Doing Business in Kenya During COVID: An Exclusive Interview with Aashit Shah of Kingsway Tyres

Interview with Aashit Shah, CEO of Kingsway Tyres

What has been the effect of the COVID-19 pandemic on your business?

The impact of COVID-19 was felt towards the end of March last year. All over our screens, we were seeing what was happening with the rest of the world. Throughout the entire organization and country, people could not accept that there was a disease called COVID-19. It was only until the government imposed a lockdown in the month of April onwards that people started to understand the issues around COVID-19. The first thing we had to do was educate our teams and staff and encourage them to practice the various measures of social distancing and invest in that area. In Africa, the private sector is sometimes left on its own, so the first thing that came into our mind was all about our people and teams, making sure that they were safe and operating at the same. In the month of April and May, we had to invest in sanitization tools, wear masks, practice social distancing, signages, make our internal teams and external customers aware of the various procedures, and at the same time try to get them to buy from our teams because many of them could not accept or even adhere to the measures that we implemented. It took us a bit of a time. In the early parts of the COVID-19 period, we spent most of our time educating and talking to our teams, making them aware of what was going on and managing expectations, because we were not quite clear about what this meant for us. When the lockdowns happened, we immediately started to see the impact on the business because the private taxi operators were grounded. This reduced the number of people traveling by up to 50%. Suddenly, we could see the impact on the business. However, it was not too bad. The main issue we faced was around the curfew. Less working hours meant less business. Our staff had to go home early. We had to close by 4:00 pm to allow them to be home by 7:00 pm. Reduced working hours was the first major impact and we immediately saw that business was not looking great. We knew that, at the end of the day, we had to remain open. One thing that kept us motivated and challenged throughout the whole period was that we could not afford to close. We knew there was no form of support from the government coming through. What kept us alive, challenged and motivated, was all about our teams and how we could support them during that period. So the one thing we kept as a key objective was to remain open. If we remained open no matter what business we did, we would be looking after our staff and that was good enough. We just had to keep the momentum, moving forward all the time, talking to our teams, listening to our customers and hearing them out. People were getting affected whether they had caught COVID or had symptoms. It was a very sensitive period. If somebody had COVID-19, it was like a witch hunt. They were isolated and nobody would speak to them. We had to isolate an entire floor. It was something that we never had to deal with and we did not have the option to close down the entire head office, a branch or a workshop. We just had to create forums, a COVID paper and adequate mechanisms for people to be able to report upwards and downwards in confidence, in order to make us aware as a management team. “If you have any symptoms report them to us, we will see how to look after you. Our most important concern is your well-being and your health”. That is what challenged and motivated us to keep going every single day.

What was the reaction of the market after the early periods of the COVID-19 pandemic?

We are looking to open a new tyre center towards the end of the year. We have renovated a few as well. Besides, we are looking at opening 3 new centers by second half of next year. We have 25 tyre centers today, 28 soon.

We have come out from a very challenging period. In Kenya, we had two elections in 2017. From 2019 onwards, we were very optimistic and it was a great year. 2020 started fantastically. January, February and March were not too bad even though the COVID-19 issues began around mid or end of March. But from April, we immediately saw the adversity in the business and that was primarily because of the curfews and the restrictions set by the government. Restrictions on people, movement, businesses and hospitality, immediately had an impact. The months of April, May and June were tough and we had to start anticipating that this would continue for some time. Never once did we think that it would be this long. What we had in mind was a period of five months and we were hopeful that we would be back on track with everything reopened and life back to normal between September and October. We started to explore different concepts during what they called “the new normal” at that time. However, business was picking up. There were some segments in the economy that were very active and continued to remain active for the rest of the year, especially in transportation and essential services. We are a net importer in the country, most businesses are, so transport was a key segment that remained active and we had to make sure that we served our customers.

