Portland Cement to cut 220 jobs in turnaround bid

EAPCC acting MD Stephen Nthei, Senator Judith Pareno, Trade Cabinet Secretary Peter Munya and Kajiado East MP Peris Tobiko touring an EAPCC facility on June 3, 2019. PHOTO | STANLEY NGOTHO | NMG 

By STANLEY NGOTHO
More by this Author

Cash-strapped East African Portland Cement Company (EAPCC)

aims to raise operation capital, minimise energy cost and cut the payroll by a further 220 workers to
turn around its fortunes.

The partly State-owned firm, which has been performing dismally drastically reducing its share in a rabidly competitive market space, says it needs Sh17 billion to return to profit- making.

It owes millions in unpaid loans from financial institutions including Kenya Commercial Bank dating to 1990s.

In May, 2019, the board replaced managing director Peter ole Nkeri with Stephen Kyalo Nthei in an acting capacity in a bid to re-engineer performance and increase the dwindling company production. Mr Nkeri was sacked before his five-year term expired after suspension by the board on February 18, 2019.

Mr Nthei, a 48-year old accountant, joined EAPCC in 2007 as an internal auditor, rising to financial manager before taking the leadership baton. The former Central Bank of Kenya banks inspector is the longest serving EAPCC senior official.

Speaking to the Business Daily in his Athi River factory office, he said over the years the company has been under-capitalised, adversely affecting the production.

The firm produced 28,000 and 26,000 tonnes of cement in April and May 2019 respectively, the lowest production of the Blue Triangle brand recorded since inception in 1933.

Mr Nthie said the company was considering disposing off 6,000 acres prime land in Athi River to inject the much-needed capital. It has so far sold 900 acres to Kenya Railway Corporation for an inland port depot at Sh5.2 billion.

The board has reached the decision to dispose of the land as “investment property’’ instead of going for a convertible loan to raise enough working capital for raw material and growth in the next one year.

Portland says it has been grappling with bloated human capital that must be downsized.

Since August 2018, more than 700 workers have been sent home on expiry of contracts. Currently the factory has 821 contracted and permanent and pensionable employees. The management plans to lay off 27 percent of them by September 2019.

"The management will downsize the human capital in the most humane way immediately we have money to pay the affected workers’ dues as stipulated in the labour act. Those with critical skills will be retained to ensure production efficiency. Re-engineering of the company will put into consideration each employee performance,’’ said Mr Nthei.

Inefficiency has seen energy cost take 40 percent of the total expenditure, with the acting CEO aiming to cut waste by 20 percent in the next year. The company uses coal, electricity and diesel for production, with electricity costing the firm Sh70 million to Sh120 million monthly. The new management plans to adopt a robust stakeholder management to increase local and regional market shares.

“ We need a robust stake holder management. The company is strategising on how we can stop our competitors in the market from using our company as training hub and ensure we have external support for our employees. Our suppliers and employees are important facet for our company growth,” he said.

Lafarge is the biggest shareholder in the manufacturer with 42 percent, NSSF 27, National Treasury 25 and other shareholders owning a paltry six percent floated at the Nairobi Securities Exchange.

The company, with capacity to produce over 1.3 million tonnes yearly is currently operating below 50 percent, incurring continuous loss.

It is budgeting on modernisation of the plant to cut cost and raise production.