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Pictorial: How Meera Investments is changing Kampala’s skyline

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Today, Meera Investments, the property development arm of the Ruparelia Group officially inaugurates their Electrical Plaza, the latest addition to their mixed use building portfolio in the city centre.  

Kampala Boulevard is a mixed use building on Kampala Road with shops and fully furnished suites- the Kampala Boulevard Suites. The suites offer accommodation with seating area. The air-conditioned units have a fully equipped kitchenette with dining area and an oven and a fitness centre.

Since 1994, Meera has been part of a number of innovative property solutions in mainly, the commercial and residential space and today owns sectors and to date owns over 300 properties in Kampala and other major towns like Mukono, Jinja, Mbale and Mbarara.    

With 287 shops, 66 fully furnished apartments, Hardware City building is strategically located in the central business district. With access to three main roads and parking for up to 150 cars, it is one of the best arcades in town.

The company, according to its Chairman and founder, Dr. Sudhir Ruparelia, is the largest developer of commercial and residential properties and also owns the largest number of ongoing real estate projects. It is also the largest private owner of commercial land in Kampala.

Bukoto Heights consists of 97 tastefully furnished modern apartments, premium designed to offer guests a mix of modern contemporary surroundings and a relaxing, laid back environment. Built in the northern suburb of Bukoto the facility offers both short stay and long-term guests all the comfort and amenities of a full service hotel. The range of accommodation facilities suits all guests, whether business traveller that require a standard apartment, leisure travellers or guests that require a luxuriously spacious apartment or have even taken the kids along for the ride and require family accommodation.  

Meera Investments Limited was in 2017/18 rated as a top rental income taxpayer by Uganda Revenue Authority (URA) while Dr. Sudhir Ruparelia, the Chairman/Managing Director of Meera Investments, was rated the second biggest individual rental income taxpayer.

Kingdom Kampala Mall, consists of 22,000m2 of Grade A retail and office space. Built to international standards. Out of the 40,000m2 built up area, 22,000m2 is lettable, consisting of 18,000m2 of office space (10 floors), 4,000m2 of retail as well as parking for up to 450 cars. The building has been fitted with a modern sprinkler fire suppression system consisting of a 200,000 litre water tank and 2 fire pumps with a back-up generator.  There is a separate holding water tank with a capacity of 150,000 litres.
The building is also equipped with 6 lifts- four with a capacity of 13 passengers and two with a capacity of 20 passengers. It also has three 500kva backup generators with a 15,000 diesel tank and has been fitted with 400 CCTVs for security. The building can run for 4-5 days off-grid.

Over the last 3-4 years, the company has been on a construction spree, raising several properties across Kampala, which have both redefined city architecture and changed both Kampala’s skyline, as well as the look and feel of the Kampala City.  

The Cube is a well- planned shopping arcade with five levels of shops, offices & restaurant space and apartments. Located at the busy Kisementi are in lower Kololo, it’s ideal for small and big brands that want to grow their dream business much faster in an ideal setting. 

Today, we revisit and review some of those projects, especially those developed over the last 3-4 years

Featuring one, two and three bedroom apartments, as well as penthouse suites. All apartments have access to complimentary WiFi, ample parking slots within the premises for residents and their guests. Guests at Speke Apartments – Kitante have complimentary access to use the swimming pool and gym at Speke Apartments – Wampewo and Kabira Country Club both of which are within driving distance.
Located on Plot 11 Market Street at the confluence of Market Street and Kiyembe Lane, the $10 million Electrical Plaza is made up of 220 shops, 56 apartments and 2 floors of parking.

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dfcu reportedly wants UGX47bn BoU refund, for Sudhir properties it acquired for a UGX10bn interest-free debt

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Doubtful about BoU’s ability to secure former Crane Bank branches, dfcu has started the process of vacating Sudhir properties. It wants the Central Bank to compensante them up to UGX47 billion. Soon we will see dfcu pull down all its branding on former branches occupied by Crane Bank

Tax payers are set to lose over UGX37bn, should a claim by dfcu Bank related to the contested sale of Crane Bank be honoured by the Central Bank.

According to confidential correspondence seen by this website between dfcu Bank and BoU, dfcu Bank has decided to exercise a clause in the Crane Bank buying agreement that said, if the central bank, failed to hand over to dfcu, vacant and freehold possession of 48 properties that previously housed Crane Bank branches with 24 months, dfcu bank had the right to return the leasehold titles to BoU and claim compensation.  

