An Exclusive Interview with Hasit Patel of RAMCO Group, One of the Leading Conglomerates in Kenya

Interview with Hasit Patel, COO at RAMCO Group

Could you give us a generic overview of RAMCO Group? Last time you were going to go from a family group to something more focused and organized. What is left to be done? What are your targets?

The last time that you interviewed me, we were in an aggressive acquisition and expansion program which had just settled in, and then we were thinking about our new corporate model. When COVID hit, two things happened – it accelerated some of the restructuring of the Group and for the first time we started looking at businesses. The one big change that it brought to us at the board level was that we became more like a treasury. Parts of the Group were up, parts of the Group were stagnant, and parts of the Group went down and in dealing with it, we were making sure all the organizations were prepped for growth. COVID made us take a step back and look at how we could talk about merging and restructuring from an efficiency point of view. This journey led us to be more process focused as opposed to running the businesses in the old style of management. Now, most of the restructuring is complete and COVID has enabled two things to happen. Firstly, everyone is on the ground and always available. The new ways to communicate mean that we have become far better at quickly arriving at decisions. With the family board meetings that we have weekly, the structure of those meetings has certainly helped us in arriving at quick consensus decisions and then acting on them. The Group now is complete as far as organizational structure is concerned and now we are focusing on the three things that we have always been focusing on which are people, systems, and processes. We are starting to become more robust about how we are defining these processes and how we are restructuring the systems. This is then enabling us to figure out whether the people that we have are the most efficient or most suited for the positions that they are in or if we could add some value to them and enable them to up their game.

In each sector, can you explain what you are doing and where? What have you achieved within the last two years?

I draw a lot of inspiration from a lot of people, both local and international. That kind of inspiration has a lot to do with how we are making sure we are leading organizations and creating an organization that has an impact on the country that we live in.

Across the board, we restarted. Regarding the printing and packaging sector, in parts of the business we pivoted and started manufacturing PPEs and to cope with COVID. For the rest of the sector, we brought in a new Head of Business Strategy and under him we have expanded certain parts, focusing on spreading the assets and driving growth to our export strategy. Because of COVID, the packaging side actually started growing with the consumption of food and manufacturing increasing. On the printing side, with schools being down and businesses not wishing to invest on print related matters in general, we took a big hit. So, the focus turned on that. We are looking at now centralizing some of our functions like sales and making sure that rather than looking at our competitors and seeing that we are competing with people with low overheads, we are asking what we as a group of companies can put into our portfolio or management that would set us apart so that family businesses like mom and pop shops cannot compete with us. One example is a better use of technology. Our e-commerce site has gone live. For the first time, we are trying to cater to niche markets and cottage industries like home cooking, home baking, and those kinds of businesses that have really taken off. But they struggle to get printing and packaging, so we have developed a quick set of products for them. We have been able to market that on our e-commerce platform which is going live now. It is about refocusing on who the real client is and how they are changing the way that they are consuming the packaging. We looked at manufacturing as well. Also, we started looking at other markets that have been created as a result of the situation and we started addressing them.

The construction side, surprisingly, has been doing well also. Projects have to finish and COVID stopped them from continuing. There have not been many new projects introduced and that could be the longer lasting problem that COVID creates. There could be a period where there are hardly any new projects. Consumption in rural areas increased. Part of that reason seems to be that everyone is fixing the places that they are living in so construction carries on. We are focusing on how the distribution model is working in our group. We are busy opening new branches and new retail outlets to cater to that last mile. Looking at the general manufacturing side, we were manufacturing products that were selling well in the construction space. Through restructuring some of these organizations, we shut a few of them down and repurposed them or split them up into different parts and spun some of them off into new businesses. That restructure, unlike the previous two verticals which were more of a consolidation, has been where we started new businesses. The Group is now going into tile manufacturing which is a massive greenfield project. We have gone into rigid plastics and we have consolidated and grown the existing businesses. That is where the Group is investing.

On the services side, many businesses have suffered a lot, but finance, IT, and some of the other services have actually grown. We have looked at areas in the market where we are strong in manufacturing and distribution. There was a big opportunity in managing large scale projects in a central area. That is a new area of service that we have gone into. We call it Apostrophe and that manages large scale construction projects, not just from a supply point of view but also from a technical and commercial point of view. If you want to do a project now, you have to deal with multiple different entities such as electrics, water, etc. We are trying to see how we could play the middle role of making sure that we could coordinate more.

