Rwanda’s largest cement manufacturer, Cimerwa, has embarked on the journey to increase its production capacity and explore new markets for its products, as it seeks to unlock value and speed up growth. Mangesh Verma, the company’s chief executive officer, has said that Cimerwa aims to produce more of its products and sell them in different places. This means expanding its manufacturing facilities and targeting new customer segments. “We are trying to maximise the optimum use of resources where we can be able to bring down our operating costs,” Verma, who was appointed recently to lead the company, told The New Times in an exclusive interview. “Since we took over, we have tried to maximise automation by implementing new IT [information technology] systems where each and every data is captured currently,” he added. ALSO READ: Cimerwa appoints Mangesh Verma as new CEO By paying attention to resource planning, Cimerwa wants, for instance, to maintain a stock of raw materials that could sustain operations in case of critical moments to reduce the amount of time they need to shut down operations due to shortages or maintenance issues. “We don’t want to run in a firefighting mode. We are aiming to have spare parts and raw materials that is three-month equivalent to the stock. This is important for us especially in the eventuality event because we shall be able minimize the factory shutdown times,” Verma noted. That journey has already begun. “We managed to bring down our operational cost and we maximized our products. Currently our Cimerwa plant is running at 120 per cent of installed capacity. We are now sourcing raw materials at a better price. Our suppliers and vendors currently offer competitive rates,” the chief executive said. The current owner of Cimerwa has, among other things, conducted a restructuring process that includes leadership and management changes as part of the drive to reduce operational costs. “There are many areas where we decided to do the restructuring. Where we had to add manpower, we added,” Verma said without divulging details, instead praising the work they have done. “Currently, we are running at more than 25-30% of the plant's performance than the previous year. We saw that there were time management gaps, so we tried to correct that,” he said. ALSO READ: Kenya's National Cement completes CIMERWA acquisition at $85 million In the nine months that ended June 30, 2024, Cimerwa’s administrative expenses – costs associated with running the company – stood at Rwf4.37 billion, 36 per cent down compared to the prior year. The company said this was due to stringent measures taken by the management to contain costs to try and keep their products competitive despite increasing competition. Last month alone, Verma highlighted that Cimerwa and Prime Cement collectively produced 100,000 tonnes of cement, asserting that this reduced cement imports to Rwanda by 75 per cent. Cimerwa was bought by the National Cement Holdings Ltd, a subsidiary of Devki Group owned by Kenyan billionaire industrialist Narendra Raval. The transaction, worth $85 million (approx. Rwf107 billion), was completed in January this year and allowed Raval to own at least 99.94 per cent stake in Cimerwa. In July, Cimerwa said it acquired Prime Cement, another cement manufacturer, in an ‘off-market’ transaction. Under the deal, closed on July 18, Cimerwa acquired all operational assets of Prime Cement, while the government retained ownership of all outstanding liabilities. ALSO READ: Cimerwa acquires Prime Cement Expansion plans According to the company’s expansion plan, the target is to increase the production capacity to 300,000 tonnes extra capacity annually by March 2025, from the current 600,000 tonnes that the firm produces annually. When Raval bought the company earlier this year, he announced that he would invest at least $60 million (approximately Rwf80 billion) in capacity expansion in the first year of the takeover. According to the company’s financial statements for the nine months ended June 30, the company has already burned about Rwf11 billion towards expansion works at its Cimerwa plant in Bugarama in the Southern Province. The firm paused production for 42 days to give room for upgrade of kilns. As a result, total revenue remained flat at Rwf72.9 billion, although its net earnings increased 22.3 per cent to Rwf11 billion and earnings per share improved by 22.3 per cent to Rwf16.17. Cimerwa currently supplies the domestic market and in the Democratic Republic of Congo, mainly in the eastern parts of Bukavu and Goma where 40 per cent of its cement supplies are directed. ALSO READ: How new $100m cement plant could impact Rwandan market As part of its market expansion plans, Verma confirmed that they were engaged in negotiation with cement buyers in the region, including in Burundi where he indicated that they saw potential business. If all goes as planned, Cimerwa sees its compound annual growth rate growing at 8 per cent in the next 10-12 years. However, Cimerwa faces competition from Anjia Prefabricated Construction Rwanda, a Chinese owned cement factory which entered the local market last year. The firm said it invested $100 million in its Muhanga district, Southern Province-based plant, which has a daily production capacity of 2,225 tonnes. While the two manufacturers have the capacity to meet domestic demand, they face competition from imported cement from Uganda, Tanzania and Kenya, among others, which is often sold at lower prices. Local cement producers face higher production costs due to reliance on imported clinker, a key raw material. Additionally, transportation and shipping expenses contribute to these increased costs.
