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Nakumatt sold
Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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@ispoa - In an interview,the MD said that almost all (if not all) were leased. I think the same applies to Junction & Prestige. I read that all the Kampala locations are leased. I know that Westgate is leased. Also the Nanyuki location is leased (not sure if it is open yet). Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 8/6/2009 Posts: 71
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By the way,Nakumatt UKAY will soon have to be demolished given that it has been built on top of a river.
Me thinks thats the reason they built Westgate is so close,just to cushion themselves because it never really made any biz sense to me in having 2 supermarkets that close to each other catering/competing for the same clientele.
When you do the common things in life in an uncommon way,you will command the attention of the world.
***********************
Indecision and delays are the parents of failure.
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Rank: Veteran Joined: 10/6/2007 Posts: 1,177 Location: Nairobi - Kenya
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@ fundaah TRM was never an MD but an operation director.... there were rumours that he was leaving nakumatt... When you run so fast to get somewhere,you miss the fun of getting there... Life is not a race,so take it slowly.... When you hear what I say, you will not understand. When you see what I do, you will not comprehend
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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@ispoa - Ukay is also leased... The SMART decision was to convert UKAY to 24 hours... very successful... then they started with Prestige among others going 24 hours. *** Even if UKAY is demolished,they will make Westgate 24 hours. Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 10/30/2008 Posts: 33
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fyi nakumatt ukay is no longer going to be demolished - mheshimwa ali pata tkk ku tosha!
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Rank: Member Joined: 9/24/2009 Posts: 20
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Prestige is leased. Its owners are the ones carrying onthe ongoing constructions cum expansions. Rumours have it that Nakumatt are required to vacate (Prestige) in which case the proximity to Junction will cushion them from loss of customers.
My thoughts would incline towards a scenario where its bankers,on getting hold of the possible external capital injection talks,froze some facilities to the supermarket aaiting outcome,this effectively impacting on its cashflow negatively...thats my take.
Nairoberry-'The darker the berry the sweeter the juice'
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Rank: Elder Joined: 6/21/2008 Posts: 2,490
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@Kamaa – yes Ramamurthy was (is) operations director and has been calling the shots till recently when a lady called Minah took over (am not sure which position) but she is the one calling the shots. She has de-listed a lot of locally manufactured products and its rumored that she has a company that deals in importing a variety of items… have you noticed that of late the shelves at Nakumatt are overcrowded with imported products?? Forgive your enemies but never forget their names… The man who marries a beautiful woman, and the farmer who grows corn by the roadside have the same problem
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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@Nairobbery - Why wud a bank stop/freeze facilities when a firm is looking at an injection of cash? I wud have thought that a cash injection would make Nakumatt more attractive to the banks. Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 11/4/2008 Posts: 1,289 Location: Nairobi
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Nakumatt Ukay may have another 3 or so years to operate. The construction of Westgate as I gathered was delayed forcing Nakumatt to extend the lease for another 5 years for the Ukay building.
Baada ya dhiki,faaraja
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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Nakumatt are selling off a 40% stake to a U.K party. While it is true that the loss of their Downtown and Thika Rd branches + ongoing expansion may have put serious pressure on the their working capital,the reason why they started taking long to pay is that Barclays suddenly came up with new rules capping credit facilities to family owned businesses at a max ceiling of kshs1b. The supermarket belongs to the Shah family and was affected. This new requirement threw them into confusion as the Co. operates large ODs and now their working cap. source had suddenly been turned off. TRM,or Ramamurthy,the Operations director and public face of the supermarket had to take a back seat - this is because the new partner on board will be professionalising everything,and coming up with formal structures for the co.
..there's nothing,absolutely nothing really,that I can't do if I put my mind to it.
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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Even if BBK only allowed 1bn max loan/OD... I am surprised that other banks (KCB,SCBK,Citibank,etc) didnt step in coz these are also large banks with lots of large clients... I am not even counting some of the smaller mid-tier banks like NIC,DTBK,I&M,Imperial,Prime.... who would be good for a 100-250 million each. Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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@VVS,they have approached some tier 2 banks for working cap facilities to plug the gap. What am surprised abt is why Barclays couldn't give them a transition period? Or the buggers are just over-extended.
..there's nothing,absolutely nothing really,that I can't do if I put my mind to it.
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Intell-tx for the confirmation. The more I read about Nakumatt,the more its finances don't pass the reality test. Ksh1bn seems like a large exposure for one bank in Kenya. Not sure why Nakumatt didn't try to do a syndicated loan or even get smaller loans from several banks... www.mjengakenya.blogspot.comSehemu ndio nyumba
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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Intell - I have never been a supplier to Nakumatt but a buddy involved in supplying FMCG told me they dont get paid for 30-90 days (depending on the product)... *** So y wud Nakumatt need huge ODs (except for operations) since their 'income' is mostly cash? [I am sure Westgate & Nyali do a lot of credit card business]. ***** Many of the goods sold in the store are on a consignment basis. Vendors get paid when/after goods are sold... ***** Or I could be wrong about the model ****** Of course,there has been a HUGE increase in their needs with new stores in Kampala & Kigali (as well as local expansion). ******** And why do I care? I have no shares in it! Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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@VVS,you say a buddy involved in supplying FMCG told me they dont get paid for 30-90 days and there's nothing wrong if that's within the terms they agreed with the chain. But if they don't pay the supplier after the agreed period iko sida,and such failure often indicates a working capital crunch in a company - because where did the co. channel his money? Elsewhere. Such as in an expansion project of the co.,to pay off bank debts,to pay off other more pressing creditors who threatening the co. with legal/ bankruptcy proceedings,etc.
