Displaying items by tag: EAPCC

Kenya: The East African Portland Cement Company (EAPCC) has begun the process of upgrading its Athi River cement plant, a project that is expected to cost approximately US$11.1m. The upgrade will halt the plant's normal operations for six weeks.

According to EAPCC head of production, Joseph Kombo, the upgrade targets the kiln and the packing plant. "In the packing plant, we are upgrading the mechanical and electrical components of the packers as well as improving the bag conveying system, all geared towards improved the loading process and quick turnaround thus ensuring customer satisfaction," said Kombo. "We are installing a bag house to replace the electronic precipitators, retrofitting the raw-mill gear box, replacing three sections of the cement kiln shell and installing a radio link into the raw material handling sections, among others."

EAPCC plans to improve reliability, increase production and improve energy-efficiency. The bag house will reduce emissions from the plant to insignificant levels, complying with international emission standards.

Kenya: EAPCC has posted a net loss of US$4.32m for the year that ended on 30 June 2014. The company said that it had been hurt by price competition, high staff costs and the weakening Kenyan shilling. In the year that ended 30 June 2013, EAPCC posted a net profit of US$18.9m.

EAPCC said that it hopes to capitalise on the growing construction industry and plans to spend US$27.9m in the coming year on new investments. "The company has not been left behind and is aggressively investing in new machinery and equipment to increase efficiency and capacity," said EAPCC. However, it added that, "The market will continue to be highly competitive and is likely to see declining prices for the foreseeable future."

Kenya: East Africa Portland Cement Company (EAPCC) is set to construct a US$9.13m power plant that is expected to reduce its annual power bill by about US$5.70m. The 4MW power plant will run on waste gases generated by the company's Athi River cement plant via waste heat recovery (WHR) system. Construction is scheduled to start in September 2014 and is expected to take one year.

"The new power plant will have a huge impact on our operational costs because its output will translate to about 40% of our current total energy requirements," said EAPCC's managing director Kephar Tande.

Around 20 - 25% of the project costs will be funded from internal savings with the rest of the funds coming from commercial loans. EAPCC also hopes to permanently address the problem of frequent power outages, which have posed major problems at its clinker plant. EAPCC currently consumes about 13MW of power supplied from the national grid to run its main installations, including a 1700t/day capacity kiln.

Tande said that the new power plant would help to stabilise the company's operations as it eyes expansion of its overall cement production capacity to 2Mt/yr by 2017 from the present 1.3Mt/yr. EAPCC plans to begin procurement for a new clinker plant near Bisil, Kajiado Country, Kenya in September 2014 at an estimated cost of US$171m. "We hope to conclude the feasibility study on the new clinker plant in Bisil by end of July 2014 and move to the next stage," said Tande.

Also on the cards is the construction of a second cement plant in the Nooleleshuani area of Kajiado County by 2016. The proposed plant site is next to the limestone-rich Maasai Plains, which are the major source of raw material for the five cement companies based in Athi River.

Kenya's power shortage has held back industrial expansion for decades despite the availability of huge energy reserves such as wind, coal and geothermal. The energy sector, though critical in uplifting the country's development, has registered slow growth due to the high initial capital requirements and inability to mobilise adequate financial resources to undertake large-scale investment.

Kenya: Three employees of East Africa Portland Cement Co (EAPCC) have been suspended while three more have been put under further investigations in the ongoing forensic audit into the theft of cement. The six are said to be mid-level managers in the company's procurement and supplies department.

Another two employees have been cautioned following the audit of EAPCC sales and procurement books. "A number of staff who were found culpable were disciplined according to the gravity of their offences," said EAPCC. "Three people were interdicted, three were asked to explain their actions and why disciplinary action should not be taken against them and another two were cautioned."

The investigations into suspected theft by staff at EAPCC revealed massive manipulations of sales records leading to the fraudulent shipment of large consignments of cement from the factory premises in Athi River. Sources at EAPCC said that the audit revealed rampant manipulation of product quotations and Local Purchases Order (LPO) prices, rendering the company's products more expensive in the market hence depressing sales. This has had a direct impact on the business and raised the cost of production.

