Rakesh Rao has been at the corner office of Kenya’s biggest paint maker for 17 years now. This now makes him one of the longest-serving chief executives of a firm listed at the Nairobi Securities Exchange #ticker:NSE . But for him, this is still not long enough to call it a day.
Mr Rao spoke to the Business Daily on how he oversaw the paint manufacturer’s recovery from losses in the Ugandan, Tanzanian and Rwandese markets, the coronavirus pandemic and his exit plan for the company.
HOW DID THE OUTBREAK OF THE CORONAVIRUS AND THE RESTRICTIONS IMPOSED AFFECT BUSINESS?
Business was greatly interrupted by the pandemic and the main hit was the cost of raw materials going up by nearly 50 percent. This had a big impact on margins last year.
Many countries reduced the production of raw materials and demand went up. Logistics became a nightmare and like for us, freight went up to $5,000 per tonne from $2,000.
This increase was monumental on our business given that we import over 95 percent of our raw materials.
HOW DID CROWN ADJUST TO THE TOUGH TIMES, AND WHAT IS THE WAY FORWARD GIVEN THAT GLOBAL ECONOMIES AND ALL SECTORS OF THE ECONOMY ARE PICKING UP?
We did not achieve our targets last year but again this was mainly due to the jump in operating costs. However, we cannot pass on an entire price increase to the market and so what we are doing is that we are increasing prices of our paints in the four countries.
The increase will be highest in Kenya at eight percent and this is because, in Kenya, premium paints account for 70 percent of our market while in Uganda, Rwanda and Tanzania they are mainly economy markets.
But we are watching the market dynamics because maybe we may need to increase the prices by up to 15 percent in the future. We wait for the right time, but what is for sure is that we have to increase prices.
IN 2020, CROWN DISCLOSED THAT IT WROTE OFF SH653 MILLION INVESTED IN ITS SUBSIDIARIES IN UGANDA AND TANZANIA. WHAT ARE THE PLANS REGARDING THESE MARKETS? Those were 2017 and 2018 and they were some of the toughest times for Crown. From 2019 onwards, we started making profits in these subsidiaries and I can confidently say that we are in the flying mode in these countries.There is no […]