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From Refugees To Tycoons

Published 10 years ago
By Forbes Africa

It all began in the 1920s, when Kishin Chand Chellaram stepped off a boat and onto the shores of Lagos. He had heard from a family friend that there was money to be made in Nigeria and had journeyed for months across the sea to find out if this was true.

Chellaram was a small textile business owner in his hometown of Hyderabad. In 1923, he joined other Sindhis who were venturing into Nigeria’s growing economy. After two weeks of exploring his options, he sent for the first consignment of goods.

In the late 1940s the Chellarams, who are Hindu, were forced to leave their home after East and West Pakistan were formed as a Muslim state. The Chellarams sold all their assets, exchanging them for coupons in Bombay, and set up shop permanently in Lagos.

The name Chellaram became known in Nigeria for retail, operating 17 department stores across the country selling groceries, cosmetics, textiles, luxury items and electronics from the early 1950s up until 1992, when economic and political conditions in the country slowed down its operations. The family business survived as Chellarams Plc. and is one of the largest conglomerates in Nigeria, with a business portfolio consisting of fast-moving consumer goods, chemicals distribution, a bicycle manufacturing division, a food packaging unit contracted to Nestlé Nigeria, an industrial goods sales and service subsidiary, a textiles manufacturing unit, a plastic film manufacturing unit,  quick service restaurants, a travel agency and a retail operations business.

This mixed bag of companies is now run by Kishin Chand’s great-grandson, Suresh, his wife Kavita and his two children, Aditya and Amisha. Although the company listed on the Nigerian Stock Exchange in 1978, 75% of the business is still held by the family; 20% belongs to shareholders and the remaining 5% is in the name of a Nigerian charity.

“My great-grandfather was the first Indian member in Nigeria’s prestigious Ikoyi Club and the first Indian to live in Ikoyi,” says Aditya proudly.

Amisha was behind the first foray of South African retail giant Woolworths into Nigeria. She started as a franchisee in 2002, but operations halted in 2005 due to an importation ban on garments and footwear. In November 2011, the deal was reopened as a joint venture business that will see three stores running in major shopping centers in the country this year. The company also made headlines in Nigeria when it entered into a joint venture with RJCorp of India and Yum! Restaurants International as the sole operator of the KFC brand in Nigeria. Today, 15 stores operate in Nigeria, with plans to open another 15 stores this year.

Chellarams has also partnered with big international names like American Express travel services, Oldenburger and Real (dairy products), as well as chemical companies like Shell and Bayer, and other international consumer durables and electronics companies. The company’s biggest trading line is chemicals for the foam mattress industry and 70% of their chemicals sold go into this.

“Nigerians are very savvy and well traveled, so they are exposed to international brands. They are looking for brands and these brands are looking for Nigeria now. With the recession in Europe and America, everyone is looking to Nigeria now and Chellarams is positioning itself to be a partner for these guys—not just an investment partner but a strategic partner that can provide services and that has the local knowledge. We will keep finding ways to leverage these partnerships to grow our other businesses,” says Aditya.

The Chellarams family is a picture of success in Nigeria, but it has not been easy. As any Nigerian business owner can tell you, manoeuvering the political and socio-economic environment in the country is an uphill battle. Nigeria has had a turbulent past, which has resulted in a tough business climate.

“A difficult period was the early to mid-’90s with the major devaluation and the ’94 election saga,” Aditya reminisces.

“International credit lines were given to Nigerian banks and they were crawling on repaying these loans. They began to aggressively try and cease advantage and take over our house. Real estate really saved us then and we have had to sell some iconic real estate that we owned, including warehouses, retail stores and an office tower.”

Remarkably, the family was not derailed by the oil boom of the ’60s when many companies were rushing to get a piece of Nigeria’s black gold.

“We are not running after a rainbow. It is a high investment business and we were small boys. It’s a game that is not for Indians or foreigners but a game for the indigenes. Our aim is to supply products that benefit these businesses which, Chellarams believes, is a better business model anyway.”

Africa hosts more than 150 Indian businesses today, many of whom are trying to penetrate Nigeria’s market. The company claims that it is not threatened by the increasing number of similar businesses entering the space it has occupied for the last 88 years. Rather, Chellarams is more worried about competition from Nigerian companies that are able to operate with lower overheads and have more focused product lines, geography and customer base within Nigeria. These businesses import their products and sell them at much lower prices.

The family is trying to invest in Nigeria’s power sector and capitalize on the government’s plan to reform and deregulate the sector. Chellarams had already formed a company called Solar Power Generation Ltd, which has already commissioned two gas-powered generators and has attained permission to sell power to their neighbors in the industrial areas of Lagos. This project has the capacity to hold up to 50 megawatts. Currently, Nigeria is the only country in which the family operates, but its next step is West African expansion in both the Anglophone and Francophone parts of the continent. Chellarams Plc. is already looking into sponsoring activities in Chad, Cameroon and Niger, where the plan is to create the pull effect for their goods into these three nations. Chellarams also has its eye on a full-time operation in Ghana.

To finance its growth objectives, the company issued a N1.5 billion ($9 million) BBB-bond in December 2010 and a second tranche of N3.5 billion ($22 million) in December 2011.

“For now, we are just holding back and looking, but we expect partnerships to be a big part of the brand. This is the business model that is prime for a region that everyone is trying to come into at once.”

The family says it will continue Kishin Chand’s Nigerian dream in the 21st century. When people ask where they come from, the family says: “We are Sindhi refugees but Nigeria has been a warm welcome.”

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Related Topics: #Entrepreneurship, #Europe, #Kishin Chand Chellaram, #Lagos, #March 2012, #Nigeria.