"We are not relenting on this one," said an EAPCC spokesperson. "A lot of dirty things have been going on here and we have resolved to kill the illegal deals once and for all."

EAPCC expects its profits to dip by more than 25% over the financial year that ends in June 2014. The company attributed the expected dip in profit to reduced sales and rising costs. EAPCC also attributed the outlook to reduced export sales and loss of market share in Kenya.

Kenya: East Africa Portland Cement Company (EAPCC) expects its profit for the financial year that ends in June 2014 to drop by at least 25% compared to the preceding year's performance, in which it made US$19.3m in profit. The company has issued a profit warning, attributing the expected dip in profit to reduced sales and rising costs.

"It is projected that the profit for the 2013 - 2014 financial year will fall by more than 25% compared with the 2012 - 2013 year," the company said. EAPCC also attributed the outlook to reduced export sales and loss of market share in Kenya.

While EAPCC's sales have declined significantly, it has maintained fixed costs, including salaries, at a high level to maintain operations. This implies reduced margins, with the firm having already posted a weaker performance in the first six months of its 2013 – 2014 financial year, which ended in December 2013. Its net profit during the period fell by 43.9% to US$2.09m, weighed by higher costs and flat sales of US$51.2m.

Analysts at the Standard Investment Bank (SIB) said EAPCC has been hit by inefficiencies and perennial business disruptions brought by shareholder disputes. The government, which has a 52.3% stake in EAPCC and Lafarge, which owns a 41.4% stake, have in recent months fought to control the cement firm. The latest battle has seen the government report Lafarge to the Competition Authority for its cross ownership in EAPCC and its rival, Bamburi Cement.

Kenya: Kenya's antitrust authority may force Lafarge to sell some of its interests in the country if the cement maker is found to be flouting domestic competition rules.

The Competition Authority of Kenya (CAK) is probing Lafarge's influence on Kenya's cement industry through its 59% stake in Bamburi Cement and 42% shareholding in East Africa Portland Cement Co (EAPCC). The findings will be published in June 2014, according to the CAK's director general Francis Kariuki.

"The current arrangement between Lafarge and EAPCC may be deemed to be an unwarranted concentration of economic power because of the close directorship Lafarge has in EAPCC and Bamburi," said Kariuki. The CAK is investigating pricing in the Kenyan cement industry amid a dispute between shareholders and the government over ownership of EAPCC. Kenya's Treasury holds a 25% stake in the company, while the state-owned National Social Security Fund has 27%.

The government wants Lafarge to dilute its shareholding in EAPCC because no company should hold a 'monopolistic stake' in Kenyan industries, according to Industrialisation and Enterprise Development permanent secretary Wilson Songa. Cross-shareholdings are 'widely recognised to dampen competition,' according to the CAK. Bamburi Cement, in which Lafarge has a controlling stake, owns 12.5% of EAPCC. "Even passive shareholdings change the incentives to set prices, as some of the earnings from sales diverted to a rival are now internalised," said the CAK.

If Lafarge is found to have a monopolistic position in Kenya, the CAK may force Lafarge to sell its stake in one of its businesses in the country, according to Kariuki. Kenyan law also stipulates that anyone found guilty of price fixing faces a US$115,000 fine or a five-year jail term.

Kenya: Lafarge could face penalties by the Competition Authority of Kenya (CAK) for suspected price-fixing. CAK has accused Lafarge of possible price-fixing owing to its cross-directorship in East African Portland Cement Company (EAPCC) and Bamburi Cement. Lafarge has a 41.7% stake in EAPCC and a 58.9% stake in Bamburi.

"Cross-shareholdings such as these are widely recognised to dampen competition," said CAK. "Even passive shareholdings change the incentives to set prices, as some of the earnings from sales diverted to a rival are now internalised."