However a challenge has arisen within BoU circles, because, whereas the sale agreement said that on return of the properties, dfcu bank would be compensated a portion of the purchase price equivalent to the net book value of the properties, included in Note2.3.11 of the PWC Assets and Compilation as at 20th October 2016- estimated at about UGX47 bn, dfcu had acquired the said properties for only UGX10 bn.

Compensating them UGX47bn, would therefore make dfcu bank UGX37 bn richer- yet they have been occupying the properties for nearly 3 years without paying rent.

It shall be recalled that according to the Public Accounts Committee on Commissions, State Authorities and State Enterprises (PAC – COSASE) reported that bank of Uganda had not valued Crane Bank’s assets and liabilities as required by law and corporate governance and as such the purchase price of UGX200bn- payable over 30 months at no interest rate was unreasonable.

According to the MPs, BoU instead relied on a purported valuation by dfcu Bank who was “an interested party and eventual purchaser” of Crane Bank’s assets and liabilities.

Former BoU Executive Director, supervision Mrs Justine Bagyenda (left) and Deputy Governor, Louis Kasekende who were severally named by COSASE for their role in the mishandling the sale of various banks, including the defunct Crane Bank.

The Auditor General in his report to parliament had earlier opined that not only was the UGX200bn unjustified, but the fact that dfcu Bank was allowed to pay over 30 months without any interest, had caused tax payers a loss of UGX39 bn in lost interest.

Dfcu Bank to quit all Ruparelia Group properties by January 24th 2020

Two weeks ago, we reported that dfcu had started an internal procurement process to relocate its branches that are operating in the said Crane Bank branches.

A confidential request for proposals document titled: “Consultancy Services for relocation of selected dfcu Bank branches – 2019”, issued to selected architectural firms, that CEO East Africa Magazine has seen, said that dfcu was looking for an architectural consultant to”setup new premises, relocate the existing premises, decommission the vacated premises and support vacant handover of the vacated premises to the respective property owners.”

The dfcu letter to Central Bank rescinding the offer to buy the 48 properties

When contacted for comment, dfcu bank at the time declined to comment, but days later said the branch relocations were within their business plans to realign their digital ambitions.

But a 12th September 2019 letter by dfcu Bank’s Managing Director, Mr. Mathias Katamba and a one Agnes Mayanja, a Chief Risk Officer to the Governor and Executive Director BoU, confirms that indeed dfcu bank board has after several postponements, has moved to rescind the offer to  acquire the 48 properties and is in advanced stages of vacating and returning them to BoU as per the agreement.

“Following court’s dismissal of HCCS No 493 of 2017 on 26th August 2019, it is unclear how long it will take BoU to recover the reversion from MIL. This state of affairs creates uncertainty for the bank which is prejudicial to its business interests. In line with its strategic interests and risk management framework, the board has resolved that it is in the best interest of the bank to exercise the option to rescind the purchase of the MIL Properties,” wrote the dfcu senior executives.

Dr Sudhir Ruparelia addresses a media conference soon after Commercial Court dismissed the BoU case. He said everyone who participated in the illegal closure, takeover and sale of Crane Bank would be made to pay

“The bank hereby rescinds the purchase of the MIL properties pursuant to close 8.7 of the Agreement,” dfcu added.

In Civil Suit No. 493 of 2017, BoU and Crane Bank (in receivership) had sued Sudhir Ruparelia and Meera Investments seeking to recover up to UGX397 bn and the 48 properties. 

In his ruling, Hon Justice David Wangutusi, said BoU “did not have jurisdiction to file HCCS No. 493 of 2017” and that the orders sought against Meera are “barred in law, rendering” BoU with no “cause of Action” against Meera.

Regarding the 48 properties, Hon Justice David Wangutusi said that “any orders awarding delivery of freehold title to the Plaintiff/ Respondent (Crane Bank (in receivership)) would be illegal and barred in law,” since Crane bank “cannot hold freehold and any pleadings seeking court orders to that effect amount to no cause of action.”

The Bank has filed a notice of appeal, an application for stay of execution and Memorandum of Appeal. The hearing of the application for stay of execution has been fixed for November 27, 2019.  

