Kampala, Uganda | JULIUS BUSINGE | George Inholo is the managing director of clay products maker, Uganda Clays Limited. He spoke to The Independent’s Julius Businge about their operations and industry issues.
How would you describe business at Uganda Clays as we speak?
Talking about 2017, the key thing to note is that we had a fair year. We grew but not to our expectations. We did better than the previous year – in terms of revenue growth, cost reduction, gross margin and on the overall profitability of the business. We would have grown better but the economy was not good in the first half and our clients had to prioritize and or post-pone buying decisions of our products. This year, we started reasonably on a fair note. We opened up an outlet in Arua, Lira, Gulu and Kabale. This year, however, we have started the plan is to go into deep West and in the other areas. We will also focus our business in Kampala and Wakiso which we believe have a high per capita income.
How has your business strategy dealt with the growing industry competition since you took over as MD in 2014?
There is no rocket science on this. The key thing is visible leadership. We are selling clay products. The biggest agenda for us as a business is to increase our top line, drop costs, motivate staff and raise the bar on control environment and ensure the health and safety of our staff, our customers and the community where we do business. Yes, we feel the competition; you cannot run away from it. But we shall uphold our quality agenda and ensure that our products are available and distributed on time and rightly priced. We will continue to have customer centric attitude in addition to dropping waste in the company. In addition, we are the only company that is ISO certified in the clay business. We still feature amongst the top 100 best taxpayers and we have improved salaries for our staff and people feel positive change in the company.
How far has NSSF gone with converting the debt that you owe them into equity?
That is work in progress. In principle, both the Board of NSSF and that of UCL agreed that equity swap will take place. The process is not as simple as you talk about it. The plan was to have it done last year but we had many priorities…but I am very optimistic that this year, it will be put to rest.
There is a general belief that our economy will get better in the short-to medium term– how are your business plans pegged on this optimism?
While the forecasts are there, we don’t use them predominantly to peg our operations and projections. There is what we call organic growth; but there is also growth that you can cause by doing certain things like road shows to influence demand. We can’t rely on organic growth because it can only deliver single digit.
What is the update on your plans to have physical presence in the regional markets?
We already have people on ground that distribute our products in Rwanda. We are also doing business in Kenya, Tanzania and South Sudan. Exports to these markets account for about 3% of our sales per year. In the short term that is what we are doing there but in the long term we would love to have presence there.
There has been talk about the ageing factory facility at Kajjansi and the underutilization of the Kamonkoli plant. What has changed of late?
Last year we had steady production because we brought in the requisite spare parts, replacing the old ones. We spent close to € 300,000 (Shs 1.35bn) on that. We ran the factories efficiently and this ensured that we did not run out of stock. This year, we will bring in more parts basing on the available need.
What about the raw materials especially clay?
We don’t have an issue with clay reserves. We are located in Kajjansi because our raw material that is underneath. We have enough of it for Kajjansiand Kamonkoli. Every year we do projections. The clay reserves that we have can last for over 20 years. Note that we always buy more land to ensure that we have enough clay for our business.
What should the market expect from UCL in 2018 and beyond?
We want to grow our business by double digits so we give value to the shareholder. We are going to do innovations – we want to go into other colored/glazed kind of tiles, clay paver. We will embrace passion to excel in everything that we will choose to do. We will also do a lot of marketing, geographical expansions by opening up outlets which will be stocked adequately at all times. We are going to put in place a robust advertising program. We will also have a builder’s academy that will bring architects, property developers, engineers and people in the real estate to help sharpen their knowledge about the industry and our products. We will also raise our bar on the corporate side when it comes to designing strategies to serve them well. We maintain the proven slogan that when you build using our products, you build for a life time unlike other roofing products. We are also going to raise our bar on health and safety; these are simple things but they mean a lot. We shall also do a lot of corporate social responsibility especially with coffee farmers because we use coffee husks in our firing process.