Rashmikant Patel: How I recovered after Imperial Bank collapse

Having come back from his studies in the UK in 1978, Rashmikant Patel joined a pharmaceutical firm as one of the partners. But as it turned out, one of his partners was also a partner at Educational Scientific and Technical Equipment Company (ESTEC).In 1985, one of the owners of ESTEC Limited was relocating to the UK and offered Mr Patel the opportunity to manage the firm on a 25 percent profit-sharing basis, which he accepted.“Unfortunately, our finances were quite low, and there was never enough money to import the equipment that I would have liked to import at that time,” says Mr Patel, the managing director at ESTEC, a supplier of analytical solutions to testing laboratories in East Africa.In 1995, he purchased and took over the company, fully using the money he had borrowed from his father and selling his house.“Slowly, I started running the business and retaining the profits generated in the business, unlike in the past when the other partner was still onboard,” recalls Mr Patel.However, at the time, there was a flood of Chinese and Indian school equipment imports while ESTEC Limited was an agent of a British company, which was costly for schools, depressing his sales.“I decided to look at the laboratory equipment market for manufacturing companies. One of our suppliers supplying us with medical equipment happened to be importing laboratory equipment too. So I decided to diversify to laboratory equipment for pharmaceutical manufacturers,” he says.Mr Patel says it was a good time because the pharmaceutical sector was growing.He says his family was never in business and being a pharmacist, he too had never run any business. This was like being thrown into the deep end of the swimming pool.He says the major hurdle he had at the beginning was financing equipment imports and having bagged his first big sale with one of the leading pharmaceutical companies locally.“Financing was the biggest challenge because nobody will offer you credit terms unless you are well established or have been doing business with them for a long time, especially when the goods are expensive like the equipment we sell,” says Mr Patel.“A lot of people have got into trouble in businesses and fallen by the wayside due to a lack of finances.”Mr Patel says he has learned never to have partners in a core business unless it is a separate company because it allows you to make the decisions you want and divert resources to what is more important to the business.He adds that when he had partners, the state of the cash flow was poor.“There are two things I learned from my partners: one is to never draw money out of the business if you want to grow it, especially the profits. For the growth of a company, you need finances that I unfortunately didn’t have,” he says.Mr Patel adds that 2015 was a dark year for him when the Imperial Bank collapsed with all the company’s finances, including his savings, and he had to start afresh as a new business.“We also had to borrow money from private people and get back on track. That was one of the biggest faults that we had,” he says, adding that some of their customers also agreed to pay for the supplies earlier than the allowed credit period and sold some of the stock at a reduced profit margin to boost sales.And with that, Patel advises against having all your finances in one bank.He says he wished he kept his house instead of using it as collateral to get financing and had the finances to go into sectors like medical laboratory equipment, but that it takes a lot of finances and workforce to go into different lines.“You can only get financing through bank loans or overdrafts but using bank money to do business is also not very good because you can get into deep trouble,” he cautions.Growth and milestonesHe adds that ESTEC’s business strategy is more about providing technical support and meeting clients’ and industry needs, picking from regulations and that the market has been growing from a regulatory point of view.“Kenya was one of the fastest-growing economies at that time, and there was a desire for exports to the neighbouring countries, and we used that to position ourselves in building our strengths to meet international and regional standards and requirements to be competitive.”With that, ESTCE Limited has grown in the pharma, food testing, environmental research, academics, and petroleum sectors, as well as with more partners and suppliers.The company, he says, aims to ensure that every product on the market is safe for human use.“There are a lot of gaps in standardisation within the East African Community. Our strategy involves building capacity competence in the area of analytical testing space,” he says.The company has a presence in Uganda and Tanzania and aims to expand in the region.“We are looking to grow, but growth is always a slow process in the current economic climate. We are looking into Ethiopia and Rwanda in the next 10 years and take the expansion further.”The company is also considering venturing into areas such as clinical testing as technology advances, adding that they may be open to partnerships, private equity, or firms in a similar field for synergy rather than a merger to finance that growth and expansion.Human resourcesMr Patel says it is difficult to find very good human resources, and the company is willing to pay for the right talent.“Initially, we were just hiring good salespeople, but we realised that in the specialised field, skills and knowledge are important, so we hire technical people with a scientific background,” he says.The entrepreneur adds that attracting talent is a big concern given that the sector has a high turnover rate, with some of the employees quitting to start their businesses.“You can imagine growing from 5 people to 40 without human resource personnel. It was a big challenge, and we needed a human resource person to guide us on recruitment, people management, and other aspects of human resource management,” adds Mr Patel.The entrepreneur says managing expenses is one of the biggest issues in running a business, and one needs to cut costs when the business is not doing well, maintain a reasonable profit, and set a limit on pricing.“This year has been the toughest in the last ten years, with sales going down for the last two years, but we are still afloat, but profitability is not what it used to be,” he says.Mr Patel concludes by saying he attributes the company’s growth to the pharma industry and the support of the government, especially the regulators setting the standards for testing, which they cannot ignore.→ [email protected] Provided by SyndiGate Media Inc. (Syndigate.info).