Shyam General Merchants Limited rose from a sole proprietorship trading business to one of the country’s respected building contractors. But it has not all been rosy as its Managing Director Harish Rabadia told Construction Kenya Showcase.
At only 33, Harish Meghji Rabadia is the unassuming Managing Director of Shyam General Merchants Limited, an NCA1 category building contractor based in Nairobi. NCA 1 is the highest classification of contractors by the National Construction Authority. It means the contractor is allowed and has the capacity to undertake projects of limitless value.
It has been quite a run for Shyam, a company that was established in 2008 initially as a trading business. But it was not until 2010 that it moved into the construction industry, starting out as a labour contractor.
For the young Harish, it was not an easy start.
“My main challenge when we were starting out was inexperience”, he says. “My dad had experience in the construction industry having worked for S.S. Mehta & Sons as a supervisor but it was a totally new field to me. I used to attend meetings but I could not comprehend the discussions. It took me some time to fully understand industry terminologies and get to know things like formwork, concrete etc. But as they say, practice makes perfect and I eventually came to understand the business.”
As a labour contractor, Shyam established a favourable reputation for itself. The company’s first project was Crescent Business Centre in Westlands. “One of our neighbours was a labour contractor and he had an offer from Tulsi Construction Limited to work on the 11-storey building. But he was too busy and since he knew we were now in business, he asked us to undertake the work.” So Shyam successfully executed the labour contract and garnered useful experience which would prove invaluable in the days ahead.
“After that, it was God’s blessings”, Harish says. Citing Crescent Business Park as testimony to its capacity, Shyam went on to bag many other projects.
But things took a different turn when the company plunged into full contracts. One of the main challenges was lack of experience, which brought about the question of ability to undertake projects. At the same time, real estate had begun experiencing challenges. “Since we were new in the industry, we did not check if the projects we were handling had financial backing from banks,” says Harish. Some of the projects were also funded by organizations that experienced turmoil midway. “We went into debt.”
Despite the challenges, Shyam would remain in business, buoyed by the trust it had earned from industry players. The company would obtain materials running into tens of millions of shillings on credit without a problem riding on Harish’s integrity and the fact that he was well known in the Temple as a trustworthy businessperson. And so Shyam continued rising and thriving, until the contested general elections of 2017 and the collapse of some banks around the same time. The elections slowed down business while banks’ collapse saw some of the company’s customers lose money. “At least three of our projects stalled, though we are reviving them now,” reveals Harish. The political agreement between the antagonists famously known as the handshake brought temperatures down and stability once again returned.
Another problem at the time was the demolition spree that was undertaken by authorities to reclaim road reserves. Harish says this brought about confusion and misunderstanding since the same government that had issued ownership documents was the same one that was carrying out the demolitions. The cap on interest rates did not help the industry either, says Harish. “The local developers were in competition with the government. The government was borrowing at the same rate as the private sector and the banks decided their money was safer if lent to the government.” This denial of credit diminished the ability of developers to start or complete projects, hence adversely affecting contractors.
Despite these problems, Harish says he has never taken any client to court and has no intention of doing so in the future. “We are a young company, relying on goodwill and word of mouth; if we take one client to court, everyone will get to know and it will work against us,” he says. “Besides, my religion teacher taught me never to fight any client over money matters.” Asked what would happen if the amounts involved were extremely large, Harish says: “We Hindus believe in Karma; every action has a reaction.” He says one who does bad deeds is likely to be repaid in kind.
Harish also cites Covid-19 as a major destabilizer in the economy, creating problems for practically all sectors except the very few that were dealing with essential services or medical products required to fight the pandemic.
These days, says the contractor, banks are not as quick to provide loans to the construction industry as they were more than 10 years ago. “Back then, they would even give unsecured loans. But today they ask for collateral and significant turnover before extending credit services”.
“In addition, local contractors are experiencing unfair competition from their Chinese counterparts who have cheap credit from home and are heavily subsidized by the Chinese State”, says Harish. “Although they are doing done a marvelous job here, they have taken over work that local contractors can do.” Asked if local contractors have the capacity to undertake gigantic projects such as The Global Trade Centre, Harish responds: “A contractor like Laxmanbhai Construction Limited has been in existence for 50 years. They did GPO and Nyayo House decades ago; so you cannot say it’s an issue of capacity.”
Harish feels Chinese contractors’ forte is infrastructure projects and they should specialize in that. “Government should let them do the infrastructure projects while awarding building works to local contractors”, he suggests. He also calls for the enforcement of the 30 percent local contractor component on projects handled by foreigners.
Going forward, Harish reckons that the next frontier for contractors is affordable housing. “There is currently an oversupply in the high end segment, and affordable housing should now be the focus even for the incoming government.” He commends the government for the steps taken so far in this direction.
On professionalism in the industry including the vices of undercutting and compromises in buildings leading to structural failures, Harish feels there is sufficient framework for streamlining the industry and achieving professionalism. He says while it is true that due to reduced margins many contractors now prefer to undertake all the work by themselves rather than subcontract, they look for savings in materials only and do not cut corners at the expense of safety.” He does not believe any established contractor can compromise on the structural integrity of buildings. He attributes recent widely reported accidents to lack of involvement of professionals in projects.
“Some developers have also become greedy; a plan is done for four storeys but they come later and ask for five storeys despite the fact that the structure had not been made to support extra floors.” He calls for strict enforcement of the building code so that everyone follows the laid down procedures.
Married with three children, two boys and a girl, Harish says his proudest moments are when his clients express satisfaction with the job. He spends most of his free time watching motivational videos and materials related to the construction industry as well as listening to spiritual sermons from Holy Scriptures. He is confident that Shyam will weather any challenges ahead and continue on its growth trajectory.
