Nicholas Richards, Gleaner Writer
Dr. Dhiru Tanna helps out on the production line. - WINSTON SILL/FREELANCE PHOTOGRAPHER
THINK OF the Jamaican mass market manufacturer which easily undercuts its foreign rivals with a good product offered at a great price.
A small company located in downtown Kingston does that. Dr. Dhiru Tanna structured Blue Power Limited to beat the competition, and now he is ready to expand even further.
''They thought I was mad,', a smiling Dr. Tanna said. ''How could anyone think of manufacturing when the entire sector was falling apart?"
At the start, success was far from certain, so he was reluctant to borrow funds. He persuaded friends and relatives to help with the financing.
That was two and a half years ago. Today, his company has reached its goal of capturing a third of the local market. Blue Power produces between 10, 000 and 15, 000 cases of blue soap per month out of an islandwide consumption of 30, 000 and 40, 000 cases per month. Each case has 72 soap bars.
NO EASY ROAD
This is quite a leap from when he started with 11 people at a former hardware store in downtown Kingston.
With the original equipment, he was supplying just 10 per cent of the market and fighting to gain recognition.
To build market share, he had to take on producers from Costa Rica, Colombia, Dominica, and Guatemala. Their brands, such as Freshness, Ajax, Ideal and Blue Bomber, had become firmly entrenched.
The journey was not an easy one since the first bar was sold in November of 2002. Blue Power operates on slim small margins, and made substantial loss in the first 18 months of its operations.
The challenge was to build brand awareness and expand production volumes, so the company could improve its margins. That tough battle was finally won.
"Business is OK'', he told Wednesday Business last week. ''We are still in the black."
Actually, he had a very good basis for his success, having had a long association with the manufacturing of soap. His family started a soap-making business in Uganda back in 1935 and they still have a major share of that market.
It did not hurt that the directors of Blue Power included Peter Millingen, Kenny Benjamin and Tony Hart, apart from himself.
Blue Power Limited is a 100 per cent subsidiary of Lumber Depot Limited, based in Papine, and both companies have a common board of directors.
Kenny Benjamin owns the building from which Blue Power is operated and opted to take shares for the rental equivalent.
NEW PRODUCT LINE
The actual making of soap is an energy intensive operation requiring access to cheap raw materials, so he imports the soap in pellets. At the factory, this is mixed with colour and scents, moulded and then cut into bars. To help boost production volumes, the company does contract manufacturing for Lasco Distributors Limited, Payless Distributors, and Hi Lo.
They have also partnered with 'Sud Sud' a local company which produces powered detergent, enabling the companies to supply both commodities packaged together to the local market for 20-30 less than overseas suppliers.
Overseas acceptance of the product has not been positive either said Dr. Tanna.
"Presently, we supply soap to the United States of America (USA), United Kingdom, Guyana and Cayman."
This move has helped to propel the company's assets to $40 million, covering its machinery, raw materials, and finished goods.
Essentially Blue Power has tripled its productive capacity since operations started in 2002 through the addition of more machinery.
"The new equipment has [also] enabled us to create a completely new line for toilet soap which will be launched in the next several weeks."
These new products include Taya, a cocoa butter soap made from a type of Jamaican cocoa plant of the same name, a cocoa butter soap and Omex an anti-bacterial deodorant soap, in addition to a cocoa butter body lotion.
Recently a wrapping machine was added to improve the product's appearance. A big challenge now is finding financing for reconditioned equipment. Using reconditioned equipment for a relatively small, low-cost operation.
"It is reasonably easy to find financing for new equipment but very difficult to get medium to long-term financing for used equipment."
There is also the governmental bureaucracy and hefty port charges to thwart the company's progress.
Amidst the challenges, however, Tanna says, ''our expansion will ensure that we compete well, and take us to the next level.''
