Companies

Savannah signs cement deals with mall contractors

RonaldNdegwaCEOSavannah

Ronald Ndegwa, managing director, Savannah Cement. The cement maker has signed exclusive deals to supply big contractors in a bid to drive sales and grow its market share. PHOTO | FILE

Cement maker Savannah has signed exclusive deals to supply big contractors in a bid to drive sales and grow its market share.

The Athi River-based manufacturer says it has bagged tenders to supply cement to contractors building the Sh22.3 billion ($250 million) Garden City Mall, Centum’s Two Rivers Development, the upcoming Sh1 billion Madiba Mall in Nyeri and a shopping arcade in Kakamega.

Savannah managing director Ronald Ndegwa in an interview Thursday said the company has also won contracts to supply cement for government projects including construction of Terminal 4 at the Jomo Kenyatta International Airport (JKIA), the ongoing building of the Sh55.6 billion JKIA greenfield terminal and the Sh4.5 billion Ruiru sewerage plant.

“We’re engaging developers to supply bulk cement orders. It is a very attractive market but depends on the life of the project,” said Mr Ndegwa.

The MD says Savannah has gained a market share of 12 per cent as at August, a claim that the Business Daily could not verify as the privately-owned company does not publicise its accounts.

Mr Ndegwa declined to reveal Savannah’s financial performance terming it as “market sensitive” information.

“Our turnover is up 92 per cent year-on-year and we are fourth in market share. We closed 2013 at eight per cent and were 12 per cent in the eight months to August,” he said.

According to a cement market report by Standard Investment Bank dated October 2013, Bamburi is Kenya’s largest cement maker with a production capacity of 2.1 million tonnes and a market share of 39 per cent followed by East African Portland Cement (20 per cent) and ARM Cement at 18 per cent.

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Savannah is also the sole supplier of cement to the 22-storey University of Nairobi towers currently under construction by China Wu Yi at a cost of Sh2.5 billion.

The company has also cemented a deal with the developers of a residential city in Namanga dubbed The Villagio, set on 115 acres and featuring 550 units.

Mr Ndegwa said the bulk orders add to about 187,500 metric tonnes or roughly a quarter of the company’s total output.

The privately-held cement maker says the orders will help diversify earnings and cut dependence on the retail and export markets.

“Bulk cement cuts our handling costs and other expenses as well as pilferage,” said the MD.

Savannah, which began operations in July 2012, has turned to engaging building contractors to cash in on the big-ticket shopping malls and infrastructure projects currently under construction or lined up across the region.

Savannah has a cement grinding factory with a capacity of 1.5 million tonnes a year. It has plans to set up its own clinker plant next year at a cost of Sh22.3 billion ($250 million).

The firm’s exports to inland Africa markets – including Tanzania, Uganda, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo – accounted for 35 per cent of sales after it was degazetted from the Export Processing Zone (EPZ) in March last year.

The EPZ exit gave the company unlimited access to the Kenyan market, which is the biggest in the region.