Prafulchandra & Brothers: Quality Interior Solutions Provider

Interview with Mukesh Prafulchandra Desai, Managing Director of Prafulchandra & Brothers

How would you assess your sector in 2016? What are the major trends?

The sector is growing, no doubt. There is a lot of potential in this country. Everyone knows that Kenya is now a growing and emerging market in the world. There are a lot of positive signs for the country. In our sector, development in the recent past has really grown to levels that are far higher than in previous years.

It is a growing market in all the different segments of your sector. What sort of companies make it a growing market? Foreign? Local? What are the major trends?

At the end of the day, our target at Prafulchandra and Brothers is that any development, any residential or private investor should have value for his money in terms of quality.

The major trends happening in the construction industry are kitchen units, lighting, accessories, floorings and tiles. It’s all an emerging market. There are a lot of investors from outside looking at the possibility of collaborations with local companies. 

What do those companies look for in a collaboration?

They look for the sustainability and financial aspects of the local company and the possibility of growing together.

Why are these companies obliged to go through a local company that is already implemented?

Because of the market name and the analysis they have of the company.

These companies and particular construction brands will find the right distributor and go for the best-known brand?

Correct.

How do you choose who you are working with or who you are going to sell?

We choose an international company brand by looking at their size and reputation in the market and their world ranking. Locally, we brand and market our name and products by having the backing of international brands. The top manufacturers in the world are in Italy and Germany, for example, Scavolini kitchens, Boone German flooring, Rania Marazzi Italian tiles. They all come with a price tag of quality.

And these brands are famous abroad but sometimes not in Kenya?

That is where we come in. We make it famous by marketing through papers, media, billboards and e-communication.

Do you or the brand assume the cost of this communication?

The local company assumes the cost. The brand only pays for its name. We are authorized to market the brand name. We are an exclusive dealer.

What is a constraint of the market?

Currently, the biggest constraint in the market is the banking industry, which is quite shaky. In the past six months, we have had three known banks collapse. These are banks where people have put in their savings, investments and daily trading. And now they are all stuck. The money circulation has ground to a halt. This is affecting the economy of the country which also affects us.

There are 43 banks here. The banking sector is too big for a country the size of Kenya. The banks will merge and the larger banks will take over the others. If there are very strong players that can take these banks easily, the money in the frozen accounts will become available. So, is this only a temporary problem?

We want our name be recognized as one of the top, leading companies in our sector in terms of quality.

It is not a temporary issue. Internal merges can happen if the two proprietors of each bank have an agreement. It is subject to why the collapsed bank has gone into liquidation and whether the new bank can afford to take on the liquidation. It is very rare that such merges happen in this country. If a bank goes down, it goes down. Whatever they try to do about it in the legal system takes a long time. Somebody who is stuck for years and years would never think of going back to that bank, however good or bad it does. 

Are you affected by that in your business and your accounts?

While we haven’t been affected by that because we haven’t banked with those banks, most of our clients have been affected. At the end of the day, it affects us as well.

What solution have you found? If the Kenyan market is as tough as that do you change or go somewhere else? What is your strategy for that? Have you diversified?

In terms of the company, we have diversified a lot in the past few years. Our core business was electrical, lighting and accessories. We brought in kitchen units, wooden flooring, ceramic tiles and domestic appliances. We are increasing slowly with the trends of the market. But our one consideration is that we would like to provide quality only.

Where do you put the most effort in sales among all the different segments you have?

We put effort into each and every segment we have. We don’t have one particular product that we would really push. Now, they are all within our family so we have to push for all of them. Lighting has been the core of the business so that is our top priority.

Do some of your products have more growth potential than others? Is it better to put the effort into the ones that have more potential and are growing more steadily than the ones that are not growing?

Technically, the new products which we have brought into our family are products that we have never had any education for. We learned through the process. Equally, in a construction unit, whether you call it a three bedroom house or a multi-story apartment building, the terms of product quantity are almost the same for every sector. This includes lighting, kitchen, flooring and tiling. They all go hand in hand. If I had to push, definitely, lighting is the core of my business. 

Can you give some insight to the structure of your company and your family?

