, NAIROBI, Kenya, Sept 29 – Eveready East Africa Limited is set to close down its manufacturing plant in Nakuru from October 1, 2014 owing to competition from cheap imports from the East.
The firm’s Managing Director Jackson Mutua says instead, the company plans to outsource from their partners in Egypt.
The plant which produces dry cell batteries commonly known as D battery that constitutes 60 percent of the company’s business, has been working at 25 percent capacity owing to cheap dry cell batteries in the market.
“The proliferation of cheap dry cell batteries into the market has seen the company review its operations to ensure continued profitability and competitiveness in an increasingly cut-throat business. The company will henceforth source the D batteries from the Energizer factory in Egypt,” he said.
The closure will see about 99 employees lose their jobs. The company will use Sh110 million to lay them off.
The company intends to use the plant’s 18.5 acres land in real estate investments having set up a subsidiary – Flamingo Properties Kenya Ltd – to spearhead its foray into the venture.
The project in Nakuru will be one of its flagship investments.
“The closure of our plant reiterates the shift to a commercial oriented entity. It has taken away the long cash conversion cycles and offers the flexibility to quickly react to market demands whilst focusing on our core business of distribution,” he said.
The company has also rolled out an ambitious diversification business model as part of its five year strategy aimed at increasing efficiency in its business processes and continuously satisfy consumer’s evolving needs in the East Africa region as plans are underway to launch new products across personal care, energy and household categories.
“We have plans to enter the lighting category bringing bulbs into the Kenyan market under the name Eveready in bid to increase revenue streams, with the first consignment set to get into the market in October 2014,” he said.
The company has already launched a leading brand of automotive batteries known as Turbo into the Kenyan market, being manufactured by Chloride Egypt.
“With the board’s approval, we started implementing this strategy last year and I am happy to announce that our Ugandan subsidiary is operational and we have signed an agreement with a competent distributor in Tanzania. The venture into real estate will be mutually beneficial to our shareholders and also poised deepen our investment in the county of Nakuru,” Mutua added.
The company registered a net profit of Sh29.4 million in the first six months period ended March 21, 2014, a 173 percent growth over the prior year.
The Kenya and Ugandan units registered a 21 percent and 4 percent growth in revenues respectively over previous year.
The Tanzania operations however registered a 34 percent decline in revenues compared to the previous year which resulted to a 5 percent overall growth performance in revenues by the group.