Industrial Sector in Kenya: Berjeesh Surty Gives an Overview of SpenoMatic Group

Interview with Berjeesh Surty, Chairman and Managing Director of SpenoMatic Group

What is your assessment of the sector in Kenya? What are the latest trends? Is the sector competitive?

As far as we are concerned, our sector is the whole industrial sector. Whatever industry produces requires utilities. They need boilers, heaters, water treatment plants, effluent treatment plants. As the industry grows, we grow. We are not in a specific sector. We could be in edible oil, tea, soap, chemicals, hotels, hospitals, virtually all of these require our products. There is continuous expansion taking place and new companies are coming in. Also, we provide cutting edge technology. Much more energy efficient technologies are being introduced by us which people are embracing so their costs come down and they become lowest cost producers. We bring down the environmental footprint for our clients. Our specialized effluent treatment plants not only meet NEMA but could be zero liquid discharge or could be producing gas which can be used as an energy source. We see the industry doing well. We are leaders by far in most of our lines.

You work for the industry, but what do you call your sector at the end of the day?

We want to bring top-end technologies to Africa and help it disseminate into the continent, bring the cost structures down, make it a serious win-win situation for us, our suppliers, and our customers.

There is no name because we provide the technologies in the utilities of factories. Suppose you had an edible oil plant, you would require a lot of steam. So, we will study it and tell you the steam you require, the best steam distribution system, what kind of boilers you would require, what kind of biomass-fired boilers to bring your cost down. We are in several segments where we help our customers bring their cost down. The whole biomass revolution in East Africa was started by us many years ago. About 20 to 22 years ago, we introduced the first biomass boilers to Africa. Now, it is the norm. That has brought down the oil usage footprint of the country drastically. It also made them more competitive. When industry here becomes competitive, then a Chinese product, a European product, or an Indian product is not imported and a local product is used. If the industry is not competitive you might as well import it because import regulations are open.

Is there a segment you want to push more?

We have been trying to see how best we can assist the industry at large. One sector which we have now started pushing very hard is the roof top solar sector for producing power for factories. We already have a host of factories which have gone ahead with us putting up solar power plants. During the day, their energy usage is fully or 80% to 70% covered by solar usage. There are some breakthrough technologies from Europe also available which can now reduce power cost in factories without putting in steam turbines. That will bring the overall power cost down by 25%. We are putting in many new technologies in the effluent treatment plants. Suddenly, there is an awareness now in all African countries that before, effluence used to spoil the soil, rivers, and seas. But now, we are giving several new technology effluent treatment plants where the plant is not just a cost, it actually saves money for the customer. You can get the water back. You can get products back. There are several areas we are operating in where the clients are benefitting now.

What is your competitive advantage? How do you distinguish yourself from the competition?

We are all engineers and we understand the processes of factories. For example, with a tea factory, I understand the tea making process and the numbers. We would go and meet the client and say this is what you are doing, these are your costs, if you were to buy this kind of equipment this is how much your cost will drop. Who will supply it? We will. Who will take on the performance guarantees? We will. We are not just consultants who come and tell you to do something, leave, and you are left on your own. We are consultants that are not charging you for consultancy, we are telling you. Then, we would take you around to another ten factories where this method is working, you go for it, and your costs come down. Now comes the bigger part which is our serious advantage. We have a big team of service people, service engineers, a huge amount of spares that we keep. So, the downstream support for a lifetime is being given by us at a very nominal charge. We help the client to select and buy the equipment, then we install, commission, and give performance guarantees, we handle training, then we provide them services and spares, etc. We have customers who have been with us for 25 years and one after the other they keep buying from us. Because we buy internationally, our ability to negotiate with our suppliers is high because we make so many purchases. We get specialized rates. Even if my client went directly to a manufacturer somewhere in Germany, France, England, etc. he would still not be able to buy the equipment at the price that I would sell it to him. So, he gets a low price, knowledge, and services. It is a competitive advantage all around for him. We win and he wins.

What challenges do you face?

The challenge we face is that when you are absorbing new technology, then you have to make breakthroughs and breakthroughs mean customers have to really trust you. The initial breakthroughs and performance guarantees are very fine and you have to meet them. If you do not meet them, then you have to rework them and tweak them until you do. Now, what is happening is that many of the plants and factories that we have supplied equipment to are running the best spec in the world. This is the spec in Germany, America, Singapore. There is no higher spec than this. You have to make the local people run it and work it at that spec and that is a challenge that we have to overcome. Sometimes, we have to send people overseas for training or bring people here from overseas for training. It sounds easy and it is doable, but it is never easy.

