Tuesday, June 27, 2006

Nakumatt fights back

In a paid advertisement appearing in today’s papers, Nakumatt sets out to correct some inaccuracies mainly in the financial numbers that have been mention in the media comparing the recent performance and taxation between Nakumatt and Uchumi

Turnover Nakumatt's was not 20X times Uchumi’s and they have always had fewer stores than Uchumi. They have gone from 7 stores in 1997 to 17 today while Uchumi has gone from 14 in 1997 to 30 in 2004 and down to the 17 which they closed on June 1. Nakumatt had lower turnover up till 2005 - their 1997 sales of 2.7 billion shillings (2.7b) rose to 7.1b in 2004, 11b in 2005 and estimated 11b in 2006 while Uchumi’s rose from 5.2b to a high of 8.9b in 2003 before dropping back to 5b in 2005 with the closure of 13 stores.

Profitability Nakumatt made profits of 60 million shillings (60m) in ‘97 and ‘98 each, lost about 200m each year (401m in 2000) from '99 to 2002 and returned to profitability in 2003 (111m), 140m in ‘04, 287m in 05 and an estimated 459m in 2006 while Uchumi had increasing losses from -246m in '03, -654m in '04, -1.2 billion in '05 and an estimated 600m in ’06.

Inspection Nakumatt say all their suppliers are complaint with the Kenya Bureau of Standards, which is not entirely true as many of their goods are imported and have not been verified for the last few years.

Taxes Claims they paid 21m in ‘04, 222m in ‘05 and 383m in '06, and are ETR compliant. Electronic tax registers (ETR) were introduced by KRA to ensure VAT amounts collected were remitted to the government.

The statement is a commendable start by Nakumatt which needs to do a lot more on the PR front. It is assuring that they have stated that they employ 3,000 Kenyans, have 600 local suppliers and that their books are audited by Deloitte & Touche.

The company needs to be more open in its dealings with the public since their image which has taken a public battering from parliamentarians and money laundering allegations. They should make more mileage from their philanthropic efforts, hire a spokesman or firm, and put forward a board of directors, preferably with a reputable Kenyan as Chairman to be the corporate face of the company.

I don’t put much faith in the recover of Uchumi which has lost so much ground to other supermarkets. If it ever reappears on the stock exchange I’d sell my 500 shares immediately. The Nakumatt statement claims that they currently have an estimated stock of 3.1b compared to Uchumi’s 330m - which paints a bleak picture for Uchumi since both firms had 1.2b worth of stocks in 2004.

I don’t see a KMC (Kenya Meat Commission) style comeback for Uchumi - speaking of which I can’t wait for see KMC to start selling their very tasty corned beef again.


maitha said...

man ! that corned beef was elsethingsome.

sassy said...

at last KMC is up and running- any sign of privatization in the near future?
Nakumatt should actually employ a good PR or front one alongside a team of good lawyers. Their battle can be won on the media since most of us dont exactly know about the dealings of the company it is shrouded by mystery. Their response is wanting

gishungwa said...

I looved the corned beef quite a life esp for the camping trips. KMC is good effort.

Anonymous said...

corned beef... can actually remember the anticipation of having the can opened...
and all our big round eyes staring with wonder!!

gathinga said...

hope the stuff remains afloat for long and even more hope thier stuff penetrates to more kenyan dinner tables..if i recall, it used to stock only in big towns

bankelele said...

maitha: coming soon to store shelves

sassy: I don't see privatization anytime in the near future for KMC. Nakumatt needs PR professionals

gishungwa: it was a real treat in packed school lunch too.

gathinga: Am loving KCC butter and milk again, and now add KMC corned beef - after a few sad years when only South African cheeses and meat cuts were sold here.

Mimmz said...

Nakumatt needed to say something. And while I'm glad they are saying something, I don't buy their innocenct act. I'll give them a fair hearing but with tons of skepticism.

KMC, another revived(ok reviving) giant. See why I don't let people go on and on about NARC having accomplished nothing. Which reminds me to insist that next time anyone wants to comment on their job creation, include this venture amongst online trading and others. Give the devil his due!

