Wiping away the competition
Chandaria Industries celebrate 50 years of manufacturing products for Kenya, East and Central Africa
Writer Emily Jarvis
Project manager Tom Cullum
Established in 1964, Chandaria industries Ltd are the largest manufacturer and distributor of tissue, paper and hygiene products in Kenya, East and Central Africa. Their sister company, Tanpack Tissues Ltd, is also the largest manufacturer and distributor of tissue, paper and hygiene products in Tanzania. The group also has an extensive interest in property and other investments. Darshan Chandaria, Director of Chandaria Industries Ltd, offers a bird's eye view of his family-owned company, as the company celebrates its 50 Years anniversary.
As the only manufacturer of tissue materials in Kenya, Chandaria Industries pride themselves on delivering excellent products, many of them from recycled raw materials. "By being the only company in Kenya that does this, we have control on the quality of our products right from the beginning to the end of the manufacturing process. From receiving the raw materials, to getting our products on the supermarket shelves, this end-to-end process has secured our leading position in the market," Darshan explains.
Over the years, Chandaria Industries have diversified the range of products they offer, in addition to their existing tissue and hygiene line. Since Darshan joined the company, he expressed a fascination in exploring the food and beverage sector. In the year 2010/11, the coffee brand MacCoffee was born. "I had always wanted to enter the food and beverage sector. I wanted to explore what I felt was a niche market in East Africa: the 3 in 1 instant coffee concept. After studying and spending a significant amount of time in the UK and discovering these products, I realised they did not exist here in Kenya." Darshan gained inspiration from the booming specialist instant coffee markets in foreign countries, knowing that places like Nairobi and other African cities would benefit from this lifestyle change, serving the mobility needs of business men and women. "MacCoffee was driven by two things: my passion for the food and beverage sector, and the ability to successfully identify and serve the niche segment in African markets." Within three years, MacCoffee has gained a huge market share and is now in third position in the instant coffee beverage sector.
"The game has changed"
One of Chandaria's key challenges has been the varying cost of importing equipment, and the decisions involved. China has revolutionised the manufacturing industry, as Darshan cites: "The country is able to offer equipment at very low, competitive prices. These lowered capital costs in terms of barriers to entry have caused the game to change, what China has done is revolutionary," he adds "however, there are certain quality and control parameters which we look for in our machines, which the Chinese manufacturers are struggling to achieve." Furthermore, the business has seen a drastic increase in cost in terms of raw materials, electricity usage and other operational costs, including Kenya's Railway Development Levy, a further 1.5 per cent cost on all imports into the country. Although the funds are being used to improve Kenya's infrastructure in a significantly beneficial way, this has obviously had an impact on the operational costs for any company in Kenya.
"Waste Paper is our DNA"
At the heart of Chandaria Industries is their supply chain, which is the most important component of their operations. "For companies like us, who have over 500 different types of products, we require an extensive variety of imports and raw materials. It is critical that we maintain the appropriate balance of stock levels and the right quality." Darshan also emphasised that Chandaria Industries always aim to work with the best supply chain partners available, who have excellent track records.
The most important aspect of the manufacturing process is the recycled waste paper raw material, "waste paper is our DNA, without it we cannot function," Darshan acknowledged. He also points out that recycled products are now globally considered more environmentally friendly by customers, therefore the demand for recycled products has increased.
Taking Premium to the Next Level
Chandaria Industries' brand building activities have also helped them strengthen their market leading position further: "If you talk about Chandaria Industries in Kenya, the first brand people will name is Velvex, which is the most premium brand on the market today in Kenya and East Africa." While in Kenya, Darshan observed that all major restaurants, hotels and institutions were using a Velvex branded product and the brand was visibly dominant. Darshan went on: "We always want to further innovate and take our premium brands to the next level, but without increasing the price unnecessarily."
There is no doubt that the Kenyan market is showing positive signs for growth. When we asked Darshan what this growth meant for his market, he replied: "All the big companies are trying to segregate Africa into four main wings, and Kenya is the focal point in the East. The Nairobi market is going to grow; therefore competition will also increase very quickly, with new players both national and international." With Chandaria's core tissue and hygiene markets becoming more competitive, they are seeking to diversify further, looking into a number of different industries.
World Class Practices
Chandaria Industries have a strong intention to further professionalise their operations by not only bringing in the best people, but also operating the business on what Darshan calls a "flat organisational structure": "By this I mean that anyone from the ground level up in the organisation's structure can come and speak with me directly, even if they report to another member of management, I operate an open door policy." By bringing in world class practices and projects, the company will become more efficient in their manufacturing process, accompanied by this method of people management with over 1,200 employees. This value reflects the close-knit family structure in the business: "People are often surprised that my brother, Neer Chandaria aged 24 and myself aged 28, are responsible for the day to day operations of Chandaria Industries," affirms Darshan. "My Dad, Mahesh Chandaria is extremely busy as Group Managing Director, therefore my brother and I have loved taking up this challenge."
This year being their 50th year, Chandaria Industries will celebrate everything they have achieved. Rest assured 2014 will be a major year for the company. The company has a firm focus on training their people to be the best they can be, accompanied by a vision to be a Pan-African player.