One idea that has proved elusive for many in the emerging economies is the idea of indigenous manufacture. Many try, most collapse, very few manage to compete with the multinationals. One idea that is important to Mr Pradeep Paunrana is self-sufficiency as a country. This cannot be achieved without a burgeoning manufacturing backbone.
Mr Paunrana is the CEO and Managing Director, ARM Cement Ltd and Chairperson of Kenya Association of Manufacturers (KAM). He obtained his Masters in Business Administration from New York University Business School and earned his first degree in Accounting on Financial Management. He left formal employment and decided to join his father to expand the family business that has helped him gain over 30 years of experience in the manufacturing sector.
Being proud of where the manufacturing business is, he quotes “What drives me as an individual and an entrepreneur is threefold, first, huge opportunities that Kenya has with respect to growth of major infrastructural projects, construction, and housing projects. Second, the support I receive from staff, shareholders and other directors is incredible and third the need to create local value addition, employment opportunities and the need to exploit our resources. This motivation made me join Kenya Association of Manufacturers (KAM) many years ago.”
ARM Cement Limited was started in 1974 and is one of the largest manufacturing plants in Kenya. The objective of its establishment was to add value, create employment opportunities, and encourage people to share and grow business ideas. The company is listed at the Nairobi Securities Exchange with over 7,000 shareholders and is rated as the 12th largest market in terms of capitalisation and growth.
“ARM was the first company in Kenya to obtain certifications for ISO 9001:2008 Quality Management Systems and the ISO 14001:2004 Environment Management Systems. Their environmental emission control technology is designed to meet the latest international standards, with state of the art technology. ARM’s plant in Kaloleni was the first manufacturing plant to be awarded ISO 9000 for quality in management systems. It is the only plant in the whole of East Africa which has 24hours online system to measure and monitor dust emission levels due to the adoption of the latest technology for dust emission management,” he notes.
ARM is among the major suppliers of the new standard 52.5 cement in the construction of Standard Gauge Railways (SGR). This standard contains very high super strength cement that has been tested by KEBS. In constructing the SGR, the Chinese contractors have come up with their own standards to be adopted and applied in Kenya; this has forced the industry to develop products that meet these Chinese standards. Technologies and factory testing methods have been put in place to ensure we meet their standards. “This is not an easy experience for the company but we are sure that investment will pay off in the long run with more infrastructure developments coming up,” he explains.
When I asked him about the effect of political uncertainty and other upheavals in business Mr Pradeep had this to say, “Turbulence is part of the business cycle and we cannot escape such calamities. For example, in the year 2008-9, United States faced a global financial crisis, which wiped off some of the biggest names in international finance; most banks had to be bailed out by their government. Besides, Europe and Asia were not immune to the crises, but at the end what matters is how one satisfies the needs of the customer though the turbulent challenges”
To diversify ARM has also invested in fertilizers, which is a vast component in Kenya’s agricultural economy. The company has developed formulations that are crop or soil specific. This ARM achieves through lots of research. Their formulation gives 30-40% increase in crop yields and is more economical than traditional fertilizer formulations. The Kenyan government has recommended this fertilizer formulation to farmers in turn boosting the demand for the product. ARM also deals with industrial minerals, which companies use, in the manufacture of glass, PVC pipes, rubber, paint and ceramics or else car breaks. With all these products, ARM services a large segment of the industry with its industrial products.
How do you make the quarries useful to the society after exploiting them? I pose. “It depends on the nature of the mining activities undertaken; some mining activities are shallow like quarrying limestone. One has to mine for kilometres and kilometres horizontally as a result; we rehabilitate the areas by planting trees. The philosophy that we have is planting trees before we begin operations so that the tree cover may not be lost to mining. The trees absorb carbon dioxide from the cement manufacturing process, keeping the air clean. Our conservation activities do not limit to the quarry environment but the entire plant and manufacturing operation including dust control to ensure all negative impacts are mitigated.”
“Rhinos in Africa are known for their strength and power, thick skin and the fear they inspire in other animals. This is where the company’s cement brand name ‘rhino cement’ originated. This also prompted the company several years ago to start supporting the rhino conservation efforts. We are very proud to be associated with the Lewa conservancy, and we hope to continue doing more work with the rhinos,” he adds.
To Kenya Engineers he says, “ARM has deliberately chosen to invest in this country for the long term, to build a solid foundation, to employ Kenyan engineers, to have technology or research based companies whether it is the cement or fertilizer industry, to present our end consumers who are engineers with a high quality final product. What is more important in our business is the partnership we have with customers, which is vital. ARM is here for the long haul.”
The Tanga project in Dar es Salaam is the largest engineering project executed in East and Southern Africa of late. They are two different sites: one in Tanga and the other in South of Dar es Salaam. The steel structures, staircase, silo and conveys were fabricated on site by locally trained fabricators and welders. The total height of the pre heater building is 128 meters to the slab, a super structure of 13 meters. This makes it the tallest building in East Africa to date. This was entirely constructed using Rhino cement from Kaloleni. ARM gained permission to export cement from Kenya to Tanzania. Four hundred and eighty kilometres of electric cable and instrumentation cable has been installed in the tower plant.
