In a bid to protect his steel manufacturing empire against growing competition, Roofings Ltd founder Sikander Lalani is continuing to have sleepless nights after his monopoly over the sub sector started developing serious cracks.
At some point, his Roofings Ltd dominated up to 70% of the steel market locally within Uganda and the region-mostly South Sudan, DRC and to some extent Rwanda. Steel market basically refers to the manufacture of iron sheets, iron bars, nails and other steel building materials.
Lalani has for many years been championing their manufacture at his plant initially in Lubowa which later relocated to Namanve where much of the production is done these days. As a market leader, he has been cashing in and having a lion’s share of the major government construction projects like the construction of mega power dams.
In fact some of the expansion at his Namanve plant was based on the business he was anticipating to be the chief steel supplier for Karuma and Isimba on which the Chinese contractors were administratively required to comply with some local content provisions.
But as he concentrated on the regional export market and such large dam steel contracts, a vacuum of sorts emerged on the rest of the market and it was taken advantage of by more efficient players.
TIAN TANG GROWING
The likes of Tian Tang have been able to use a combination of good prices and high quality products to emerge as very strong contenders for the rest of the market, something that has frightened strategists at Lalani’s Roofings. Owned by shrewd Chinese businessman Paul Zhang, Tian Tang is based in the Mbalala Mukono Industrial Area where it’s one of the leading employers of the local youths.
Indeed at Roofings, the days of being in a comfort zone are no more and there is growing pressure on especially the sales team to hit higher targets as a way of checking on the competition Tian Tang and others have occasioned.
The Roofings bosses also accused of resorting to accusing their very aggressive competitors of engagement in poor quality products manufacturing and tax evasion falsely arguing there is no other way to explain the pace at which some of them are growing into big industry giants.
“They [Roofings officials] have virtually been to every major office in this country. Even in meetings, they keep dangling a list of manufacturers in the steel sub sector who they allege are involved in tax evasion and under declaration of tax obligations. But in most cases the allegations have been found to be unfounded leaving the Roofings bosses not looking good. They don’t seem to have any other strategy to confront this unexpected growing competition apart from making wild allegations claiming bad quality and tax evasion which actually is nothing but total falsehoods,” says a source working with one of the high political offices to which Roofings bosses are said to have frequently been lodging petitions accusing their competitors of bad business practices.
“It’s important to accept that you can’t be a monopoly player forever. They enjoyed that monopoly position for long enough and its strange that even when their market leader position still remains, they are restless until everybody else has been strangled,” says another government source familiar with the intrigue to which some of Roofings’ competitors say they have for long been subjected to.
ROOFINGS SPEAKS OUT
But in a phone interview, Oliver Lalani (Sikander’s son who is also now Group MD) told Mulengera news that they are too big to be frightened of anybody on the market. He admitted that their representatives have always openly voiced their quality and compliance-related grievances during relevant forum meetings like UMA, Private Sector Foundation and the Presidential Economic Council (PEC).
“It’s unfortunate that our views have been deliberately misunderstood by some of our colleagues in the sub sector. We have consistently used such foras to raise compliance challenges including those cutting taxes. That has to be discussed because it’s our economy yet there are lots of malpractices,” explained Oliver Lalani who was speaking from Dubai via telephone link.
He said there is no way Roofings (that last year grew by 14% at a time Uganda’s economy/GDP was growing by 5%) can be frightened or scared of anybody in the market. “Our growth as a company is faster than the GDP of the country and we aren’t going down in any way to warrant any nervousness on our part,” he said sounding very dismayed by the allegations of bad faith by some of industry players.
He said there are many things that Roofings could have done as a pioneer steel manufacturer to frustrate entry of new players but that never happened “because we look at the bigger picture which is the development of Uganda as a country.”
“Players like Steel & Tube, East African Roofings and others are all big players now yet they found us here. We could have frustrated them by manipulating or controlling prices but we didn’t. We allowed them because we know Uganda needs all of us to grow its economy. We are now 28 companies in the steel manufacturing sub sector and as Roofings that makes us happy,” he explained.
He added it remains his conviction that there is a lot of tax evasion in the manufacturing industry and not just the steel sub sector. “That is the point we have been making in those forum meetings. It’s not that we are attacking any individual company. It’s in the interest of Uganda because our government needs taxes to develop Uganda and deliver services to the people.”
He said it’s intriguing that some of the manufacturing companies are seemingly very big and are among the industry’s giants yet they aren’t anywhere among the 5 top spenders on power/energy consumption and they don’t even feature on the list of the 150 top tax payers.
To him, this can only be proof of widespread tax evasion in manufacturing industry and he says raising questions in that direction doesn’t amount to Roofings being scared of the competition.
“We shall continue working with URA, UMA and Private Sector Foundation to ensure we all play by high standards and have a level playing field,” he said adding that because of unwillingness to comply with high industry standards, some steel manufacturers are now able to sell products similar to Roofings’ but at a much lower price. “That can be okay for those doing such but it’s hurting the economy in the long term because such low pricing isn’t even sustainable. We all remember the building that collapsed near Makerere and hurt our people. Is that what we want as Ugandans because we enjoy lower prices?”
He said at the end of the day as Roofings, they can only raise a red flag but can’t do much since they aren’t part of the enforcement mechanism. “Why would anybody be worried of our outspokenness [during those forum meetings] if they have nothing to hide?” he rhetorically asked.
SHARING ON KARUMA DEALS
He also denied claims that his company unfairly took a lion’s share of the steel supply deals for Karuma Dam. He explained there are a number of local companies that benefited under the Local Content rules which the entire sub sector membership has for long been advocating for. Mulengera news separately established that besides Roofings, other firms that made a big killing on Karuma include Steel & Tube and the Madhvanis.
And Trade Ministry sources say that the three qualified and took a lion’s share because they are the only ones who readily met the high quality standards that had been set for anyone to qualify being a supplier on the $2.2bn dam project.
Oliver Lalani advised those steel sub sector players that are loathing Roofings’ successes and market leader position to instead concentrate on growing and strengthening the Steel Association which major manufacturers recently formed at the prompting of Trade Minister Amelia Kyambadde.
“It’s a self-regulation mechanism and we have built a lot of common understanding on matters to do with standards in the sub sector through that Association. When we are there, we are lobbying for the entire sector and our point in those meetings has been that we can only lobby and do successful advocacy with government if we are compliant ourselves to the industry set standards,” he said adding that the issue of some actors producing poor quality so that they can sell at very low prices has lately been a major talking point in the Association forums. “It’s a concern for many players and not just us as Roofings.”
Oliver’s father Sikander Lalani is the pioneer Association Chairman deputized by the Uganda Baati supremo. Membership is voluntary and some of the other members include Paul Zhang’s Tian Tang Group. Oliver Lalani says: “We [as Roofings] are the major sponsors of that Association because we want the sub sector to grow and become more vibrant. Why would we be active in such initiatives if we are indeed not interested in other players growing and becoming stronger? It brings us together to discuss everything and mostly standards. The idea is to set our own standards and level playing field before government even comes in to regulate us. We are open to self-criticism.” For comments, call, text or whatsapp us on 0703164755.
