Eveready East Africa Plc, a publicly traded entity on the Nairobi Securities Exchange (NSE), is seeking a Sh160 million loan from one of its existing shareholders.

This move aims to address the company's pressing cash flow issues exacerbated by dwindling sales and ongoing losses.

An undisclosed shareholder has stepped forward to provide the loan, as confirmed by the company's chairman, Maurice Nduranu.

"It is one of our shareholders. It is an existing shareholder who wants to provide a shareholder loan. I cannot say more now but I can confirm to you it is one of our shareholders," Ndaranu stated.

This intent is further detailed in the company's latest annual report for 2023, which disclosed that the company has an investor who expressed interest in investing in the company and intends to provide a loan of up to Sh160 million.

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The financial predicament of Eveready is starkly reflected in its recent performance metrics.

For the fiscal year ending September 30, 2023, the company reported a loss of Sh43.77 million, a marginal improvement from the previous year’s loss of Sh50.86 million.

Compounding these challenges, the company's current liabilities exceed its current assets by Sh88.41 million, a significant increase from Sh45.72 million in 2022.

The annual report underscores the gravity of the situation: “This situation indicates that a material uncertainty exists that may cast doubt on the company's ability to continue as a going concern.”

The necessity for this loan is underscored by Eveready's history of financial instability challenges. 

In response to these challenges, Eveready has shifted its business model from manufacturing to distributorship to cut operational costs.

Despite this strategic pivot, the company continues to grapple with significant financial hurdles, highlighting the critical need for the proposed Sh160 million loan to stabilise its operations and enhance its cash flow position.

As shareholders continue to face years without dividends, the infusion of this loan could be a pivotal step in ensuring the company's sustainability and returning it to a path of profitability.