In their letter, dfcu’s Katamba and Mayanja said that accordingly, in line with clause 8.8 of the Agreement, it would immediately return to BoU the certificates of title for the MIL properties duly re-transferred into the name of Crane Bank Limited- a process that would be completed by 24th January 2020.

According to insider sources at BoU, rather than be paid in cash, which might cause more furore given that the Central Bank is cash-strapped, dfcu is exploring options of having the UGX47 bn, deducted from the balance remaining on the purchase price of Crane Bank.

As at June 30, 2019, dfcu Bank had paid UGX140 bn and the outstanding receivable amounted to UGX60bn- according to the Auditor General’s letter accompanying BoU’s annual report for 2018/19 ended June 2019. The amount due from dfcu Bank Limited is interest free and dfcu is supposed to make full payments by the end of January 2020.

This theory is supported by the last paragraph of dfcu’s letter to BoU which reads: “The bank acknowledges that the rescission process and the payment associated therewith may entail certain other modalities; we therefore consider a meeting to agree these modalities and the associated timelines important.”

Now that dfcu has elected to return the properties to BoU, the fate of several other court cases amounting to UGX35bn in claims, launched by the Ruparelia Group against dfcu Bank as the successor in title to Crane Bank (in receivership) is also unclear.

We reached out to dfcu’s Managing Director, Mathias Katamba and the Executive Director, William Ssekabembe for a comment, but both had not replied to our inquiry on Whatsapp. In fact Ssekabembe saw the inquiry but left it unanswered.

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UBL’s Busola Doregos wins 2019 Chief Finance Officer of the Year award

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Ms Busola beat Coca Cola’s Ivan Bombom and Centenary Bank’s Godfrey Byekwaso, to the coveted award. She is the first female CEO of the year out of three winners, since the awards were introduced in 2017

Uganda Breweries Limited’s Finance and Strategy Manager, Busola Doregos, is the 2019 Chief Finance Officer of the Year!

Judges, chose her over Coca Cola’s Ivan Bombom and Centenary Bank’s Godfrey Byekwaso, the other two finalists in what has now become probably the most prestigious individual meritorious award in Uganda’s finance managers’ profession. 

Byekwaso, however won the Strategy Execution Award for his role in spearheading the automation and the reconciliation processes of Centenary Bank.

In the only double win of the night, Busola, also tied up with Moses Kargbo of Tugende; a boda-boda microfinancing social enterprise for the Finance Transformation Award.  

Busola, also the first female CFO of the year, now walks the footsteps of Alvin Mbugua (then CFO but now Managing Director Uganda Breweries Limited) the winner of the very first 2017 CFO of the Year Award and Sam Mwogeza the Stanbic Bank CFO who won the 2018 accolade.

Busola holds a Bachelor of Science (Accounting) degree from the University of Lagos and an MBA from the University of Kent. She is a Chartered Accountant.

Between 2007 and 2014, she held various roles within Diageo in the UK and in Nigeria. In June 2014 she got appointed as the Business Supply Manager at Guinness Nigeria and rose to the position of Financial Controller in April 2016. In May 2018 she Joined Uganda Breweries Limited- a subsidiary of EABL, itself a subsidiary of Diageo as Finance & Strategy Director.  

Winners of the night, joined by other nominees and judges for a power shot

To win, judges were looking for finance managers that have exhibited excellence in the seven vital quotients or skills of an accountant i.e. intelligence, creativity, digital knowledge, emotional intelligence, experience, vision, and technical and ethical skills.

The 2019 CFO Awards were organised by ACCA Uganda and Deloitte Uganda and sponsored by Stanbic Bank and Uganda Breweries Limited.

Full List of Winners

  1. CFO Of the Year: Busola Doregos, Finance & Strategy Manager, Uganda Breweries Ltd.
  2. Strategy Execution Award: Godfrey Byekwaso, General Manager, Finance; Centenary Bank
  3. Not For Profit Awards: Martha Sebunya, Finance Manager, Mengo Hospital
  4. Young CFO of The Year Award: Brian Collins Amanyire, CFO, Bank of Africa 
  5. Finance Transformation Award: Busola Doregos, Finance & Strategy Manager, Uganda  and Breweries Ltd and Moses Kargbo, Finance Manager, Tugende.
  6. SME Sector Award:  Maxwell Odera, Finance Manager, Fiduga Uganda
  7. Public Sector Award: Joshua Karamagi, CFO, Uganda Electricity Generation Company Ltd (UEGCL) 

