[Kenya] ARM suppliers, workers peg hope on PWC
12-10-2018 06:15:00 | by: Bob Koigi | hits: 4245 | Tags:

The fate of hundreds of small and mid-sized businesses that have been supplying Athi River Mining Company, ARM, since 1974 when the manufacturer first set up shop now rests with the recently appointed administrators from PWC who have taken charge of the business.

Since 1974 when H J Paunrana established a startup primarily dealing with agricultural lime, processed minerals for the glass and paints industries, ARM’s founder equally opened the door for similar small companies that would grow to become well-established companies in decades to come.

Like Siamese twins, the fate of the first crop of ARM suppliers was and still is intertwined with the fate of the Paunrana family and company. As PwC, ARM’s administrators, take charge of the business, the fate of hundreds of companies whose success and challenges is tethered to that of ARM are in the balance.

“I bought my first truck through an agreement with ARM and Pradeep. My father worked with the late Mzee Paunrana. Today I have over 80 trucks and employ over 200 people and this would not have been possible without the support of the Paunrana family and the ARM family,” said one of ARM’s transporters -who sought anonymity for fear of victimization.

Typically ARM outsources transportation of inputs and outputs where truckers deliver clinker, limestone and other raw materials on one side and on the other, distributors deliver finished goods to end users across the region.

This strong customer focus and relationship management has been a key ingredient to ARM’s success over the years and suppliers are closely watching how PWC will maintain this.

Other suppliers expressed hope that PwC will continue the Paunrana tradition that blended professionalism without losing the human touch, a mix that has created a mutually beneficial relationship between the company and its stakeholders over the years.

“When I started my business Mr. Pradeep gave me my first chance, he had faith and supported my business. ARM has helped me grow and stood by me when I needed them. Now I will be here for them. I hope the administrators can serve the company in the same way. We have had some tough times but we always come out of it. I pray that ARM comes out stronger. I am sure with Mr. Pradeep can take ARM back to where I was,” said a supplier.
Supplier fear is understandable as many a time administration means that suppliers may have to forego payments as management fees and other creditors are often given priority when it comes to payment.

“I was shocked about PwC because the company (ARM) has been paying me my dues and reducing the backlog even though there have been delays in the past. I have been a supplier for 15 years and I know the staff well working with PWC will not be as easy as they do not understand the relationships and the business. I hope they help the company and all the creditors. Let us see what their plan is and whether it satisfies all creditors or pushes this problem further along, we also do not understand how much they are paying themselves and if they are paying themselves ahead of key suppliers. We must have a regular report from them,” said another supplier.

Uncertainty on whether the PwC-led administration will work is also spreading internally.

ARM staff are unsure of their futures as there is no feedback on the way forward by PWC and regulators including the Capital Markets Authority (CMA) and the Nairobi Securities Exchange (NSE).

“The administration news came as a shock. We thought CDC (one of ARM’s main investors) was in discussion with lenders and had reached an agreement hence the communication on the board and management changes etc.
The administrators are unable to anticipate the needs of the business and are slowing decision making. The business needs a lot of care and attention and they must work with the existing management team what concerns me most is the incentive scheme for PWC and whether they have the company's best interests at heart and how this is monitored as it is a public company. What are the CMA and NSE doing about this? What plan do the banks have for the company?
I am very concerned about job security because PWC have a reputation of spoiling other companies where they are administrators. They have no track record of success.”

Collapsed contractor Spencon and flower firm Karuruturi are near-comatose firms that have passed through the hands of PWC administrators.
Other employees echo the concerns that administrators are not presenting a well-detailed roadmap to recovery and skepticism on whether their interest is to earn fees or revive ARM.

“The law is not so clear on whose interest the administrators work for since they are put in by the banks, therefore, they could work in the interest of their appointees. In addition to that, they earn monthly revenue in form of fees while the company is in administration,” said an employee-who sought anonymity.

“It begs the question on how long they would drag out the administration process for no ceiling is set out. It would be helpful to have the administrators and the management working in cohesion since management is best positioned to explain the business as a whole and know the key driving factors within the business,” she added.

With each passing day that the PWC administration goes mum, anxiety heightens, hope fades for the hundreds of suppliers and thousands of ARM workers. Time is nigh for administrators to engage all stakeholders.