Just months after the country gained independence, a small tissue paper factory opened at the Kenyan coast. At the time there was not much local manufacturing of the product despite high demand. Over the next five decades Chandaria Industries has grown to become one of the largest tissue and hygiene products manufacturers in East and Central Africa.
The company currently manufactures in Kenya and Tanzania, and sells its products in 15 African countries. Chandaria Industries manufactures its tissue products by recycling waste paper, which it buys from local waste paper collectors.
“People think paper is a nuisance,” says Darshan Chandaria, the 29-year-old CEO of Chandaria Group, which operates several subsidiaries, including Chandaria Industries.
“I tell people not to burn their waste or not to dispose of it, but to bring it to us and we will buy it. You can actually earn a living out of collecting waste paper and selling it to us. We are recycling the country’s waste and transforming it into a source of national wealth, and providing employment to many thousands of people.”
Chandaria Industries is the flagship company of Chandaria Group, a diversified organisation with interests in consumer goods, real estate, insurance, automobile manufacturing, mining, and solar energy generation.
According to Darshan, the group’s waste paper recycling activities creates jobs for nearly 20,000 people.
“Our recycling operations in Kenya and Tanzania have saved over 30 million trees since 1964, a measure based on the weight of waste paper recycled. However we still don’t get as much waste paper as we need,” he says.
Diversifying the business
Although the Chandaria Group is best known for its tissue and hygiene business, the family has diversified into a number of other sectors. Recently it entered a partnership with Barclays to establish an insurance business in Kenya.
“The reason we have branched into these other sectors is because we see opportunities there. In East Africa everybody is talking about the growing middle class who require a wider range of better quality and more sophisticated products and services,” Darshan explains. “We are positioning ourselves in sectors where we see the growth potential and where we can have a major social impact and transform lives. However, our core business as a family still remains consumer products.”
The group was started by Darshan’s grandfather M.M. Chandaria in the 1960s. Darshan’s father Mahesh Chandaria, joined in the 1970s and led the expansion into new products.
“We would have never been able to achieve any of this if it wasn’t for my father’s visionary leadership and the great value system my parents instilled in us. My father has this amazing foresight, the ability to identify a great opportunity and relentless commitment to succeed at it,” adds Darshan. “We have also built good relationships with customers and suppliers. We have been able to innovate constantly and serve customers right from the bottom of the pyramid to the top in terms of our product and price offerings.”
But trading in consumer goods comes with many challenges and requires investment in research and development to be relevant to different consumers. For instance, Chandaria Industries and its Tanzania-based sister company, Tanpack Tissues, produce several tissue brands that differ in texture, shade and price point depending on the target consumer.
Poor infrastructure, Darshan notes, does drive up the cost of distribution and maintaining the group’s fleet of vehicles.
“In Tanzania, the land area is much bigger and you have to travel much longer distances to get from one end of the country to the other,” he says. “The importance of using a simple necessity like toilet paper for basic hygiene and sanitation purposes has still not fully been understood by people living in remote rural areas across East Africa. So we often carry out various initiatives to help educate people across the region.”
He adds that the group faces unfair competition from businesses that engage in malpractices such as tax evasion, selling of products without charging VAT, and production of sub-standard products.
“The malpractices in Tanzania are even more widespread and to counter this we have focused on building strong relationships with customers by producing products equal to international quality standards and at extremely competitive prices,” says Darshan.
“Our business in Tanzania is doing well even though a number of Kenyan companies who have set up there, are either struggling or have decided to pull out.”
Darshan notes the rapidly evolving business environment in Africa presents opportunities for Chandaria Industries and Tanpack Tissues to expand further. Improving the companies’ distribution capabilities, he says, and innovating new products will help it tap into new markets.