07 Apr 2020 / Article

Chandaria group’s insatiable appetite for success

Kenyan family business Chandaria Group has put down strong roots in the region, becoming the largest producer and distributor of fabric, hygiene products and paper in East Africa. Educated in the UK at Cardiff Business School, Darshan Chandaria, CEO, is working to grow the 50-year-old company alongside his father Mahesh, Group Managing Director, and his younger brother Neer, Marketing Director.

 

“When I was 13 years old, I used to spend hours playing in my father’s factory,” recalls Darshan Chandaria. “He used to take my brother, Neer, and me there thinking it would make us better understand what he was doing. And it worked! By the time I was 18, I had already gained a good idea of how the factory was run.” No surprise, then, that today he heads up the family business. Except this is no longer a small company, but a multinational with almost 3,000 employees.

 

Like Sipromad in Madagascar (see Sipromad article), the story of Chandaria group is one of

the many success stories of the Indian diaspora in Africa. Darshan’s grandfather, who came to Kenya from India in search of a better future, founded the company in 1964. It started out as a simple SME making cellulose wadding. But when Darshan’s father, Mahesh Chandaria, joined the family business in 1974, he brought professionalism, innovation and a whole new marketing approach. Eight years later, he became manager of the company and was determined to take it to the next level. However, for a good ten years, revenue stagnated. Mahesh then had an idea that would change the group’s history forever: to invest in a paper recycling project to make hygienic fabric, an innovation that had previously only been done in South Africa. And it was a success. In its wake, in 1995, Chandaria invested in the construction of a wadding processing plant in Tanzania. Its growth was such that, in 1999, the group acquired Tanzania’s largest producer of hygiene products, Tanpack Tissues Limited, followed by a paper mill, Garnett Papers, in Leeds, UK, which it sold four years later.

 

By the time Darshan joined the group in 2009, the company already had factories in Kenya and Tanzania. But his ambition went far beyond that, planning “to expand the group across the region”. Darshan quickly began to diversify into other business sectors, such as real estate with Chandaria Property (2013), which can be found in East Africa, the United Arab Emirates, the United Kingdom and India. Next, in 2014, came insurance, with the launch of a joint venture with Barclays Bank named Barclays Life Insurance Kenya, which quickly became a regional reference. That same year, the family became the majority shareholder of Mobius Motors, the continent’s leading producer of mass market vehicles, whose cars are entirely manufactured in Kenya. With one success story after another, the Chandaria group continues its far-reaching strategy, recently expanding its activities into the mining sector in Uganda. Having become CEO of the group two years ago, Darshan founded Chandaria Capital (a venture capital fund) in 2017, which is active worldwide and through which the group has already invested in twelve start-ups, including Kobo360 (Nigeria), Sokowatch (Kenya) and Doorsteps (United Kingdom).

 

“The heart of the business remains the manufacture and distribution of hygienic products”, the young leader tells us. This area of the business represents 50% of turnover, and the group sees itself, above all, as “the African leader in paper and hygienic products”. But the family group’s diversification has allowed it to grow and to rely less and less on its core business. Even though Darshan acknowledges “the economic environment as a potential obstacle given the dismal climate of the last two years”, he is confident in his company’s ability to continue to grow. Darshan is thus planning to further expand into other parts of the continent outside its eastern base. Chandaria group already distributes its products in Sudan, Zambia and Democratic Republic of Congo (DRC), in addition to the countries bordering Kenya (Ethiopia, Somalia, South Sudan, Tanzania and Uganda). It is now looking to agriculture, which the young leader sees as an attractive area for diversification. To support these ambitions, the group has not shied away from taking on debt in Kenya. In addition, the group has embarked on a new joint venture in the mining sector, Greenstone Resources Limited, in partnership with an Indian family business in Uganda.

 

Speaking of family, ownership of the group is now shared between Mahesh and his two sons. The issue of governance is not, however, neglected by the family, which is aware of the need to bring in outside expertise and insight as the company becomes a multinational.

This is why they recently opened up the board of directors to external, independent members with voting rights, called in on the strength of their expertise and experience. Darshan returns often to the fact that every decision is crucial and weighed up carefully, with one thought always at the forefront of his mind – “The family reputation is our top priority.” 

 

The fourth generation is yet to show its face. Darshan Chandaria is still single and, when asked, he says he does not necessarily want his future children to carry on the family business. He concedes, however, that part of him “would like them to be involved”, but adds that he would especially like his children to follow their own path. So much so, in fact, that he is unclear as to who will become the group’s eventual owners: “We are open to the idea of developing our business, whether it remains a family business or not. Becoming a listed company is also an option…”. This would be a decisive choice for the group’s future, certainly leading to a loss of ‘family feel’, but which would also increase its financing capacity tenfold.

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