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Simba Cement gets approval to acquire Cemtech business
The Competition Authority of Kenya (CAK) has approved the acquisition of Cemtech Company Limited by Simba Cement Company Limited.
“CAK considered that Cemtech has been dormant for a decade. Its shareholders have been looking a strategic partner to finance construction of a cement plant. The proposed acquisition is therefore expected to resuscitate the dormant firm, create jobs and raise the economic profile of West Pokot County” said the CAK in a press statement.
The Devki Group of Companies owns Simba Cement Limited (Simba Cement). Simba Cement trades under the brand name National Cement while Cemtech Limited, is a subsidiary of Sanghi Group of India. Sanghi Group is one of the world’s largest cement manufacturers.
The proposed transaction involves the acquisition of 100 per cent of the business and assets of Cemtech by Simba Cement. The assets include land, business intellectual property, business records, equipment, goodwill, licenses, stock and third party rights.
According to CAK, there will be no change in the market share of the merged entity since Cemtech has not yet commenced operations. The authority says that the merged entity will have a market share of 8 per cent.
“The transaction is unlikely to raise negative competition or public interest concerns, the Authority approved the proposed acquisition of Cemtech Company Limited by Simba Cement Company Limited,” it said.
Data from the Kenya National Bureau of Statistics (KNBS) indicates that the market players in Kenya’s cement sector, and their respective market shares are: Bamburi Cement Limited (33 per cent); Mombasa Cement Limited (16 per cent); East African Portland Cement Company (15 per cent); Savannah Cement (15 per cent); National Cement (8 per cent); and Athi River Mining Africa Limited (13 per cent).
KNBS data indicates that cement production decreased by 8.2 per cent from 6.7 Million tonnes in 2016 to 6.2 Million tonnes in 2017. Similarly, cement consumption and stocks declined from 6.3 Million tonnes in 2016 to 5.8 million tonnes in 2017 owing to reduced demand in the construction sector.
These market dynamics, coupled with competitive players, have resulted in a decrease in cement prices over recent years. In 2018, the average price of a 50kg bag of cement was Sh605 from an average of Sh687 two years ago.
Simba Cement Clinker Deal
Simba Cement bags Sh28bn contracts to export clinker
Simba Cement has inked long-term contracts that will see it export up to Sh27.7 billion worth of clinker to the neighbouring countries annually.
The move comes ahead of the opening of the firm’s West Pokot plant in August. The company has targeted regional markets of Rwanda, Uganda, and Burundi given the proximity of the new plant to these countries.
Mr Raval told the Business Daily that the signing of the long supply deal has started with the neighbouring countries with the supply of 6,000 tonnes of clinker a day.
The West Pokot plant, said Mr Raval, will export 80 percent of the total production to the regional market.
“Currently we are exporting 20 percent of our production to these countries but we are now signing long-term contracts that will see us supply clinker worth $200 million dollars (Sh27.7 billion) a year,” he said.
Several countries are already making orders because the West Pokot plant is closer to them and it will make the cost of the commodity cheaper as compared to other markets where they are acquiring it currently.
The new plant will pump into the country an additional 2.5 million tonnes of clinker, a key raw material in the manufacture of cement.
The commissioning of the plant will make Mr Raval the largest producer of clinker in East Africa with the production of 7.5 million tonnes from his three factories.
The businessman has other cement operations through National Cement Company Limited.
The West Pokot plant will be the second largest in Kenya after his Emali plant, which currently produces 3.5 million tonnes of clinker annually.
Mr Raval said the additional capacity in Kenya has the potential to cut the cost of cement from the current Sh650 for a 50-kilo bag to Sh500.
The plant, said Mr Raval, would also contribute to job creation with at least 2,000 people to be employed directly at the facility.
In the 2023/2024 budget to be read next month, Treasury has proposed a 10 percent tax on imported clinker, resulting in an outcry from small players who have opposed the move through the Kenya Association of Manufacturers (KAM).