What is your international reach?

Our customers are all in Africa, mainly East, Central, and Southern Africa and to some extent in the West. We are not in North Africa yet. Our focus is on Africa but our suppliers of technology are from all over the world. We access technology from all kinds of places from Finland to Germany to France to India to Singapore. Because we have this huge network now, we also have top international companies approaching us asking us to work for them because we have all the customer bases with us. We are able to pick and choose and see what is really applicable and will work in African conditions. There is an efficiency platform, but there is also a reliability platform and the ability of people to run it. We look at all of that and then we select our international suppliers. Then, we introduce their products or we integrate them into the factories. Today, we are in an enviable position because even if a large, well-known multinational actually approached me, I may or may not decide to go with them. I would look at whether that product really fits my clients’ profile here. If it does not, we will not suggest it.

Are you looking at attracting partnerships or investors?

We have a lot of relationships with some of our suppliers and there are various models in which we operate. We are open if there is something good in a new line or something that we can talk about where an international leader wants to work with us and we create a special purpose vehicle and we can go ahead. We are not averse to it and we are operating that zone in different ways with different people. We have the agencies for some of these top companies, but it is not just an agency to buy and sell, it is a whole value chain from consulting to downstream service and support to complete project management.

What are some of your success stories?

One success story is that many years ago, this entire market was based on oil-fired boilers. Thousands of tons of oil were being imported into the East African market. We approached one of our clients and told them they could fire coffee husks and rice husks. We introduced that technology and as a result of that one case, others saw and slowly, today, the entirety of East Africa uses all kinds of biomass from sawdust to coffee husks to rice husks to Bagasse and Bagasse briquettes. Today, the norm is not to use oil-fired equipment. In one day, a big oil-fired boiler would use 20 to 15 tons of oil. Imagine the amount of environmental footprint that we have brought down because of that. This is a success story in itself. Also, we are in the process of commissioning the world’s first Sisal Waste (Sisal plant fibers are used to make ropes) fired power plant. We will use sisal stumps which has never been done across the world. We have several success stories in every area.

Are you active in a specific area of CSR activities?

I look at corporate social responsibility a little differently than how it is defined. One of the things is that the first priority for us is our people. I am intimately involved with our people and their lives. For the people that are working with us, even on the customer side, we make sure that when there is a need or a requirement that it is really met. We look at not only financial, it could be assistance in the form of medical treatment or knowledge or a host of other things. I would rather do CSR every day of my life with our people at our side and our team and the regular thing of gifting some books, medicine, etc. goes on. I am averse to saying a certain amount of money has been put aside for CSR to be given to someone. I want to do hands-on CSR within our organization. When people have difficulties, they can come to us and we can find alternate ways to resolve problems and assist them much more than would be under the so-called employee requirement.

Are you working on any projects currently?

There is something called IOT, the Internet of Things. We have set up the first complete factory with remote monitoring and analytics. It is in Nairobi. That client is now saving 15% in terms of energy and labor costs because of getting complete IOT within his factory. We are now in the process of doing a tea factory on complete IOT. We will then get analytics. Once that happens, the rest of the tea industry will follow. That will change their cost structures, bring huge amounts of additional control on their operations, and help them drastically. In a few years from now, all of Africa will be on remote monitoring and analytics and we will be the frontrunners. It will be similar to how email addresses were some years ago. Emails would come in and people ask others if they had an email address too, and today it is the norm. In five to seven years, there will be remote monitoring of equipment and getting data and data analytics for factories where not one specific machine is being monitored by a German company, but that factory owner gets a dashboard on his table for everything that is linked up. We are in the forefront of that technology and that will be the future.

Project yourself three years into the future. What is your vision for the company?

I want to add serious value to my work. When we stated our vision, it was not just a financial vision, but we want to actually empower Africa. We want to bring top-end technologies to Africa and help it disseminate into the continent, bring the cost structures down, make it a serious win-win situation for us, our suppliers, and our customers. I want to do this happily. I want the people who are with us to be excited about doing something extraordinary and feel great about it. It is not just about numbers. The numbers keep happening. But when you have the passion and you do something interesting, everybody wins. I can see it because our attrition is very low. People have been with us for 15, 20, 25 years. They are not leaving because there is passion, there is the joy of doing something exciting and I enjoy that. There are lots of new lines. The turnovers will rise, the profitability will go up, but that is a natural corollary. You need to enjoy what you are doing.

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