The Dar es Salaam plant contains two transformers of 23MW each producing 46MW at full capacity that the company expects to be consuming. The company will be using 43-46MW of power, making ARM Tanga plant the largest consumer of electric power in Tanzania.
“For a business to thrive, one has to have the right people from the engineers to public relation managers or marketers who exhibit same vision and mission for the company as you. Leadership is bringing progress in the society either at business or government level. A leader connects with people, motivates people, or even energizes people to ensure they have a common purpose,” he concludes.
“KAM is an organisation whose key mandate is to influence government policy and decision making through research, advocacy to advance the interest of manufacturing industries in Kenya on a competitive basis. This ensures there is a level playing field and at the same time helps the government to provide manufacturers and the private sector with resources to make investments, improve productivity and exports in order to benefit the Kenyan manufacturing industry as well as the private sector,” says the current chairperson, Pradeep.
He further explains, “KAM is the umbrella body for manufacturers in Kenya and adhere to World Trade Organisation rules. The recent factory closures like Cadbury and Eveready is a major concern to the Association. Some industrialists are moving to Egypt due to availability of cheaper sources of power than Kenya. The cost of doing business in Egypt is more affordable than here in Kenya. In general, Egypt provides a good environment to work in than Kenya, unfortunately. Goods produced in Egypt can then be sold to East Africa through the Common Market for Eastern and Southern Africa (COMESA) without any tariffs. The associated transport costs still do not harm the profit margins. Therefore, KAM is seeking for ways that can make Kenya’s manufacturing sector as competitive as Egypt.”
He observes that Kenya can be competitive by encouraging skills development. There is need to develop skills that fit in with those demanded to improve industrialisation. This calls for practical or technical training to students and graduates to improve labor services in the country. This can be achieved through partnerships between the government, academic institutions, and the private sector with the academic institutions.
The other is by building infrastructure and reducing the cost of power. There are efforts in the power sector to introduce new sources of power which will reduce the overall cost of power in the country. These efforts will see Kenya generate 5000MW from different sources that will include geothermal, hydropower and wind power. These will help in reducing the cost of power. Infrastructure development is currently doing well with the standard gauge railway, new berths and ports coming up which will help improve Kenya’s investment environment.
KAM also has an energy centre that was specifically set up for two reasons. First was to promote energy efficiency in industries. Industries consume 60-70% of power generated in Kenya and there are many technical ways of reducing consumption, which can liberate power. This would reduce the cost of manufacturing for industries. Secondly, the energy centre is to seek alternative energy solutions for companies that can use innovative technologies to substitute the use of main grid power or expensive fuels. KAM provides funding from financial institutions to carry out viable projects toward providing energy solutions.
He admits that engineers play a major role in the manufacturing industry especially where technological innovations come into play. “The more our professional manufacturing sectors are, the more efficiency we can achieve promoting a cost effective industry. Thus, we need to support our engineering institutions and provide opportunities for our young engineers whether it is in the field of mechanical, civil or electrical engineering as all of them count on technology. Engineering courses should however be tied together with practical training from the industry.” He asserts.
His relationship with KAM has helped him relate with other manufacturers as his customers with those dealing in edible oils, printing, or manufacture of paints. He also uses the opportunity to champion for an improved manufacturing environment in Kenya.
4,000 tons per day clinker plant commissioned in Tanga
…..More insight from the ARM CEO
“On October 25th, we formally commissioned the 4,000 tons per day (tpd) clinker plant at Tanga, Tanzania. 13th November, also marked another milestone as we commissioned the first of the two 150 tons per hour raw mills. The rotary kiln was fired on Monday 17th November, and clinker production to commence.
The production of our own clinker from Tanga will make ARM CEMENT the largest cement manufacturer in East Africa, and transform the competitive position of the company, allowing us to increase our volumes with significant increase in margins.
I take this opportunity to thank you for your support over the past few years in helping to grow our company. We have managed to build one new cement plant every 2 years since 2006:
2006 : 750 tpd clinker plant at Kaloleni, Kenya
2008 : 1,500 tpd clinker plant expansion at Kaloleni, Kenya
2010 : 2,000 tpd cement grinding plant at Athi River, Kenya
2012 : 2,500 tpd cement grinding plant at Dar Es Salaam, Tanzania
2014 : 4,000 tpd clinker plant at Tanga, Tanzania
ARM was also the first company in Kenya to obtain certifications for ISO 9001:2008 Quality Management Systems and the ISO 14001:2004 Environment Management Systems. Our environmental emission control technology is designed to meet the latest international standards, with state of the art technology.
As we continue expansion of our cement business, we will now complete during 2015, the construction of the one more cement grinding plant in Tanga with a capacity of 2,500 tpd, bringing our total cement capacity in Tanzania to 1.8 million tons per year.
This will be followed by the expansion of our Kigali, Rwanda cement grinding plant to a capacity of 200,000 tons per year. Our next major growth will be in Kenya, a growing market that is still heavily reliant on imported clinker. We will meet this growing demand by building a new 2.5 million tons per year integrated clinker and cement plant in Kitui County, Kenya.
At all times, we will continue working closely with and supporting our employees, communities, and the Countries we operate in. The Rhino Cement Foundation has set a strong example of delivering long term, high impact social investments in Kenya, and we will replicate this model in other countries in which we operate.
I thank you again, and look forward to your continued support as we help to Build Africa.”