In latest news Car and General CEO, Vijay Gidoomal, gives outlook for the company in East Africa

Latest news: Interview with Vijay Gidoomal, CEO of Car and General

Can you give an overview of the scope of business that Car and General is involved in?

We are an 85-year-old company that was established in 1936 and we have been through a number of iterations. In 1996 we essentially sold all of our businesses and decided to start again. From there we first went into the motor vehicle business with Alfa Romeo and Fiat but exited that and in 2003 we set up the two-wheeler business in Uganda. We set up the three-wheeler business in Kenya in 2004 and tied up with Cummins in 2006 and then with several other brands in 2013 and 2014. That was the genesis of our business. We then found ourselves focusing on several key areas. Number 1 is the automotive and equipment distribution lines, the biggest of which is the motorcycles, as well as the three-wheelers, the generators and the aftermarket for those products. Number 2 is the Watu Credit finance business which we bought into in 2017. We have some prime real estate and are ensuring we get the maximum returns on it. We have an agricultural business in Tanzania, which is a poultry business, and we have a manufacturing business where we make helmets. We think there will be an opportunity to go into more manufacturing going forward.

What is the competitive edge that your company offers?

We always align ourselves with a product that will be number 1 or number 2 in the market. Quality is absolutely paramount for us. Our people and execution are the second competitive edge that we have. We have developed some great people and we execute fairly rigorously, which is a differentiator. That is the case globally as products become more similar. Those are our competitive edges from a very high level and distribution from a slightly lower level.

What kind of revenue do you get from each of the sectors you are involved in?

The news is that if you look at our year ending in September, our equipment and distribution business was at about $170 million USD. Our finance business was approximately $80 million USD. Our real estate business is mainly rental incomes, so the volume was low, at $3.5 million USD, but when you look at our assets on our balance sheet our investment property base is around $40 million USD. Our poultry business, which is a high margin business but not high in volume, closed at around $6 to $7 million USD.

Can you give a brief outline of each of the sectors your company is involved in?

We believe we can have a major role in moving the market from the internal combustion engine in the two and three-wheeler space to electric vehicles. It is going to take time because it is a long play, but it is one thing that we can be very committed to.

When we look at the equipment and automotive distribution business it is made up of two-wheelers and three-wheelers. It is the biggest business we have because it is a mass market product and the aftermarket that caters to it. We do tyres, oils, parts. It is a very solid consumer business. When we look at our equipment business, it is a joint venture with Cummins. That is generators and the aftermarket from mining, ports, and rail. It is a multi-faceted business based on the engine. And with that we have construction as well that includes forklifts and tractors. Our finance business is predominantly financing for two and three-wheelers and right now we are doing that in Uganda, Kenya, and Tanzania, which is where we have a footprint for our own automotive and equipment distribution business. That business is expanding into Sierra Leone, Togo, and Benin. We have a small operation in Nigeria, and we are looking at a couple of other countries that show the right dynamics. Our real estate business is across Uganda, Tanzania, and Kenya with the largest section in Kenya. We are looking at various opportunities to expand in that and we have already created the land bank. Now it is a question of putting the right developments on some of the land. Our poultry business will remain in Tanzania, and we are looking to double the capacity of our production. With our helmet business we are working with the government of Kenya to industrialize the two and three-wheeler space. On that basis we will be looking to see how we can go into backward integration to industrialize more of the parts that go into two and three-wheelers so we can promote the manufacturing process.

The other really big thing that we see is the electric vehicle space. Right now, we are testing the three-wheelers and with our distribution network, our fairly strong brands and our ability to finance it, we see ourselves as being able to play a significant role in EV transformation. We believe we can have a major role in moving the market from the internal combustion engine in the two and three-wheeler space to electric vehicles. It is going to take time because it is a long play, but it is one thing that we can be very committed to.

What kind of infrastructure would you have to put in place for electric vehicles?

With the two and three-wheelers you can plug them in at home. That is number 1. And you can get to a full charge in 3 hours 45 minutes if you have electricity, and our three-wheeler customers tend to have electricity. We would also put in the charging infrastructure, the DC units that fast charge. We can play a transformative role as long as the technology is there, and we can satisfy our customer. We think we have the technology for the three-wheelers although we are still testing proper range on full load. With the two-wheelers we think the technology is lagging a little bit in terms of range. These are high utilization products and if we are going to launch a product, we need to be sure it has the ability to make our customers smile.