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Two years after Sadolin-Plascon paint wars; Plascon emerges nearly unharmed as the new Sadolin struggles to get a grip on the market

Kansai Plascon’s USD$126 mn (UGX452.5 bn) of the former Sadolin Paints (Uganda) Limited, Sadolin Paints (Tanzania) Limited and Sadolin Paints (EA) Ltd of Kenya was perhaps one East Africa’s biggest acquisitions in 2017. Even bigger, especially in Uganda, was the fight between Akzo Nobel the owners of the Sadolin brand and Kansai Plascon the new operators of the infrastructure and distribution network, left after Akzo Nobel had taken away its Sadolin name.
Two years, after the introduction of Plascon paints to replace the Sadolin brand and the re-launch of Sadolin into the market, CEO East Africa’s Muhereza Kyamutetera looks back at the contested takeover and who is winning the share of wallet war.

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Wim Bramer, Managing Director Kansai Plascon East Africa (left) and Chris Nugent, then Managing Director Kansai Plascon Uganda Limited display the new Plascon paints portfolio at the Kansai Plascon plant in Namanve on August 3rd 2017. This was at a press conference to announce Kansai Plascon’s acquisition of Sadolin Paints operations in East Africa. Mr. Bramer was a former Akzo Nobel senior executive in London, who only joined Kansai Plascon in January 2016 and is believed to have been instrumental in the takeover deal. Chris Nugent the man who built the UGX166.8 billion Kansai Plascon profolio in Uganda has since left the company.

For over 23 years, Sadolin Paints Uganda had been the exclusive manufacturer and distributor of paint under the Sadolin trademark by virtue of a trademark licence with Akzo Nobel Coatings International B.V. the Dutch owners of the Sadolin brand. 

The contract was renewed on the 1st of May 2015 till December 2019. Under the agreement, Akzo Nobel was entitled to royalty fees equivalent to 2% of net sales.

However, according to documents seen by CEO East Africa Magazine, around 2016, Akzo Nobel hinted that it planned to increase royalty fees to 5% after 2019 and also rebrand from Sadolin to Dulux- their largest global brand that already had good presence in South Africa.

Sadolin Uganda and their shareholders, who had a franchise to run Kenya, Tanzania,   Rwanda, Burundi, South Sudan, Ethiopia, Eastern Democratic Republic of Congo, Somalia and Djibouti were not happy about the rumblings by Akzo Nobel.

There were also other complaints like- Akzo Nobel failing to meet their end of the bargain in especially marketing support.

Then an opportunity came if form of Kansai Plascon- the out-of-Japan paint manufacturer and one of the global top 10 giants- just like Akzo Nobel.  Kansai Plascon, as they are largely known- had been in South Africa for some time and was kin on expanding northwards.

To Kansai Plascon, a partnership with Sadolin Uganda owners, who also had operations in Kenya under Sadolin Paints East Africa Limited (SPEAL) and Sadolin (Tanzania) Ltd with ongoing export business to Rwanda, Burundi, South Sudan, Ethiopia, Eastern Democratic Republic of Congo, Somalia and Djibouti was God-sent.

A deal was struck for Kansai Plascon East Africa Proprietary Limited (KPEA) to acquire 100% of Shalvik Investments Limited- registered in Guernsey that owned 85% of Sadolin Paints (Uganda) Limited and 80% of Sadolin Paints (Tanzania) Limited respectively. Along with acquisition of other minority shareholders KPEA, on 1st August 2017, secured 92.5% of Plascon Uganda and 90% of Sadolin Paints (Tanzania) Ltd. The two were immediately renamed Kansai Plascon Uganda Ltd and Kansai Plascon Tanzania Ltd (Respectively).

Wim Bramer (Left), Managing Director Kansai Plascon East Africa and Chris Nugent, then Managing Director Kansai Plascon Uganda Limited address a press conference on on August 3rd 2017 to announce the Kansai Plascon’s takeover of Sadolin Paints’s operations in East Africa.

KPEA also acquired 85% of Sadolin Paints (EA) Ltd and renamed it Kansai Plascon (Kenya) Ltd. The company in its 2017 report said it hoped to acquire all the remaining shares so as to acquire a 100% controlling stake in the Group.  

