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Bus bodies builder Labh Singh falls as Sh1bn KCB loan bites
Assembling of a bus goes on at a assembly plant in Miritini, Mombasa County on June 29, 2022. LSHS joins a growing number of companies that have gone into administration in recent months over financial upheaval.
Kenya’s oldest and one of the largest truck, coach and bus body builders, Labh Singh Harnam Singh Limited (LSHS), has been placed under administration over a Sh1 billion bank debt, joining a growing chain of corporates that have suffered a similar fate in a tough economy.
Administration is a process through which a third party - an administrator - is appointed to take over the affairs of a company in distress to improve its financial situation for the benefit of its creditors or auction its assets as a last resort to protect the interest of creditors.
Administration puts a moratorium on all proceedings against a firm giving it the much-needed breathing space to recover.
The High Court placed LSHS under administration effective February 4, 2025, after the company failed to service a Sh1.1 billion loan from KCB Group and appointed Ponangipalli Venkata Ramana Rao and Swaroop Rao Ponangipalli as the joint administrators.
“Following the appointment, all the affairs and business of the company are being conducted by the joint whose powers extend to all assets and undertakings of the company. The powers of the directors in terms of dealing with the company’s assets ceased,” the administrators said in a notice.
“Any party having a claim against the company shall submit the claim in writing with relevant supporting documentation to the joint administrators not later than March 15, 2025. The joint administrators act as agents of the company without personal liability.”
Its financial distress comes amid a major drop in demand for buses and trucks. Sales of new buses and trucks have declined steadily to 5,766 units last year from a peak of 9,824 units in 2015, according to data from Kenya Motor Industry Association (KMI).
LSHS, which was established in 1950, commands one of the largest market share in Kenya and East Africa with a production capacity of up to 60 units per month.
The bodybuilder has been servicing orders by new vehicle dealers including Isuzu East Africa, Scania East Africa, DT Dobie, Hino Motors Kenya, Simba Colt Limited, King Long, and CMC Motors Group.
Kenya has about 12 body-building firms including Kenya Coach Industries, Kenya Vehicle Manufacturers, Banbros Limited, Central Farmers Garage, Master Fabricators Ltd, Labhsons, Crater Automobiles, Sahota Body Works Nakuru, and Kenyon Limited among others.
LSHS joins a growing number of companies that have gone into administration in recent months over financial upheaval.
Data by the Business Registration Service (BRS) shows that a record 26 firms went into administration in the year to June 2024.
September and May 2024 saw the highest number of firms (six each) placed under administration during the financial year 2023/24, according to the BRS data. October and June each saw four firms placed under administration, one in November and two each in January and February.
Among the firms that went into administration in the period was Mastermind Tobacco (K) Ltd over an undisclosed debt to I&M Bank.
Mastermind, which went into administration in December 2023, was at the time Kenya’s second-largest cigarette manufacturer.
Sendy Group, a technology-based logistics firm, was also placed under administration in September 2023 year after defaulting on its debt. A similar fate befell Vehicle and Equipment Leasing Limited (Vaell) in February 2024 after defaulting on creditors to the tune of Sh1.1 billion.
In May 2024, e-commerce firm Copia was also placed into administration by its Board of Directors after failing to attract capital even as its costs piled up.