In terms of tourism, one of our big segments was the tour operators and the fleets. Tourism came to a grinding halt within a few months. That was something that impacted us. However, most organizations, private organizations and institutions were probably thinking the same as we were, that we needed to keep going, keep the momentum and keep doing what we were doing. In some cases we saw private use of vehicles increase as there were restrictions in the taxi segment. People were using more private vehicles to move around and felt safer using their own vehicles. There was generally a good movement of traffic. The only issue we faced was reduced working hours. From April to July onwards, we started seeing an amazing pickup in terms of business, especially in our industry. I am certain there were industries in hospitality, hotels and tourism that suffered throughout the period. We are also in that sector and we felt the impact immediately as occupancy dropped to 0%, apart from quarantine guests who were staying with us. That changed the model entirely. We had to react quickly, without panicking, to introduce new concepts.

In the workshops, we had to focus on customer well-being, making sure that we had spray guns, sanitizers and kept the workshops clean to make the customers feel safe. All our workshop staff were self-distanced, wore masks and sanitized. We really had to invest in a completely different type of experience, to welcome the customer just like before, but introducing different mechanisms. We found out that the domestic economy was still thriving in many segments. It was a complete misalignment between the West and Africa. While the West had to go into a lockdown, Africa per se was not in lockdown. It was a curfew, especially in Kenya. There was still movement, and the country dealt with it in a very decent way. The country and the private sector did not have a choice to close down. It wasn’t sustainable and economical. We just had to keep moving. Whereas many suppliers and partners in the Western countries were completely switched off. They had to work from home and factories were closed down. There was no communication and the supply chain was disrupted. We kept educating them about the fact that we were not in the same position; our mindsets were different and much of the population lived hand to mouth. People didn’t have a choice and still wanted to come to work, so we needed the supply chain to continue. However, there was a complete misalignment between the West and this part of the world. They were completely scared and couldn’t work in that chaos. They had to implement the government’s directives. Whereas in Africa and especially in Kenya, it was not too restricted and was left to the private sector to deal with. Knowing that closing down was not an option was one of our biggest strengths. We just had to keep going every single day. Any kind of business was good business, and any kind of business supported our staff. That is something I will remember my entire life. We had to introduce austerity measures when we saw the impact in the first couple of months. We knew that this could be there for between 3 and 5 months. At some point around June, we had to talk to our teams and make them understand and be aware that if it continued at that rate, we would be on our knees, and as result, there was something we had to introduce which was not being done to cause anybody pain, and we would rather do it to all instead of a few, which included those at the highest level. So we were going to implement some measures to make sure that we were not in that red zone. It took us a couple of weeks and months to communicate that to our staff and teams. There were a lot of barriers to that. Many could not believe it. However, over time, when people understood what other companies and the government were doing, they accepted it and it allowed us to remain afloat.

What lessons have been learned as a business following this pandemic?

Our biggest win during this challenging time was our mindset. In the tyre division, whatever change we could not implement in the past years, this was a golden opportunity to move forward to implement that change. It was a perfect way to get people on board. It made us realize that being comfortable was not an option and that it was the time to rise together. There was a message throughout the organization where we had to make the effort to communicate, build our teams to always make joint and consensus decisions and make people feel that we were one family. That message went out strong and loud. At the end of the process, we felt that we were stronger together. Our relationships were much stronger and we were supporting our staff in many different ways. As a team and as a company, we all felt very united and confident that we were doing this for the right reasons. The message was well accepted eventually.

