Manufacturing is one of the major value drivers in an economy.
In this episode I speak with Darshan Chandaria, Group CEO of Chandaria Industries, the company founded by his grandfather in the late 1940s and which has now diversified into other areas.
The core business is hygiene products: recycling waste paper and turning it into tissue and other products.
This episode is slightly longer than usual, mainly because there just seemed to be so much to talk about. This includes the set up of their fully integrated operation, the thought process of building a new factory, hiring strategies across the group and Darshan’s management strategy for leading the team. Essentially: find people on the same wavelength and leave them to it.
There are also other tidbits of information in there around designing detachable roofs in the new factory, the comparatively high cost of transporting goods, as well as Darshan’s strategy for building his Instagram following.
The interview took place at Chandaria HQ which is a working factory and so at times there might be some background noise of trucks moving around. I’m sure you’ll agree though that it adds to the effect.
Anyway, without any further ado, here is Darshan.
Family business established since the 1940s. Established in 1964.
Diversified portfolio of companies. Hygiene is the main. Largest tissue and hygiene products company in East and Central Africa: a fully integrated operation.
There are 30,000 Kenyan families employed in the paper collection. Often these jobs stay in the family: there are generations of people in collecting of paper waste. 3,000 people are employed across the group.
Toilet tissue is the biggest seller. It’s the entry level product to hygiene.
Leadership team have to be on the same wavelength, the same vision.
There a few major channels they work with, the crux of the experience the customer should feel is: does the customer feel comfortable enough to call you late at night, because you will sort out the issue they have.
Meeting ISO standards, and the way in which that is measured.
It’s a capital intensive company with high barriers to entry.
Transport cost takes up a higher percentage of the margin.
The expansion of building a new factory will be a $50m investment. Part of this will be a detachable roof in the design. Most of this new factory will be taken on with debt.
Raw materials is a big thing. Less things being printed means availability of raw material is a concern.
Transition from Family Office to Venture Capital firm. Early stage companies to then scale up.
Lessons and Insights
Biggest learning: the leadership team has to be on the same wavelength
Biggest insight: future proof your investment decisions i.e. does your factory need a detachable roof
What keeps you up at night: as paper usage reduces, raw material costs will increase
Social media etc.