Jomo Kenyatta University of Agriculture and Technology was called in for the noodle manufacturing company it entered for additional income.
JKUAT has reported losses of Sh3 million on the project.
Auditor General Nancy Gathungu warns of a bleak future if nothing is done to change the trend.
“If there are no strategies in place to reverse the trend, the company is likely facing financial challenges to deal with in the near future, “said the auditor after reviewing the project books through June 2019.
The project posted the loss in its first year of operation, despite the university’s over Sh300 million in. capital expenditure for setting up the pasta project has fallen.
The project was launched in January 2018 to produce pasta for the market by marketing the “delicious pasta brand”.
JKUAT The company said the company developed and sampled 31 variations of pasta within focus groups, the young mothers, students and the general university population.
But in its first year the company reported gross sales of Sh 250,000. with a net loss of Sh 3.2 million, which according to management should not be a cause for concern.
“It should be noted that the company has just been handed over by Nissin Foods and has spent this first year doing so was to put together the systems required for the independent company, “said the university in a statement by the chairman to the auditors.
Nevertheless, Gathungu also inquired about the composition of the company in terms of participation and ownership and raised doubts whether the university has full control over the owner’s capital of Sh381 million.
The auditor said a search of the commercial register revealed that the company was jointly owned by an international food company and the JKUAT with 70 and letters from the directors of the company, respectively International Food Compa If JKUAT is the sole shareholder, it is not clear why the transfer is not in the commercial register registered ”, says the auditor’s report.
“ Under the circumstances, it was not possible to confirm the ownership structure of the company. ”
JKUAT took this position in its explanations that the selling costs are low because “the factory was still doing test runs and therefore hardly made any sales.
” The company is looking for financing to build up the right working capital.
“That Company is still focused on finding the right formulation to get to market. This will enable full production capacity, ”said the university.
(Edited by Bilha Makokha)