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Duo turns small outlet into major medicines importer in Kenya

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Orange Pharma staff led by Dipesh Shah (third left) during the Kenya Top 100 mid-sized companies dinner hosted by the Business Daily and KPMG at the Carnivore Restaurant, Nairobi, on November 23. The firm was ranked eighth.

In 2011, Dipesh Shah and Kaushik Purohit pooled resources with others to start a general merchandise shop at Nairobi’s OTC area selling lowly priced consumer goods.

Their firm, Orange Pharma, solely targeted hawkers, kiosks and retail shops where they delivered orders on foot or bicycles.

“We realised that our customers’ businesses were growing into mini-wholesalers who loaned out their items to hawkers at bus stops and roadside traders while sourcing for products directly from us,” recalls Mr Shah.

They relocated to Baba Ndogo Light Industries a year later and embarked on importation of products from India and China, raising their revenue to Sh200 million in 2013.

Mr Shah said they registered Sona Moja, Sonadol Extra, Kaluma balm and Sonaplast which they proceeded to promote in TV and radio advertisements as well as branded billboards across the country.

“Many people remember the late Mzee Ojwang’s aching back being jumped on to ease the pain and TV comedian Mwala’s matatu skit where he hands over a Sona Moja pair of tablets to a Maasai warrior with a blinding headache,” says Mr Shah.

Mr Purohit, who is the sales director said their marketing offensive endeared their products to customers across the country creating new demand for their products.

“Our products compete against global brands that are unavailable in villages as over the counter drugs. Marketing has proved beneficial as customers easily relate with our brands,” he says.
By 2017, Mr Dipesh, who serves as the Chief Financial Officer, said they raked in Sh615 million in sales enabling them to increase their employees to 80 with greater emphasis put on intensified marketing and direct sales to far flung shopping centres.

“But our nationwide marketing offensive has been hard it by devolution that saw county governments enjoy new power and create revenue-targeting laws that introduced new levies for branded vehicles as well as charging our vehicles when we deliver cargo within their towns.

“Some charge annual fees for every vehicle entering their areas to deliver cargo while other county governments request for a general licence per company fleet. This has made it impossible to penetrate some regions.

“We have scrapped all advertising messages on our vehicles and reduced one on one campaigns during market-days as all expenses we incur have to be passed on to consumers,” he said.

Mr Poruhit says delays and bureaucracies witnessed at the Embakasi’s inland container depot have also contributed to new expenses that hurt their business.

“We used to spend Sh45,000 per trip transporting cargo from Mombasa port 472 kilometres away but now we spend Sh30,000 to transport the same goods at Embakasi ICD.

At Mombasa we enjoyed a 21-day grace period but at ICD, we only have four days to clear our goods.

“We cannot beat this deadline and we have to pay demurrage and storage charges plus penalty taxes adversely hurting our profits as well as forcing us to increase prices for our products,” he adds.

Mr Shah says such an unpredictable environment both at the national and county levels has made doing business difficult as one is unsure of what will happen tomorrow.

He says county governments should be compelled to adopt a uniform licensing regime that is reciprocal where licences obtained in one county are mutually recognised in the other county.

Nairobi, Nakuru and Kiambu charge a single fleet licence while Murang’a, Machakos and Kajiado county governments are among authorities that charge per vehicle fee.

Mr Shah says there is need for the government to adopt use of technology to fast-track documents processing at the Embakasi depot.

 

-www.businessdailyafrica.com

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