ARM Cement chief executive Pradeep Paunrana. He said the firm has opted
to keep the fertiliser unit within the group business. Photo/Diana
Ngila/FILE
Nation Media Group
By VICTOR JUMA
In Summary
- The firm makes fertiliser, lime, sodium silicate and cement — the mainstay product that generates 82 per cent of its sales.
- The company in October said that it was in talks with a private equity firm for the sale of a 30 to 50 per cent stake in its fertiliser business, targeted for distinct listing at the Nairobi Securities Exchange (NSE).
- The listed firm has opted to keep the fertiliser unit within the group business.
ARM Cement has made a U-turn over plans to sell a portion of its fertiliser business and list it separately on the Nairobi bourse.
The company in October said that it was in talks
with a private equity firm for the sale of a 30 to 50 per cent stake in
its fertiliser business, targeted for distinct listing at the Nairobi
Securities Exchange (NSE).
The listed firm has opted to keep the fertiliser unit within the group business.
“Selling the fertiliser business is no longer a priority for us,” chief executive Pradeep Paunrana told the Business Daily in an interview.
“We are happy with our overall business as it
stands,” he said, adding that the firm has registered increased
profitability in its various divisions.
The firm makes fertiliser, lime, sodium silicate and cement — the mainstay product that generates 82 per cent of its sales.
Mr Paunrana first disclosed plans to spin off the
fertiliser business in October. Cash from the planned sale of the unit
was to be used in building a new fertiliser plant, allowing annual
production to increase from the current 15,000 to 150,000 tonnes in five
years.
The spin off was also expected to raise cash to
beef up the cement unit, hoping to grow it five fold by 2018 in a
business environment where cement consumption is rising amid price war.
Now, ARM is raising funds from shareholders and lenders to expand the
cement business.
Mr Paunrana said ARM will raise up to $300 million
(Sh25.5 billion) in the medium term through a mix of bank loans,
corporate bonds and rights issues.
The cash will fund new cement plants including one
in Kitui with a production capacity of 8,000 tonnes per day, making it
the single largest cement factory in the country.
ARM also plans to start producing cement in South
Africa over the next five years through its subsidiary Mafeking Cement
that it has registered in that market.
ARM posted a 28 per cent rise in net profit for the nine months to September, boosted by higher sales.
Its net profit stood at Sh1.53 billion in the period, driven by a 32 per cent jump in sales to Sh10.2 billion.
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