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Admarc loses K3.7 billion in first half

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State-owned grain marketer, the Agricultural Development and Marketing Corporation (Admarc), recorded a net loss-after-tax of K3.7 billion in the first six months of the 2020/21 fiscal year.

This is according to the Annual Economic Report by the Ministry of Economic Planning and Development and Public Sector Reforms.

The revelation comes at a time another State-owned enterprise, Blantyre Water Board, is poised to post a K10.2 billion loss this year.

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According to the Annual Economic Report which was released on Friday alongside all budget documents, Admarc’s loss in the first half was mainly because the grain marketer did not secure funding for commodity purchases in time.

“In addition, there were no commodities in stock for most parts of the period. As such, Admarc was exposed to consecutive months of low sales and low purchases on one side and high overhead costs on the other,” the report reads.

It says the liquidity position of Admarc in the 2019/20 financial year was barely on the margins at a current ratio (1.37:1) while leverage was at 65 percent as measured by debt/equity proportions.

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However, at mid-year, the current ratio had worsened to 1.07:1 and it is projected to further worsen to 0.76:1 by June 2020 indicating that the corporation will struggle to meet short-term obligations as they fall due,” the report reads.

The Annual Economic Report says Admarc is expected to close the year on June 31 with a loss of K2.05 billion.

The performance of Admarc over the last five years varied due to unique circumstances that prevailed in each respective year.

Revenues in the 2019/20 financial year increased over the 2018/19 position, with K31.98 billion recorded against K33 billion reported in 2019/20.

Of these revenues, actual sales were K13.2 billion and total expenditures were K29.3 billion, translating to a gross profit of K3.8 billion. Admarc reported K19.8 billion as revenues in 2020 whose large proportion was invoiced to government for undertaking social obligations on its behalf.

On Tuesday last week, Chairperson for the Parliamentary Agriculture Committee Sameer Suleiman asked President Lazarus Chakwera to intervene in the affairs of Admarc to save the grain trader from extinction.

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