Bankelele, you really need to consider a publication, "Significant Kenyan Market Facts Weekly". Bestseller it will be, I predict!

Kibet said...

I hear from reliable sources that the KMC Board is not all that competent. Thus, i cross my fingers that KMC lives through its first year. Somebody should chunguza the constitution of KMC's board; it leaves some to be desired.

Suspect! Its one thing to re-open a factory with equipment more than a decade old; its another thing to compete favourably.

69/\/\ said...

Despite their ads:
Nakumatt still haven't said anything about accounts they allegedly have with Charterhouse bank.

Deloite and Touche is just a name

The facts given remain just figures unless they can be traced to their origins in source documents.

Conclusion: They still have a lot more to do to clear their name.

bankelele said...

Mimmz: Some political and maybe underhand dealings gave Nakumatt a headstart over Uchumi. But likewise how much will we blame Citi Hoppa when KBS folds up? Flawed decisions were also made by the Uchumi side. On KMC, NARC are looking good for next election (more on that later)

Kibet: KMC is still a parastatal that EA EDitor says "I still cannot see how this giant will be able survive the competition as long as it remains under a management and board composed of political appointees"(http://www.nationmedia.com/dailynation/nmgcontententry.asp?category_id=25&newsid=76065) said...

69/\/\: At least their side is being told, and next they should release their (audited by Deloitte) accounts to the public for the last five years for verification.

coldtusker said...

On Nakumatt:

@sassy - Nakumatt's response is more enlightening than the accusations made against it! Unfortunately these are made in parliament so no-one can sue for libel!

Bankelele is right coz all I have heard is the following:
- Nakumatt evaded Shs 18 Billion in taxes
- Nakumatt has 20x turnover of Uchumi

The advert says NO to both the above! Further these are numbers that can be verified using their tax returns filed with the KRA.

Simple math = at VAT of 16% the KShs 18 Billion would imply sales of over KShs 110 Billion! This is like EABL & KQ combined!

Also note that VAT is lower on most food products (among other items) thus the sales should be even higher than KShs 100 Billion.

Finally on VAT. Businesses are supposed to pay the difference between OUTPUT & INPUT i.e. VAT charged to Nakumatt by the suppliers is deducted from what Nakumatt receives from customers. The NET VAT amount is substantially lower!

@Banks & kibet - Nakumatt did publish their accounts when they were looking for public (debt) financing. Generally private firms remain private coz they want to be private! Many closely held firms choose not to provide the info except to bankers to give them a competitive edge.

What I would like to know is HOW MUCH business Uchumi (a public firm) gave kirubi & his cohorts.

coldtusker said...

Just as an FYI - I am not for or against Nakumatt. I prefer a system that is FAIR to all.

I understand Nakumatt's complaint/letter about the subsidy provided to Uchumi. It is patently unfair to do so.

Companies rise & fall. Industries rise & fall. Josef Schumpeter called it "Creative Destruction". The "delay" of VOIP's introduction in Kenya occasioned by a 5 year monopoly given to Telkom for the provision of international services denied Kenya THOUSANDS of jobs which went to countries like India.

We should NOT allow politicians to throw good money after bad. Uchumi might be a "name" but why not support the neighbourhood kiosk who sells bread, milk & eggs?

I think there are more jobs to be gained by streamlining the licensing & health inspections for the numerous kiosks then providing Uchumi with KShs 675 Million.

BizKenya said...

as i had said in an ealier coomment on nakummatt, this whole saga would turn political and true it has.
What with Kabogo and Kajwang trying too politicise this matter.
They are the last people to be trying to defend Charter House and Nakmatt.
With their character, they cannot be taken seriously

oli said...
This comment has been removed by a blog administrator.
FG said...

Anyone has current information on Nakumatt. I understand it is planning on issuing IPO, but whatever happened to tax evasion charges of 2006 and other charges. Can their current financial be trusted or their management?? Are they credential?. Halo, only if you have solid information/opinion. Thinking of buying this IPO when it is issued but looking for current background on Nakumatt.


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