According to their 2018 Annual Report, Kansai Plascon agreed to pay USD40.8 mn for the three companies’ current assets, USD46m for non-current assets like plants, vehicles and buildings as well as USD83.1 mn as goodwill. Less theliabilities and cash acquired, the final price came to USD$126 mn (UGX452.5 bn).

All payments were made in cash!

The specific amounts for the Uganda acquisition is not mentioned in the report, but according to the East Africa Venture Capital Association (EAVCA) and KPMG Private Equity Sector Survey of East Africa for the period 2017 to 2018, the Ugandan operation being the biggest of the three- was cashed out for an irresistible USD88 mn (UGX316 bn).  

But Akzo Nobel had gotten wind of the deal in its infancy stages and had moved to on 31st January, 2017 to  serve Sadolin a 12 months’ notice to terminate the contract. However on getting knowledge that KansaiPlascon had completed the takeover deal with Sadolin and that they were in advanced stages of ditching Sadolin branded paints even before the expiry of the notice period and were to launch their own Plascon paints brand, Akzo on 2nd June 2017- served Sadolin a 15 day notice to terminate the Trademark Licence Agreement.

Meantime, Akzo Nobel had hatched a master stroke up their sleeves- they were planning, following the termination to use their production facilities in South Africa and Zambia- which operate under the Dulux brand to manufacture and reintroduce into Uganda, Sadolin paint. Their bet, was hedged on the fact that Sadolin as a brand certainly had higher awareness and trust levels, that they would, working with some staff poached from the former Sadolin Uganda, use to penetrate the very same distribution networks that Sadolin Uganda had cultivated and hopefully crowd out Plascon who would no doubt need a little bit more time to gain traction in the market.   

You cannot approach Sadolin’s former distribution network- Court Tells Akzo Nobel

Somehow, Kansai Plascon managed to learn of this Akzo Nobel plan and went to work- putting their money, literary where their mouth was.

According to their 2018 Annual Report, Kansai Plascon reported spending another USD5.3 mn (UGX19 bn) on various consultants to complete the deal but also smoothen their landing and hit the ground running.

Having been stopped from directly importing and distributing Sadolin products on the Ugandan market, Akzo Nobel instead partnered with Regal Paints, a subsidiary of Kenya’s Crown Paints. In this September 28, 2017, photo Rakesh Rao the Crown Paints East Africa Group CEO (left) Johann Smidt (centre) and Deon Nieuwoudt the Managing Director and Africa Executive respectively, at South Africa’s ICI Dulux Pty Ltd- a subsidiary of Akzo Nobel are seen relaunching Sadolin paints at Kampala Sheraton Hotel.

In Uganda, Kansai Plascon hired TBWA Uganda one of the best advertising agencies to handle their market launch. They also hired Corporate Image Limited, a brand and reputation agency to manage both the awareness needs but also any potential image and reputation issues.

On the legal front they hired M/s Muwema & Mugerwa Advocates & Solicitors – a law firm known for their hard-hitting and unconventional approach to the law.

Fred Muwema, the firm’s founding and Managing Partner holds over 20 years of extensive experience in Commercial legal practice and litigation. He has handled numerous commercial transactions on mergers and business acquisitions, receiverships, legal audits, company formations and restructures for business ranging from banking, manufacturing and mining etc.

He is also known for handling some of Uganda’s major disputes in areas of trade, tax, telecom, broadcasting sector, banking, intellectual property and constitutional law and he didn’t disappoint.

Muwema advised Kansai Plascon to sue Akzo Nobel in the commercial court for seeking to unjustly enrich themselves by taking advantage of and grabbing Sadolin’s market profile and customer base, once the company ceased trading under the Sadolin brand.

He subsequently dragged Akzo Nobel to court for “actively and aggressively approaching former Sadolin Uganda’s (now Kansai Plascon Uganda) customers who have been grown over time, to switch allegiance and continue buying Sadolin products under a new arrangement.”

