Category Archives: India

Karuturi AGM 2018

As workers of the former Karuturi flower farm in Naivasha, Kenya, await the outcome of a new appeal of the long-running court case and receivership, the Karuturi Group held an AGM in India and passed new resolutions to turn round the company.

The Bombay Stock Exchange-listed Karuturi, the world’s largest producer of cut roses, had published an annual report ahead of the AGM. According to the notice and results of the AGM, the Group proposed to increase the authorized share capital of the company to meet their long-term capital requirements.

Karuturi also plans to allocate convertible warrants to new shareholders who are; IBelive Fitness Solutions who may end with 10% if they exercise all options, Eye-3 Info Media who may end with 8% and Srinivasa Retail who will end with 14.3%. Prior to the AGM, the three had no shares in the company while the promoters of Karuturi had 25% and other public shareholders had 75%, including Deutsche Bank with 5%.

Shareholders also voted to appoint Messrs K G Rao and Co as auditors of the company and the notes showed that the previous year’s figures had not been audited by the current year auditors who had then provided a qualified opinion due to non-filing of some tax returns by the holding company. Another resolution was to ratify the appointment of the daughter of the Chairman and MD Sai Rama Karuturi, who had joined the board in September 2017. The resolutions were all passed.

The company has primary borrowings with Axis Bank in India (third largest private bank in the country), ICICI Bank of India, Axis Dubai, and smaller borrowings at the Commercial Bank of Ethiopia, Zemen Bank and Lion Bank in Ethiopia.

The accounts provided an (incorrect) link to the long-running Kenya bank case and receivership in Kenya. There are mentions in the notes that Karuturi Kenya was wound up by a court order of March 2016 and the company did not have any outstanding tax demands in Kenya or Ethiopia 

In a statement, the Board Chairman wrote that the Kenya farm should soon be back in the company’s possession following workers’ protests to various government authorities and media attention fueled by Kenyans on Twitter. On Ethiopia, he welcomed the new leadership of Prime Minister Dr. Abiy Ahmed and mentioned that the company had withdrawn all cases against the government of Ethiopia, paid compensation to the workers, and entered new lease agreements with a view to resuming operations in mid-2019.

Banking History in Colonial Kenya

This morning there was a talk given by Christian Velasco of Warwick University on A Colony of Bankers: New Approaches to Commercial Banking History in Colonial Kenya. He said there have been very few books written about the early banking history of Kenya and East Africa and he had sourced information from the Kenya National Archives in Nairobi, and scattered bank archives in the UK, South Africa, or Australia, but that many records were now lost.

Excerpts 

There were the banks that came before the first World War and a raft of banks that started after the end of the Mau Mau war – and the banks could fall into three categories: Colonial banks (state-supported banks that were the only ones that could handle government accounts, and which disappeared after independence), Imperial banks (less dependent on government business, and who focused more on trade and agriculture) and multinationals (who had most of their business abroad).

The story is of Kenya’s colonial banking era is really about three banks – the National Bank of India (NBI), Standard Bank of South Africa (SBSA) and Barclays. The arrival of Barclays in Kenya changed the banking sector greatly as it sought to end the long relationship that the National Bank of India had with the colonial government in Kenya. Also when Barclays arrived, they found that the Standard Bank controlled many of the white accounts, so they set out to include more Africans as customers. Africans had bank accounts from around 1926, and by the 1950’s Barclays had more African accounts than settler accounts. 

Banks were mostly found in urban areas and with the ending of the Mau Mau uprising, there was an expectation that Kenya would remain a British colony for many decades. This resulted in several new banks setting up in Kenya in the 1950’s. Meanwhile, NBI, SBSA, and Barclays all expanded by 100% opening up in new places around the country, even with mobile bank units to attract customers. Despite the arrival of the new banks, the main competition remained between these three established big banks, and in 1954, Barclays sent a memo to the colonial government complaining about the unfair practice of them favouring the NBI who retained a monopoly of new business that dated back 60 years. 

All banks eventually had to break with their colonial past and the British empire, and a big loser in the period was SBSA which had concentrated on the white settler population. Kenyan politicians tried to engineer boycotts of businesses related to South Africa due to the Apartheid regime and African customers now shunned it. Officials at the bank wrote to their headquarters about the problem and as a result, the name was changed by dropping “South Africa” from the name, and SBSA became “Standard Bank.”

However Africanization of staff did not start until quote late – Barclays had 1,000 employees, and just 70 were Africans with many more who were Indians. There was a hierarchy in banks of having whites being top managers, middle jobs were done by Indians and Africans, the clerical jobs – and this was because customers did not want to deal with African staff.

Reading the Nairobi Hospital tea leaves

What does a read of The Nairobi Hospital, which is probably the top hospital in East Africa, tell us about the state of medical investments here? The Nairobi Hospital (NH) was founded in 1954, and it, alongside Aga Khan Hospital,  is where top leaders, politicians from Kenya and the East Africa region are treated. It is also where middle-class Kenyans, tourists, and anyone with private medical insurance is treated or operated on.

