Treadsetters, Dunhill Consulting, Thika Road Mall and Imaging Solutions by Bharat Doshi

Interview with Bharat Doshi, Director at Dunhill Consulting, Thika Road Mall, Treadsetters and Imaging Solutions

Out of all the sectors you are present in, which one would you like to push more?

We are in quite a diverse set of businesses. In all areas, we are going forward, but at different paces. All areas have different kinds of challenges and we are looking at many different opportunities. At the moment, our group’s main focus is our tire business, Treadsetters Tires Ltd. There are plans and things that we are doing that are very expansionist.

Is the tire sector competitive? What are the latest trends? What is your assessment of the sector here?

We are already getting a lot of inquiries from large funds that want to come and invest money with us and do joint venture projects with us. These are all opportunities that we are looking at.

We have been present in the tire business for more than 25 years. In 2003, we left the management with Goodyear, one of our partners. We had a fallout with them in 2011, so we then separated from them and went on to take the distribution rights for Bridgestone Tires. For five years, we were not directly involved in management. In 2018, we suffered a major cybercrime theft. This is one of the biggest problems in Kenya right now where there are very intelligent people outside who are able to play with the IT systems of a company and do funny things. After discovering that, we made the decision to either close the company or put ourselves back in the driving seat. More than 250 people would have lost their jobs and many of them have worked more than 15 years in the company. It did not make sense to close. So, we decided to jump in ourselves. Now, two partners are actually fully involved in the business, running it on a day to day basis, and making sure that we get it to where we want. When we went out to the field and met our customers and saw what was going on, we were amazed. In the 15 years that we had been out, customers have grown multifold. Customers that used to own 20 trucks, suddenly have 400 trucks. The sector has become far more aggressive, far more competitive, customers are far more demanding, they are far more professional. They completely understand concepts like lowest cost per kilometer for tires. There are very professional yards. We are now comparable to many developed countries in terms of the systems and the way that a transporter runs his fleet. We see that as a huge opportunity because we were the driving force in leading these kinds of changes. We were pioneers in introducing tubeless tires, cost per kilometers, mileage contracts, and this really falls into line with the kinds of services we want to offer. Treadsetters never saw itself as a trading company, just trading in tires, but more as a service provider. So, it made a lot of sense for us to partner with these customers. So, here we are back again. We have completely changed the management team. There are a lot of new people that have joined the business in the last six months. We see a huge opportunity for Treadsetters to provide the kind of services that we want to do for the customer. Our concept is basically how to lower the customer’s operational costs; therefore, it is a partnership. We are coming up with many innovative products using technology, skill sets that are not necessarily available in Kenya, and bringing all the benefits to the customers. In terms of product range, we have increased now to distribute Bridgestone, Sumitomo, and Eternity tires. We also retread with Bandag and Leader tread which is a very good quality rubber value line from South Africa. With this range, we are able to give the customer whatever they need. With the skills we have, we are able to work in a customer’s yard and physically take care of his tire problems.

What do you need in the sector?

A real interesting concept that we are thinking about is to attract a partner to join our company. The advantage of that is firstly value added in terms of skill. There will also be value added in terms of investment because in this industry the requirements for funding are very large. This would definitely enhance our ability to expand ourselves much more rapidly. If there was a way in which the government could also work with us, there are many areas where the government is directly involved with the work that we do. For example, the inefficiencies in the port, the clearing of cargo, the difficulties of bureaucracies in many areas. The government is investing a lot of money in infrastructure which has helped our sector tremendously because we are now seeing performances which are unheard of in a developing country. Any direct investment in Kenya will definitely benefit Treadsetters. Within or without Treadsetters, we see the opportunity in these funds coming into Kenya.

Which of the sectors you are active in would you like to develop?

There are four different silos in our property business: property management, property sales and leasing, property evaluations, and property development. As far as sales and leasing is concerned, the market is very quiet at the moment. Cash flow is the main issue. Customers simply do not have enough funds to be able to purchase houses or move forward and that sector is currently suffering. That is also a problem externally throughout Kenya where money is tight. One of the main reasons for this is the capping of interest on the banks. As a result, the banks are not very willing to lend and, in turn, the local people just do not have enough funds to buy a house. Property management is an outsourced service that we give to people who own commercial buildings. That is fairly stable and well-controlled. We have about 35 properties that we currently manage. With IT and the use of technology, we are able to provide better services at the same price points. The market is very competitive in both these segments. Property evaluations is an ongoing business. It is a service we provide to banks, insurance companies, etc. and it is quite stable, as well. It is following the same growth path we originally expected. For property development, we have now completed the building we were working on at Waiyaki Way which is a 21-story office building. It is a very exclusive, prime office space. We applied for green star ratings and we have now been awarded a five-star green star rating which makes this building unique in this part of the world. It is the first building to have a five-star rating in Kenya. The European Union Parliament decided to move their offices into our building. They now occupy six floors of the building. We also have some very large multinationals that are interested in taking the remaining floors. Because of the quality of the building, the kind of clients we have been able to attract are of a different level. They are people who understand quality, plug and play, and exactly what the building needs to provide and that is what Dunhill Towers has done. We have realized that we have a niche here. We are able to define these kinds of needs and then meet them. Future projects will be focused more on catering to a very niche market. We are looking at more commercial office space developments. We have also completed a warehouse project that we were able to sell. It was a very high-quality development. We are finding that the buyers are now very discerning. They understand what they need, quality, and all the different aspects of a building. To people who provide that level of quality, customers are happy to pay the price because they see the value in the proposals. We are now starting a second warehousing project. We are also looking at opportunities to find good parcels of land which have now come down in price and where we want to develop in the future through land banking. The property market for us now is more in the developing side and the two other sides are stable. We are waiting for the market to wake up for the sales and leasing sector.

