Portland Cement to grow revenue with precast items

NAIROBI, KENYA: East African Portland Cement Company (EAPCC) will next month start producing precast materials like electric fencing poles, culverts and sewer pipes to create fresh income streams.

The company’s Managing Director, Mr Kephar Tande, told Business Beat that engineers are putting final touches to a Sh100 million plant in Athi River, and he is optimistic it will greatly improve Portland’s revenue.

“We expect to generate up to Sh300 million from the plant in the first year of its operations. Earnings will increase as we expand our market,” said Mr Tande.

He said the precast product line would be easy to run and friendly to the environment as it would run on waste materials from its cement manufacturing processes and quarry. This is also expected to cut production costs.

EAPCC’s key rival for the local cement market, Bamburi Cement, already produces its own precast materials. Portland’s foray into the business is expected to help provide variety and competition, which Tande said would ultimately benefit consumers.

EXPANSION PLANS

Initially, the company will focus on Nairobi and its environs to market and sell products from the line, but will later expand its scope to cover other parts of the country.

The MD, however, ruled out expanding to markets outside Kenya.

“Precast products are naturally heavy and bulky. This makes them unsuitable for export. Our focus will be the local market and we hope to get more Kenyans to use our products,” said Tande.

The new products are expected to benefit from an initiative by the cement maker to generatee its own energy even as it seeks to expand its cement capacity by over 50 per cent in the next two years.

Plans are in place to produce steam to power operations, reduce the firm’s costs and increase profitability, given that energy consumption accounts for about 40 per cent of production costs.

Tande explained that the company wants to move away from a common perception in other countries that well-established precast industries do not live up to expectations.

“We definitely want to make our customers feel secure that they will receive what they have ordered, and according to the agreed schedule.

“To ensure both quality and reliability, you need a facility that can make products at the right time. The machines must be up and running, and our engineers have made sure that this is where we are.”

If things go according to plan, the new product line will account for between 30 and 40 per cent of EAPCC’s revenue stream in the next five years.

PRODUCTION COSTS

Despite the slow uptake of locally manufactured cement, EAPCC, which is the country’s second-largest cement maker, is also at an advanced stage of commissioning a new cement plant in Bissel, Kajiado.

It is hoped that the new plant will utilise the firm’s new production and packaging technology to increase cement production to two million tonnes from 1.3 million tonnes annually.

“The additional plant and capacity will put us at par with our main competitor in terms of production, while lowering our costs of production. This will put us in a good position to derive maximum value for our shareholders as we compete to be the best in the industry,” said Tande.

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