Billionaire steel industrialist and philanthropist Narendra Raval, the executive chairman of Devki Group, has added a multi-billion shilling steel smelting plant to his business empire.
The 59-year-old Raval, also known as Guru, spoke to the Business Daily about the new plant being commissioned today, tips on how to grow from a small to a big entrepreneur and Kenya’s industrialisation dream.
Tell us about the journey to putting up the new steel factory in Kwale…
It has taken four years to build the plant. It is the first in East and Central Africa of this kind and size. It is going to produce steel from iron ore.
The capacity at the moment is 500,000 metric tonnes of steel, which can in future be improved to one million metric tonnes. The plant is situated on about 300 acres in Kwale.
It is going to employ 2,500 people directly. Presently, there are 1,000 workers from the local area. In two months’ time, we will go to 2,500 workers.
Building a factory of this size is not easy. What are some of the challenges you encountered?
The engineering works were a bit challenging. The funding has also been a challenge. The plant cost me $240 million [about Sh29 billion], which is the biggest single investment in steel in Africa in two decades.
We have got teething problems, but we are overcoming them and the plant is now stable. The plant is producing its own electricity from the waste heat. The capacity of waste heat is 55 megawatts [MW].
How important is this factory to Kenya?
The plant is producing materials called steel fillets and wire rod coils. These are largely imported from South Africa and China. They will now be produced by Devki Steel Mills. This will save the country about $350 million [Sh42.35 billion] in foreign exchange.
Devki has largely invested in building materials like steel and cement, but recently we have seen you are diversifying into fertiliser blending, aviation and packaging. What other sectors do you see opportunities in?
Devki now believes in diversification. We have Mavuno fertiliser, which is a 40-year-old brand that we want to promote because the government is encouraging investment in agriculture. We are also diversifying into power generation by looking at waste heat recovery power in all our factories.
We are also setting up a wind power project which will produce 65MW. This will position our group as a green energy company in the coming years.
It will make us more sustainable because energy is the biggest cost in manufacturing.
Devki Group has its roots in the Gikomba market [Nairobi] where it started more than three decades ago as a hardware store. What advice would give to a young entrepreneur aspiring to grow into a billionaire industrialist?
Everything you start, you start very small, but you have to dream and think big and work towards your goal. You should try and do one thing at a time and do it with your whole heart.
You should not work on something today and then next year, you start something else. Don’t do trial and error. First, you need to dedicate time to do your research, then put your full commitment to it.
You will eventually become successful.
What is this one deal that you were so close to cutting, yet it slipped through your fingers?
I was looking for this sugar company called Mumias. I worked very hard to put a deal together keeping in mind that I will run that company as part of my plan to go into the agriculture sector and make sure I change the lives of people in the Mumias area.
But it never materialized after I saw there was too much political element in it. I came out because where politics is, we don’t board.
Why not do a greenfield investment in place of leasing Mumias Sugar?
It’s not difficult to start a greenfield venture. I went into that deal because it is easier for me if I have a head start. I said if it doesn’t work, then definitely I can start a new one which we still would like to do.
But in the meantime, I got the project for wind power with a capacity of 65MW which is bigger than that and we are now working on it.
One would assume you have the government’s ear. What is this one piece of advice you gave the government that was ignored?
I put a proposal to the previous government that we have sufficient clinker [material for making cement] in the country, but Kenya is importing $250 million [about Sh30.25 billion] every year while we have the ability to produce and stop importation.
The government never put any duty instead, the issue was politicised and duty never came. If the government does not move to protect local industry, that is slowing down the industrialization of the country.
You have always insisted that every experience gives you the opportunity to grow…
Every problem, hindrance or obstacle gives you a new lesson. Only then will you learn the hard way. If you learn from books or watching or listening to somebody only, it is never going to give you the same result.
So every difficulty is a big lesson and a big opportunity. When there’s a problem, there is something in it which can make you bigger.
For example, the biggest problem of Covid in the whole world, created big opportunities in medical care, making masks, gloves and vaccines across the world.
How have supply disruptions as a result of Covid and the war in Ukraine affected your factory operations?
The disruptions largely affected the supply of raw materials and food commodities around the world. The cost of raw materials went up three times. So manufacturing activity became very challenging because people cannot afford to buy expensive items.
What are some of the major lessons from Covid and the war in Ukraine for factories in Kenya?
We need to start becoming self-dependent now so we sustain ourselves if this kind of situation arises in future. This is a long journey but it is a very important lesson.
As a country, we can sustain ourselves in terms of pricing and availability of raw materials by stabilizing the supply-demand chains. We have to protect our local industry and agriculture to grow so that we become self-sufficient in food production and manufacturing.
If we do that by encouraging local investments, even if supply chains are disturbed in future, we are not largely affected. At the moment, a significant share of GDP goes into import bills and paying loans.
This is partly because we don’t have a strong local industry that will help us become self-sufficient. We will never become self-sufficient if the current situation continues because we are heavily reliant on imports.
What incentives are necessary for a company like yours to grow and expand?
The growth of the steel industry is always based on the development of the country. Kenya is developing, infrastructure is developing and low-cost housing is coming. But this will not be sustained unless they stop imports.
Even if industries are here, people keep on importing and do not support local industries. Until that time when the industry is protected, we will not sustain local investments.
We should not be exporting our jobs to China and India. We are importing everything including furniture and even kibiriti [match box] because have don’t have clear policies on importation. They have to put heavy import duty on the products we produce.
If they don’t do that, the country will always fail and local industry cannot survive. America had to put a 250 per cent duty on steel imports because they wanted to sustain their own industry. If America can do that, who are we?
