Trading of EA Cables shares back after brief suspension
John Otini
East African Cables shares resume trading after a brief suspension yesterday following a liquidation scare.
One of the lenders to the company, SBM Bank Kenya, had filed a petition to have it wound up after the company defaulted on a Sh285 million debt.
“The company has continued to engage all the lenders and has made significant progress to complete the restructuring of the remaining phase which includes the debt with SBM Kenya,” the company’s board wrote to the Nairobi Securities Exchange (NSE).
Cut-throat competition
The NSE Tuesday told stock brokers to suspend trading of the company’s shares to seek clarification from the troubled manufacturer.
EA Cables is suffering from cut-throat competition as severe price undercutting chews up its sales. Sales have plummeted from Sh5 billion to Sh1 billion in five years.
A spot check at downtown Nairobi CBD reveals how East African Cables market share is decreasing day by day as its distributers blame the high cost of the company’s products.
The distributors say ASL Ltd, Coast Cables and Metsec Cables are now the three most preferred brands by majority of customers due to their pocket- friendly prices and good quality.
Another new entrant from Sri Lanka known as Sierra is also set to increase competition.
Traders say they are given a very short window to pay for goods on credit to a maximum of only a month compared to other companies that offer up to three months to repay reflecting cash-flow pressures.
They decry what they describe as being “undercut” by the company for directly distributing to its customers instead of using them.
“It is unfair for the company to send its agents to the field to sell directly to customers at discounted prices while offering free transport,” said Susan Maina, a distributor at downtown Nairobi.
However, the distributors said the company still has the best quality products in the market.
Distributors say that EA Cables terms of operation have remained rigid and hard to operate on especially during these hard economic times.
