MIFCO loses MVR 48 million annually to poor fish quality, audit finds
When the company's operating expenses are added, the net loss is estimated at MVR 1 billion.
By
Aman Haleem
A special audit of MIFCO has revealed that the company suffered a loss of MVR 290 million over a period of five years due to having their export shipments rejected due of discrepancies in size and type and and lower quality.
On a per annum average, this accounts for a loss of MVR 48 million per year.
The audit office conducted a special audit to assess the status of MIFCO for 2016-2021.
The audit observed:
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MIFCO's financial position based on revenue and expenditure
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Factors contributing to the losses incurred by exported fish shipments
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The rules and procedures followed in exporting and the extent to which it is followed.
The audit found that the main reasons for MIFCO’s losses were:
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The rate at which fish is purchased to MIFCO is higher than the selling price in the overseas market
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High costs in running the company
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Rejection of some fish in export shipments
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Loss of revenue for the company due to differences in fish size and type
MIFCO earned MVR 6.9 billion from the sale of fish, but after the deduction of MVR 7.1 billion spent on production, the company had made a total loss of MVR 250 million in five years. When the company's operating expenses are added, the net loss is estimated at MVR 1 billion.
Company debt higher than fixed assets
The losses piling up, and in five years, by the end of 2021, the company stood at a loss of MVR 1.3 billion. What is even more worrisome is the state of the company's debt.
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The company's debt stood at MVR 1.9 billion at the end of 2021
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The company owns immovable assets worth MVR 961 million
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The company is currently operating at a "negative net worth" of MVR 955 million
Fish rejected because freshness not maintained
The audit cited non-retention of the cold chain of fish and the lack of fish storage as the reasons for the high number of fish being rejected.
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When fish are stored, there is no arrangement to separate the type and size of the fish
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The status of the shipments has not been adequately verified
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Fishing vessels don't have modern systems to maintain freshness of their catch
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There is no system in place to buy fish based on the quality of the fish
To rectify these, the audit recommended that MIFCO formulate a business strategy and fix the price at which fish can be purchased based on its impact on the global market and private businesses. The office also suggested ways to store fish in a proper system, from fishing boats to export docks.
Under the fisheries policy of this government, on 20 September 2020, the state removed the price control of fish and set the minimum price at MVR 13. Prior to that, for seven years, MIFCO used to buy fish at MVR 20 per kg.