Working capital for acompany is tied up when a company buys lots of stock (worse if such stock is slow-moving or even obsolete),and may then also sell lots of it on credit. Such a co. will have very little cash left for day-to-day operations like salaries and wages,fuel for pool cars,re-stocking,etc as it has to wait for this slow stock to be bought and/or debtors to pay up so that it can in turn pay off its debts
Imagine if such a company was also building another branch elsewhere at the same time and was funding this organically i.e relying on the funds from shareholders and operations i.e the very cash tied up is stocks and debtors?! If it still insists on proceeding with building the branch,then little or no cash wil be left for operations meaning there's no cash to pay your buddy and other suppliers. The cash in the till at westgate,prestige,etc may look colossal to the average shopper but when you look at it relative to the demands of the business at that time,it really is mere pittance. Meaning the Co. has to borrow from banks. If the Co. builds yet another branch,the working capital crunch is exarcebated - meaning it has to borrow even more! But banks will refuse to lend if you have so much debt (highly geared/leveraged/over-extended) and in any case you will have mortgaged all your properties - you have reached your boroiwng limit. Since the co. needs more cash,it has no choice but to go to either the capital market (IPO),or seek a strategic investor. This is probably what happened.
..there's nothing,absolutely nothing really,that I can't do if I put my mind to it.
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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@ intell - What I am asking is why wud Nakumatt needs loads of OD for FMCG items that the suppliers finance. My buddy knew of the 30-90 day periodso he expects to get paid 30-90 days (depending on the product) AFTER they deliver the goods. In any event,there has been some delay BUT he has not stopped supplying... Why? Nakumatt is a major (assume profitable) customer. He supplies prepared/boxed/canned food items (among other stuff... I cant/dont keep track)... but I noticed he is developing other channels... he better do so asap! *** Like you said where did the cash go? Even if the delay is only 15 days. Remember how Uchumi was buying kirubi's properties??? **** Shah on the other hand used the cash to judiciously expand & invested the surplus in T-Bills. Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 5/26/2009 Posts: 326 Location: Nairobi
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Due to the immediate prevailing economic climate in Kenya (or is it globally),retailers have seen decrease in demand for high value (high margin) stuff. Retailing is now back to 'dukawallah' basics - volumes.
Nakumatt plays at the sharp end of ABC1,but there was a great downward shift of purchasing power 2008/9 (re. usage & attitude survey,09). Coupled with other factors such as stricter anti-money laundering (wasn't me) and the somali pirate menace,financiers and some suppliers saw things heading south for NKMT. Charterhouse story is also quite some skeleton.
We are seeing a high noon for them. New investor might in turn spurn it to S.Africans who are looking into expansion to EAfrica.
Even without a 'for sale' sign at any of their doors,all major chains (Nakumatt,Tuskys,Ukwala and Naivas) have at least 1 unsolicited offer.
Retail sector in sub-sahara africa is very untapped,as one pundit put it,it is 'constantly ovulating'. Nakumatt braced the trail as among pioneers,and its time for another to make the real money.
Healthy eating = nutritious urine. Nyama choma anytime!
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Rank: Member Joined: 5/17/2008 Posts: 488
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.......am told that the ongoing construction at Bomas Junction is meant for their complex on lease
... could someone confirm
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Rank: Chief Joined: 1/3/2007 Posts: 18,107 Location: Nairobi
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@Wa P - LOL... does someone want to buy my Uchumi shares??? No takeover plans??? I was lucky... I bailed except for 2-3 thousand shares... cant even remember...! Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,520 Location: nairobi
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VituVingiSana wrote:@ intell - What I am asking is why wud Nakumatt needs loads of OD for FMCG items that the suppliers finance. My buddy knew of the 30-90 day periodso he expects to get paid 30-90 days (depending on the product) AFTER they deliver the goods. In any event,there has been some delay BUT he has not stopped supplying... Why? Nakumatt is a major (assume profitable) customer. He supplies prepared/boxed/canned food items (among other stuff... I cant/dont keep track)... but I noticed he is developing other channels... he better do so asap!
*** Like you said where did the cash go? Even if the delay is only 15 days. Remember how Uchumi was buying kirubi's properties???
**** Shah on the other hand used the cash to judiciously expand & invested the surplus in T-Bills.
Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB Looking back
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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