By Victor Were Maumo
Is Tuskys Supermarket going down?Who will save it from its current woes?
Tuskys,a Kenyan supermarket chain and one of the large supermarket chains in the Great Lakes Area is recently facing hard times.The Competition Authority of Kenya (CAK) is investigating the bank accounts of supermarket chain Tuskys after the retailer defaulted on suppliers to the tune of Sh1.2 billion.One of the siblings who owns the retailer, Tuskys, has also vowed to block planned sale of majority stake in the company in order to solve the current financial issue.
Tuskys has also been unable to pay suppliers, placing it under a the watch of the CAK. Customers are complaining of empty shelves. The supermarket’s aggressive expansion has ended.
The supermarket had joined the Nairobi Securities Exchange (NSE) Ibuka programme, which is an incubator for firms that want to list in the stock market.
A branch it planned to open along Kamiti Road, in Nairobi’s Zimmerman has remained with an “opening soon” banner for months.
Quickmatt, one of its fierce competitors, came and opened a branch there in just under a month. It has now stepped up competition with two other branches in the Nairobi Central Business District.
Sagaci Research, a provider of African market data and analysis, noted that Tuskys appeared to be in the weakest financial position of any supermarket chain in the country.
Tusker Mattresses Limited has been ordered to furnish the regulator with its monthly bank statements for the past one year for all bank accounts relating to its retail business by Friday this week.
Documents seen by the Business Daily show that this is part of a wide-ranging investigation into one of the country’s largest supermarket operators, which has lost the trust of the regulator.
The CAK started looking into Tuskys operations in April after reports emerged that it was not paying suppliers on time as provided for in their respective contracts.
For weeks now, shoppers have complained of missing essential goods on the retailer’s shelves in a signal that some suppliers are severing ties with the company.
Tuskys’ executives and the retail chain risk a jail term of five years or a fine of up to Sh10 million or both if they fail to settle the debt or furnish CAK with bank statements, audited accounts, list of suppliers and their contracts.
“Any person who fails to comply with the order of the authority commits an offence,” said CAK in a letter to the retailer. “This matter remains under investigations and further orders will be issued as and when merited”.
The retailer on May 15, told the regulator that it owed suppliers a total of Sh884.3 million. It subsequently wrote to CAK on June 12, revising down the outstanding sums without proof of payments and concurrency by suppliers.
In a fresh twist, Yusuf Mugweru, the fourth born of the seven siblings who co-own Kenya’s second-largest retailer has vowed to block the sale stating that wrangles among the company’s shareholders are yet to be ironed out.
The retail chain is seeking to sell its stake to pay off its debts that stood at Ksh1.2 billion in June following intervention from the Competition Authority of Kenya (CAK) that is now surveilling the company’s every single move.
Tuskys Supermarket shareholders
1 John Kago 10.0
2 Samuel Kamau 17.5
3 Stephen Mukuha 14.5
4 Yusuf Mugweru 17.5
5 George Gachwe 10.5
6 Founder’s Daughter I 10.0
7 Founder’s Daughter II 10.0
Tuskys is in talks with a private equity firm and an international retailer regarding the acquisition of the stake but the wrangles are likely to scuttle the deal or scare off the investors.
Mr. Mugweru who owns a 17.5 percent stake in Tuskys maintains that his brothers are yet to account for some Ksh1.6 billion that was the subject to a court suit and is also demanding a forensic audit of the store’s accounts covering the past eight years.
“They reached out to us last Sunday to support the share sale, but we have declined unless past problems are resolved,” Mr. Mugweru’s lawyer, Philip Murgor said.
The retail chain’s current Chief Executive Dan Githua was at one time ousted only to be hauled back in over the family disputes.
Conversely, nearly ten years ago, the retail chain was rocked by a family feud that threatened to tear it down.
Two co-owner brothers of Tuskys – Stephen Mukuha and George Gachwe –were four years ago charged with theft of Ksh1.64 billion from the retail chain.
The two were arraigned in court after Mr Mugweru raised the alarm over theft from the company’s accounts.
The seven siblings took over the ownership of Tuskys in 2002 after the death of their father and the retail chain’s founder, Joram Kamau.
Mr Mukuha, Mr Mugweru, Mr Gachwe Sammy Gatei own a 17.5 percent stake in Tuskys each, according to disclosures in a previous court case.
John Kago, Mary Njoki and the late Mary Njeri own 10 percent stake each.
Details of the proposed transaction, including the size of capital to be raised, are yet to be disclosed.