The office supplies and stationery side is an area that took a big hit. One thing we started doing straight away was that we moved to e-commerce and started delivering in the homes and created work from home packages. The e-commerce side has not taken off quite as well as we hoped, but we have started servicing the markets well. The retail side, which was shut down for quite a while, gave us an opportunity to relook at how we are running inventory management. We started sealing up the back end of how we are running things in preparation for the time when we could reopen. For example, we looked at how we could use AI to help us understand what is moving where and help us to analyze all the data that we have been collecting. Regarding the office supplies and stationery side, we have been applying more intelligence on the back end of the information that we have. Regarding the real estate, it has been quiet. Our overarching achievement is that we are starting the data analytics side which has now come to fruition. Most of us are on a single platform now, which is SAP, making it possible to analyze that data at the palm of your hand. It is live and it is possible to see almost everything that is going on in the Group. We are now adding more value to transition that from looking back in the rearview mirror and at static data to looking at how we can start predicting things, which takes a bit of time, making sure that the data points are correct and that they are populating in the right areas of the whole analytics server. We are using AI and various other kinds of tools to make sure that better decisions are being made in the Group, especially at board level.

The other big overarching thing is the people. We formed a committee that was supposed to be the decision making group of COVID. No one really knew what was going on. It was a fast-changing environment. We wanted to create a committee that was quick in making decisions and then correcting things if they made the wrong decisions. We started building trust in the Group through that committee. There is a lot of noise creating a lot of anxiety. But, being the standard committee, there was at least the knowledge of most COVID related things which gave our employees confidence that the Group was managing things well. As COVID continued to persist, we turned that committee into an engagement committee. The purpose of the engagement committee was to bring the employees of the Group together on non work related issues. We have a mental wellness side which deals with mental wellness in the Group. We have the discovery side which seeks out the talent that we have in our Group from music to photography, etc. We are looking at various other facets of this engagement group which is driving the sense of belonging in the Group. There is one part of the Group where you can go for advice or mental health or you can also just have a bit of fun, join other communities, get your newsletters, quizzes, etc. That has big impact on how people perceive the personality of the Group. The Group is starting to have this personality of something that believes in its people and believes in their well-being as much as we believe in the business.

How has your international reach changed in the last two years with the pandemic? Has COVID changed your perspective or attracted new partnerships?

COVID has done the opposite. It has created a localization with being in Africa and being heavily dependent on imported raw materials and products. COVID made our government and all of us as a business community realize that we definitely need to relook at manufacturing in the country. When you look at the broader supply chain issues that even currently are plaguing the world, there is a strong case of first looking at what supply chains we need to start building into the country. Pharmaceuticals is a great example. We have pivoted to the manufacturing of PPEs. It was difficult to get raw materials. The conversion was the easy part. We are looking at what we need to localize to safeguard ourselves from this kind of situation in the future. The Group is also starting to look at what we need to vertically integrate, where we need to start creating some of these raw materials, and what that looks like. We might need to secure different supply chains from China and India, for example. The big greenfield tile project has also opened the way to different discussions around Kenya as a manufacturer, not just for Kenyan consumption or East African consumption, but perhaps even export to West Africa or even as far as the US but from a Kenyan base. The partnerships that we are forming with international companies now and the tile company is where they can bring in the technical knowledge and we bring in the manufacturing knowledge. We are prepping the factory not just for African consumption but for export to whichever other markets that we can based on our advantage strategically from a geographic point of view or a position point of view and being an East African hub to China or Kenya versus China to the US. We are looking at how we can substitute Kenyan goods and services for ones that are coming out to these regions. Of course, these are big projects and there is a big risk. With the right partnerships from an international perspective it will be easier. The thought process has changed now to who we need to partner with so that we can create supply chain within the country for our own consumption, but then also for markets that we could reach which are struggling with supply chain issues at the moment.

What is something that you are proud of that you achieved in the last three years that defines the DNA of RAMCO Group?

The proudest achievement is our greenfield project. We have decided to go ahead with it in such uncertain times because that is, by far, the biggest investment that we have made in the last few years. In manufacturing tiles, there are two or three players in this market, two are quite serious. As a family, to take that kind of a risk when the others smaller players have not really managed to take off, putting a large scale project in a tough environment, getting that off the ground, getting board consensus, having tough conversations within the board and then making the deal happen and making the partnership come to life has been a huge achievement for us from an entrepreneurial perspective. Another thing we are proud of is that the board itself has evolved. From a perspective of managing pure strategy to managing a treasury function to how we protect our people and how we dealt with COVID in general, there were certain things that we as a board put together quickly and decided whether businesses were going to get shut down or not. We had a couple of principal decisions that we had to arrive at. The first was that we were not going to shut any businesses down and we were not going to let people go. The organizations that are doing well will support those that are in crisis. All those decisions, we made as a board quite quickly. We organized ourselves well and that is something to be proud of because this could have been a situation that could have gotten out of control.