KAM issued a statement calling on the government to reconsider the proposal, saying it poses serious negative economic and social ramifications including a possible loss of more than 100,000 jobs.
The billionaire, who also has an interest in steel, has been pushing for an increase in duty levied on imported clinker to protect the local industry.
He has been pushing for enhanced import duty on clinker, the main ingredient for the manufacture of cement, as the steel magnate eyes some Sh8.3 billion that factories without grinders pay to import the crucial raw material. Import levy on clinker stands at 25 percent currently.
Simba Cement Pokot plant opens in August
Simba Cement, part of the businessman Narendra Raval’s empire, is set to open its West Pokot plant in July, pumping into the country an additional 2.5 million tonnes of clinker, a key raw material in the manufacture of cement.
Production is scheduled to start a month later, raising competition in the cement sector and further constraining the industry’s ability to raise prices.
“The plant is on the final stage of completion with the first production expected to be out by August,” Mr Raval told the Business Daily.
The commissioning of the plant will make Mr Raval the largest producer of clinker in East Africa with the production of 7.5 million tonnes from his three factories. The businessman has other cement operations through National Cement Company Limited.
The West Pokot plant will be the second largest in Kenya after his Emali plant, which currently produces 3.5 tonnes of clinker annually.
Mr Raval said the cement firms would export surplus clinker to other East African countries that also rely on imports to meet their needs.
The billionaire, who also has an interest in steel, has been pushing for an increase in duty levied on imported clinker amid opposition from other manufacturers.
He has been pushing for enhanced import duty on clinker, the main ingredient for the manufacture of cement, as the steel magnate eyes some Sh8.3 billion that factories without grinders pay to import the crucial raw material. Import levy on clinker stands at 25 percent currently.
However, five cement makers put up a spirited fight against a fresh plot by Mr Raval to control the lucrative clinker market.
The Competition Authority of Kenya gave Simba Cement, a subsidiary of the Devki Group of Companies, the go-ahead to buy 100 percent of the business and assets of Cemtech owned by Indian conglomerate Sanghi Group in 2019.
The feasibility study for the project, which was commissioned in 2010 by the Kerio Valley Development Authority showed that the area has large deposits of limestone with the potential to produce 1.2 million tonnes of cement per year.
Additional capacity
Mr Raval said the additional capacity in Kenya has the potential to cut the cost of cement from the current Sh650 for a 50-kilo bag to Sh500.
The plant, said Mr Raval, would also contribute to job creation with at least 2,000 people to be employed directly at the facility.
West Pokot governor Simon Kachapin said the commissioning of the project would contribute significantly to the residents of the county.
“This plant will have a multiplier effect on the West Pokot economy because of the direct impact that it will have on our people,” he said.
Mr Kachapin said the county would give the investor all the support that he requires to make the project successful.
Simba Cement’s Nakuru Sh6.8 billion plant
Kenya’s Devki Group has opened a huge cement manufacturing plant in Nakuru a move that its chairman Narendra Raval says will not only boost cement production in the area but also offer employment.
Mr Raval says that already Simba Cement factory located in Salgaa area is selling cement at Ksh.530 in Nakuru and its environs down from Ksh.750.
The Ksh5.8 billion plant is still being expanded and will create a total of 1000 direct jobs by June this year.
“This cement factory has an installed processing capacity of 750,000 metric tonnes annually. Plans are underway to double the installed capacity going forward,” said Mr. Raval.
Speaking after presiding over the opening of the cement plant, president Uhuru Kenyatta urged companies involved in the construction industry to leverage on the low cement prices offered by the processor to expand their enterprises and assured that the Government is keen on attracting more factories to the region.
He said the Government will continue to support investments that utilise local resources to create wealth and employment opportunities for Kenyans across the country.
“My administration will support value addition, extraction industries, and manufacturing and we will continue supporting investments targeting the economic base of each county,” the President assured.
