A large TV screen welcomes you to the head office of the largest steel factory in the region.
A large TV screen welcomes you to the head office of the largest steel factory in the region. On the screen is a looping documentary on the journey the company has taken to become the behemoth it is today. Donning the walls are pictures of the Chairman, Narendra Raval in various poses with Very Very Important People. There is one with former President Daniel arap Moi. There is another with Narendra Modi, India’s Premier who, during a recent state visit to Kenya, squeezed some time to visit his old friend Raval, or Guru as he prefers being referred to, in his house in Nyari estate. The other is that of Raval with Mwai Kibaki, Kenya’s immediate past President. The most telling picture however is that of Guru adjusting Uhuru Kenyatta’s tie right where Raval’s cement and steel companies thrive. “The President is my friend and we have known each other for a long time,” says Raval as he ambles around his massive office. And it is a very big office.
The entire top floor of the office complex is a case study in good taste; ambient lighting covers the entire floor; the furniture is what you find in those expensive catalogues while the walls are decorated with art and rather pricey looking wallpaper. The floor is bedecked with the most expensive Italian marble, a turquoise blue there, a gray and blue tile thither. Yet, he wasn’t born with a silver spoon. “I started off at Gikomba in the cheapest store we could get because nobody was interested in the area as it was considered a very unsafe place,” says the former priest. Having seen a gap in the hardware business, he took a plunge by sinking his savings in buying and reselling steel. The Kshs 3,500 shillings a month in rent for 5,000 square feet was considered steep for the time and place but Raval was undeterred. It was a tough time for him and the country in general. During the late eighties and early nineties, Kenya was going through the labour pains of the advent of multi-partyism and the epicenter was usually the area around Gikomba. “I started off at Gikomba in the cheapest store we could get because nobody was interested in the area as it was considered a very unsafe place,”
Stepping into the spacious reception of Devki Group of companies in the dusty little town of Ruiru, one is met by an antiseptic environment and tranquility that belies the reality outside the offices.
“All the riots were starting around where our shop was, on Kombo Munyiri road. We endured a lot of tear gas”, says Raval rather mistfully. He started off buying steel from the existing mills and within five years, his store had become the largest steel hardware shop in the area. Having sold steel and seen the margins manufacturers were making, Raval decided to backward integrate by venturing into manufacturing. At the time, there were only a couple of steel rolling mills in the country that basically had a tight hold on the market. Raval found a site in Athi River, 30 kilometres from the city centre, where he planned to make his dream a reality. “We bought 25 acres at Sh35,000 an acre. At the time, the whole place was nothing but a thick bush. Only Kenya Meat Commission had established in the area,” he says. Having bought the land, Raval was left penniless. He did not even have enough money to put up a boundary wall. “I used a have a pick up Toyota KXU 905 (today I don’t remember the number plates of any of my cars but this one I remember which means whoever stays with you in difficult times you will never forget them) that I used to ferry stones from the quarry for building the wall”, he says.
After the fencing project, Raval approached KCB Bank for financing to set up his steel rolling mill. He had never done a business plan before, but he gave it a shot. It was shy of the bank’s expectations and as a result, he hired an expert who helped him prepare a proper plan. A KCB Bank manager, whom
The number of employees employed directly by the Devki Group. Thousands more are employed indirectly. 4,000.
“It was very nice of KCB Bank what they did to me. That’s why till today, I tell my board of directors that we will not ever leave KCB Bank because they understand the Kenyan market, they understand the people, and the business way of Kenya. “
BRANCHING OUT
He fondly remembers as Mr. Ndambuki, kept encouraging him during the loan application process. Finally, he applied and received US$100,000 (at the time equivalent to Sh36 million) which he used to purchase his first steel rolling equipment. Production would start after KCB Bank gave him a letter of credit to import the raw materials needed to kick off the business. But a setback was to strike immediately he started production.
The global price of steel not only crashed spectacularly, but a couple of local competitors, keen on running Devki out of business, ganged up by undercutting him on the price. Raval’s steel was piling up in the godown and the market was flooded. “For five months, I could not pay salaries for my employees but they stuck by me. It was very nice of my bank and the Kenyan workers, some of whom are still working with me, to stick by the company,” says Raval.
To his relief, KCB Bank did not push him for repayments but instead restructured the facility until the market recovered. Fortunately, fate was on his side. When prices recovered, the only steel available in the market was from Devki; all the competitors had cleaned out their stocks because they had been selling their product cheaply to force Devki out. “I woke up one day and I was the only one with steel in the store. I got a good profit margin at that time because I had the goods and nobody else had it”. He made a cool US$1 million in profit.
Today, Devki is the largest steel firm in the region, with a production capacity of a quarter million tonnes per year spread over several factories. The firm employs over 4,000 employees directly and tens of thousands indirectly and, according to FORBES magazine, Raval is one of the richest men on the continent, with a net worth of some US$400 million. The Devki group has a turnover of Kshs65 billion according to FORBES. The company makes over 300 items, ranging from shoe nails, roofing sheets, steel bars, wire mesh, barbed wire among others. The company also makes its own oxygen on site. “It was very nice of KCB Bank what they did to me. That’s why till today, I tell my board of directors that we will not ever leave KCB Bank because they understand the Kenyan market, they understand the people, and the business way of Kenya. I have stopped doing business with many other banks, but I will never leave KCB Bank,” says Raval.
The Devki Group has also invested heavily in cement, aviation and energy, partly through financing from KCB Bank Kenya. The group owns National Cement Company, the makers of the Simba Cement brand. Raval says that all he wanted was to act as a disruptive force in the industry and sell his products below the prevailing prices. Today, Simba sells for Kshs575 a bag compared to the competition’s Kshs675.
“I decided that I will not only invest for profits, but make cement affordable to millions of Kenyans,” says Raval. “I feel KCB Bank is my own bank. The bank has never let me down in the thirty years that we have worked together. I can put my hand on my heart and say that I will not go wrong with this bank and they will stand with me in good and bad times.”
