The Madhvani group is set to scale up its investment portfolio in Rwanda with new ventures valued at US$20 million in the telecoms, tourism and insurance sectors.
The group already has investments worth $13 million in the sugar industry.
Mr. Mayur Madhvani, the group managing director recently presented his investment plans to President Paul Kagame.
The Madhvani group of companies first entered the Rwandan scene after acquiring Kabuye Sugar Works Sarl, a state owned company and only sugar factory in the country in 1997.
The group now seeks to invest in tourism by putting up a five star hotel.
Already, the group has registered two companies in the telecommunications sector and another in the insurance sector.
The group’s sugar factory at Kabuye sugar is registering commendable growth although production capacity has failed to fill up the demand gap.
Kabuye Sugar Works was established by the Chinese in 1976 with a daily cane crushing capacity of 200 tonnes. It was transferred to the government in 1978. The factory was disrupted by the 1994 Rwandan genocide, which led to its closure in 1996.
By then, cane was mostly cultivated in about 550 hectares in Nyabarongo valley on the fringes of Kigali city.
After going through a divestiture, the government transferred the factory to the Madhvani group in September 1997.
On acquiring the factory, the buyer was asked to rehabilitate and renovate the factory and bring it to the working order.
The new owners agreed to develop the 3,000 hectares of land given to them and expand the plant capacity to 550 tonnes per day Alternative Investments. This led to the production of 14,000 to 15,000 tonnes of sugar every year.
Mr. MSV Rao, the general manager of the factory told the East African Business Week that the factory which was totally destroyed in 1994 and closed for almost two years has been revamped and that production is very impressive.
“The first task given to us was to rehabilitate the factory. People did not believe it could operate again,” Rao said
With their experience in sugar industry in Uganda, the Madhvani group did not find any problems as a team of technical experts coupled with financial capacities were sent and the factory took about six months to renovate.
The group procured and installed new machines. With support from the government, the group has managed to increase cane cultivation from 200 hectares in 1999 to 2,200 hectares today.
“The government initially found it difficult to make land available because land is a sensitive issue but we finally got it”, Rao said, insisting that land is still a limiting factor to their expansion plans.
According to Rao, the group has invested about $13million in the factory todate.
“It is not small considering the size of the plant and we are prepared to put in more money,” Rao noted.
Rwanda’s domestic market requires about 22,000 tonnes of sugar every year and the total production of Kabuye Sugar Works is currently projected to reach 14,500 tonnes this year.
This has forced the country to allow other sugar to enter the market. However, Rao said the factory has the will to expand but land is still a problem.
“We have the potential. We are technically and financially capable to produce even more tonnes every year but our main shortcoming is insufficient land”, Rao noted
The factory has requested to get 300 hectares of land to enable it grow its capacity by another 2,000 tonnes of sugar.
Kabuye Sugar Works employs some 5,000 people directly and indirectly. The private cultivators are given cane seeds free of charge and technical assistance in cultivation by the factory.
The company is now bringing in cane varieties from Uganda to give to the private cultivators. The move is intended to increase production in the interim as the solution for land issues is being sought.
Alternative Investments In order to minimise the cost of electricity, the factory has installed a boiler that currently generates 650Kw of power from crushed cane residues. In the future, there are plans to generate about 1 mega-watt of electricity, which could be supplied to the national electricity supplier.
Tags: africa, Alternative Investment, Alternative Investments, Investment Plan, investment portfolio, managing director