The Head of State said the Government will keep investing in capacity building for local industries to enable them get a share of the ever expanding international market for Kenyan products.
Devki Group has been on an aggressive expansion drive over the last two years. In February last year, his National Cement launched a $280 million cement clinker plant located in Merrueshi/Mbirikani in Kajiado County, 80 km south of Nairobi.
Earlier this year he acquired the Kenyan assets of bankrupt Cement manufacturer Athi River Mining for $50 million, apart from Nakuru cement plant the company is currently constructing two new cement factories in Njoro and Mariakani in Mombasa.
Devki Group is one of the largest manufacturers of steel in East Africa.
Social Commitment: Helping the needy
Five students from Nakuru County will finally join high school after Simba Cement Company awarded them scholarships.
The children who scored above 350 marks in their KCPE exam results released last December were yet to join high school due to lack of fees.
While issuing the cheques to the students, the head of administration of Devki Group of companies Peter Paul said that the company would continue supporting more children from poor backgrounds who performed well in their national examinations.
“We have today cleared school fees for the first year and we shall continue supporting them for as long as they continue with the good performance,” said Paul at the Simba factory in Salgaa, Nakuru Factory.
He disclosed that the company is also in the process of coming up with a feeding program targeting two local primary schools and two orphanage homes within the locality in Nakuru County where the company is located.
“We are planning to start supplying the community with clean drinking water as well as embark on a school feeding programme targeting at least 2,000 children,” Paul added.
The schools selected to benefit from the feeding program include Mukinyai Primary School and Matuiku Secondary School all located in Nakuru County.
He said last year, the company renovated three classrooms and an administration block at Mukinyai Primary School.
One of the parents of the beneficiary students Gladys Dama said she had lost hope that her daughter would join high school and thanked the cement company for the scholarship.
Dama said that her daughter scored 370 marks and was supposed to join Kisumu Girls High School but was unable to do so due to lack of fees.
Simba cement is an affiliate to the Devki group of companies owned by Dr. Narendra Raval, a Kenyan industrialist, entrepreneur and philanthropist of Indian Gujarati origin.
Dr. Raval is the executive chairman of the Devki group of companies, a conglomerate in East Africa that manufactures steel, aluminum and cement.
Kenya “Guru” to donate salary as Egerton Varsity VC
Kenyan steel tycoon Narendra Raval, also known as ‘guru’, has decided to work for free at Egerton University where he was recently appointed as the vice-chancellor.
His appointment to one of the country’s oldest and most reputable institutions was made by Kenya’s President Uhuru Kenyatta.
“It’s the first time that a Gujarati has been appointed to such a prestigious position in a government university in Africa. I have decided that my entire salary including any allowance or financial benefit received from this position will go to support needy students at the university,” Raval said.
The college has over 24,000 students and Raval said that he will use his good offices as a business leader to collaborate with industries in Africa and create job opportunities for the students of Egerton University.
A native of Maathak in Surendranagar district, Raval has joined the list of prominent Kenyan business leaders who have been appointed by President Kenyatta to head government-owned universities in the recent past.
The founder and chairman of Devki Group of Companies has a business empire with a turnover of around USD 650 million, spread across six sectors including steel, cement, infrastructure and aviation.
Raval made it to the Forbes ranking of Africa’s 50 richest people in 2015. Two years later, he pledged to donate half of his net worth to humanitarian causes.
Beginning as a small trader of steel in the Gikomba area of Nairobi, Kenya, the Devki Group has diversified into manufacturing of steel, roofing sheets, cement and other businesses over a span of three decades.
He earned the sobriquet ‘guru’, thanks to his initial days as a cleric in the Swaminarayan Temple in Bhuj. A well-known palmist and crystal gazer for Kenyan presidents and other high-ranking Africans, Raval released his autobiography in 2018 titled ‘Guru: A Long Walk To Success’.
He has also counselled presidents of countries like Tanzania and Congo as well as heads of some European nations.