In which direction do you want to take your real estate business – residential or commercial?

Our real estate is commercial, and we are our own users of it. We build on it and we are our own tenant. It is run separately so we have different entities that will rent real estate from the mother company. That is number 1. We built our first mall in the middle of the pandemic in 2020 and we have another two planned, one in Mombasa. We want to be sure that the retail dynamics are back up to speed. The traditional mall does not work anymore in the traditional sense. You cannot just have a whole bunch of retailers and expect them all to be successful, that has changed. Because of online shopping and changes in buying habits, when we look at setting up a mall, we look at doing so with more than one anchor. Our ideal number would be three anchors. For example, the one we are looking at setting up in Mombasa will have a big retail operation, and in addition to that, it will have a big food offering, plus a community center. We have seen that purely retail right now would be a very dodgy proposition so that is where the reformed thinking has come into play.

What is your company’s position on getting investors, international and/or local?

Each business currently finds its own investments. As a holding company, we are not really looking at adding to our investor base right now. Where we are adding to that is places like Watu whereby we have a big financial appetite because we have a big rollout program and the commodity is fundamentally cash, so we are looking at broadening our investor base. We already work with many financiers, and we already have Mez Capital in place and in the near future we will look at equity capital as well. In terms of our other operations, we are still trying to scale up and then look for some big-ticket items.

On our real estate side, we will certainly be looking for other investors when we launch the new projects. Real estate is one business where you have to be very careful about your debt equity ratios, whereas with the other businesses it is a bit simpler. Debt equity ratios have to be conservative. With our distribution and poultry businesses, we feel that we are pretty well catered for as it is.

What are some of your best success stories?

Our belief is in sustainability rather than success but the good stories in our business are the two-wheeler business. Identifying Uganda as an opportunity for us to scale up the business and then bringing it to Kenya is a positive story. Our joint venture with Cummins is a very positive story. And our investment in Watu is a really positive story because it is something we always wanted to do but not do it ourselves as a business. To be able to identify the right partners with the right technology was a very critical step for us. Another big one is our ability to grow people and develop them into managers. We have not recruited externally for a long time because we have brought people up from within the organization. Actually, as a business we should be a lot bigger, but the market has not allowed it because it has not grown fast enough.

What are some ways to grow the market at a faster pace?

One solution is to have a multi-engine growth strategy. We hear about African countries growing at 5% or 6%, but if you look at the real growth in the different segments you can see they are not growing fast enough. That is because a lot of the growth that is happening is on the back of infrastructure and if you strip that away, it takes away a lot of the growth. That is government spending. The facilitators of the growth that we have had are technology, M-PESA, border space and equity banking.

Where do you see the growth coming from in future?

It will differ from business to business. We think with the entry of finance and EVs there is a big growth story to be had there. We think our consumer business shows signs of having a lot of growth potential. With our equipment business we think the growth will not be geometric but arithmetic. And with our dominant market positions we will be able to build a satisfactorily profitable business. Our Watu business has plenty of scope for growth because we have a huge customer base in many countries. The poultry business can be a solid growth story, more in terms of market share. But we think the food business should see continuous growth. In real estate, we have projects lined up and it is just a question of pushing the button to kick them off. And in terms of our manufacturing, we are very optimistic because of the industrialization program we have with the government of Kenya.

What are your next priorities?

The big one is EV and the very big one is three-wheeler electric vehicles. We are confident that we have the right product and now we need to make sure it is fit for purpose. The other one is the country growth for Watu. We have just launched in Tanzania and Sierra Leone so that is going at 100 miles an hour. And even on the poultry side in Tanzania, if we can find the right partner to bring value, we will look at that too.

What is your inspiration in life and in business?

My philosophy in life is to do the right thing every minute every day and give myself the tools to make the right decisions. That is from a very high level and if I can do that my conscience will always be clear. I will always be doing the right thing for the business, for the personal side, for the family side. I would like to make a difference, and when I say that I mean have an impact. For example, I feel that most things I engage in I am having an impact in terms of improving people’s lives. That is a key driver for me.

What is your vision for the company in 5 years’ time?

I would like to see us be the dominant player in each of our businesses. I would like to see us continental and would really like to see us have an impact in the electric vehicle space. And I would like to see us do really well financially, but also do a huge amount of good socially.