CAK is expected to rule in June 2014 as to whether or not Lafarge is culpable of having 'Unwarranted concentration of economic power.' If found guilty, CAK could force Lafarge to sell off its stake in one of the businesses. The Competition Act (No 12 of 2010) also stipulates that Lafarge directors, if found guilty of price fixing, could be forced to pay up to US$115,000 in fines or serve five-year jail terms.

The report comes four months after the Kenyan government, which together with the National Social Security Fund (NSSF) has a controlling stake of 52.3% in EAPCC, accused Lafarge of attempting to destabilise the cement maker to protect its interests in Bamburi. Lafarge countered that its minority stake in EAPCC is insufficient to exert control over the firm. They added that EAPCC is a genuine competitor of Bamburi Cement and that Lafarge stands to lose if it were to destabilise EAPCC.

The director-general of CAK, Kariuki Wang'ombe, stated that the current shareholding structure is not good for fair business. "Cross-directorship could lead to price-fixing since this creates a position where a competitor is privy to the strategic decisions of another competitor. However, it is not conclusive that there is price-fixing going on," said Wang'ombe.

Kenya: Industrialisation and Enterprise Development cabinet secretary Adan Mohamed has confirmed the extension of Kephar Tande's term for a further three years as the managing director of East African Portland Cement Company (EAPCC). The appointment is effective from 16 November 2013.

His confirmation has been pending since 2013 after the company's board requested that the government renew his term, which ended in October 2013, after being in the position since November 2011.

"I wish to thank the cabinet secretary and president, Uhuru Kenyatta, for the re-appointment. I am committed to fully implementing the strategy that the company has embarked on to raise its market share and to ensure that EAPCC is a leading cement manufacturer, for the welfare of our staff and the benefit of all of our stakeholders," Tande said.

Kenya: President Uhuru Kenyatta's decision to sack East Africa Portland Cement Company (EAPCC) chairman Mark ole Karbolo was upheld by the High Court on 21 February 2014.

Justice Mumbi Ngugi ruled that an earlier order stopping the Capital Markets Authority (CMA) and the government from interfering with shareholder resolutions made during a controversial annual general meeting (AGM) on 17 December 2013 did not shield Karbolo.

"I dismiss Karbolo's application," she ruled and directed Karbolo to bear the legal cost incurred by the government while defending the sacking since he was not acting in the interest of EAPCC. The ruling paves the way for Bill Lay to become chairman of the cement company.

The earlier orders were given after CMA suspended the AGM resolutions which were contested by the government, which is EAPCC's majority shareholder, on the grounds that voting was done by a show of hands instead of by the strength of shareholding.

On 7 February 2014 president Kenyatta removed Karbolo from chairing the firm's board and replaced him with Lay. Karbolo went to court on 10 February 2014 and obtained orders stopping Lay from occupying the office, arguing that Kenyatta's action was a breach of court orders. On 20 February 2014 Justice Ngugi said that Karbolo was seeking to exploit the controversy surrounding the shareholders' resolutions to remain in office until end of his term in October 2014.

"Karbolo was trying to protect his own personal interest. Even if the court allows all orders sought by the petitioner, the orders have no impact on Lay and Karbolo," said Justice Ngugi.

In March 2014 Justice Ngugi is expected to deliver a separate ruling regarding the suspension of shareholders' resolutions by CMA.

Kenya: The Kenyan government has halted the appointment of Bill Lay to the chairmanship of the East Africa Portland Cement Company (EAPCC) just hours after his appointment.

The current chairman, Mark Karbolo, went to court to block Lay's appointment, claiming that he still has seven months in office. He added that he would be content to leave after finishing his term but not to be bundled out as if he had run down the company. "I still have seven months to go. I will be glad to call it a day when I have served my term," said Karbolo. "I am and remain to be the bona fide chairman of the EAPCC, with the support of the shareholders, majority of directors and the personal," he added.

Lay had earlier thanked president Uhuru Kenyatta for giving him the opportunity to serve the country in the capacity of chairman of EAPCC. However, EAPCC's board rejected Lay's appointment as director when the government tried to introduce him late in 2013 as a director to the company.