Battery manufacturer, Eveready, closes struggling Nakuru-based factory

East Africa’s largest battery manufacturer, Eveready, has shut down, blaming rising cheap battery imports which have slashed the capacity of the plant to a mere 25 per cent.

The five-decade-old company will stop manufacturing the iconic Eveready battery locally effective tomorrow  and will instead import the batteries from its partner, Energizer Battery of Egypt.

The company said 99 employees working at the factory will be sent home in the next two weeks. It announced that a sum of Sh110 million has been set aside to pay their severance package.

The battery unit remains the key revenue stream for the company contributing over 60 per cent of the group’s turnover.

DROP IN REVENUE

The firm’s revenues remained almost stagnant at Sh706.9 million for the six-month period ending March 31, 2014 compared to Sh701.9 million over a similar period the previous year, realising a meagre profit before tax of Sh44.8 million.

The 18.5 acres of prime land where the factory is located will be converted into a mega real estate project once the board of the listed company gives its approval. A subsidiary company, Flamingo Properties Kenya Ltd, has already been set up to spearhead the foray into the real estate sector.

“The closure of Nakuru is part of the bigger picture in the realisation of our future,” the board chairperson Lucy Waithaka said during the announcement of the firm’s new diversification business model in Nairobi yesterday.

As part of the company’s new strategy to grow sales and remain relevant in the market, the company said it would now focus more on its marketing and distribution channels with the import of the batteries and other products expected to reduce the time taken to generate cash from supplies slashed from six to two months.

“The closure of our plant reiterates the shift to a commercial-oriented entity... the key investment for us will be marketing,” said Managing Director Jackson Mutua.

Yesterday, the company said it is diversifying into new product lines to remain relevant in the market as part of a five-year programme kicked off two years ago. For instance, the company has in the last two months been selling motor vehicle batteries branded Turbo and has already signed what it calls a big distribution agreement with Yana Tyres to sell the batteries at Yana Centres countrywide.

In November, the firm said it would introduce energy-saving bulbs and other lighting solutions as part of a diversification plan.