Uchumi revamps board in fight to regain top slot
Posted Monday, April 4 2011 at 00:00
Uchumi Supermarkets has strengthened its board with the appointment of two directors as it seeks to boost a strategy that is geared to reclaiming market leadership through opening more stores.
In a notice announcing its annual shareholder meeting slated for April 21, the retail chain said it has appointed Mr Mahmud Janmohamed, the managing director of TPS Serena and businessman Kungu Gatabaki.
The two are expected to boost the corporate governance credentials of the retail chain and sharpen the input of its board, which has been muted since its near collapse in mid-2006.
“We only have five members on our board and we found it necessary to get two additional directors to strengthen the team,” said Mr Jonathan Ciano, the chief executive officer.
“The two have wide experience in the corporate sector and we expect them to bring this to our business,” said Mr Ciano.
It’s not clear whose interest they will serve on Uchumi’s board, but sources say they were tapped by the Ministry of Trade, which is now the single largest shareholder in the retail chain with a 13.1 per cent stake it acquired after it converted its debt to shares.
The government loan was part of Sh875 million advanced to the retail chain in May 2006 after its near collapse under the weight of debts, which saw it suspended from trading at the Nairobi Stock Exchange (NSE).
The retail chain has since returned to profitability, but is seeking new people and fresh ideas to complete its recovery and reclaim its market position that is now occupied by its main rivals —Tuskys Supermarket and Nakumatt.
The firm posted a pre- tax profit of Sh433 million in the year to June 2010 on revenues of Sh8.6 billion compared to a loss of 1.2 billion in 2005, a signal that its turnaround strategy is bearing fruit albeit at a slower pace.
The retail chain has started an ambitious expansion plan to reclaim its market position that is also coming under threat from second tier players such as Naivas and Ukwala supermarkets.
The supermarket reopened the Nakuru branch and plans to open new outlets in Embakasi, Dar-es-Salaam and Kampala, setting the stage for bruising battle for shoppers’ wallets as its rivals are also on an expansion mode.
Analysts say the appointment of two directors is mainly geared at boosting corporate governance, which have not been impressive and played a role in its near collapse.
Several former directors of Uchumi Supermarkets Chris Kirubi, Isaac Awuondo and Kennedy Thairu are in court on allegations of having sold a prime property belonging to the retail chain irregularly.
“A small team makes it easy for accountability flaws in decision making and this is necessary especially now that some directors have been charged in court,” said Wycliff Masinde, an analyst at Kestrel Capital.
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