Saturday, July 11, 2020

The rise and fall of Ram

Choppies’ woes took another dramatic turn this week as the company board suspended the long term serving CEO over allegations of impropriety, and with the CEO vowing to fight back for a company he heralded to success. Sunday Standard is publishing this never seen before feature that traces Ramachandran Ottapathu’s humble beginnings with Choppies.

The over two hours interview took place in his plush Choppies offices two years ago.

The call came in unexpectedly that day, “We have an interview with Ram today at 11 am,” the person said on the other end. While it was a short notice for me, I knew that getting an interview with one of Botswana’s leading entrepreneur was no easy walk in the park. An hour later I find myself sitting across a man who had built a multi-billion pula business in a space of less than 20 years.

Ramachandran Ottapathu looks visibly tired but his sharpness is not lost. In fact as soon as the interview begins, he becomes energized and passionate as speaks about Choppies and its future. As the chief executive officer of Choppies, a leading grocer in Botswana, Ottapathu has a lot on his mind and hands. Following its huge success in the domestic market, Choppies is expanding its footprint across Southern Africa, a costly exercise that has caused concern among some quarters, including investors worried about returns, or lack of.

As a listed company, the dwindling profits have put Ottapathu on a collision path with shareholders who are doubtful of the expansion strategy. However, the man at the helm is resolute that he will deliver real value to shareholders. Taking on challenges and venturing into unchartered territories is nothing new to Ottapathu who left his native country India as a young man on the prowl for new opportunities-  arriving in Botswana as an auditor at Mazars, an accounting firm operating in Gaborone.

“When you leave your country, it is because you not satisfied about the opportunities you are getting back home,” he says. “But it all comes down to taking risks, and be able to move fwhere you are by making changes in your life. I ventured out because I had greater dreams.”

Although young in a foreign country, Ottapathu says he was not scared but rather excited about his prospects. Although the money was good, he says it was the challenges that excited him the most and as fate will have it, Mazars was doing accounting work for Wayside supermarket, a predecessor to Choppies.  Wayside – founded by Farouk Ismail in 1986 – was a struggling enterprise at the time with one store in Lobatse.

Mr Ottapathu handled the company’s account, and by the end of the contract there was visible improvement in the financial position of Choppies, and that gave him confidence that things can be turned around.

Ottapathu then joined Choppies in 1992, and seven years later he became a shareholder. The now improved store was ready to branch out of Lobatse, with Ottapathu equally ready to prove his mettle in his first business venture in Botswana. The first real expansion happened in 2000 when Choppies opened a superstore in Gaborone, a decision that proved to be wise as the company’s finances improved drastically. In the same year, Ottapathu was appointed the CEO of Choppies, a position he has held ever since.

The Choppies CEO prefers keeping things simple and focused as evidenced by the initial expansion of Choppies. “Our strategy was simple; the retail space was dominated by South African companies and they were making good money,” he said. “However they were profit oriented hence not willing to expand to where it doesn’t make business sense. We realised we can easily compete with them.”

With Choppies’ credibility established in the nation’s capital after opening several stores, they went on to open branches in villages. The move also paid out as the retail market in villages was informal, with small general dealers that had inconsistent stock inventories, and prices that were considered high by consumers. Choppies is now  a retail titan in Botswana with more than 90 stores spread across  the country, commanding close to 35 percent of market share – a great feat for any retailer in any market.

Ottapathu revealed that it was not an easy undertaking, reflecting on how the domestic expansion was financed by individuals after financial institutions clutched at their purses, skeptical about the company’s financial projections and future prospects. But with the continued success of the retailer, banks later opened their purses to lend to the company.

“When the weather is fair, funding from banks will always be there,” Ottapathu chuckled like a man who had seen his fair share of rainy days.

Botswana’s diamond dependent economy happens to be dominated by multinational firms with extensive resources, therefore raising barriers of entry for small local businesses, and making competition on a large scale almost impossible. Still, Choppies defied that by employing a cleverly trick that could only be executed by someone who understood the reality on the ground.

A distinct advantage Ottapathu and his team had was that they understood the local market better than their foreign competitors. While the latter was focused on profits and limiting their exposure to risks, Choppies understood Batswana were in need of professionally run stores that offered quality goods at affordable prices.

The local retailer would later benefit from the government of Botswana’s 2005 decision to devalue the pula – an exercise that sent some competition scuttling for cover as they worried about the future of the country’s economy, resulting in diivenstments through disposal of some stores. This was a moment of reckoning  for Choppies as it quickly saw an opportunity and seized it through further expansions,   which included aquisitions of competitor stores.

“The devaluation created opportunities for us when others saw a crisis. We filled in the gaps they left and we expanded.”

Ottapathu believes in having a life away from what you have created, and this kind of thinking motivated him to start businesses that will have a legacy long after he is gone. It was one of the reasons why in 2012, together with the founder of Choppies, Ismail Farouk, decided to list the company on the Botswana Stock Exchange. The Initial Public Offering (IPO) was a huge success as the shares on offer  were oversubscribed by investors who wanted to be part of the profitable entity.

The IPO gave Batswana a chance to own part of a locally brewed company that has punched above its weight and knocked some multinational retailers to the ground – a cherished outcome for Ottapathu who says he wanted to share his creation with other people.

But now fast forward to 2019, Choppies board has done the unthinkable. Ram has been suspended from the company but has vowed to fight until the end. Only time will tell how things will end.

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Sunday Standard July 5 – 11

Digital copy of Sunday Standard issue of July 5 - 11, 2020.