Only innovations will secure Uganda Clays

Following the agreement between National Social Security Fund and Uganda Clays to turn their Loan into Equity, the media has been awash with all sorts of fears, from dilution of stock, to losing of the funds money in a not so lucrative investment.

Having watched Uganda Clays from the time of its listing, to date I ask myself, if I had Shs17 billion, where would I rather spend it on paying debts or on innovation. In my view, the deal of turning debt into equity only settles the past by providing relief on the outward cash flows but does little to increase on the inward cash flows which are crucial to a business’ future.

Uganda Clays is a key player in a very dynamic real estate industry. New construction technology has been developed over the past decade, which innovations have provided the market with options, any player who then becomes a last resort in the option list is doomed to fail in the event that fewer customers choose their product.

The Uganda clays cash cow which has for long been face bricks and clay roofing tiles faces major competition in form of other new good quality roofing materials. With a much younger demographic involved, new building trends have emerged. While at one point using clay tiles was a status symbol, low cost housing has since debunked that mindset with more people opting for the lighter, cheaper but equally beautiful roofing materials, not to mention the decra roofing solutions.

Real estate
A close look at the housing boom in areas of Gayaza, Kira and Najeera can very easily signal the dilemma of Uganda clays if they don’t come up with better options, an average of 2 in 10 new construction sights are using clay tiles.

While talking to Thomas Kaija a real estate developer on why he chooses tin roofing over clay tiles, I discovered that with limited money available to invest in real estate, what was once prestigious is now becoming trivial. Thomas asked me, “ why should I spend 26 million shillings on roofing when I could spend only 14 million are my tenants going to sleep on the roof? If it does the job and looks equally good, I will take the cheaper option.” This pragmatic thinking further reveals the dilemma that Uganda Clays finds itself in. The company is not perfoming as well as it did, because the thinking of its customers has changed while its product base has largely remained the same.

Another real estate trend that Uganda clays could capitalize on is the eco-building and environmentally friendly housing. As a company it is best placed to compete on this rising tide. Few homes today are built without floor tiles, be it for commercial or personal homes, tiles have become the in thing. This is an area in which Uganda clays stands to grow as an alternative to ceramic floor tiles.

Innovation can span from a product range to processes, systems and brand, there are not many company in this business that have more clout with constructors than Uganda Clays. They stand to benefit from business to business distribution channels, for example developing products and delivering products specifically for big players like National Housing among others.

As a professional marketer I must highlight the ignored value of the Uganda clays brand. Even after the rebranding of the company, there has not been any deliberate effort to grow the brand. More corporate people know Uganda clays through its poor performance on the bourse than their products, which goes without saying that this portrays the company in a negative light. Uganda Clays should invest a considerable amount of resource in brand development as a tool for driving sales because there is a direct relationship between market share and awareness of a brand in a market.

To answer the management dilemma, much as the NSSF deal reduces the leaking of critical cash in the short term, overall innovation of products and services will create the much needed increase in the positive cashflow from sales and brand equity.


SOURCE: Daily Monitor

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