals in a sector that is growing faster than GDP, propelled by younger demographics and growing disposable income,” Mr Kavuma said then.
Coming with a cash injection, a fresh and professional management and majorly the drive to maximise on a sector that was recording growth faster than the general economy, Catalyst never thought anything could go awry.
Misconduct
But steering the firm would later appear challenging for the PE firm, as it faced management issues and allegations of misconduct.
In 2019, the company board fired Mr Robert Kagundah who was appointed managing director upon acquisition, as claims of mismanagement dogged him.
Reports would later emerge that even before it was acquired, the firm was already leaking.
Britania then opted for a series of loans without proper plans, defaulting on supplier payments and other business misses that dipped it into the fire.
A few months ago, there were reports of the company’s employees protesting after management delayed their salaries for months. It is not clear how the dispute was ironed out.
Mr Kahi said an assessment of the company’s books to establish the extent of financial dents the business baked itself into was going on, after which he will advise on the best way forward. He indicated that among the options is going back to the creditors to seek financing to revive the business. “We will have three options, being to revive the business, maximise outcome for the creditors or sell the business. The option we take will depend on what best suits the situation,” Mr Kahi told Smart Business.
While appointing Mr Kahi, PKF last week offered a two-week window up to September 3, for other creditors owed by Britania to come forward.
Mr Kahi said by Friday, several other unsecured creditors claiming about Sh300 million from the company had come forward, adding to the over Sh900 million owed to DTB Bank.
“Since it is something that has up to September 3 for creditors to come forward, we are waiting to see how many others will,” the administrator said.
He said in regard to the debts owed to DTB, the baker had taken term loan and overdraft facilities, ending up with over Sh900 million debt.
Production lines
Citing documents on DTB Bank loans, Mr Kahi said the bank had issued two debentures on January 17, 2017 (Sh665 million) and October 22, 2018 (Sh150 million) to secure its loans.
Mr Kahi also said an assessment of production lines revealed they were in good condition, meaning it would be easier to revive operations.
Britania was put under administration at a time when another food manufacturer, Uzuri Foods, had also sued it seeking its liquidation, after failing to pay for supplies worth Sh14 million.
Uzuri Foods told the court that as at June 18 last year, Britania owed it a total of Sh17,352,893, a sum of the supplies delivered between March and August 2019 and interest. Payments were to be made within 30 days of each delivery note.
“The petitioner (Uzuri Foods) has made repeated requests and demands to the company for the payment of the debt but the company has failed, refused and/or neglected to pay the amount in debt. Evidently, the company is insolvent and incapable of paying its debts as demonstrated by its failure to satisfy its debt as illustrated,” Uzuri Foods said in court documents.
Britania CEO Dipak Shah blamed impacts of the Covid-19 pandemic on the business for the failure to pay. This was despite the fact that the earliest supplies were made about a year before Covid-19 was reported in Kenya.
“Unfortunately, due to the harsh economic times and the effects of Covid-19 in the country, the company has not been able to pay the aforesaid amounts due to the petitioner (Uzuri Foods). The company is a manufacturer of biscuits which it had supplied to various supermarkets including Nakumatt and Tuskys which are both facing financial difficulties and owe the company amounts up to Sh50 million hence contributing to the company’s financial difficulties,” Mr Shah said in a replying affidavit.
Britania owns four parcels of land within Industrial Area measuring more than two acres, production machines, trucks, lorries and cars, whose value has not been disclosed in the court documents.
Mr Shah indicated that the company had a workforce of more than 200 people, both on a permanent and casual basis. BY DAILY NATION
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