Sameer’s Sh1bn fundraising bid flops after Chinese investors back off
A production line worker at Sameer Africa's plant along Nairobi's Mombasa Road. PHOTO | FILE
A Sh1 billion investment in Sameer Africa has fallen through. Managing director Allan Walmsley said Tuesday several Chinese investors had been showing interest in the business but many later backed off citing low profitability of the company.
Mr Walmsley said increased imports of tyres into the East African market had eaten into Sameer’s market share, forcing the company to also source for cheaper-priced ‘Summit’ tyres from China.
“Kenya and other African countries are yet to cushion their own industries against cheap imports from China whose producers enjoy tax incentives, cheap loans and are assisted to source for foreign markets for their products,” he observed.
Mr Walmsley said the government ought to increase incentives such as reduction of power costs and also curb tax evasion such as incidents where importers under-invoice imports.
The managing director said a harsh operating environment in the tyre maker’s subsidiaries in Tanzania, Uganda and Burundi suffered from political turbulence which saw them post low returns.
The tyre maker recorded Sh3.36 billion total sales in 2015 compared to 2014’s Sh3.77 billion while cost of sales dropped to Sh 2.4 billion compared to 2014’s Sh2.8 billion.
The marginal profit of Sh6 million was realised from reduced overheads of Sh91 million and a Sh118 million savings on factory operating costs.
The MD said the sale of low-cost Summit tyres brand currently being made in China had proved popular with motorists.
“We had no choice but to join the importers so as to survive in business, it is a strategy we are also exploring and we might soon identify a manufacturer for our second brand, Yana Tyres, in India or China which we find costly to produce locally,” he said.
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