NCBA Group has placed Kaluworks Limited, a manufacturing firm that is part of billionaire Manu Chandaria’s Comcraft Group, under receivership over non-payment of $40 million (Sh4.3 billion) debt.
The bank has appointed a receiver manager to turn around the firm or protect its assets in the race to recover the multi-billion shilling debt.
Kaluworks, one of Kenya’s largest manufacturers of aluminium utensils and roofing sheets, has been struggling financially over the last few years on the back of weak sales and increased competition from other cookware manufacturers.
NCBA has tapped receiver manager Pongangipalli Rao for the Kaluworks job in a development that marks a rare blot in the career of industrial magnate Manu Chandaria, Comcraft chairman.
“Notice is given that the above company (Kaluworks) was placed under administration on May 27, 2021 by the holder of a qualifying floating charge,” Mr Rao said in Friday’s Kenya Gazette notice.
The receivership comes months after several lenders, including I&M Bank , scrambled for auctioneers and debt collectors to auction multimillion-dollar properties, including residential and commercial complexes, which had been used to guarantee loans for Kaluworks after the firm failed to honour its obligation.
The company is said to owe another top bank $40 million (Sh4.3 billion) and hundreds of millions of shillings in a commercial paper whose repayments it has defaulted on.
John Gachora, group managing director at NCBA, declined to comment on the bankers’ plan for Kaluworks.
“Please refer all questions to the administrator,” said Mr Gachora, when contacted for comment by the Business Daily.
The company started operations as predominantly a cookware manufacturer and in 1988 diversified into aluminium rolled products by setting up a state-of-the-art aluminium rolling plant in Mariakani near Mombasa.
Among its assets are a foundry, continuous caster, cold rolling mill and “other finishing equipment.”
Kaluworks is a subsidiary of Clovis Company Limited, a Bermuda-registered investment holding company that is owned by the Comcraft Group, of which Chandaria is the chairman and controlling shareholder.
Mr Chandaria, who is also a leading Kenyan philanthropist, has previously distanced himself from Kaluworks operations.
Bankers say Kaluworks links to Chandaria gave them additional comfort to offer the pots and pans manufacturer multibillion-shilling debt.
Information on its website shows that Kaluworks Limited was set up in 1929.
Chandaria’s father, an Indian immigrant, laid the earliest foundation of the Comcraft Group in 1915 when he relocated to Nairobi to start a provisions shop in Nairobi’s Biashara street.
As the business grew, his father and extended family members subsequently acquired Kaluworks.
When Chandaria returned to Kenya after studying in the United States, he joined the company, expanded the group’s product offering and steered the company to its remarkable growth.
Comcraft is now spread in more than 40 countries and US business magazine Forbes in 2011 estimated Comcraft to be worth $2.5 billion (Sh215.6 billion), the last time it valued the business.
In 2011, Mr Chandaria made it to the Forbes 40 Richest Africans list, and one of Kenya’s wealthiest businessmen.
In 2012, Kaluworks raised $14 million (Sh1.5 billion) in a corporate bond sale.
Sanlam Kenya listed Kaluworks as one of the defaulters of a commercial paper it invested in.
Sanlam had to write off Sh1.15 billion mainly related to investments in firms that fell into financial distress.
“For Kaluworks, who thought that Manu Chandaria could default on a commercial paper?” asked Sanlam Kenya group chief executive Patrick Tumbo earlier.
The family-owned conglomerate Comcraft Group had ambitions of taking parts of the business public, reflecting its growing size and need for capital as it expands internationally.
Mr Chandaria earlier said that some sections of the business could merge ahead of the initial public offering, which could be one of Kenya’s biggest if the Chandaria family decide to list on the Nairobi bourse.
The lenders’ action on Kaluworks comes as banks that had gone slow on property seizures last year following the Covid-19 pandemic have stepped up debt recovery efforts to clean up their loan books, leading to a spike in auctions.
The Central Bank of Kenya (CBK) says the defaulted loans are mainly in the real estate, agriculture and manufacturing sectors besides those listed as personal and household.
But Kaluworks was struggling long before the Covid-19 outbreak, which triggered layoffs and firm closures.
