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Steel magnate: God has given me enough, let me bail out Mumias

NEWS
By Macharia Kamau | May 30th 2021
Egerton University New Chancellor Narendra Raval (right) addressing the university Senate on April 12, 2019 when he visited the institution for the first time since he was appointed by President Uhuru Kenyatta. [Kipsang Joseph, Standard]

Industrialist Narendra Raval is eyeing Mumias Sugar Company. Not to make money, he says, but to revitalise the rundown miller and give back to cane farmers the livelihoods that have been ruined by the sector’s decline.

Mr Raval, who is behind steel giant Devki, recently said he planned to lease Mumias and invest Sh4 billion in refurbishing the factory, and use an additional Sh1 billion to farmers who supplied cane to the company but have not been paid.

The man also referred to as Guru said he had made his money, being among the largest steel and cement producers in East Africa, and instead wants to help farmers and other Kenyans in the sugar supply chain make decent earnings.

He is also on a mission to break what he said are cartels in the sugar sector that have frustrated local production in favour of imports.

He is already claiming frustration by the cartels in his bid to revive Mumias, saying they have been pulling strings to stop the sugar miller’s handover to Devki.

“I am not interested in Mumias to make more money. God has given me enough investments and industries, but I want to change the life of farmers and break this monopoly formed by a cartel among players in the sugar sector,” he told The Standard in an interview Friday.

“I don’t want to make more money. I have many businesses that give me good returns, I want to change the lives of these farmers. My main intention is to bring back the livelihoods in the area, nothing more than that.” Raval said he has signed an agreement with the receiver-manager that will see him lease the facilities for at least 15 years.

Though he did not disclose the terms of the lease, he said Devki would inject Sh4 billion to upgrade the sugar miller’s equipment.

He will also put in Sh1 billion, which he said would be used to support the farmers “giving them back their livelihoods and enable them to have some of their dignity back”.

Outdated equipment

Mumias Sugar company main gate taken on May 6, 2021. [Benjamin Sakwa, Standard]

Among the challenges that the sugar sector faces include use of outdated equipment, especially in State-owned factories blamed for low production.

Rai is, however, concerned about the slow process of handing over Mumias, attributing it to politics and corruption. “While I am interested in Mumias, I am finding a lot of politics and some crafty people blocking the handover. My guess is that they want to keep their monopoly in the area but it’s the poor farmers who are paying the price,” he said.

“I have already signed the lease agreement with the receiver-manager but they do not want to hand over the plant to me.” 

He said he is not a politician but an industrialist and was reviving the company in good faith.

“I have visited the place and seen people are getting poorer. Their cane has been going to waste over the last two years because nobody wants to buy,” Raval said.

“The cartels want to keep it like this so that their lives cannot change and the sugar manufacturers can keep their monopoly… and if I am honest, they are not manufacturers, they are importers and do not want sugar production in Kenya to go up.“If it does, it will kill their monopoly.” Kenya heavily depends on sugar imports to meet local demand.

The country consumed about one million tonnes of sugar last year, of which only 400,935 tonnes were produced locally

Imports bridged the balance of 597,782 tonnes, or 57 per cent of the local sugar requirement.

“If I can start work at Mumias, I will make sure that Kenya does not need to import even a kilogramme of sugar,” the Devki owner said.

“The sugar sector will continue struggling because the intentions of many of the players are wrong. If my intentions are wrong, I would not manufacture cement but instead import.” Sugar milling is big business.

In many countries, other than sugar, there are numerous products from cane. Leasing Mumias Sugar will give Raval an entry into the sector, with time possibly becoming a key player as he is in steel and cement.

Mumias Sugar was once the best performing millers in the country. In addition, it had started diversifying its revenue streams with power and ethanol production.

Business acumen

The Ministry of Agriculture has for some time tried to lease out some of the other government-owned millers.

While the process has stalled as some of the players went to court to block the process, the ministry said it would insist on leaseholders diversifying from just milling to include products such as electricity and ethanol.

Other by-products include industrial sugar, pharma sugar and sugar cubes. Given his business acumen, these are areas that Raval may have seen as having potential. He told The Standard that while sugar production is not his forte, he would bring in experts to turn around Mumias.

“Mumias (sugar production) is not my line but I will bring expertise and will give life to not just the three million farmers but also the economy of western Kenyan region,” he said.

“The three million people are waiting for the company to start crushing cane but it will not come out if this cartel is not broken.” “If they hand over tomorrow, I will start production in 30 days and six months after I start, that place will be back to life.”

He sees a scenario where Devki might be edged out in the deal to lease Mumias because of “other interests” and further claimed chances are that “whoever will come, especially if it is an existing sugar manufacturer, their intention might be to kill Mumias”.

He, however, declined to name the people frustrating the handover of the mill. “Kenya is not friendly to investors anymore.”

Raval is famed for his philanthropy, with the recent donation of oxygen to public hospitals to deal with the Covid-19 pandemic perhaps being one of his largest acts of charity. In late 2019, he took over the then cash-strapped Athi River Mining Cement (ARM), bringing to an end a 45-year leadership by the Paunrana family.

While he said his major concern was the more than 1,000 workers that would have lost their jobs had the company shut down, the acquisition propelled Raval to be a top cement producer in the region when the capacities of National Cement, owned by his Devki Group, and ARM were combined.

He said he is investing $45 million (Sh4.8 billion) in refurbishing ARM’s two cement plants in Athi River and Mombasa. “We have rehabilitated the ARM plant in Athi River, changed most of the machinery and now it is at 80 per cent in production,” Raval said.

“We are changing everything at the Mombasa plant to bring it to today’s standard because it has been running on equipment which is 50 years old. It will be ready in November or December and will be to world-class standard.”

The ARM fertiliser plant is also being overhauled and in addition to the new equipment, new investments are expected to see the plant triple its production capacity.

The firm – which has since the acquisition been renamed Maisha Mineral Fertiliser Ltd – was started in 2003 and has capacity to produce 100 tonnes of per year but this will go up to 300 tonnes.

“We are also removing all the old machinery at the ARM fertiliser plant. This month we have started production of fertiliser in Athi River, which is better quality and also producing higher quantity, with less manpower because it is fully automated,” Raval said.

The firm is investing $17 million (Sh1.8 billion) in upgrading the factory. Raval paid Sh5 billion to take over ARM, and became the largest cement manufacturer in Kenya with a combined production capacity at more than three million tonnes per year.

He said the cement maker had retained all employees even when the rehabilitation was in progress. “I did this because the company was closing down and people would have lost their jobs. I retained all of them and revived it to being one of the most modern cement manufacturers,” he said.

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