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Sarrai Group

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Sarrai Group
Company typePrivate Conglomerate
Founded2000; 24 years ago (2000)
HeadquartersKampala, Uganda
Key people
Sarbjit Singh Rai
Group Chairman
ProductsSugar, Ethanol, Electricity, Plywood, Cement
Number of employees
17,000+ (2022)
Website[1]

The Sarrai Group of Companies, commonly referred to as the Sarrai Group, is a privately owned conglomerate in East Africa and Southern Africa. The group maintains its headquarters in Kampala, Uganda, with subsidiaries in Kenya and Malawi. The group is headed by the executive group chairman, Sarbjit Singh Rai[1]

Overview

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As of November 2023, the Sarrai Group comprises 11 subsidiary companies as outlined in the table below:[2][3]

The Companies of The Sarrai Group
Rank Company Location Products Notes
1 Kinyara Sugar Works Kinyara, Uganda Brown Sugar, Industrial Sugar, Electricity [2]
2 Hoima Sugar Limited Hoima District, Uganda Brown sugar, Industrial ethanol [2]
3 Nile Plywoods Limited Nakasongola District, Uganda Plywood [2]
4 Nile Fiberboards Limited Uganda Fiberboard, MDF [2]
5 Comply Industries Limited Nakuru, Kenya Fiberboard, MDF, Doors [2]
6 Raiply Malawi Limited Chikangawa, Malawi Fiberboard, MDF, Doors [2]
7 Tasco Industries Limited Uganda Soap, Cooking oil [2]
8 Engaano Millers Limited Jinja, Uganda Wheat flour, Bread [2]
9 Vitafoam Limited Uganda Foam mattresses [2]
10 Rai Cement Limited Kisumu, Kenya Cement [2]
11 Hima Cement Limited Hima, Uganda Cement [3][4]

History

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The father of Sarbjit Singh Rai, the current chairman of the group, migrated from his native India and established businesses in Kenya. The father's brother, one Tarlochan Singh Rai, who either came with him or followed him to Kenya, also established his own chain of businesses. After the two brothers died their sons expanded and diversified the businesses, which operate separately. Sarbjit Singh Rai moved to Uganda and started the Sarrai Group. His cousin Jaswant Rai, stayed in Kenya, where he operates three sugar plantations; (a) West Kenya Sugar Limited (b) Sukari Industries Limited and (c) Olepito Sugar Limited.[1]

Acquisition of Hima Cement Limited

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In November 2023, the Sarrai Group signed binding documentation to buy the 70 percent of Hima Cement Limited that Holcim held in the cement maker, through several subsidiaries including Bamburi Cement of Kenya. The purchase price is reported as US$84 million. The deal requires regulatory approval in Switzerland, Kenya, Uganda and COMESA.[3][4][5]

Controversy and Cancellation of Mumias Sugar Lease

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In December 2021, the Sarrai Group controversially[6] won a tender to lease Mumias Sugar Company Limited in neighboring Kenya. However, the announcement of the lease award was successfully challenged in Kenya High Court leading to immediate suspension of the lease on December 29, 2021, by Justice Kenneth Ndung'u of Nairobi High Court. The judge cited a petition by one of the bidders alleging fraud, mistakes and illegalities in the leasing process.[7][8][9][10]

On 29 December 2021, the Kenya High Court in Nairobi, suspended the Mumias lease offer to Sarrai Group after one of the bidders filed a case against a lease award, with Sarrai Group and Mumias Sugar receiver manager named as defendants. The bidder, Tumaz and Tumaz Enterprises, which had placed the highest bid of Kshs. 27.6 billion against Kshs. 11.5 billion for Sarrai Group, alleged fraud, mistakes and illegalities in the bidding process, which was headed by Kenya Commercial Bank (KCB)'s receivership manager P V Rao. Mumias Sugar was placed under receivership in 2018 by KCB, which was one of its creditors. Justice Kenneth Ndung'u of Milimani High Court in Nairobi suspended the lease award and ordered KCB's receiver manager and Sarrai Group not to interfere with Mumias Sugar until the case was heard and determined.[7][8][9][10]

In January 2022, other bidders including West Kenya Sugar Company were enjoined in new cases filed against Sarrai Group and P V Rao. A group of Mumias Sugar farmers filed another lawsuit challenging the lease award. They protested that KCB's receiver manager had erred in awarding the lease to the lowest bidder. West Kenya Sugar company told the court that it was the highest bidder, and yet the lease was awarded at a cost of Kshs. 5.8 billion to Sarrai Group. They contested that Sarrai Group was the lowest bidder out of 8 bidders who had submitted their bids. The Nairobi High Court judge Okwany issued a second lease suspension until March 14, 2022,  when the case would be heard and determined. The farmers had sued Sarrai Group, P V Rao, the Attorney General, Competition Authority,  Kakamega County government among others. In its reply to the suit, the Competition Authority of Kenya told the court that the lease award was fraudulent, because the KCB receiver manager and Sarrai Group failed to get its approval before taking over the lease. They said it was a criminal act as per the Competition Act of the 2010 Kenyan Constitution.[11][12][13][14][15]

In early February, 2022 another round of lawsuits were filed by creditors including the law firm of Kimeto, which is owed Kshs. 76 million. The law firm claimed that the leasing process was fraudulent because KCB's receiver manager had filed documents in court showing that KCB collected over Kshs. 1.5 billion from running Mumias Sugar since 2018. They argued that KCB's Mumias Sugar debt of Kshs. 570 million should already have been credited from the collections which were 3 times the debt KCB was owed. They wanted KCB receiver manager to be fired by the court and a new tender process to be announced and administered by the court. They argued that the previous tendering process had virtually collapsed after a barrage of lawsuits were filed, and effectively stopped the operations of Mumias Sugar.[16]

