Starafricacorporation Limited is grappling with mounting liquidity pressures after ending its financial year ended March 31, 2026, with a US$2,23 million working capital deficit, forcing it to rely on fresh long-term borrowings and tighter capital management to sustain operations.
This comes as the group’s current liabilities exceeded current assets by US$2,23 million by year-end, although management attributed the shortfall to losses incurred in previous reporting periods.
Despite the liquidity pressures, the company posted a profit after tax of US$1,44 million for the year under review, compared to a US$4,83 million loss in the prior year.
This represented a US$6,28 million turnaround, driven by reduced foreign exchange losses and administrative cost savings.
“As at March 31, 2026 date, the group’s current liabilities exceeded its current assets by US$2 230 723. The adverse working capital position is because of losses incurred in previous reporting periods,” starafricacorporation said in its financial year results for the period ended March 31, 2026.
“The negative historical performance has been addressed through a reorganisation of the business. The business is forecasting making a profit in FY 2027 on the back of the re-organisation and volume growth.”
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Liquidity support came through new financing during the 2026 year, with the company securing US$4,22 million in long-term borrowings and US$523 963 in short-term borrowings, which it said helped address working capital constraints while supporting ongoing operations.
“The business has excess production capacity. The plant can produce 120 000 tonnes of white sugar annually, which can be uplifted to 180 000 tonnes per year with additional capital expenditure.
“During the period under review, production was aligned to sales to manage working capital.
“The business forecasts volume growth in FY 2027 at Goldstar Sugars and Country Choice Foods enabled by improved competitiveness, government efforts to protect the local market from cheap imports and better distribution.
“Additionally, the group accessed long-term finance in FY2026 that assisted it in addressing working capital challenges. The business has adequate access to working capital to support operations.”
The improved outlook comes as starafricacorporation expanded its asset base by 15% to US$36,47 million during the year, supported by higher trade receivables and cash balances despite property write-downs.
“The balance sheet reflects a write-down of property, plant and equipment, as well as investment property, primarily driven by the change in the functional and reporting currency,” starafricacorporation chairman Rungano J Mbire said.
“Regarding working capital, an increase in trade and other receivables was offset by a corresponding rise in trade and other payables, reflecting the business’s strategic initiatives to defend the local market against imports.”
Despite the return to profitability, the group turnover for the review period decreased by 9% to US$58,1 million, primarily due to strategic price reductions implemented at the start of the financial year.
Hence, the group forecasts volume growth in the current financial year underpinned by operational efficiencies, business reorganisation and retooling.
“Operational efficiencies achieved through business reorganisation and retooling have enhanced domestic competitiveness,” Mbire said.
“Accordingly, the group is evaluating regional export opportunities, the execution of which will be supported by favourable cost structures.”