Wednesday, June 21, 2006

Mid-week Business

Fuel racket
The post budget 3 -4 shilling hike which has taken the price of a lire of fuel from about 73 to above 82 shillings per litre is the second such increase in just over a month.

Kengen
Refund cheques and physical share certificate are now ready for all Kengen shareholders and can be collected from stockbrokers. I already got and spent my refund last month.

Uchumi lifeline
Trade & Industry Mukhisa Kituyi says Uchumi could resume operations in just under a month under a governemnt approved plan. No word yet on the fate of (us) shareholders.

Naku Crash
- Uchumi’s main rival Nakumatt are having a sale this week at their ‘Mega’ branch (Nyayo Stadium) which is driving housewives, techies, and electronics shopkeepers, crazy. For the last week there’s been a mad rush each morning for flat screen TV’s, fridges, cookers, microwaves, radio’s and other electronic items which are have all been discounted by 50%.

- Meanwhile the company’s directors have failed to heed a lesson that the corporate world has learnt - which is that you don’t mess around with Government ministers. From Michuki (Standard & KTN), Tuju (CCK, KWS, KICC), Ngilu (Narc-K), Munyao (KMC), Kirwa (Kenya Seed) Maitha (city councils) and now Kituyi who has turned his fury at Nakumatt for interfering with his revival plan for Uchumi and retaliated on two fronts against the company – one is the non-inspection of their goods and the other is on the low taxes they pay (1/10th of Uchumi’s VAT).

New Bank
Family Finance Building Society will be licensed as a commercial bank at the end of this month and add on 5 new branches by the end of the year.

New University
Following the launch of Gretsa (U) in Thika last month, Kenya Methodist University in Meru will receive accreditation papers later this month.

Housing
New houses are on sale at the under-construction Balozi Estate off Muthaiga road. The 4 bedroom houses are going for 6.5 million.

Buy a minibus
Easy coach is disposing of 14 buses (10 38-seat Mitsubishi’s and 4 25-seat Isuzu’s). More details from easycoash@wananchi.com

Sleeping giants want you back
Telkom is waiving charges in a bid to get customers to reconnect their disconnected/out of service telephone lines. Reconnection and other charges from when the line was disconnected have been waived and the company will arrange repayment plans to settle the old bills.
Posta reminds Kenyans that it has over 80,000 mail boxes available at post offices around the country at an annual cost of 1,300 shillings for individuals and 4,000 for corporations.

18 comments:

Kibet said...

Nakumatt: I was astonished to see Mukhisa issue in response to Nakumatt's request(which i thought on the face of it raised legitimate concern) a threat to carry out actions that he apparently and for reasons not cited decided not to take. In my view, KACA or the Efficiency Monitering Unit should find out why Mukhisa had not acted dealt with Nakumatt's alleged defaults prior to yesterday's outburst. Are there other corporate defaults that Mukhisa is sitting on? Is he getting any incentive for sitting on the defaults?

On Nakumatt's request for cash, i see where they are coming from. Where should the Govt. draw the line while playing both roles of Shareholder (of Uchumi) and Regulator. Nakumatt is, in my view, rightly concerned about the unfair advantage that is accruing to Uchumi who simply played the wrong cards and stumbled.
If Nakumatt were public (tho' without the Govt. being a shareholder) and suffered the same fate, i.e. went into receivership, would the Govt take efforts to bail it out? Murky waters, i say.

bankelele said...

Govt will ahve to bend its rules and policies (divestment not investment in parastatals) in order to save Uchumi. If they don't invest in some of these companies (Kengen, Telkom, KR), there will be nothing to privatise.

I think Nakumatt injunctions have been there longer than the Minister and his statements were only bluster for the media. He can't touch Nakumatt and the AG will tell him likewise.

Ken said...

I think the minister doesnt really know how much of a gamble he is taking. He is acting irrationally looking at the jobs to be lost and the losses shareholders will make, but he doesnt seem to realise that if he injects more funds into Uchumi and it doesnt survive, it will all blow up in his face.
Nakumatt acted with irony and I do believe, the govt being a shareholder or not by using taxpayer's money to bail out a firm that is not a monopoly is a little unfair to the competing firms.

I was all for the takeover by shopprite or any party that thought there was a lifeline but no the Govt.

ip said...

alright, i just took a look @ the gretas university website, first - abysmal website. 2 the cost u mean to tell me attending a private university
and uncredited as yet is more expesnive in keya than the US
http://www.gretsauniversity.com/compscience.htm

is more expenive than the US.

btw; those building look ugly too

BizKenya said...

Nakummat saga is not new to the Kenyan public and the government. It is a secrtet that this information was about Nkmtt was in the corridors and the governmnet is only hesistant tio take legal action.
Ksh 18 billion is no joke, Charter bank must be investigated, so should Nkmtt. Don't be astonished when the whole saga turns to be political, some Mps will start fighting the whole saga down.

Ig-know-rant said...

Doesn't that bank and it's big customer demean our financial regulatory system? Let them carry their own crosses. The letter to Kituyi was an insult to say the least and I thought it was very stupid of them to write it, very unbusinessman-like.

M said...

I cannot take Kituyi seriously. The man just cannot be serious. He acts shocked and flabbergasted to the events at Uchumni and yet he was fullly represented on the Uchumi board by THREE of the members!

bankelele said...

