East African Portland Cement Company CEO confident political meddling won’t cripple company growth

East African Portland Cement Company M.D. Kepha Tande.

By Kenneth Kwama

Kenya: There is a boom in the real estate and the construction industry in the country. What does this mean for the East African Portland Cement Company, and how does it plans to leverage on the situation to build its portfolio?

The current construction boom, which is expected to continue in the foreseeable future, is certainly good news for EAPCC. It means the company can expect to continue growing its business by achieving higher revenues and improved profitability.

However, its prospects in the business must take into account the more competitive nature of the market, and therefore means that it must continue seeking better ways to improve its performance. This will include making smart investments, achieving greater efficiency, and investing in the development and acquisition of better talent.

What are your expansion plans?

The company is planning to expand its capacity to produce more clinker and cement. This will ensure its position in the Kenyan market remains strong, and help it eventually acquire leadership.

We are currently carrying out feasibility studies for a clinkerisation plant in Bissel, Kajiado, and will install a new cement mill by 2016 to increase our cement production capacity to two million tonnes annually, among other things.

In your evaluation, how has the company’s board performed to help EAPCC achieve its business obligations?

The company’s board has performed very well in keeping the company on its feet and maintaining profitability despite great challenges both internally and externally.

What would you say is your biggest achievement since you started working as MD?

My biggest achievement since taking over the company has been turning it around from severe losses in 2012 (approximately Sh1 billion) to profitability in 2013, exceeding Sh1.7 billion. This is a major turnaround, which I hope to sustain in the coming years. Other achievements include implementation of an advanced enterprise resource planning (ERP) system, and an ongoing culture change programme.

What are your biggest challenges?

The greatest challenge has been political interference in the company, and its parastatal status in the midst of a competitive business environment.

What is your typical day in the office like?

My day usually begins at 4am. I wake up and check my emails and do some workout at home.  Before leaving home, I review the factory statistics of the previous day’s performance and speak with the production managers.  Meetings begin as early as 7am or sometimes 6am.

The interactions required of a CEO are numerous, starting with customers, government departments, community and public enquiries, shareholders and employees.

I will then squeeze in time to review the business performance of the previous day and address any urgent issues, sign documents and attend to mail.

I will often wrap up the day with a dinner or evening coffee appointment with business associates. It is hectic and demanding.

If you were given the opportunity to go back in time and rectify something done in the company whose outcome you did not like, what would it be?

One thing I would want to correct is the parastatal status of the company. The restrictions involved do not allow the speed and agility required to compete effectively. Good examples of companies that performed better after being relieved of this status include Kenya Airways, General Motors and Safaricom. Even the former Kenya Posts and Telecommunications Company is doing better than when it was a parastatal.

Happily, the recent task force on parastatal reforms appointed by the President has recommended the removal of this status from EAPCC. This company is a good example of an investment that can do more  for the country if its operating conditions were improved.

What is the current market demand for cement, and how much of it does EAPCC supply?

The current cement market demand is approximately four million tonnes per annum, of which EAPCC supplies approximately 21 per cent.

What do we need to do as a country to increase cement uptake and production?

To increase the uptake of cement, we need to improve the economy and reduce income inequalities in society.

There is still a huge housing deficit, which is growing due to a burgeoning population — hence the ever-growing slum problem. We have to create more better-paying jobs by encouraging investments in all sectors.

How much is EAPCC planning to invest in the industry, and how will this help in the growth or enhancement of shareholder value?

The company expects to spend up to Sh1.5 billion this year, and around Sh15 billion to Sh20 billion over the next five years in investments. By the time this is completed, the company will have around 1.5 million tonnes of clinker and two million tonnes of cement production, up from 0.5 million and 1.3 million, respectively.

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