Steel billionaire in Sh5bn offer for Mumias revival


Narendra Raval, chairman, Devki Group of Companies during an interview at his Ruiru office on April 19, 2021. PHOTO | DIANA NGILA | NMG

Steel tycoon Narendra Raval plans to invest Sh5 billion in modernising Mumias Sugar #ticker:MSC ageing plant and develop cane in the latest bid to revive the once top miller that stopped production nearly three years ago.

Mr Raval, who is in the race to lease the indebted sugar miller, has unveiled a multi-billion shilling package that will see Sh4 billion used to upgrade the rundown production plant and Sh1 billion sweetener for farmers to return to cane production.

The billionaire who made his initial fortune in the steel industry before moving to cement production is now betting on Kenya’s agriculture sector, with his first step being sugar milling.

Mumias, which used to be Kenya’s leading producer at more than 250,000 tonnes a year, was beset by poor management, heavy debts and years of mounting losses, prompting its closure.

The miller was in September 2019 placed under receivership by KCB Group to protect its assets and maintain its operations.

Its shares were then suspended from the Nairobi bourse, and the leasing deal will be keenly watched by shareholders, including the State with a 20 percent stake, and creditors who are owed over Sh11 billion.

Under the leasing deal, the successful firm will run the plant and pay monthly fees to KCB —which is owed Sh545 million — for up to 15 years.


Entrance to Mumias Sugar Company. FILE PHOTO | NMG

Shareholders would wait longer for dividends because the creditors including Ecobank and French development agency Proparco, will first have to recover the defaulted billions.

In an interview with the Business Daily, Mr Raval, who founded steel and cement manufacturer Devki Group, says he will run the plant for between 10 and 15 years if he secures the leasing deal.

"Mumias would require a minimum of Sh4 billion for it to go back to where it was before. I am looking at putting Sh5 billion for it to start running again," said Mr Raval, whose net worth is placed at more than $600 million (Sh65 billion).

"I will pay the receiver manager the monthly dues and meet other expenses of running the plant and paying farmers for cane delivery. It is up to the receiver manager to decide on how to divide the money that I will pay them, in terms of paying the creditors," he added.

KCB has been barred from auctioning the plant to secure assets used as security for other loans.

Mumias Sugar owes Proparco Sh1.84 billion secured using the electricity generation plant, Ecobank Sh1.77 billion on the ethanol plant and Sh2.83 billion owed to the Treasury.

Other banks owed more than Sh3 billion include KCB Group, NCBA and Stanbic Bank.

The heavily-indebted firm has been struggling with cash flow problems in recent years, forcing the government to step in with bailout funds and even tapped an expatriate chief executive, Errol Johnston, to drive a turnaround, which was unsuccessful.

Mumias losses widened to Sh15 billion in the year to June 2018, from Sh2.08 billion in the year before due to increased finance costs and competition from imports and private millers.

Kenya has used high tariffs to protect its sugar farmers but the policy has encouraged smuggling of cheaper sugar imports.

Mr Raval, 59, hinted at hiring expatriates for a swift turnaround for a miller that last produced sugar more than two years ago and has been relying on the ethanol plant to keep afloat.


A number of millers have tapped foreigners from countries such as Sudan and Mauritius, which are known for efficient production of the sweetener at low cost with high returns.

Eight firms participated in the leasing tender and Mr Raval is the front-runner on the strength of his financial muscle and track record of running industries, people with knowledge of leasing details said.

Raval’s Devki has annual revenues of more than $700 million (Sh75.8 billion) and produces steel products, roofing sheets and cement among other items.

The group has been on a multi-billion shilling expansion over the past four years including construction of a $110 million (Sh11.9 billion) new roofing sheet manufacturing plant in Lukenya, outside Nairobi.

In 2018, his National Cement with its Simba Cement brand launched a $280 million (Sh30.3 billion) cement clinker plant in Merrueshi/Mbirikani in Kajiado County.

The following year, he acquired the Kenyan assets of bankrupt cement manufacturer Athi River Mining for Sh5 billion, and constructed two new cement factories in Njoro, Nakuru and Mariakani in Mombasa.

The investments are the product of Devki’s internal resources and bank loans.

Now, the man who left India in 1982 where he was a temple assistant to take up a job in a hardware shop in Nairobi is betting on Kenya’s sugar industry.

"My main objective will be to revive the factory and give back the livelihood to over a million people who relied on the firm," said Mr Raval whose first business was a hardware shop he started in 1990 in Nairobi’s Gikomba market.

In 1992, he took out a loan and started a roofing and fencing materials business, developing a small steel rolling mill near Athi River on the outskirts of Nairobi. That business morphed into the behemoth that is Devki Group.

Should he enter the sugar business through the Mumias lease, he will prepare for battle with billionaire Jaswant Rai whose family controls half of the sweeteners sales in Kenya.

Rai family firms — West Kenya, Sukari Industries and Olepito — have taken the market previously occupied by Mumias with their Kabras sugar brand. At its peak, Mumias had more than 60 percent market share.

Mr Rai and Mr Raval were locked in a bitter battle for purchase of ARM Cement, which was previously controlled by the wealthy Paunrana firm, before it was auctioned after crumbling over debt.

Mr Raval emerged top in the auction of the ARM Kenya assets.