When you look at hospitality, it looked like a complete nightmare from our perspective. We had to temporarily close down one of our properties. Part of our group has the Tribe Hotel, Trademark Hotel, and the Village Market in Nairobi. We had agreed to start renovations in December 2019 so we had a full-blown budget. The process started in December 2019 and in March 2020, it was the first company in the group that immediately felt the impact of COVID-19. That is why we reacted very quickly, because within the group we could see that there was an immediate impact. They started to feel the impact way before the government directives. Before March, they saw occupancy drop, bookings being canceled and flights changing. From there onwards, we told ourselves that there was a big hurricane coming towards us as the entire group. We made the decision to temporarily close down the Tribe Hotel and just fully renovate it. We moved our guests from the Tribe Hotel to the Trademark Hotel and we agreed to run it as one property. We kept all our Tribe Hotel and Trademark Hotel staff thinking like everybody else that this was something temporary and that in six months we would be back on track. Eventually, we had to reduce our staff at the Tribe Hotel. However, we supported each member of staff every month just to get them going. That is something that we had to do to continue supporting them. From a Trademark Hotel perspective, the entire business model had to change. There were a lot of proposals coming from the United Nations, embassies and from international tourists that were still stuck traveling in Africa about choosing a destination for quarantine. Instead of closing down the hotel and just panicking, we agreed to close a few wings and make them into a quarantine hotel, not a COVID positive hotel. Our reputation and the way we dealt with it was our biggest advantage, unlike when we heard the horror stories in Europe where people were locked down in their rooms for 7 or 14 days. Our teams went the extra mile every single day. We allowed our guests to open up the windows with a live band playing outside in the Village Market. We gave them a piece of cake every day and we took a guest at a time outside to the pool area to get half an hour of sunshine. We went the extra mile to make them comfortable because our only review on TripAdvisor were quarantine guests. Suddenly our reviews were just accelerating and everyone talked about the Trademark Hotel as a preferred quarantine hotel. We had proposals in big groups from the UN and embassies saying they will take 40 or 50 rooms. The teams worked in the 10th gear. They were accepting the challenge with both hands and delivering on the promise. That made us proud. Quarantine eventually stopped. It was there for a short period of time between 3 to 6 months and eventually any arrival that came through quarantine was not necessary. We knew at some point, it had to die down. Our rates were also restricted and we couldn’t charge the rates that we used to charge.

Then we focused on our food and beverage services. We had curfews so we could not keep our bars and restaurants open up to 9 pm or 10 pm. However, there was frustration in the market. People wanted to go out and be cautious but still have a good experience. During that period, we saw the best results in our food and beverage outlets at the Harvest and Hero restaurants in some meetings and banquets in smaller groups. That was something exceptional. The team really outperformed. When you speak to the local market, the top 2 choices in the country are the Harvest and Trademark Hotels for dinner or drinks and to be in a safe place where the COVID-19 measures have been implemented, teams are vaccinated and there is an amazing experience.

From the Village Market perspective, the ball had dropped and tenants were complaining, which was expected. We had to support them for more than six months in concessions to allow them some freedom to pick up their businesses. Different challenges were faced in different groups and every company dealt with them in a very positive way. At the end of the day, the one reason why that was the case was that we did not have a choice. There was no government support and no following scheme. There were some tax benefits for a few months from the government but apart from that, we were left to ourselves. It was a tough period. We wanted to reduce headcount in our main offices, so we asked young members of staff to work from home or take extra leave. Many called us back and said they could not work from home because the working conditions were just not ideal. They felt that they were more positive, more motivated being in the workplace rather than staying at home. When you reflect or visualize the youth in their 20s with between 2 and 4 of them staying in a 2 bed apartment, sharing a couple of rooms, you know they just could not stay and isolate themselves. They therefore prefered to come to the office and just talk and chat and do their work. We kept ourselves busy and that was what kept the engine running every single day. It was a pretty exciting time.

How would you categorize your businesses?

You cannot categorize them in the same portfolio because one is asset rich and the other is more cash-rich. However, from a day-to-day business and family perspective, our entire business is what we are passionate about. They all remain a key component of the portfolio of what we do.

With an improvement in the COVID-19 situation, how are you planning to move forward? Where are you going to focus your development?