Ken: politics, image and jobs is driving the salvage at Uchumi. wait and see

ip: Maybe they will improve with time. Most private uni's have church backing and are better financed

BizKenya: agree, the amounts are staggering for a supermarket and they have been doing this for years.

Ig-know-rant: most of their branches are in Nakumatt. I don't know too many people who bank with them though. Naku-directors shot themselves in the foot - now ordinary over-taxed Kenyans are asking what makes them so special that they don't want to pay their taxes!

M: He was too busy working with other (more-lucrative) parastatals

ip said...

banks:
Uchumi's revival i think to me is just another scandal as much as any. what process did the govt go thru to do this for whom does it benefit employees,shareholders or suppliers.(mainly suplliers akina kimani rugendo and even kirubi i think)what about the legal process. why is uchumi so important most commodities are fungible if they are not bought in one place they will be sold somewhere else. - so insteasd of the govt working to fix the company act, they work on some extra judicial solutions

Kibet said...

I share ip's sentiments. However after listening to Mukhisa on Nation's talk show last night, he gave quite a compelling argument about saving the brand Uchumi because 'its a Kenyan symbol'. I must admit that he seems to have quite some support from uchumi's suppliers, creditors, employees and landlords to the extent that he hopes to have Uchumi Hypers open in 2 wks time.

The question still lingers in my head, one which Julie tried asking last night but didn't get a response to. Doesn't the matter of unfair advantage arise when the Govt. pulls its weight behind one Kenyan brand which is competing in a competitive market against other brands? Brings to my mind the international concern of Govt's (eg. USA) giving subsidy's to various sectors competing internationally.

kritik said...

hi banks..
hebu sambaza me the book villa yearly deal...
nakumatt should be penalised heavily and made to pay-up all tax arrears

gathinga said...

this issue is getting hotter. looks like, as usual, there are some things we're not being tld about Nakumatt. All the same, i think Kituyi made a reasonable case for reviving uchumi yesterday. And besides, even the most liberal economies have acted one time or the other to protect national brands.....remember the MG rover case in Britain a few months back... and Alitalia, Boeing at all... all these are have been rescued at one time or the other by the support of government. Uchumi's case is similar. And Nakumatt should be made to pay their alleged tax bill!!

coldtusker said...

@Gathinga - I disagree since there are no more "nationaL symbols. Let's look at your examples:

- MG Rover is DEAD in spite of wasting millions of pounds. The factory was shut down & the Iranians were looking into buying the plant & technology at a fraction of the cost.

- Boeing has NOT received direct subsidies. They get reimbursed for developing military aircraft but Boeing can use some of these "advances" for their own use.

- Alitalia is among Europe's worst airlines. It is facing stiff competition from the low-cost carriers. The behemoths are KLM-Air France who gave up their status "national" airlines to become European airlines.

Other examples of failed "national" firms:

- Air Tanzania is DEAD coz they wanted to maintain "national" status & refused to entertain a logical offer from Kenya Airways.
- Uganda Airlines. DEAD. See above.

- Airbus. Heavily subsidised BUT their A380 is in trouble & they have scrapped the A350 unlike Boeing's 787 (Dreamliner) which is booming. KQ couldn't even get any till 2010!

Success:
- KQ understands it is not a Kenyan but African airline. 90% of its business is international & it acts as a conduit for passengers to/from E&C Africa to/from Europe & Asia.

There should be a LEVEL playing field i.e. ALL players should pay taxes, get same benefits, etc.

Subsidies directed at specific enterprises are a slippery slope.

When kabansora mills (Nyachae) has problems should the govt use MY tax money to bail them out?

When alliance hotels (matiba) ran into trouble should the govt have provided a subsidy?

Careful what you wish for.

bankelele said...

ip: I think all the stakeholders being voters, is a prime reason for the government actions

Kibet: Was a good interview

kritik: tuma hizo pics

gathinga: good point - governments around the world have stepped in to 'save' companies

coldtusker: agree in that
1. I don't see Uchumi competing with Nakumatt (despite their recent bad press) even on a level playing field
2. How long will suppliers anf government keep this up? Stakeholders financed the rights issue (to save Uchumi) and now are 'injecting cash'! what about us 'passive' shareholders - does out stake alter? What if Nakumatt is still losing money after 3, 6 months? I think people are keepint it going only so they can jump off teh train before it derails completely

coldtusker said...

@Banks - There should be a transparent process that needs to be sheperded along by competent people. Thanx for your comments/view on my blog (www.coldtusker.blogspot.com).

The current shareholders' stake is virtually worthless (except for value attached to the brand). There will be a dilution of current shareholders BUT the process could be challenged in court since the minister did it ad hoc without the law to support it!

ip said...

this whole nakumatt/ uchumi is raising just too many question first i havent had nakumatts side of the story - but im a liitle troubled about the whole uchumi revival thing for whom ar ethe benefits and whose benfit is it for nakumatt to come down.

do kerrow and kituyi repsresnt certain business interests do the own shares ?
im suspicious about kerrow (think about it all the graissa lodge businesses in electronics that are facing competition) as for kituyi smiling wth kimani rugendo aremnt this the guys who supllied overpriced stuff. not to mention the behind the scense interviews
(tutus mugo mong the prospects). this things stinks to high hell.

regarding nakumatt and taxes. is it the CBK's role to investigate tax evation? what about due process. Ok
maybe that was a side efcct but how come there is more info on tax evation than money laundering.

i think in the quest to save uchumi we may destroy so many other things
one being rule of law and due process. is uchumi more important tham that ?

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