Commercial lawyer, Fred Muwema of M/s Muwema & Mugerwa Advocates & Solicitors was key to the legal strategy that thwarted Akzo Nobel’s plans to directly reintroduce the Sadolin brand into the market, thus buying Kansai Plascon valuable time to organise a knockout punch

In the case, Miscellaneous Cause No 163 of 2017, Muwema successfully argued that Sadolin Uganda (now Kansai Plascon) had “invested a lot of effort and resources in promoting Sadolin as the number one paint brand in Uganda with little help from Akzo Nobel” and that it was “therefore unfair for Akzo Nobel to take benefit of Kansai Plascon’ customers without compensating it.”  

On 07th July 2017, court granted a 3 months injunction against Akzo Nobel, up to 11th October 2017 upon which the two parties would enter into arbitration proceedings. 

“An interim measure of protection doth issue restraining the respondent (Akzo Nobel), its agents, assigns or licensees from: Directly or indirectly soliciting and or selling any Sadolin paint products to the distribution network or customer base developed by the applicant in Uganda under the trademark license agreement of 1st May 2015, between the applicant and the respondent pending a hearing and determination of the arbitration proceedings,” reads an extract from the ruling by the commercial court registrar.

With this injunction Kansai Plascon had secured a very important window and did not waste any single minute of it.

After closing the acquisition deal on 1st August 2017, two days later on 3rd August 2017, Kansai organised a press conference at their Namanve factory to announce the acquisition of the former Sadolin Paints Uganda and the rebranding to Kansai Plascon. A few days later they would roll over a nationwide radio, outdoor, online and TV campaign to announce the new brand name.

Sadolin is now Plascon, they told the market. They would also roll over a trade campaign that rewarded several distributors, painters and house owners.

According to audited results for Kansai Plascon Uganda that CEO East Africa has had access to, the company in 2017 alone increased their cost of advertising by 59.1% from UGX4.9bn in 2016 to UGX7.8bn.  

How Kansai Plascon managed to stay a step ahead of Akzo Nobel remains a mystery but a clue could lie in the a one, Mr Wim Bramer a senior executive who worked for Akzo Nobel for 11 years as Director International Business Development based in London- but but was involved in branding, distribution footprint, exports, licensing, joint ventures and acquisitions in Europe, Middle East, Africa, Central Asia, Far East and South America.

Mr Bramer had left Akzo Nobel and joined Kansai Plascon as the Managing Director for East Africa in January 2016.

Akzo Nobel revises plan, relaunches under Regal Paints

Paint companies- like all other construction supplies manufacturers, use the same distribution channels- hardware outlets and duukas. So it is not uncommon to find one hardware shop, stocking products, in this case, paint from over 15 paint makers.

So, thwarted by Kansai Plascon’s legal manoeuvre, Akzo Nobel, decided they would instead pick an existing company to manufacture and distribute their Sadolin brand.  An existing company would after all already be using the same distribution channels as any other paint maker. With this strategy, they could still ride on the popularity of their Sadolin name.

Akso Nobel couldn’t find a better partner than Crown Paints East Africa, to manufacture and sell their Sadolin paint in East Africa. 

Inside one of Akzo Nobel/Sadolin’s colour centres launched in Kampala. Despite such significant efforts, the market is yet to warm up to the new Sadolin.

The company had been operating in East Africa since in 1958 and in Uganda since 2006- under Regal Painnts- a company they own 100%.  In Kenya, Crown Paints is said to be a market with an annual turnover of about KShs7.4bn (UGX260.4bn) in 2017 and is the only paint company listed in the Nairobi Securities Exchange. The Company also has presence in the three major East African markets- Kenya, Uganda and Tanzania.

In Uganda, Regal Paints, is among the top 10 paint brands with an already established distribution network across the country.

However, Crown Paints was a little bit cash strapped to fund the quick regional rollout of Sadolin products, but Akzo Nobel, desperate to make this deal work, had to lend an equivalent of KShs136,380,000 (UGX4.9 billion) to Crown Paints Tanzania Limited and KShs41,616,000 (UGX1.5bn) to Crown Paints Rwanda Limited as working capital- all because then needed to keep the Sadolin brand alive and present in every corner of the region.

With the deal, done and dusted, on September 28, 2017, Johann Smidt and Deon Nieuwoudt the Managing Director and Africa Executive respectively, at South Africa’s ICI Dulux Pty Ltd- a subsidiary of Akzo Nobel and Rakesh Rao the Crown Paints East Africa Group CEO put up a powerful relaunch of Sadolin at Kampala’s Sheraton Hotel, complete, with pomp and sabre-rattling.

