KISCOL takes off as Kenyan sugar industry grows | Video
World Finance speaks to Rajesh Pabari, Kaushik Pabari and Harshil Kotecha about the growth of the Kenyan sugar industry
The sugar industry has enjoyed a profitable run in Kenya with consumption currently standing at 800,000 metric tonnes per year, and production remaining below 500,000. One company who has capitalised on the growth of the sugar industry is Kwale International Sugar Company (KISCOL). World Finance speaks to representatives Rajesh Pabari, Kaushik Pabari and Harshil Kotecha to find out about KISCOL’s impact on the industry, its expansion plans, and ambitious green fields project.
World Finance: What impact has KISCOL had on the local sugar industry as well as the economy in the country?
Kaushik Pabari: Kenya has a deficit as a sugar country, KISCOL expect to reduce the deficit and to increase employment. To give you a vertical example, we just started the project Mombasa, sold one truck every month. Now they sell a truck of the flour every day.
KISCOL expect to reduce the deficit and to increase employment
World Finance: In 2007, you started an ambitious green fields project. Tell me, how was it financed and how has it developed?
Harshil Kotecha: We approached a consortium of bankers, both regionally and internationally, and we nominated a syndicate leader for the bankers, that was PTA Bank and Standard Bank, who are in Kenya. They formed a group of about 12 bankers altogether who came in to finance the project. We have now reached 80 percent finishing the project, and we are commissioning in August this year.
World Finance: What is the soil to shelf concept and why does it matter?
Harshil Kotecha: It’s not known where the raw materials come from. In terms of KISCOL, what we’ve tried to achieve is a complete traceability. We will be growing the raw material in our nucleus, which will supply 75 percent of the project, and we will also be branding the sugar under our own brand. It will maintain stability and ensure consistent supply to all clients. It also will help to determine the taste of the clients, which can be traced backwards.
World Finance: What gives KISCOL a niche advantage in the current sugar industry?
Harshil Kotecha: Firstly, KISCOL is actually the revival of the collapse from sugar factory. According to the feasibility studies, the sugar cane growing should have been at the cost and not invested in Kenya, which is currently the scenario. This has caused Kenya to be one of the most expensive sugar growing in the region, and the consumers pay the highest price in the world. In this case, KISCOL comes to correct this picture, not only to grow in the right area, but to grow with the right type of technology, which is strip irrigation. We also have ensured consistent supply of water by ensuring we have adequate dams in place. Because the factories are located in the wrong region and they are high producers, we will soon be losing the market of Comesa, and all the chip sugar will be important. First KISCOL will help to shape this pattern and ensure that sugar is produced at a sustainable price, and in case we don’t have a market in Kenya we’ll be able to also export it.
World Finance: Now the local Kenyan sugar industry experienced some instability in the 1980s, how can you ensure that KISCOL doesn’t suffer the same fate?
Rajesh Pabari: KISCOL has invested heavily in studies to ensure feasible projects. We have invested in state of the art drip irrigation and to ensure availability of water by creation of dams and bore holes. The main stakeholders are involved in the project on a regular basis and we know the outgrowth are very important to sustain this project.
KISCOL has invested heavily in studies to ensure feasible projects
World Finance: Tell me about KISCOL’s expansion plans.
Kaushik Pabari: KISCOL aims to have a set-up where 50 percent of the cane to the factory shall be supplied by the outgrowers. At one point in time, it will also increase its nucleus as opportunity arises. As KISCOL has plans to expand the factory to 5000 it’s important to also increase both the nucleus the outgrowth.
World Finance: Thank you so much for joining me today.
All: Thank you very much.