We have always been optimistic. We have realized a couple of things that are currently happening in the country. We have caught up with the global challenges which we did not face earlier. The issues with supply chain, shipment, freight and allocation, have accelerated and are all over the world. Whilst we are optimistic, what we have been affected by is more of the global issues that are now catching up in the domestic market, such as increased costs and pricing, delays in shipment and increasing trade. These are new challenges we are facing every day on the domestic market. That has had an impact on the local economy with inflation, liquidity and cash flow. We are also approaching another very sensitive period next year with the election. When you apply the global and now domestic issues and combine them, it becomes a monster of an issue. The next 12 months are going to be tough. We just need to put our head down, be very resilient, be absolutely focused, simplify what we need to do, and just get through it because once we do, at the end of next year after the election, I see a completely optimistic view of how the country will operate. I wish the global issues were not as significant. We did not really feel them at the end of last year. We started to see them coming through more in the last 3 or 5 months. It is something that we need to deal with because we are a net importer of tyres. We are completely reliant on shipments and production from our main partners. There is again a misalignment of how the world is operating. Demand has picked up all over the world. When I look at the allocation of stock to this part of the world, most of our suppliers initially had to allocate stock to the priority markets which are Europe and the Americas, and they felt that they should not pay too much attention to Africa. However, that is what we had to reiterate to our partners saying they cannot eliminate Africa from the equation so they should allocate part of that stock to Kenya and the region. We had to influence that decision. We had to make them aware that we were not in a bad place and let us not lose the opportunity. Some of those things are and remain our concern today, which is more of the global supply chain.

Are you looking to attract or develop relationships with investors?

We have never refused it, though our long-term vision remains to operate as a family. Every single day, we do what we do because we love it and we want to continue creating the best organization. We never let overseas interests distract us. However, we have been approached many times with international interests and in a time like this, you cannot ignore it. But it also takes away resources from the conversation and we cannot afford to take resources away. Our time now is absolutely about the business and our teams, making sure that we are doing whatever it takes to grow, sustain ourselves and make ourselves better. If we do that and create that environment and culture, we would have done a great job. Whether an international interest appears today or tomorrow, what we have built as a group and as an organization is remarkable and that vision remains all the time. Sometimes you are easily distracted about international interests of private equity or offers. However, Africa is not an easy place and with what we have achieved so far, we must always continue to have a long term vision, never distract ourselves with the short term and always work towards the next 60 years.

What are your future plans regarding the tyre centers?

We are looking to open a new tyre center towards the end of the year. We have renovated a few as well. Besides, we are looking at opening 3 new centers by second half of next year. We have 25 tyre centers today, 28 soon.

What inspires you? What drives you to do what you do?

I am blessed to have inherited the values set by the family. All the hard work done in the family to implement, install and communicate our purpose, values and beliefs is what I have inherited. My job is to continuously communicate that to the entire organization. My success is about me being a steward. If I leave the place better than I found it, and we create a healthy and strong organization that can stand on its own two feet for many more years to come, I would have done a fantastic job to continue with our culture and our values. My entire thinking and operations are always about the moment. It is something that, as a family, we take pride and joy in. It is about our relationships with our staff internally and our long-term partnership with our suppliers. Our partnerships go back between 30 and 40 years in some cases. Michelin tyres is more than 30 years, Apollo tyres is more than 25 years and Kumho tyres is more than 30 years. It is something that we have managed to grow together all the time. I have never believed in win-lose or lose-win. Our mentality is always win-win, be transparent, build relationships and build partnerships. That is one way of building a great organization. Also, putting weight on to our staff. The average length of service in our organization is 15 to 20 years. We have some members that have been with us for between 30 and 35 years. To me, it is literally having that family environment and family structure but in a very professional structure. We have heads of departments, who are fully accountable, yet we are soft on the inside and we integrate really well. What drives us is a family culture environment. That is our biggest strength. What keeps me ticking and going is always working for the long term. It is not about me. It is not about my position or my seat. It is about the company, family, teams and staff. If we can all grow together with our partners and stakeholders, that is what will keep us alive every single day.

ABOUT KINGSWAY TYRES: Kingsway Tyres Ltd is a tyre distributing and retailing company with over 60 years of experience in Kenya and 25 tyre centres countrywide. It is part of Kingsway Group, whose companies are spread out from the hospitality industry to the financial sector. Together, they set the same high standards in their operations and service delivery.

For more information, please visit: www.kingswaytyres.com.

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