Simba Cement has received an approval to acquire Indian cement firm, Cemtech Company.
Simba Cement, which trades as National Cement, will have 100 per cent acquisition of the business and assets of the West Pokot county-based company. This includes land, business intellectual property, business records, equipment, goodwill, licenses, stock and third party rights.
This is after the Competition Authority of Kenya accepted the bid from the company, saying there will be no change in market share since Cemtech had not commenced operations.
“The proposed transaction is unlikely to lead to substantial lessening or prevention of competition in the market for production and distribution of cement in Kenya,” CAK said in a statement.
Data from the Kenya National Bureau of Statistics shows National Cement holds a market share of eight per cent. Other market players, including Bamburi Cement, Mombasa Cement and Athi River Mining Africa Limited, hold 33, 16 and 13 per cent, respectively.
East African Portland Cement and Savannah Cement hold 15 per cent each.
Construction of Cemtech processing factory, a subsidiary of India’s Sanghi Group at Sebit-Ortum in West Pokot, has been underway for 10 years.
Delays of more than Sh10 billion investments were attributed to the quality of limestone and clay deposits, and accessibility to the area.
In January, Cemtech chief executive Rajesh Rawal said works at the factory would commence after license approvals.
“Its shareholders have been looking for a strategic partner to finance construction of a cement plant. The proposed acquisition is therefore expected to resuscitate the dormant firm, create jobs and raise the economic profile of West Pokot,” CAK added.
Cement production and consumption have been consistently low for three years.
Production decreased to 5.63 million tonnes in 2018 from 6.2 million tonnes in 2017. This also represented an 8.2 per cent decline from 6.7 million tonnes in 2016.
Similarly, consumption decreased to 5.49 million tonnes in 2018 from 5.8 million tonnes in 2017 and 6.3 million tonnes in 2016, owing to reduced demand in the construction sector.
The market dynamics coupled with competitive players have resulted in a decrease in cement prices. Last year, the average price of a 50kg bag of cement was Sh605, down from an average of Sh687 two years ago.
Nigeria-based cement maker Dangote is set to open a plant in Kenya. The date is not known but it is expected to bring stiff competition to market.
