Auditor General’s Office (AGO) has revealed Maldives Industrial Fisheries Company (MIFC) incurred millions in losses from 2016-2021.
In the audit report on MIFCO’s operations, the AGO reviewed the company’s revenue, operational expenses, and losses from fish export shipments. The report also reviewed the result of the company’s efforts to make its operations more efficient.
The audit report shows MIFCO received revenue of USD446 million from 2016-2021 but the cost of sale reached USD459 million. In addition, the company incurred much higher losses from purchasing and processing fish compared to exporting fish to foreign markets and selling the products. During this period, the company incurred a gross loss of USD16 million and a net loss of USD65 million.
Furthermore, the audit report shows MIFCO incurred an accumulated loss of USD84 million as of 2021 and the amount of debt was higher than the value of the assets. As such, the company had USD62 million in assets and USD123 million in debt, resulting in negative net worth. The report also shows the company incurred USD11 million in losses as of 2016 and incurred a further USD3.6 million in losses in 2017, and the net loss increased steadily for the next four years. By 2021, the company had incurred a net loss of USD16 million.
AGO also evaluated 394 shipments made from 2016-2021 and found that MIFCO had incurred USD19 million in losses from rejections due to the deteriorated conditions of the fish products. The amount is a yearly loss of USD3 million. In addition, the audit office found that MIFCO had violated its sales and marketing procedure by selling USD9.3 million in fish products to various parties without signing agreements from 2016-2018.
AGO noted that the main reasons for the losses are MIFCO purchasing fish products at a higher price compared to the market rate, the high operational expenses, the rejection of shipments, and the varying size and weight of the fish products in the shipments. The audit office noted that MIFCO had failed to measure the value of the fish products and ensure their quality in cold storage facilities. It also stated that fishing vessels did not have facilities to maintain the quality of their catch and the company did not have the means to determine the quality of fish during the purchase.
AGO advised MIFCO to reduce expenses and make its operations more efficient, as well as to formulate a new business strategy by evaluating its opportunities and challenges in the local and foreign markets. It also highlighted the need to reduce the losses from exporting fish products by maintaining quality.