Devki shakes up Nakuru cement market with price cuts

Devki Group chairman Narendra Raval revolutionised the Kenyan cement market more than a decade ago when he founded the National Cement Company to produce and supply low priced cement to construction sites across the country.

And now, Mr Raval, popularly known as Guru, wants to do more. He plans to build factories near catchment areas to shorten the distances covered by trucks transporting materials to sites – with the ultimate goal of further cutting cement prices.

Mr Raval’s National Cement Company, a member of the Devki Group of Companies, has just completed construction of a cement factory at Salgaa in Nakuru, with an installed processing capacity of 750,000 metric tonnes annually.

The new factory is selling its product at Sh530 per 50-kilogramme bag in Nakuru and its environs, down from upwards of Sh650, in a move that threatens to spark a new price war among sellers of the commodity in the region.

“When we launched our operations, our goal was to reduce the cost of housing and it is being realised as I have managed to offer quality cement at Sh550 ex-factory compared to the then market price of Sh700 per 50kg bag before our entry,” Mr Raval said in a 2018 interview.

The opening of the Salgaa cement factory – built at a cost of Sh5.8 billion – has created 700 direct jobs, with the number expected to hit 1,000 by June this year.

It comes three months after Raval obtained the approval of the Competition Authority of Kenya to acquire ARM Cement after it went into administration due to piling debt and losses.

READ: How Devki beat Dangote in battle for ARM Cement

Devki, whose main cement factories are located in Athi River, off the Nairobi-Mombasa highway, is also building a cement factory in Mariakani, Kilifi County – with a capacity to produce 750 metric tonnes of cement annually.

The company is also in the final stages of acquiring Sanghi Cement’s assets in West Pokot, after the Indian enterprise failed to raise funds to build its factory.

The expansion of Devki’s cement manufacturing assets comes a time when a shrinking regional exports market and low domestic consumption are forcing local cement manufacturers to cut production to a four-year low.

Official data shows that cement companies produced 5.37 million tonnes in the 11 months to November 2019, a 3pc drop from 5.54 million tonnes for 2018.

The slowdown in the cement market has been blamed on low spending on public infrastructure and a cash crunch that has badly hit the local construction industry.

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