The New Kenya Cooperative Creameries (KCC) has stopped supplying milk to the Tuskys Supermarkets following non payment of debts running into millions of shillings.
The new KCC disclosed that the retailer had accrued high debts prompting the supplier to suspend dealings with them. They said that they would not be supplying any types of milk to the Supermarket Chain.
This comes after Tuskys exceeded its 60 days credit period without issuing any payments to the supplier.
The Supermaket has been delaying payments to suppliers, citing low business brought about by the Covid-19 pandemic prompting intervention from the Competitions Authority of Kenya (CAK).
New KCC Managing Director Nixon Sigey said they are negotiating new payment terms with Tuskys before they resume supplies.
“We are at the moment in discussion with the firm to agree the way forward after we stopped supplies of milk to the retailer,” said Mr Sigey
Although Mr Sigey did not disclose the amount owed to New KCC by Tuskys, he said that the retailer gives them business worth about Sh80 million on a monthly basis.
New KCC has suffered has been through familiar ground before when Nakumatt Supermarket went down with suppliers debt worth Sh18 billion.
Other suppliers have also intimated that they are taking caution when issuing out their supplies to Tuskys due to payment delays which is affecting their cash flows negatively.
“We are still supplying to them (Tuskys) but we have cut down on quantities to avoid huge debts at the end of the day given their slow pace of payment,” the managing director of a flour company told Business Daily while requesting anonymity.
Various manufacturers have urged the government to intervene and oversee payment of debts owed to suppliers by the Supermarket to avoid a full blown debt crisis.
CAK on Monday ordered Tuskys to disburse and settle Sh1.29 billion owed to suppliers between July 1 and July 16.
Tuskys is the first major retailer to go under the scrutiny of CAK’s Buyer Power which was created following Nakumatt’s collapse with a debt of Sh 30 billion owed to suppliers.