Corporate News
Tata Chemicals Magadi workers harvest soda ash from Lake Magadi. The company plans to lay off 400 workers. Photo/FILE
By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com
In Summary
- Indian conglomerate Tata says the retrenchment will result from the closure of one of its manufacturing plants.
- It joins a growing list of Indian companies likes Essar, Karuturi and Bharti Airtel (yuMobile) whose businesses in Kenya have run into problems, some to the extent of closing down.
- Soda ash is widely used in glass production and manufacture of detergents and cleaning agents.
Indian-owned soda ash producer Tata Chemicals
Magadi (TCML) has announced plans to sack 200 staff, making it the
latest firm from the emerging Asian giant to encounter headwinds in its
Kenya operations.
The company, which was owned by a British company
until 2006 when it was taken over by Indian conglomerate Tata, says the
retrenchment will result from the closure of one of its manufacturing
plants.
It becomes the latest Indian firm to implement
restructuring programmes that have affected employee contracts similar
to ongoing changes in telecommunications company yuMobile flower firm
Karuturi, and Kenya Petroleum Refineries.
“The proposal (to restructure) was a painful one,
precipitated by the high energy costs that have overwhelmed the
viability of this plant,” said the Tata Chemicals Magadi managing
director Jack Muchira.
“TCML will fulfil its legal and contractual
obligations to the impacted employees and intends to commence
consultations with the affected employees and the union towards ensuring
those who may be potentially impacted are prepared.”
The firm, which is Kenya’s sole soda ash
manufacturer and exporter and also manufactures cattle and industrial
salts, says it will “mothball” its Premium Ash Magadi (PAM) plant in the
second quarter of this year.
It joins a growing list of Indian companies likes
Essar (which jointly owns the Kenya Petroleum Refineries), Karuturi
(flower grower and exporter) and Bharti Airtel (yuMobile) whose
businesses in Kenya have run into problems, some to the extent of
closing down. Soda ash is widely used in glass production and
manufacture of detergents and cleaning agents.
Tata Chemicals Magadi was formerly known as Magadi Soda Company, which was owned by Brunner Mond & Company of UK.
It was renamed Tata Chemicals after Mumbai-based
Tata Chemicals acquired it in 2006. Mr Muchira says the company has over
eight years explored various options to keep costs down but have failed
to “mitigate sufficiently the serious impact of the energy costs on its
business.”
He said the PAM factory accounts for about 70 per
cent of the company’s total energy consumption. TCML’s fate mirrors that
of Essar, its Indian peer who is selling off two of its local
operations— its stake in the loss-making Kenya Petroleum Refineries
Limited (KPRL) and yuMobile.
Essar is in talks with government to end their five-year partnership in the Changamwe-based refinery.
The Indian conglomerate is looking to sell its 50 per cent stake and pay Treasury about ($5 million) Sh440 million.
Essar invested $7 million in the refinery in 2009, but has decided to exit claiming it was not an economically viable venture.
Corporate India’s problems in Kenya deepened in April after CfC Stanbic Bank placed Sher Karuturi, an Indian flower firm, under receivership after the latter defaulted on a Sh383 million loan.
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