Nairobi Hospital room

But treatment at Nairobi Hospital is not cheap; , a few days stay without surgery will cost about Kshs 300,000 (about $3,000) and a night in the intensive care unit (ICU ) is about Kshs 500,000!

Kenyans who have medical conditions have discovered that traveling to India for surgery, medicine, and other complex treatment procedures is a better option, even after one factors in the cost of travel for patient and relatives who oversee the patient.

Anyway, how does the Nairobi Hospital (officially registered as the Kenya Hospital Association) in 2016 compare to a few years earlier with the hospital’s 2009 report?

  • Turnover was Kshs 8.79 billion (~$88 million), up from 8.0 billion in 2015.
  • They had a surplus of Kshs 1.3 billion  ($13 million) up from Kshs 1.06 billion, but below the Kshs 1.4 billion in 2014.
  • Some income items: Pharmacy income was 2.5 billion (a 13% growth on the previous year) and the pharmacy had 60% growth in chemotherapy sales thanks to NHIF package (partnership with NHIF has opened doors to our brothers and sisters who would otherwise have not received world class health services. This has seen a rise in number of patients accessing their preferred health care in our Cancer Center, Renal Unit and Catheterization Laboratory. Laboratory income was Kshs 1.4 billion (they have also implemented o shore reporting from India for CT scan, MRI and mammography). Physiotherapy revenue was Kshs 246 million, and accident and emergency revenue was Kshs 374 million (53% of visits were done in 75 minutes and they plan to reduce the waiting time).
  • Some expense items: The Nairobi Hospital paid salaries of Kshs 2.5 billion (compared to Kshs 2.1 billion in 2015) and they added 276 staff in the year (including 128 nurses), a CEO, Company Secretary, and a Security Manager. Key management compensation dropped from Kshs 130 million to Kshs 93 million (in 2015) – and does that difference correspond to the salary of the outgoing CEO who left to become Kenya’s Cabinet Secretary for Health? They also bought medicine worth Kshs 1.7 billion, paid cleaning costs of Kshs 71M, Oxygen with 41M and paid Kshs 21 million to credit card companies
  • The Nairobi Hospital invested Kshs 2.1 billion in projects such as pharmacy, water storage, parking, nurses accommodation, roads, fencing, and kitchen improvements. They also hired a marketing agency to improve the image and awareness about services at the hospital and participated in news interviews, features, and social media.  
  • Some operational numbers for the hospital: They had 154,760 visits to accident & emergency centre, carried out 685,802 lab tests, handed out 354,296 prescriptions, and did 98,198 radiology procedures. They had 18,386 admissions, had 2,730 births (a 17% decline from the year before), and did 7,990 major operations and 1,975 minor ones. They also an occupancy level of 79%, which was down from 81% on their 299  beds, and they retained their customer satisfaction measure of 89%.  The relocation of their ICU / HDU units temporarily reduced capacity from 356 to 299 beds. 
  • On the finance side, they had cash and equivalents of Kshs 2.7 billion (down from 3.5 billion) but still a very healthy liquidity position. They also had Kshs 399 million at Imperial Bank and had Kshs 280 million of doubtful debts (up from 240 million), and Kshs 24 million in foreign exchange losses from currency fluctuations.  
  • The new Nairobi Hospital CEO wrote that his strategy would revolve around talent, technology, turnaround and territory (new location to enhance service). On the health industry, which contributes 6% to GDP, he wrote that income at the Kenya government’s National Hospital Insurance Fund (NHIF) had more than doubled to Kshs 28.5 billion in 2016 thanks to new rates levied on Kenyan workers and that there were 172,706 health personnel in Kenya in 2016.
 
Website of the Nairobi Hospital.  

In defence of Mahindra

Several years ago, the Government of Kenya was swindled when a politically connected group procured substandard Mahindra jeeps for the police force which did not run for very long.

Since then, Kenyans have had an unfavourable view about vehicles from India (Tata’s, tuk-tuks, scooters) and other third world countries such as Korea & China (which the government is reported to soon approach for army lorries).

This is unfortunate because Mahindra, Maruti, Tata, and other vehicles produced in these countries are more affordable and probably better suited for our harsh roads than the 8 years old used-Japanese cars that thousands of Kenyans buy every year (I am guilty).

We need to get beyond the stereotype that if a vehicle is not European (or now Japanese) in origin, then it must be substandard. The police jeeps were part of a rip-off deal, but India has a wide variety of other vehicles, that if sourced legitimately – such as from local dealers of Tata and Maruti here in Nairobi – can be of great use to the country, and especially to Government departments who continue to waste their scarce resources on expensive fleets of European limousines.