Crown Paints to open Sh400m plant

Crown Paint's Sh400 million plant in Kisumu. The firm is set to open the plant in coming weeks as it seeks positions itself to tap into the vibrant real estate market in Western Kenya.

Crown Paints is set to open a Sh400 million factory in Kisumu. This is expected to help the firm cut costs as it seeks to cash in on the growing real estate market in the Western region.

The paint maker is putting the final touches on the construction of the facility, which should open in the coming weeks.

“This is a Sh400 million state-of-the-art plant and it will see us serve our market in the region much better,” Crown Paints CEO Rakesh Rao said.

The plant is expected to create hundreds of jobs directly and indirectly.

In an interview with Business Beat, Mr Rao, whose firm is the only paint manufacturer listed at the Nairobi Securities Exchange (NSE), raised issue with the delays in clearing Crown’s products to Tanzania, saying this was hurting its regional business.

Rao said he is considering writing to Tanzania President John Pombe Magufuli on the frustrations the firm is facing getting its products into the market due to customs challenges.

“There are times we are taking more than 10 days to have our products cleared. The customs officials take too long just clearing our paperwork, and this is hurting our business,” he said.

The firm’s latest annual report shows Crown Tanzania had a difficult first full year.

“It has been a challenge to enter into the market and gain a respective foothold competing against the major paint companies that have been established for many decades in Tanzania,” the report notes.

BOOST SALES

But Rao said the company has made significant inroads in Uganda and Rwanda, even though last year’s high interest rates and difficult economic environment posed huge challenges for the paint industry.

Crown is counting on a better year, with the new plant expected to boost the firm’s sales and market share.

The new plant will supply all the counties in the Western region, including Kisumu, Eldoret, Uasin Gishu, Kakamega and Bungoma.

It has the capacity to manufacture 1.3 million litres of paint a month. Currently, Crown produces 2.3 million litres a month.

Devolution has seen the growth of the real estate sector in the counties, with significant investments being made in housing and commercial developments. The real estate sector is the biggest market for the paint industry.

The Cytonn Investments 2016 Outlook Report notes that local and foreign investors will continue reaping handsome returns from property, as the growth of the middle class and continued urbanisation increase demand for residential and commercial developments across Kenya.

The report adds that last year, investors in real estate reaped returns at 29 per cent, which is set to attract more capital into the sector this year.

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