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The $400 Million Kenyan Man Of Steel Who Said No To Africa’s Richest Man

Narendra Raval (Second from right)

Narendra Raval (Second from right)

Narendra Raval, a steel tycoon, is one of Kenya’s most successful entrepreneurs. He is the founder of Devki Group, a $650 million (annual revenues) Kenyan conglomerate that manufactures steel products, roofing sheets and cement.

Raval, 53, a Hindu of the Brahmin caste system, came into Kenya as a teenager to serve as a Priest’s assistant in a Temple in Kisumu, a commercial city in western Kenya. He soon got married, abandoned his priestly calling and started a trading and manufacturing business with his wife which snowballed into the Devki Group. The company now employs more than 4,000 employees and is the largest building materials company in East and Central Africa.

Raval, now a Kenyan citizen, is one of the wealthiest people in the country with a fortune estimated at $400 Million. He is also one of the country’s most devoted philanthropists- spending millions annually on scholarships for thousands of destitute children and rehabilitating schools.

I recently had an informal chat with him in Nairobi where he recounted his journey and spoke about the lessons he has learned along the way.

I heard that a while back, Aliko Dangote, Africa’s richest man, approached you and offered to buy you out completely from one of your companies – National Cement Company (NCC). But you refused. Who says no to Africa’s richest man?

I said no because it is my family business. He first offered to buy me out completely and then when I said no, he asked if I would be interested in selling a significant stake in the business, but I also had to turn him down. I want to keep the business within the family.

But in February last year you sold some shareholding in NCC to the International Finance Corporation (IFC).

The IFC liked our corporate governance and they had been monitoring us for a while. We were at a stage where we were raising additional funding to take the company to the next level and so we discussed with them. We only wanted a long-term loan, but they were very impressed with our company, and so they said they were not only interested in giving us a loan like a commercial bank, but they wanted a part of the company. So they requested for a minority stake in the company. We got $70 million from them – $55 million in debt and $15 million in equity.

Dangote Cement is finalizing plans on constructing a cement plant in Kitui (in Kenya’s’ eastern province). It’s the largest cement company in Africa and they’ll be your competition. Do you lose sleep over this?

Not at all; I think there are very interesting times coming ahead. We are not afraid of competition.

You are one of the most successful businessmen in Kenya. Tell me the story of your success.

I was born in 1962 in Gujarat, India. I am a Brahmin, so I belong to the priestly caste of the Hindu religion. At a very young age I was working as a Temple assistant in a Swaminarayan temple. In 1978, I was given an opportunity to travel to Kenya to work in a temple in Kisumu, and being a young man who was eager to travel, I took the opportunity. I was a teenager at the time and I was getting an allowance of Ksh 2,500 a month (which at the time was about $50) for my work in the Temple. Back then, it was a lot of money and it was enough for me to meet my basic needs – food and shelter. As time went on, my family began to pressure me to get married and start a family, so I got married in 1982 to a medical doctor from Thika. Of course, once you get married you are not allowed to serve in the temple. So I had to leave. When I left the temple, I had to find a means of earning income, so in 1982 I took up a job at a hardware shop and steel mill in Nairobi. While I was at the job, I was saving my income and learning all I could. In 1990, when the owners closed the company, I got a small place in Gikomba market in Nairobi where I started a small hardware shop which I called Steel Center. I ran the business with my wife. As the business started picking up, I saw an opportunity for manufacturing moderately-priced roofing and fencing solutions. I went to the bank and discussed my plans with them, so they gave me a loan and they supported me. In 1992 I put up a small steel rolling mill in Athi River. Back then, there were only one or two steel rolling mills in Kenya, so it was like a monopoly. The prices for steel bars, roofing sheets and other products were just ridiculous and beyond the reach of most Kenyans, so many people couldn’t afford to build homes. I wanted to change this.

I imagine it was difficult for you as a new company to compete with the big boys.

It was not easy. At the time it was difficult because as a startup, we had little cash flow. Also, the big steel companies were always frustrating us and trying to destroy our business. We came into the business with a plan to provide high quality products at affordable prices and make small margins. But the competition frustrated us. Whenever we sold a product for $10, they would sell for $9. Because they were bigger and always purchased large volumes, they could negotiate with suppliers to get their raw materials cheaper and still make a profit selling at a price lower than ours. I couldn’t compete with them. Within 6 months, I was almost on my knees. No one was buying our products because they could get it at a cheaper price from our competitors. We had tons and tons of raw materials and finished products just taking up space in our warehouse. It was a nightmare.

It must have been difficult for you to make payroll. How many employees did you have at the time and how did they cope with the situation?

It was difficult; I could not pay my workers. I had about 60 of them at the time. But they were very understanding. They said to me: “Guru, don’t worry. We know the problem. We will work for you; don’t give us a full salary- just give us enough to run our house. Give us the rest when you’ve made money.”

How is it possible that your employees were so nice to you?

I used to directly work with them in the factory. We were a small company so I didn’t have time to be the boss and spend the whole day in a fancy office. I was working with them-operating machinery, getting my hands dirty every day. My wife used to drive the truck and deliver our products to clients. So we interacted a lot with our workers on an informal level, talking about family, sports and other things. We never for once saw them as workers – we were family. And in that spirit, they were very accommodating and understanding. They all stayed with us even in those dark times.

So what then happened?

As fate would have it, soon after those sixth months, steel prices started to skyrocket. It went double within a few weeks. Now, prices from $300 per ton went to $600 a ton within a month. And we had tons of raw materials and finished products which we had been unable to sell. We had acquired at cheaper prices. So I sold my stock, made a very good profit and paid all our employees. We paid our loans to the banks and we still had lots of money in our reserves – enough to compete favorably with the bigger guys. Those early employees are the best. Many of them are still working at Devki Group till this day, and we’ve sent many of their children to school and their kids are even working with us today. So we are a big family.

What do you think has made you so successful?

Hardwork plays a crucial role. But I’m spiritual man. I believe God helps people. But if you work hard and you persevere and remain good to people, the Universe will reward you. Do not cheat your customers; always give them good quality products and good prices.

You’ve got a lot of money – $400 Million by FORBES’ estimates. How do you spend it?

I bought a helicopter- for my personal use and business. So I took some of the orphan kids I’ve adopted in Athi River – about 56 of them. The best part of having wealth is giving it away. That’s how I spend money- spreading it and supporting people. We (Devki Group) support thousands of people. When our employees are retiring, we finance them to start their own businesses. One of our former employees who retired from here now runs a trading business that buys more than $1 million worth of goods from us every year. We run many orphanages and many schools in the most remote and vulnerable places of Kenya. We provide the children with food every day, and we pay school fees for many students. We’ve seen so many poor students who are intelligent but they can’t afford to pay school fees, and when you look at the sums of money involved, there are very small mounts – like $50 for a term. So we step in, and we do this for so many schools- mostly in poor rural communities. There’s no better way to spend money than to use it to enrich the lives of those around you.

Who are your role models?

I admire Warren Buffett for his generosity; I also like Mahatma Gandhi and Mother Theresa.

What’s the future looking like for Devki?

No one knows the future only God. But we are putting up a $200 million cement manufacturing plant in Kajiado, which is predominantly inhabited by the Maasai people. We are also expanding our steel manufacturing to other parts of Africa and by 2017, we want to become the largest cement company in Kenya.

Forbes

 

 

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