Johann, according to The Independent, a weekly news magazine in Kampala, said that Akzo Nobel was putting up their own UGX10bn plant at Regal Paints’  Kampala Industrial and Business Park, Namanve compound to produce Sadolin Paint for local and regional markets.

“Our Sadolin plant in the KIBP now under construction will be the primary site for manufacturing and distribution of Sadolin,” he told stakeholders and the media.

Rakesh Rao, on his part said that the partnership signalled a strong statement on Akzo Nobel‘s investments and continuity of the Sadolin brand in Uganda and the region.

“Sadolin brand has been a household name for many years,” he said, adding that the firm would sell its own Regal Paint products besides Sadolin Paints in the market. 

Sadolin strategy yet to bear fruits  

But how much of this Akzo Nobel/Sadolin strategy has succeeded?

(Left-Right): Chris Nugent, then Kansai Plascon Uganda Managing Director, Kansai Paints President; Hiroshi Ishino, Vice President; Kalpana Abe nd MD Kansai Plascon East Africa, Wim Bramer, during the launch of anti-mosquito paint in Kampala on February 2019.

To track how and if the Akzo Nobel/Sadolin strategy has succeeded in disrupting Kansai Plascon, we looked for Regal Paints’s financials to gauge the performance of the business before and after the October 2017 Sadolin partnership. 

According to the financials for Regal Paints that CEO East Africa Magazine has had access to, between 2015 and 2016, Regal Paints’ sales turnover declined by a minor 2% from UGX15.1 bn in 2015 to UGX14.8bn in 2016. However, even with the declining sales, Regal Paints managed to reduce their losses from UGX1.1bn in 2015 to UGX500mn in 2016.

But in 2017, Regal Paints turnover, rebounded by 14.86% from UGX14.8bn to UGX17bn- perhaps partly driven by the Sadolin portfolio. Regal Paints even declared a UGX100 mn profit that year.

2018 would have been the year when Sadolin’s full impact would be felt- but Regal Paints’ turnover, only grew by 8.82% to UGX18.5bn. The company also registered losses of UGX2.9 bn.

However, thanks to what is believed to be an Akzo Nobel’s investment and increased stock in the market, Regal Paints’ assets, doubled from UGX3.2bn in 2017 to UGX7.1bn- particularly, the value of plant and machinery grew from UGX2.6bn to UGX6.3bn a sign that perhaps Akzo Nobel was delivering on their investments into Regal Paints’ operations so as to fortify them against a raging Kansai Plascon.

Kansai Plascon progresses, largely unharmed

For Kansai Plascon Uganda, it appears they have maintained their previous growth levels with little or no visible impact as a result of Sadolin’s re-entry into the market.

According to their audited books, sales turnover for Kansai Plascon (then Sadolin Uganda) in 2016, grew by 3.9% from UGX146.6bn in 2015 to UGX152.3bn in 2016. That year, profits, grew by 60.8% from UGX16.6bn in 2015 to UGX26.7bn.

In 2017, Kansai Plascon grew slightly faster that in 2016- turnover improved by 4.6% from UGX152.5bn to UGX159.3bn. However the cost transiting from Sadolin to Plascon, took a toll on profitability.

According to information available to us, in 2017 total operating expenses nearly doubled, growing by 92.3% from UGX5.2bn in 2016 to UGX10bn in 2017. This was largely driven by a 59.1% rise in the cost of advertising from UGX4.9bn to UGX7.8bn. Administration expenses also shot up by 112.5% from UGX4.8bn to UGX10.2bn.

Consequently, 2017 saw a 69% dip in profitability to UGX8.3bn, from UGX16.6bn.

In 2018, turnover further grew by 4.7%, reaching UGX166.8bn. However, expenses remained high- operating costs, although they eased down by 15% to UGX8.5bn, driven by a 28.2% reduction in the advertising bill to UGX5.6bn, administration costs further went up by 10.5% from UGX10.2bn to UGX11.4bn.

But the company still remained profitable- although there was a slight 3.6% reduction in profit to UGX8bn compared to the previous year.  

Two years down the road, all odds seem to be in favour of Kansai Plascon; it remains to be seen how 2019 will pan out- but it is less likely that Akzo Nobel (Sadolin/Regal Paints) can cover up the huge gap between itself and its archival.

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