In February 2022, 500 former employees of Mumias Sugar who occupied the company's houses claimed that they were served with eviction orders by Sarrai Group, despite court orders stopping the eviction without their salary compensation. Sarrai Group's eviction notices were in violation of court orders.[17] These evictions echo of another controversy involving a Sarrai Group subsidiary in neighboring Uganda, in which Sarrai Group brutally evicted 5,000 people from their ancestral lands, prompting a Commission of Inquiry.[18]

On April 14, 2022, the lease award was legally canceled by Justice Mabeya for failure to consider other creditors, for failure to consult the Competition Authority of Kenya, for failure to explain how Mumias would repay its creditors, and for failure to conduct a feasibility study. The Judge further demanded that the administrator step aside and give unrestricted access of Mumias to the newly appointed administrator, Mr. Kereto Marima. The new administrator is to “start the lease process afresh, in consultation with all the secured and unsecured creditors.”[19]

Burundi

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On 29 December 2023 the Burundian head of state said he had visited the Sarrai Group in Uganda, which he described as a very efficient company. He had invited them to become partners with SOSUMO, the local sugar company, and claimed that production would rise to 300,000 tons per year after three years of production, with a workforce of 12,000. Burundi would supply the sugar cane plantations and the Sarrai Group would supply the other capital. This announcement came at a time when the sugar cane plantations were flooded and could not be accessed by cane transport vehicles.[20] On 4 April 2024 the Managing Director of SOSUMO told workers that the date of 18 April for the start of the Sarrai Group partnership given by the Ministry of Commerce was incorrect, since they were still at the stage of assessing the assets of SOSUMO and negotiating terms of partnership.[21]

See also

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References

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  1. ^ a b Breaking Kenya News (December 2021). "Mumias Sugar deal sets Rai family siblings up for 'sweet' rivalry". ≈Breaking Kenya News. Nairobi, Kenya. Retrieved 8 February 2022.
  2. ^ a b c d e f g h i j k Sarrai Group (8 February 2021). "The companies of the Sarrai Group". Sarrai Group. Kampala, Uganda. Retrieved 8 February 2022.
  3. ^ a b c Victor Juma (16 November 2023). "Bamburi sells Sh12bn stake in Uganda". Business Daily Africa. Nairobi, Kenya. Retrieved 17 November 2023.
  4. ^ a b James Anyanzwa (16 November 2023). "Kenya cement maker sells $84m stake in Uganda". The EastAfrican. Nairobi, Kenya. Retrieved 17 November 2023.
  5. ^ UBN (16 November 2023). "Uganda's Sarrai buys Hima Cement from Swiss Holcim Group". Uganda Business News (UBN). Kampala, Uganda. Retrieved 2 March 2024.
  6. ^ "CAK says Mumias lease award to Uganda firm is criminal". People Daily. 8 February 2022. Retrieved 9 February 2022.
  7. ^ a b Sharon Maombo (30 December 2021). "Court cancels Mumias Sugar lease to Ugandan firm". The Star (Kenya). Nairobi, Kenya. Retrieved 9 February 2022.
  8. ^ a b Charles Etukuri (1 January 2022). "Kenya court halts award of Mumias Sugar to Ugandan firm". New Vision. Kampala, Uganda. Retrieved 9 February 2022.
  9. ^ a b Kamau Muthoni (11 January 2022). "Court issues warning in Mumias Sugar lease row". The Standard (Kenya). Nairobi, Kenya. Retrieved 9 February 2022.
  10. ^ a b Sam Kiplagat (14 January 2022). "Mumias lease suspended in fresh court directive". Business Daily Africa. Nairobi, Kenya. Retrieved 9 February 2022.
  11. ^ "High Court extends orders suspending Mumias Sugar Company lease". Citizen Digital. 26 January 2022. Retrieved 9 February 2022.
  12. ^ "Court bars Ugandan firm Sarrai Group from running Mumias Sugar for 6 weeks". The East African. 26 January 2022. Retrieved 9 February 2022.
  13. ^ Kalekye, Margaret (7 February 2022). "Hearing of Mumias Sugar lease case set for next week". Kenya Broadcasting Corporation (KBC).
  14. ^ "CAK says Mumias lease award to Uganda firm is criminal". People Daily. 8 February 2022. Retrieved 9 February 2022.
  15. ^ Muthoni, Kamau. "Regulator yet to approve Mumias Sugar takeover". The Standard. Retrieved 9 February 2022.
  16. ^ Muthoni, Kamau. "Creditor seeks to kick out Mumias Sugar controller". The Standard. Retrieved 9 February 2022.
  17. ^ Amalemba, Robert. "Ex-Mumias Sugar employees told to vacate miller's houses". The Standard. Retrieved 9 February 2022.
  18. ^ B. T. (19 January 2022). "Uganda Evictions Haunt Sarrai Group Mumias Operations". Retrieved 9 February 2022.
  19. ^ "Judge halts Uganda-based firm's Mumias Sugar lease". Business Daily. 14 April 2022. Retrieved 19 April 2022.
  20. ^ Niyongabo 2024.
  21. ^ SOSUMO & SARRAI Group.

Sources

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