What are the challenges with the Mall?

There are interesting challenges at the Mall. The largest retailer in the market, Nakumatt, collapsed. They were our anchor tenants in the Mall. It was a very difficult time for us with this and the elections. 2017 and 2018 have been very tough years. When an anchor leaves a mall, the rest of the tenants will suffer. As a result, managing tenancies was not easy. We worked very proactively and we were very aggressive in our strategies and thinking. We went out and managed to talk to Carrefour which is a new player that is a worldwide supermarket chain. They were very interested in our location and have now moved in. They are now our anchor tenant. Many other large multinational retailers have now entered into the Kenyan space such as Burger King, and other large brands who are very eager to come in to Thika Road Mall. Now, for the last year, things have been very stable. The Mall is now doing extremely well. Tenancies are full and we have 95% occupancy. We are looking forward to 2019. The retail sector is going to suffer and it will face competition from online shopping which will grow in Kenya. The main focus for us is how to make the customer experience unique. Besides shopping, what are other things we can give to the customer? We are already looking at expansion plans, entertainment, hospitality, and what other things a customer would come to a shopping mall for. We have changed our management team and we now have an excellent CEO who is running the mall in a much better way. We are very positive and we are looking forward to where the mall is heading. In the future, we may look into putting up apartments and hotel type apartments. There is also entertainment, food outlets, etc.

In our camera business, the Kodak downfall forced us to focus on Nikon cameras. We are the exclusive distributors of Nikon. Surprisingly, this market segment is actually growing. While mobile phones have taken away the lower end of the amateur photography segment, the slightly higher end and the professional levels are really growing. With tourism and the wildlife in Kenya, there is a huge demand for good quality digital SLRs. As a result, we have now opened two more showrooms. We have one in Thika Road Mall, the second one in the Village Market, and we just opened another one. These outlets are really experiential so we expect our customers to come in, feel and touch a camera, play with it, borrow it if they like, and then purchase it. We are seeing a lot of growth opportunities here. Nikon has been a very progressive company. They have been developing some amazing products. The latest is the mirrorless range which was just introduced with the Z6 and the Z7. The interest levels in Kenya are very high. To keep our business solid going forward, we are now setting up training schools, we do a lot of work in schools, and in some of the weaker sectors of the country we are helping to train photographers and creating entrepreneurs who are able to learn how to do photography and then take it up as a career. These CSR projects have been very successful and Nikon has now become a generic name for cameras in Kenya. We see growth opportunities there. It will not be a huge business, but it is a good, solid business that has some good potential.

What other CSR activities are you doing?

The progress on our philanthropic activities we are involved in is very good. The Yunus Social Business Enterprise we launched is now up and running. We have just chosen the first impact business we will fund, called Burn Technologies, which is in the manufacturing of stoves which use less wood to cook food. Yunus Social Business will now expand very rapidly because the setup is finished and we can now start the distribution of funds from our side. The processes and the people and the professionalism are all in place. It was set up in partnership with Professor Muhammad Yunus of Grameen Bank who created microfinancing. On our water projects we are doing, we have recently finished 8 more bore wells in some very arid areas in Kenya. We are now providing water to those areas using solar technology and pumping water out of the ground and allowing schools and the local community to benefit from clean drinking water. Our feeding program is still going strong. We have 1,500 people being fed every day. Our cerebral palsy unit is doing well. We are looking after 120 children who have cerebral palsy and plans are now in place to put up more classrooms and expand the whole facility so we can take in more children. We are waiting for the government to give us the parcel of land we have been promised. It has been going on for two years. If they give this to us, we are happy to set up the first cerebral palsy center in Kenya. There are many children with CP in Kenya and our objective is to set up a unit where we can give these children facilities for treatment as well as vocational training for their livelihood. From a charity perspective, the progress is great.

How do you see the company developing in three years’ time? What do you want to achieve?

Tied in with our value systems and our CSR projects, etc., we see this company growing, we see opportunities in Kenya, we see our team members and our staff getting more involved in the companies. Eventually, we see partnerships with them, as well. We expect our staff to grow and eventually own shares in the companies. Overall, Kenya is an excellent platform to be able to launch or grow businesses. The opportunities are there, but the difficulties are there, too. This is an African country and there are all the difficulties of the developing world. But we need to see the opportunities in the chaos. We see a huge ability to be able to capture that in the segments that we are in now. We are now a bit slow in terms of new opportunities in different sectors because we believe these four sectors are where our focus needs to remain. We see staff participation, investment from overseas, there could be partnership possibilities from investors who are interested in the sectors we are in. We are already getting a lot of inquiries from large funds that want to come and invest money with us and do joint venture projects with us. These are all opportunities that we are looking at.

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