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From Sweating In The Fields To Cool Meetings In Bermuda

The extraordinary African entrepreneurial tale of the Madhvanis is a 114-year-old story of enterprise, suffering and stubborn determination.

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The Madhvani Group is a Ugandan-established international conglomerate with assets of $750 million. It generates between $250 million and $300 million in annual revenue and has more than 10,000 employees through its operations in the Middle East, India, North America and East Africa. At the helm of this massive family business is English-educated Mayur Madhvani, the senior director and last born of the founder, Muljibhai Madhvani.

MR. MAYUR MADHVANI GIVING A SPEECH AT A RECENTLY CONCLUDED COMMONWEALTH BUSINESS FORUM IN UGANDA

The journey began in 1898 with two farmers, Vithaldas and Haridas Madhvani, from the Indian village of Vanscharia, and their quest for greener pastures. The two brothers crossed the Indian Ocean and found themselves in eastern Uganda, where they opened up a trading business. In time they bought land and grew coffee on a farm in Kakira, near the Nile River, which flourished.

Muljibhai Madhvani, born in 1894, immigrated to Uganda to work for his farming uncles. While still a teenager, he opened up and managed his own shop in Jinja, a fishing village that is now the largest town in Uganda and the second largest commercial center.

The family business faced losses when coffee prices fell at the end of the World War I, so it switched to producing jaggery, or unrefined sugar, using donkey-driven wooden mills.

In 1930, under Muljibhai’s direction, Vithaldas Haridas & Co—the company founded by his farming uncles—built and commissioned the first sugar factory in East Africa.

“He came from humble beginnings. He then had the business acumen to start from basically having nothing and developing his business talents—the vision that this man had is just incredible,” says Mayur.

This sugar factory is now the massive Kakira Sugar Complex. It produces 160,000 tons of sugar a year, around 62% of national production. It generates about 24 megawatts of power from waste products every day, selling 14MW to the national grid and feeding 10MW back into the complex.

The group also owns Kakira Sweets & Confectionary, also inside the complex, which produces everything from fruit drops to lollipops.

The sweet smell of success is the fruits of decades of planning. In 1947, the company expanded throughout East Africa and the partnership dissolved. By 1949, Muljibhai was joined by his sons, Jayant and Manubhai. The company’s 5,000 employees worked hard manufacturing cotton, beer, tea, steel and confectionaries, all while enjoying free housing, electricity, education, water and healthcare.

In 1956, Manubhai, Madhvani’s second eldest son, was sent to India to secure a textile mill for his father. In his book titled Tide of Fortune he wrote: “My father’s dream was to own a mill, so he instructed me not to return without this one.”  Manubhai did this in a couple of days at a cost of 3.7 million rupees.

Karika in the old days

The shop owner-turned-industrialist, Muljibhai Madhvani, died on July 11, 1958. His eldest son, Jayant, took over the reins and developed the business into a large conglomerate with presence in seven countries. The group diversified into glass, textiles, matches, packaging and plastics.

It appeared the Madhvanis could go anywhere and do anything, but this growing family empire would soon be under threat when President Idi Amin assumed power in 1971. By this time, the group was the largest private sector investor and employer in Uganda, with more than 9,000 employees and about 70,000 tons of sugar being produced at Kakira.

Fate dealt the family a double blow. First, Jayant Madhvani, the head of the family business, died. Then President Amin expelled all Asians from Uganda.

“This was a very tragic, unbelievable expulsion… a period of sadness,” says Mayur.

Manubhai, the new head of the Madhvani family business, was taken and detained at the Makindye military prison for 21 days. The prison was notorious for inmates disappearing and being brutally murdered. The family worked tirelessly behind the scenes with regional leaders and respected international individuals to get him out.

Outside the jail, the group’s assets were nationalized and mismanaged—business came to a grinding halt. The family fled to London, focusing on their assets outside Uganda.

When President Amin was toppled and forced into exile, the family came back to reclaim what was theirs, but even then, all was not well. A family feud broke out.

“We had one segment of the family saying that the assets belonged to them,” says Mayur.

He laughs it off more than 30 years later, saying cool heads prevailed and the property was returned.

“One tries to keep family business away from the actual business.”

Mayur admits family businesses are difficult, but points out that the major companies in the United States started off with single entrepreneurs and developed into family businesses, like the Ford, Rockefeller and Wal-Mart empires.

The trick, he says, is keeping everyone informed. Three meetings are held in Bermuda every year to tell the family and shareholders what is happening in the group.

Many members of the family work for the group, but it is not a birth right. Family members must prove themselves and are only given a chance to participate in the business if they can a make a contribution. Mayur says he started at the bottom and so did his brothers.

“Actually, I had visions of being in a grand seat, but that never happened,” he says.

Instead he was out in the fields, toiling and learning.

With the family business back in the hands of its rightful owners, the 1980s were dedicated to rehabilitating and restructuring the businesses. This was made possible with $60 million from the World Bank, African Development Bank and Uganda Development Bank. Once the factory was back on its feet, the loans were paid off.

Manubhai Madhvani, the man once imprisoned by Idi Amin, died on May 17, 2011, aged 81.

The Madhvanis’ fighting days are far from over. The family is embroiled in a court battle over land and assets in Kwale, Kenya, worth millions of dollars. The family has 199 title deeds proving the land in the Ramisi sugar belt is theirs. According to Mayur, he has owned the land for 30 years, but despite this, the Ministry of Land feels it should be taken back by government, he tells FORBES AFRICA, unable to hide the disappointment in his voice.

“I hope the Kenyan authorities encourage the private sector, rather than resort to this kind of malice. I call it land grabbing,” he says.

It’s not all doom and gloom for the Madhvanis: Their company owns a Beechcraft King Air B200 and many lodges in Uganda and its tourism arm has already opened a hotel, with others under refurbishment. It also recently acquired three properties in Kenya and is exploring religious tourism in India, where people visit places of pilgrimage and holy sites.

Its construction company, Excel Construction Ltd, has projects worth nearly $13 million in Uganda and was involved in the development of the SABMiller brewery in South Sudan. It has been appointed as the main civil contractor for the construction of a brand new brewery in Mbarara, Uganda.

The group has signed a memorandum of understanding with the government of South Sudan for the construction of a sugar plant. It will increase its Kakira sugar production to 180,000 tons and plans to generate 50MW of electricity daily and sell 30MW to the national grid, along with producing 20 million liters of bioethanol a year.

The next challenge is taking Kakira public.

“Some members of the family may feel that you have to leave family business in the family,” he says.

He argues that in order to achieve sustainability, you need the proper corporate governance and transparency that comes with a public listing—the latest battle for the industrialists who came to East Africa with nothing and fought every step of the way to wealth.

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