STO pledges to make subsidiary, Fenaka profitable

The State Trading Organization (STO) has pledged to make its newest subsidiary, Fenaka Corporation Limited a profitable utility provider.

President Dr. Mohamed Muizzu has announced that Fenaka will become a subsidiary of STO, transferring hiring and firing authority to the parent.

STO in a statement on Wednesday said that Fenaka owed majority of its outstanding debt to the STO Group. The largest state-owned enterprise assured it will develop recovery plan, ensuring recovery of Fenaka’s debt owed to the Group along. It also added the plans will include objectives aimed at making the utility provider a profitable company.

At Tuesday’s STO directors’ meeting, the board approved working with the Ministry of Finance and Fenaka to formally bring the utility provider under STO’s corporate umbrella effective from 2025 onward.

The plans involve hiring an independent auditor to analyze Fenaka Corporation’s fiscal health, asset valuation, and conduct legal due diligence as per STO board’s instructions, the new parent company added.

The board further instructed cooperating with the Finance Ministry to enhance operations of Fenaka.

According to STO, the interim board of Fenaka will include representatives from STO, Finance Ministry, and the Environment Ministry. Once Fenaka becomes a subsidiary, board appointments will follow STO’s governance code and board appointment policies.

Earlier on August 15^th, STO proposed to the government that Fenaka become a fully-owned subsidiary. The state accepted the proposal, deciding to transfer the utility provider entirely under STO’s corporate umbrella.

Fenaka Corporation’s Managing Director Muaz Mohamed Rasheed earlier said, the company’s loss in the final quarter of last year when the current administration assumed office, stood at MVR 24.7 million, but ended the current year’s second quarter with a modest MVR 7.4 million profit.

Muaz aims Fenaka to generate an annual profit of MVR 25 million by the conclusion of 2024.