The company was started by my father and his older brother back in 1964. They migrated from India to Kenya. They started a local filum distribution company. In 1988 they started their first retail outlet for electrical products. After that, their sons came in and expanded the business. It is totally a family business. My father’s older brother sadly passed away a couple of years back. My father is semi-retired. Now, the four brothers are running the show in a very professional manner in terms of shareholding, management and everything else.

Are you interested in bringing more resources into the company through shares?

We have not thought of that but it could be of interest once it is on paper.

What about strategic partners, joint ventures outside the country or in another field? Are there any specific areas or countries?

Our options are always open. We are always looking for opportunities. Not a specific area or country, but as long as we see the right prospects it will be interesting.

Sixty percent of your clients are consumers and forty percent are B2B. What is B2B?

B2B is the main construction industry, which are the big developers and contractors.

How does it work? They have a building to construct and they put out a tender and people reply or they just contact you directly?

In certain cases they contact us directly with the materials they require. In certain cases they do tenders.

How many B2B companies are there?

There are over fifty in Kenya.

What are they looking for in a partner?

They are looking for trust first. After that, delivery, quality and then the price.

In that order? The price comes last?

When they come to us they know the price will not be the first thing.

What is your competitive advantage?

The main thing is quality, time delivery and the trust in this company. In terms of quality, all the brands we market -Scavolini, Boone, EGLO, BG- are reputable companies in the world. Anybody can surf their website and see the amount of business and quality certificates there. 

What do you deliver to them? Is it only a product or is there a service behind it?

For kitchen units, the product and the service behind it. For lighting and flooring it is the product.

Do you install the kitchen units yourself?

We have an installation team which does the installing. There is also an after sales service which is much more important in a kitchen unit.

Roughly how many people work with you in all the different sectors?

The top management consists of four brothers, followed by four managers who are divided into different sectors. Under them we have around forty to fifty people working.

What is your strategy for development and how do you approach it?

Kenya is a rising country. There is a developing market in every sector, whether it is petroleum, tourism, construction or any other sector. It’s a developing country and the developing market will automatically be achieved.

How has the company been growing over the last few years?

We have been having challenges for the last few years because the new government has put in some good measures in terms of importation, but it will take a while to be realized by the people on the ground. We are having challenges but we are on a steady growth. We are looking at plus or minus ten percent per year for the last three or four years. 

Are there investment opportunities in the sector for external companies?

There are a lot of investment opportunities and possibilities in most of the fields including construction, tourism, agriculture, and also petroleum because we just discovered oil.

How difficult is it to do business here in Kenya?

It’s not difficult. It’s like any other world. It has got its pros and cons. Very much possible to do good business here.

Projecting to medium term, three to five years’ time, how do you see your company if everything goes according to plan?

We want our name be recognized as one of the top, leading companies in our sector in terms of quality. We still need to do more. In this country, a lot of people in the current business environment would like to go to China, Europe, Dubai or Far East markets and source their products directly thinking those things are not available here, but they are. It’s one of our challenges here that people go to China directly to get cheap products. There are a lot of ways and means to get those products in bypassing the governing body controlling the quality. 

Do they ask the company to do that or do they go directly to see the supplier in China?

They go directly to see the supplier. They go for a fair or something. They go straight to the company and tell them they need ten kitchen units. The bottom line to him is the price. And if he’s getting it at a cheap price, of course he’s going to bring it here. We place ourselves in that if you compare and apple to an apple, then we are competitive in this market. We can’t compare an apple to a banana.

That is not your market anyway, correct?

That is the current trend in the construction industry because everybody wants to reduce their overhead.

Do you think Kenya is not looking at quality?

Currently, they have been cheated by the supplying companies that show one thing and send something else to the knowledge of the developer or the individual who is going there directly to buy. What is the difference between the two qualities? Once they burn their fingers, they will realize. The same scenario happened seven or eight years ago when Dubai became a big market for this country. Everybody started importing from Dubai. Eventually, three or four years later, when they started burning their hands, they realized. Then it came back to the local industry and local market. Now, people have started moving on to China and they are burning again. It will still take some time before it comes back to its senses.

So we hope that very quickly they will know about it and the development will be good again.

At the end of the day, our target at Prafulchandra and Brothers is that any development, any residential or private investor should have value for his money in terms of quality.