Mumias Sugar, Kenya's largest sugar miller by production capacity, will be generating 20 per cent of total revenues from sugar by-products by end of the 2013/14 financial year.

Chief executive Peter Kebati yesterday said its new energy co-generation, ethanol distillery and mineral water plants will be operating at full capacity by June.

"We have completed our diversification projects and will now work on non-organic growth including consolidation and acquisitions," he said.

The sugar factory is operating at 54 per cent of installed capacity currently, largely attributed to cane delivery challenges resulting from cane poaching by new sugar millers that don't have their own schemes, and declining yield per hectare.

Mumias reported a decline in earnings for half-year ended December 31, attributed to low activity levels in its plants and depressed sugar prices that 30 per cent lower than a similar period in 2011. Sugar prices were an average of Sh74,000 per tonne compared to Sh106,000 per tonne in 2011.

Loss before tax was Sh1.58 billion as net revenues fell to Sh5.42 billion from Sh7 billion a year before.

The firm is servicing a dollar-denominated loan of $35 million from Proparco, whose repayments were affected by a fluctuating shilling in late 2011 and early 2012. It has other loans from EcoBank Consortium, and short-term loans from KCB, Barclays and CFC Stanbic.