President Kibaki and Prime Minister Raila Odinga are taken round National Cement plant at Lukenya on Mombasa Road, June 15 2011. Fredrick Onyango
National Cement, a subsidiary of Devki Group, has revealed plans to grow its production by more than six-fold by the end of next year, making it East Africa’s largest producer.
The firm has announced plans to invest an additional Sh13 billion to expand production capacity to 2.5 million metric tonnes per year, from the current 400,000 MT, essentially making it the biggest player in the region.
The investment is likely to heighten competition in the sector that has already seen older players cede more than 10 per cent market share to new entrants since January last year.
President Kibaki who presided over the commissioning of its Sh2 billion plant at Lukenya, Athi River, yesterday said competition in the sector had led to cheaper cement.
“The entry of more cement-makers has increased competition in the market, which has in turn raised the quality of cement while lowering the cost by about 10 per cent,” said President Kibaki.
Mr Kibaki asked manufacturers to be more efficient to achieve cheaper prices, which would enhance economic growth. Manufacturers should exploit local natural resources, including iron ore and coal used in making steel and as the cheapest source of industrial energy.
Narendra Raval, the Devki Group managing director, said his firm will be growing output to meet growing demand. ‘‘We plan to expand our capacity to 2.5 million metric tonnes of cement per annum in 2012 by investing extra Sh13 billion,” Mr Raval, adding that the initial plant was financed through a bank loan.
National Cement, the cement manufacturing subsidiary of the group, is destined to overtake Lafarge-owned Bamburi which controls about half the Kenyan market according to a survey by African Alliance. Mr Amason Kingi, the acting Industrialisation minister, said that the ongoing construction boom in East Africa presents room for cement makers to grow.
“There is an ever-rising demand for cement in the region as a result of the increase in construction in housing and infrastructure development,” said the minister. Government statistics indicate cement consumption soared by 16 per cent last year to 3.1 million tonnes, which meant a near-full capacity use by the five cement makers.
National Cement is betting on pricing strategy to earn itself a bigger slice of the market, which analysts say has worked for its young peer, Mombasa Cement.Devki’s Simba and Mombasa’s Nyumba are the cheapest brands in the market, retailing at about Sh680, whereas the other brands are selling for at least Sh720.National Cement’s Simba brand is the latest entrant into the Kenyan market, having debuted last year.
Mombasa Cement, which has been in the market for two years, has started construction of a new Sh500 million grinding plant that will double its production capacity next year.
