Simba Cement sues Siemens for Sh460m production delay claim

Simba Cement has sued global engineering firm Siemens to recover Sh460 million it claims was incurred following delays in supplying equipment to its factory, leading to production losses.

The cement maker says it was forced to cancel its order for two mill drive gear boxes from Siemens after delays by the tech company.

Simba sought a new supplier in August 2015, who could only deliver the gear boxes in July this year — five months after the date Siemens was expected to supply the equipment.

Simba claims that faulty gear boxes slowed down its daily cement production by nearly half, causing a Sh460 million loss. Simba has sued through its parent firm National Cement Company.

But Siemens says Simba failed to provide a letter of credit to cover 90 per cent of the €989716 (Sh111 million) cost agreed on for the gear boxes, hence breached the contract.

Siemens experts who visited Simba’s factory recommended replacement of additional equipment with the gear boxes at €1.4 million (Sh158 million).

The engineering firm says the delay was caused by securing travel documents for a German expert to visit Simba’s factory and made recommendations on compatibility of its gear boxes with other equipment in the factory.

“Having in mind that on a normal production day at the factory when the gear box is operational, the plaintiff produces 4,200 metric tonnes reflecting a net sale of Sh8.6 million. The production rate has since depreciated after the gear box failure to 2,400 metric tonnes, reflecting a net sale of Sh23.54 million with a net profit of Sh4.9 million a day.

“National Cement therefore claims for the said loss to be incurred for the period of five months (125 working days) which is calculated at the figure of Sh460.75 million,” Narendra Raval, Simba Cement managing director says in court filings.

Siemens has denied the accusation, arguing that it sent specialists to Simba’s factory as soon as possible.

The engineering firm added that recommendations for additional equipment replacement were to ensure that the gear boxes to be supplied would work at maximum efficiency.

Simba claims that the site visit by the Siemens specialists was to be footed by the engineering firm.

It adds that the engineering firm has refused to refund the 10 per cent deposit of €98,971 (Sh11.1 million) and threatened to deduct costs for specialists who visited Simba’s factory from the amount.

Justice Olga Sewe gave the two sides until February 8 to try settling the matter out of court.