Kenyan industrial conglomerate Devki Group drops out of Mumias Sugar leasing plan, dampening miller’s revival plan

KENYA – Devki Group of Companies, industrial manufacturing giant in Kenya, has withdrawn its bid to lease the troubled Mumias Sugar Company.

The Founder and CEO of the Group, Dr Narendra Raval, had recently revealed that he was seeking to pump in Ksh5 billion (US$46m) in modernising the state-owned sugar company’s ageing plant and develop cane, in the latest bid to revive the once top miller that stopped production nearly three years ago.

However, the steel tycoon cited the ongoing public interest, where by stakeholders raised accountability questions over the bidding process, to be the trigger for the company to take a step back from the leasing process.

In a statement, the firm indicated that its withdrawal was to give room for public-run bidding as requested by cane farmers and local leaders.

“Given the ongoing public interest which the matter has attracted and the call for a publicly run bidding exercise, we have found it worthwhile to take out our application,” read the statement.

The withdrawal of the bid by the cement manufacturer is expected to dampen efforts to rekindle Mumias Sugar back to full-scale operations.

“Unless all stakeholders come together and the receiver too, I have no problem to sit with them and make a plan to have a way forward on how to start the form in 30 days.”

Founder and CEO of Devki Group, Dr Narendra Raval

In September 2019, Kenya Commercial Bank (KCB) Group placed the miller under receivership after an accumulation of debt, appointing Ponangipalli Venkata as the company’s receiver manager.

Since then, the miller has struggled to stay afloat and only resumed partial operations including the manufacture of ethanol.

A government-backed task force proposed the leasing of struggling State-owned millers setting the path to the bidding process for Mumias Sugar Company.

Eight firms participated in the leasing tender and Mr Raval was the front-runner on the strength of his financial muscle and track record of running industries, reports Business Daily.

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“I was told that I am the winner, but it is unfortunate that I will not continue with the plans to invest at Mumias because of the new political twist that has questioned the process of selection,” he said.

Call for accountability

Cane farmers from the region and local politicians have accused KCB of unilaterally awarding the multi-million tender without following due procedure

Kenya National Alliance of Sugarcane Farmers Organisation (KNASFO) chairman Saulo Busolo has questioned the experience of the investor in the sugar sector.

“We should not gamble with the critical sector of our economy. If the cane growers are ruined, everything else will be in a mess,” said Busolo.

Kakamega Senator Cleophas Malala sought a statement from the Senate’s Committee on Agriculture, Livestock and Fisheries on the state of affairs of the troubled company and reported recovery measures.

“I call on the committee to address the current state of the company’s asset and liabilities while indicating the value of the core and non-core assets and reveal which entity undertook the valuation,” he said.

Malala also urged the committee to furnish the House with details on the procedure to be followed by the government in selling its stake in the company.

“Specifically, the committee should address the bidding process including who the bidders were, when the bidding took place, when the evaluation of submitted tenders was done, what criteria was used to pick the successful tenderer,” he said.

The withdrawal of Devki Group now sends KCB back to the drawing board, however, Dr Narendra has indicated his willingness to return to the Mumias Sugar leasing bid from July 1st 2021, only if various stakeholders are involved in the deal.

“We will however express interest, should the exercise be conducted in consultation with all the stakeholders.

“Unless all stakeholders come together and the receiver too, I have no problem to sit with them and make a plan to have a way forward on how to start the form in 30 days,” said Dr Raval.

Despite the setback, the manufacturing giant is still raking in investments in Kenya’s agriculture sector as its subsidiary Maisha Mineral Fertiliser is set to launch a new fertilizer blending plant worth 1.8 billion (US$16m).

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