Kenya’s manufacturing giant Devki Group invests US$16m in new fertilizer plant, seeks to pump in US$46m to revive Mumias Sugar

KENYA – Devki Group of Companies, industrial manufacturing giant in Kenya, has pumped Ksh 1.8 billion (US$16m) in the establishment of a new fertilizer plant.

The new investment has come less than two years after Devki Group’s subsidiary, National Cement Company, acquired ARM assets in Kenya, which included its industrial minerals business, fertilizer unit, silicates business and mining operations for US$50m.

The former ARM fertilizer arm and producer of leading brands such as Mavuno Planting, Mavuno vegetables and Mavuno top dressing, has been since renamed to Maisha Mineral Fertiliser.

The new fertiliser blending plant will sit on 11 acres in Athi River, Machakos County and is aimed to triple the company’s production capacity to 300,000 metric tonnes of fertiliser annually.

“The total cost of investment in this project is Ksh1.8 billion (US$16m). The money will go into buying new machinery and upgrading the plant to new standards,” said Devki Group founder and CEO Narendra Raval in an interview with the Business Daily.

The plant is set to become fully operational in the next two months with the company boss indicating that, “We have been constructing the new plant for the last one year. We expect to open in the next two months. By then, the plant should be 100 per cent operational.”

In other related news, the business tycoon Mr Raval plans to invest Ksh5 billion (US$46m) in modernising Mumias Sugar’s 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 Ksh4 billion (US$37m) used to upgrade the rundown production plant and Ksh1 billion (US$9m) 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.

ADVERT

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 Ksh545 million (US$5.06m) — for up to 15 years, indicates Business Daily.

“Mumias would require a minimum of Ksh4 billion (US$37m) for it to go back to where it was before. I am looking at putting Ksh5 billion (46.4m) for it to start running again,” said Mr Raval, whose net worth is placed at more than US$600 million (US$5.57m).

“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.

The heavily-indebted firm has been struggling with cash flow problems in recent years, forcing the government to step in with bailout funds which have been unsuccessful.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE

Other Posts Worth Reading

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.