What is the perception that international investors have of RAMCO Group?

The most common thing that I hear is that we are still the Group that is growing despite everything. The one thing that has not changed is that we are still investing, getting into new things, exploring, talking about potential acquisitions and mergers. There was so growth freeze or any kind of freeze. We knew that life was going to carry on and we know how long it takes to make certain things happen. We could not let the situation slow us down. Of course, we are far more precise and clear about what we would like to get into and what we definitely do not want to get into. The only real change is that we moved from open to all to open to certain things.

Are you open to partnerships or investors?

We are open to strategic investors and simply investors with money. I have a vision of the company to be involved in agriculture and developing agriculture in Egypt far more than they are, developing the people we have, and developing as a society. The most powerful thing we have in the country is the people and I want to have an investor that understands and is willing to invest in these people and is willing to invest in an organization that is creating a better life for our society, be it gender equality, women empowerment, creating jobs for the underprivileged, creating social standards. All these people need the right education, the right lifestyle, they should feel proud of themselves being part of this country and this company. I need the company that believes that in order to earn money and to have money in their pockets, they also have to earn money for the people they work with. The investor must be willing to understand the idea, understand the vision that we have here, and know that our company is a very progressively growing organization. We grow every year within two digit numbers in every province. So, we need this continual operation everywhere. I do not want to find an investor who thinks this business is too risky because the only way to improve our industry is through taking risk. This is a risky business by nature.

What are some of your major accomplishments and products?

We are open to anything that could secure the supply chain that is traditionally imported into the country. This means anything that is on the manufacturing side or anything that would secure long term printing or packaging related raw materials. Construction related raw materials are good at selling the end product. We see an opportunity in starting to manufacture greenfield projects for traditional items that we have been importing on the stationary side and anything related to education. We were traditionally importing these and we could start manufacturing locally. In the pandemic, we started manufacturing things which traditionally we used to import, such as notebooks. We were always manufacturing textbooks, but we were not distributing them, so we started distributing those. Now, our focus is on the logistics side of delivery to schools around the country. We see a huge opportunity there. Where we are traditionally importing things that we are selling and where we need to correct that supply chain we are definitely open to any partnerships there. Ware looking for a strategic partner who could provide the technical capabilities to us. We know how to operate on the ground, so it could be a good marriage.

What projects are you currently active in for your CSR obligations?

One project that I have been looking at very strongly started with the plastic sector and the need for a circular economy when it comes to plastics recycling and management. We formed an organization and went through a year and a half of trying to figure out what would be the right model. The issue in this market is that the collection of plastics is not happening as close to the source as we would like it to, which means that if you are in recycling, collection from waste, dump yards, etc. makes the resulting plastic so expensive when you have to wash and clean it as well. Many times, it is cheaper to use virgin materials than it is to use recycled material. We are examining how we make this circular economy work because Africa needs plastic. It is the cheapest form of packaging. The Achilles’ heel of plastics is that people tend to have single-use plastics because it is cheap. But culturally, there is no regard to how these plastics are then being recycled. We formed an organization to create MRF or material recovery facilities in conjunction with four other companies. We are going to create MRF across the country and make the collection at the source. A typical MRF will be based in various communities and the collection will happen by people within that community. We will help subsidize that cost initially of the plastics so that we can complete the circular economy. Each of these MRF are quite manual in nature now because of the way that we are starting them, but the intention is to automate them so that as the collection starts getting better and better people will realize that collecting plastics generates enough income for them to sustain a household. Then, we could kickstart that circular economy. Now, we have plenty of people who can recycle, but they are not able to secure raw material at a good enough price. If we can get the right model, this is not only a huge business, but it is the best thing that could happen to Kenya from a circular economy perspective. Our country is quite progressive in the policies that it has towards controlling plastic, but we have been forced to go heavy handed in how we are dealing with it. The right way to deal with it is to make sure that if the circular economy gets going, then the government starts seeing plastic as a friend as opposed to an enemy. That is the end vision.