Guru bhai today runs his business empire with more than 4,500 employees spread across East Africa.
Devki Steel Mills injects life into poor, forgotten town
A few years ago, Samburu town in Kwale County was rated among the poorest in the country, with no industry present and locals burning charcoal and farming livestock for survival.
With climate change and a drought, residents suffered, their animals dying due to lack of water and pasture.
However, Samburu’s face is now changing since the opening of one of the biggest steel manufacturing plants in Kenya and the second largest in Africa after South Africa’s.
Driving along the Mombasa-Nairobi highway, one cannot ignore the changes that the Devki Steel Mills, located in Samburu-Chengoni ward, has brought.
As other towns along the highway have suffered a persistent economic crisis due to the shift of cargo haulage from the road to the standard gauge railway, the once sleepy town of Samburu has flourished in the last few years.
Construction of the steel plant, nine kilometres away from the Samburu town centre, started in 2018 whereas operations started last year.
Simba Cement’s Nakuru plant promises 700 new jobs
Devki Group’s National Cement Company (NCC) on Tuesday launched a new factory in Nakuru County, lifting the company’s annual consolidated production capacity to two million tonnes.
The Sh6 billion plant, with an annual capacity of 750,000 tonnes, is located in the Salgaa area on the Nakuru-Eldoret highway. It is expected to generate 700 direct jobs.
Devki Group chairman Narendra Raval said NCC’s overall production capacity would hit 3.5 million tonnes by July following ongoing expansion projects, including phase two of the Salgaa plant that is expected to add another 750,000 tonnes.
“We are adding more investment to deliver more capacity in the market,” he told the Business Daily.
NCC has been on an aggressive expansion drive, buoyed by demand from huge infrastructure and real estate projects across the country.
Last year, NCC bought the assets of rival Athi River Mining (ARM Cement) — beating Rai Cement Company to the deal.
The new Nakuru plant is expected to increase competition in the cement market, which has recently witnessed price wars due to expansion and entry of new players.
Mr Raval urged the government to impose a duty of at least 25 percent on importation of raw materials for cement production to protect local producers.
He said Kenya has enough clinker to meet local demand and imposing duty or a total ban on clinker importation would elbow “unfair competition” by imports and help create more jobs for Kenyans.
“We urge the government to impose duty, 25 percent or more, on clinker importation from September 2020, or ban clinker importation like the Tanzania government to protect local industries and create more jobs for the Kenyan people,” said Mr Raval.
Kenya imports approximately two million tonnes of clinker annually, costing the country over Sh10 billion ($100 million) in foreign exchange every year.
Devki Group is also constructing a second clinker line in Emali, Kajiado County, for production of raw materials for cement that will increase the group’s total capacity to three million tonnes of clinker annually, which is the total requirement for Kenya.
“We are gearing towards fixing the country’s clinkers gap and making Kenya a regional market for raw material in cement production. If we add clinker produced by other companies, Kenya and East Africa has sufficient surplus capacity of raw material for cement production that will contribute to further reduction in cement prices,” said Mr Raval.
Devki Group of Companies owns Simba Cement Limited (Simba Cement). Simba Cement trades under the brand name National Cement while Cemtech Limited, is a subsidiary of Sanghi Group of India. Sanghi Group is one of the world’s largest cement manufacturers.
Cement production decreased by 2.4 percent while consumption grew marginally by 0.18 percent in the half-year of 2019, according to the Kenya National Bureau of Statistics (KNBS).
KNBS data indicates that cement production dropped by 8.2 per cent from 6.7 million tonnes in 2016 to 6.2 million tonnes in 2017. Similarly, cement consumption and stocks fell from 6.3 million tonnes in 2016 to 5.8 million tonnes in 2017 owing to reduced demand in the construction sector.
These market dynamics, coupled with competitive players, have resulted in a decrease in cement prices over recent years. In 2018, the average price of a 50kg bag of cement was Sh605 from an average of Sh 687 two years ago.
