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KENYA
association with the Malaysian tread brand has gone well for almost seventeen years. They have a good product and price as well as quality,” he explained.
Despite the slowdown in the market, the company has retained its 300 tyre production as it has a loyal clientele base, which has stayed firmly with Fine Tread. The company prefers to be away from any competitive environment prevailing in the retreading industry in Kenya where production is down due to a slump in the market, and price cuts and undercutting to scale up volumes are rampant.
“We are aware of competition prevailing around, and we keep the faith in our client base, therefore, we are still moving on,” he stressed. He also emphasised, “Although terms of payments are long, we maintain the cycle and rotation to run the operation and prefer to tread carefully.”
The Nairobi site modernised about five years ago with the addition of a monorail and Bandag autoclave imported from the US to retread truck tyres by the precure process. The plant also retreads OTR tyres by the hot process and is installed with 15 moulds of various sizes.
the end of 2019. It is scouting for a 1-acre location and says it will soon finalise it.
The Forbros principals also operate a retread site in Ras-Al-Khaimah in the United Arab Emirates.
Now the company is further
expanding in the Middle East, investing in a retread unit in Oman. “We have already registered the company in Oman, investing about $1.5 million in the 2000 retread tyre per month plant,” said the company.
Forbros to Add More Farm Tyre Moulds at Kisumu Site
Due to the challenging market scenario in Kenya, retreading companies are now keen on retaining their client base over expanding the business among new customers. The focus remains on clients that maintain a long-term relationship and honour payment schedules.
“Business has been consistently dropping in the last few years. Therefore, we are content with our existing clients for whatever number of tyres they give us as long as they are paying on time. It is better to do less business than having to run around collecting money from the market,” believes Jayanti Shah, Managing Director of Express Machinery & Spares Ltd.
The company has been active in the distribution of new tyres from more than six decades but forayed into retreading in 2004. Express Machinery’s retread site operates on a seven-tyre Elgi autoclave and equipment.
“We retread around 300 tyres every month and at peak the volumes were about 400 – 500 tyres per month, as our objective was to offer service to our clients buying new tyres from us and getting them come back for retreads in the future. We were never in the numbers game.” The company also repairs about 10 OTR tyres
each month.
The volumes were never particularly high, says the company, as it was conscious about local market dynamics. “We know the market and long- term credit offered by competitors. We were never interested in that kind of business as it is always better to do business with the customers who are committed to payment schedules.”
On the potential of Kenyan retread market, he added; “This country has a big retread market as everyone cannot buy new tyres. Therefore, there is always scope for retread tyres. But
right now, the economy is in bad shape and clueless about its revival, besides which the retread market became highly competitive due to the presence of Chinese tyres.”
It is not business as usual at the Nairobi based company’s plant, though. The retread unit is operating as usual but its tyre and battery business is down. Tyre business used to be its one mainstay as it sells more than 1,000 tyres annually.
“We used to distribute locally produced Yana tyres produced by Sameer Africa Limited, but the only Kenyan tyre producer shut down its operation in the middle of 2016 due to surging competition from cheap and subsidised tyre imports,” he complained. The premium tyre segment, where Yana was a key player, reduced from 60% to 25% due to low priced tyre imports, leading the tyre maker to close down its operation.
Meanwhile, the company’s battery business closed as the brand it distributes in the market shut its operation due to environmental concerns. It continues to retail tyres for all kinds of vehicles from cars to OTRs, but now the company mostly sells Chinese brands.
Kenya remains the biggest African market for Indian tread rubber suppliers. Those based in Nairobi are importing tread rubber from India and supplying it locally as well as distributing in the adjoining African countries.
Kerala based Forbros Tyres & Treads Ltd also forayed in to the Kenyan market four years ago in 2015. The company opened its site in Nairobi for producing cushion gum, BVC
plant in Kisumu two years back in 2017. Kisumu is about 340 km from the capital Nairobi and is the third largest metropolitan city in Western Kenya on Lake Victoria. The Kisumu site retreads 400 trucks tyres by the precure process and about 200 OTR tyres by the conventional hot process each month.
Forbros invested about 200 million Kenyan Shillings in the Kisumu
retread site and plans to further make investments to expand its farm tyre range. Kisumu is an agricultural region and has highly fertile land of about 1.6 million hectares.
“Currently, the Kisumu plant has two autoclaves of 8 and 4 tyres respectively along with 25 varieties of moulds for OTR tyres. We are planning to invest about 100 million Shillings to expand on the farm side, adding more moulds to further focus on farm tyre retreading as the segment offers further scope for growth,” he revealed. The move would further hike the capacity of the farm tyre retreading considerably. Meanwhile, on the distribution side, the company supplies almost
80 tons of precured tread rubber and 25 tons of bonding gum each month in the African countries. Commenting on the Kenyan market, he said, “The market is down due to various factors like the liquidity crunch caused by demonetisation, the fluctuation of the currency vis-à- vis Dollar and the shift of container handling from Mombasa to Nairobi. Therefore, we are now focusing more on farm tyres. We hope the market scenario will be likely to improve in the next couple of months.”
Meanwhile, Forbros, which currently operates the Kisumu retread site from rented premises, plans to move to its own plant by
Express Machinery to Focus on Retaining Existing Customer Base
Jaison Jose, Director, Forbros Tyres & Treads Ltd.
Jayanti Shah, Managing Director of Express Machinery & Spares Ltd.
solution and distributing tread rubber and consumables in Kenya besides supporting its own retread unit in Kisumu.
“We have a tread rubber production facility in Rubber Park near Ernakulam and import from the India site, distributing it largely in the Kenyan retread industry as well as Tanzania and Uganda,” said Jaison Jose, Director of Forbros Tyres & Treads Ltd.
The Kerala based parent rubber producing unit, manufacturing about 600 tons of precured tread and camelback and 200 tons of cushion gum each month under the brand LP Tread.
Forbros also started its own retread
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