What is your inspiration and what drives you to do what you do? What is your philosophy in life?

I draw a lot of inspiration from a lot of people, both local and international. That kind of inspiration has a lot to do with how we are making sure we are leading organizations and creating an organization that has an impact on the country that we live in. From a personal perspective, the biggest inspiration I grow from is how we as a Group started and where we have reached. We reached that through hard work, a clear vision and trust. Trust is the main thing that has kept the family together as well as the belief that different styles of management can work together if we celebrate them. A personal inspiration for me has been making sure that we could create a sustainable family business in Kenya that can last for generations without the founders or the promoters being a part of the day-to-day. It is a fundamental shift in belief, so I draw my inspiration from the belief that that is possible. I look at what the expectation is of the youth of the country – how they are focusing more on people who are making not just money through business but making a change in the world, choosing products that speak to them not just because of what they do but also how they are made in a safe environment, looking after our people. That inspires me to make sure that we are not cutting corners just so that we are cost competitive. We are not treating people badly because it is cheaper to do so. From a human perspective, the biggest impact we could make is to make people realize that these businesses could be excellent businesses to work for and there is a future in them. Many times, people believe that you can get to a certain level in a family business, then you have to go either start your own or create a corporate or join a corporate if you want to remain in employment. But as a Group, we draw inspiration from the fact that our grandfather was given an opportunity and in three generations this is where we are. There is a new project that I am studying to give the students of Kenya and the youth of Kenya heroes that are not out of their reach. I am not talking about someone who has become super big or super famous. I am talking about someone who has just come from humble beginnings. I want to create a book of role models that are not the most famous people in the country or the most accomplished people in the country; rather, people who are successful in raising a good family, creating a household that is enjoying life, and something that they did not have when they were growing up. The idea is to actually publish this into a book which we can distribute for free. We have started the process of finding who those role models are and they are not famous people. They are successful people who you may not even know who they are when you are sitting next to them. That could inspire a youth that believes in their country, really create some patriotism amongst the people, and mentally challenge the youth to see that you do not have to be a Jeff Bezos or even some of our local heroes which are so far out of reach that they sometimes believe that it is too far. We need to give them those kinds of role models. That is a big project that I am starting personally. I draw my inspiration from the fact that we do not need a hero that is so far away. We need to get little things done and that is good enough. You do not need to take it to international levels, but we lose sight of that fact because unless you are one of those international people, you have not made it.

Who is one of the people you might talk about in your book?

One of those people is one of our CEOs that came to our Group to buy a modem one day. Eleven years later, he is the CEO of one of our organizations. I want him to be a hero for other people. Then, I look at artists. You have these big artists who sell paintings worth $10,000 to $20,000. But then, there are a ton of these artists who create furniture and managed to secure sustainable income through hard work. One of those is a furniture maker that I know. She has worked hard, is creating new designs, and she does not run a massive business but she sustains a family and they can afford what they need and they are happy in what they do. I would like to get 100 of these people to write their own story. We can help them write it and with the help of psychologists bring out the facets of their life in writing so that the reader can take notes from them and hopefully have their mindset changed.

Last time you mentioned that your vision in three years’ time was to be a billion-dollar family run business in Africa. Have you reached that goal or are you close to it?

It is almost like a workout routine. Your target is to reach somewhere but somewhere along the line, you hit a plateau. Then, you realize that you need to change something and if you do not change that, no matter how hard you try, you are not going to get there. For us, with the bandwidth of managing multiple businesses, we had to fundamentally change. It is clear that to get to that billion we have got to grow the existing businesses, but we also have to take on many more businesses. We realized in that acquisition phase that bringing in the culture and getting the organization prepped to a level that they understand our culture is taking far longer than we thought. We started creating the building blocks for big acquisitions and bigger projects that will get us there faster. We got rid of all the little ones that were taking our attention away and keeping us from growing the other ones big enough and keeping us from acquiring certain types of industries. We have pruned and the platform is set. I still need three to five more years, but the vision has not changed.

ABOUT RAMCO GROUP: Ramco Group is a conglomerate of over 50 companies operating within East Africa with a focus on 6 sectors: print, hardware, manufacturing, office supplies, services and property. The Group started from humble beginnings as a hardware store in Nairobi (Kenya) in 1948 and has since expanded into Uganda, Tanzania and Rwanda, and now employs over 4,000 people with an annual turnover in excess of US$300 million.

For more information, please visit: www.ramco-group.com.

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