Mehta Group sets its feet in cement business

By Jackson Okoth

In what is likely to spark an intense price war in the cement industry, Mehta Group, an Indian-based conglomerate has made proposals to the Government to set up a cement plant in Kenya.

"We are still waiting for the Government to give us the necessary approvals before we proceed," Gajendra Batavia, a director at Glenn Investments Ltd, the cement-manufacturing arm of Mehta Group told Financial Journal.

The group plans to set up a 1.2 million metric tonnes cement plant in West Pokot, to cost about $200 million, in a phased programme that will be scaled up depending on the available limestone deposits in the area.

In last eighteen months, Mehta Group has been busy with groundwork for the project, including awarding a contract to Department of Mines and Geology to carry out geological survey in Pokot.

　

high demand

This is probably the first extensive geological survey and detailed testing of raw materials carried out by a private investor in the area.

Mehta Group, through its cement company Glenn Investments Ltd, has also held meetings with the Pokot County Council officials, which has invited it to invest in the region.

A builder at work. Mehta Group plans to set up a cement plant in Pokot to tap into the lucrative cement business. [PHOTO: FILE]

The group has also submitted investment proposals to Kerio Valley Development Authority and the Ministry of Regional Development Authority. "We intend to set up in Pokot due to the high limestone deposits in this area, enough to sustain three cement plants," said Batavia.

Mehta Group will set up this plant in Pokot area, an ideal location for its target export markets of Uganda Rwanda, Burundi and Southern Sudan, where demand for cement is huge at the moment.

While the biggest market for local cement manufacturers is the Ugandan market, location of these plants around Mombasa and Nairobi has meant high prices due to transportation costs.

　

price reduction

" We shall sell only 40 per cent to the local market while the rest will be for the export markets," says Batavia.

Mehta’s plans include setting up a cement plant that will also have its own power station, a cushion from the high electricity costs responsible for high retail prices of cement sold. Figures indicate that a 50kg bag of cement retails at Sh900 to Sh1000 plus in most upcountry outlets.

But Mehta intends to cut these prices by half.

Pending approvals from the Government, it will take at least two years before the necessary machinery is manufactured, delivered, shipped, cleared and installed.

Apart from proximity to export markets, the Pokot plant will also use its location to supply cement to upcountry destinations, at a cheaper cost.

The cement industry is dominated by Bamburi Cement, East African Portland and Athi River Mining as well as imports coming mainly from China and India.

French multinational, Lafarge, owns substantial stake in all the three cement manufacturing firms. It is this dominant structure that Mehta Group will be up against. The Mehta Group controls assets in excess of $350 million and has a global presence spanning Asia, Europe, North America and Africa.

Mehta has almost 65 years’ experience in cement manufacturing with two plants in India, which produces about 3.5 million tonnes of cement a year, with its own jetty for export.

　

diversified investments

Industrial project consultancy arm of the Mehta Group known as Agrima Consultancy Services operating from India has established cement plants for various investors in Ghana, Libya, Myanmar, Mauritius, Zambia, Sri Lanka and India.

These were turnkey projects successfully placed into production by the Group as international experts on cement.

The Mehta Group has diversified industrial investments in Kenya, Uganda, America, Canada and India.