Business
Uganda Clays applies for its own industrial power
UCL’s tile output that stood at 31,800 tonnes last year, is expected to rise sharply as the company enhances its production capacity. Photo/ANTHONY KAMAU.
Uganda Clays Ltd looking for dedicated power to improve production efficiency as part of an expansion programme which begun three years ago.
UCL, the country’s leading producer of clay building materials is holding talks with Umeme, the local electricity distributor to allocate a dedicated industrial power line for its new Kamonkoli factory in eastern Uganda.
This is expected to curb frequent power fluctuations currently being experienced with the general line.
Charles Rubaijaniza, the company’s executive director said: “Power interruptions disrupt production shifts, delay deliveries and damage machines.”
Mr Rubaijaniza said the company also intends to refurbish the powerhouse.
Ultimately, the company hopes that the new operational strategies will among others, lower production losses, power interruptions and turnaround times for its tile and brick products
UCL will also buy more generators to mitigate the effects of frequent load shedding caused by insufficient power supply.
Currently, the company spends an average Ush70 million ($33,997) per month on diesel to power its generators.
Analysts are optimistic that increased efficiency will boost UCL’s profitability in the medium term with positive effects registered on the distribution chain.
A stockbroker who requested anonymity said it was necessary for the company to make key capital investments to ensure long term growth.
“There are also signs that UCL is interested in leaner and more effective distribution chains in western Uganda,” he said.
UCL will also continue its equipment modernisation programme as part of its move to improve efficiency.
The company has already entered an arrangement with an Italian firm, Morando, a global supplier of clay production equipment, for the procurement of industrial spare parts valued at Ush150 million ($72,851).
The acting finance manager of UCL Richard Kajungu, said this will help to fix old equipment and ensure regular maintenance of new equipment.
The firm has also procured more clay reserves to meet rising production levels.
So far, the company has secured 150 acres in Kamonkoli for clay reserves projected to last 50 years and spent Ush185 million ($89,849) on securing new leases for clay reserves in the region surrounding the Kajjansi plant.
Though the company has increased output over the last five years as a result of accelerated demand in the construction sector, limited gains in efficiency have led to hidden costs and reduced profits.
Uganda’s construction sector has grown by over 10 per cent since 2006 leading to increased pressure on local suppliers of clay building materials, cement and timber to boost capacity and meet the surging market demand for both domestic and regional markets.
Significant investment in expansion has seen UCL’s tile output grow from 15,900 tonnes in 2008 to 31,800 tonnes in 2009.
Production losses are now estimated at a minimum of 10 per cent per day, at the new Kamonkoli plant and 14 per cent at the Kajjansi plant.
Mr Rubaijaniza said the company intends to slash these losses by 10 per cent and 5 per cent respectively in two years’ time.
UCL registered an after tax net profit of Ush2.2billion ($1million) in 2008 but paid no dividends because of considerable debt repayment pressures.
It is also the oldest listed company on the Uganda Securities Exchange having debuted in 2000.
