Plucked from Bamburi’s parent firm— The Holcim Group— Mohit Kapoor has used his first seven months in the corner office to set up new management while repositioning the manufacturer for growth amid disruptions arising from high operational costs and a clamour for sustainable growth.
How has been the transition from the Group to heading the Kenyan unit?
I have been with the Group since the 2000s and the benefit has been to get exposed to a lot of countries and have had a full understanding of the business. I have been blessed with having the holistic experience of both emerging and mature markets. The transition to Kenya has, therefore, been smooth.
You came in and then there was a shakeup of the top management, including the CFO, a new company secretary and had changes on the board, how have you handled these changes?
Honest, it has been nothing new. I look at it from the context of being blessed to have the opportunity to create my new team. I have had full support from the board to make a brand new team and most changes have happened from within the organisation as there is a strong succession process while the team is fully aligned to the direction we want to take.
What other changes have you overseen?
We have made some changes with the view of making it more agile and to bring customer service at the heart of the business. We have formed operational committees where we review actions on a regular basis. I would say the changes have been on alignment, speed and the pace of execution is what we have been targeting.
Has Bamburi changed its strategy or direction after these changes?
As part of The Holcim Group we have very strong processes and one of them is medium-term planning presentations that each country has to present to the region. This year, for instance, they asked what our ambition is for 2030. To give an example, we have strong sustainable goals. Our ambition is to move to a 100 percent green portfolio by next year and we are walking in that direction. On the innovation side, we also have ambitions. On the culture side, we want to become the employer of choice. This is a huge exercise and it brings synergy to our organisation.
We are still seeing resilience in terms of turnover but operational costs have been stubbornly up; how is Bamburi responding to this?
When you face challenges in the context of operating environment, the real resilience of the team comes forward. I would say there is a lot of cost pressure but as a team we are focusing on more efficiency and more productivity, more alternative fuels, alternative raw materials, exploring new sources of raw materials that can replace existing ones, and spending more on innovations to bring new products. It’s a multiple joint team effort.
We have seen a move by peers in the manufacturing sector moving towards cleaner fuels, where does Bamburi stand on this journey?
Sustainability is one of our laser targets. I would broadly split it to the operational and supply sides. On the operational side, we have alternative fuels, renewable energy, alternative raw materials and solar power. On the supply side, I think we are the only company moving a significant percentage of our raw materials by train, reducing our carbon footprint significantly.
Our sustainability journey also looks at people and human rights. Our organisation wants to become an exemplary example of what a corporation can do. The focus on compliance and ethics is also top-notch. We also don’t just source raw materials for anyone and want to increase supplies from women and persons with disabilities.
How has Bamburi handled rising finance costs, noting the pressure exerted by weaker local currencies?
When it comes to debt, Bamburi has a very strong balance sheet and hence we do not have significant debt on our balance sheet and are better placed than most companies.
The 2023 Finance Act introduced a requirement to pay a 17.5 percent custom value on imported clinker outside East Africa which is known as the export promotion levy; how has this impacted the operations of Bamburi?
We have our own independent plant in Mombasa and are able to produce our own clinker and so we have not had an impact from the requirement.
Put together with inflationary pressures, how is the playout between passing on costs to consumers and absorbing some of your costs?
You will be amazed to look at some of the data. The cost of fuel, milk, bread and sugar has gone up but the price of cement has only gone up by seven percent in the last two years. The price of cement today is exactly what it was in 2014. In the cement industry, we have not been able to pass on the huge costs to the consumer because of the nature of the industry where it is competitive and everyone wants to run their own show.
How much longer can the industry hold without the pass-through costs?
Ultimately, we cannot absorb everything. Consumers are also well aware of the context and put things into perspective so some costs of course have to be shared.
How is Bamburi positioned to take advantage of opportunities presented in the construction sector, such as the affordable housing programme?
Bamburi was a preferred partner in previous infrastructure projects by the government. Going forward, affordable housing is an opportunity but there remain challenges in terms of execution on the ground. The government has to think through on how to unlock the value chain to make sure the execution begins to happen.
What's your five-year outlook?
Bamburi is a strong brand name. There is a huge legacy but we would still want to achieve excellence. We want to move with speed to be the lead in this sector and in manufacturing.