Manufacturers dominate Top 100 SMEs competition

A service firm won this year’s survey of the fastest-growing medium-sized companies in Kenya as manufacturers dominated the top ten list of the 100 firms profiled.

Lean Energy Solutions, a company founded in 2007, was announced the winner of the survey covering firms with sales of between Sh70 million and Sh1 billion.

Its triumph marks the second time a service firm has won the competition after Professional Marketing Services took the crown in 2010.

Four manufacturing companies –Coninx Industries, Vivek Investments, Propack, and East African Canvas— took the ninth, seventh, sixth, and second positions respectively.

Lean Energy emerged tops, riding on a green technology that has won it major clients and sparked a change in established manufacturing processes. The company uses remnants of sugarcane, also known as bargasse, to power boilers in factories producing fast moving consumer goods.


The bargasse is compacted to create flammable blocks or briquettes that cost less and have a lower carbon footprint compared to diesel-fired boilers. The boilers generate steam used in manufacturing processes.

“This technology is much cheaper compared to fossil fuels,” said Dinesh Tembhekar, the managing director of Lean Energy. “It also creates more jobs and emits less greenhouse gases. We are therefore offering triple benefits with this solution,” he said.

The company has been hired by Coca-Cola and Spin Knit Dairy Limited, among other large manufacturers, to instal boilers compatible with its technology.

Lean Energy works on a build-operate-transfer (BOT) model where it instals such boilers and earns fees for a predetermined period before the equipment reverts to the client.

Mr Tembhekar said the company has been growing by 35 per cent year-on-year, underlining the rising uptake of green technology by manufacturers keen on cutting costs.

Industrialists have cited high energy costs as one of their major challenges, observing that it thins their margins and blunts their competitive edge compared to low-cost producers in Asia, South Africa, and Egypt.

Lean Energy was also named the best company in the professional services category of the Top 100 Survey, which was first launched in Kenya in 2008 to recognise the companies that employ over 70 per cent of working Kenyans.

The survey is conducted by the Business Daily, a publication of the Nation Media Group, and KPMG — a consultancy firm.

Six companies graduated to Club 101 on Friday, meaning that their turnover has crossed the Sh1 billion mark. They are Foam Mattresses, Jubilee Jambo Hardware, Niti Distributors, Sai Pharmaceuticals, Saracen Media and Universal Corporation Limited.

Nation Media Group chief executive officer Linus Gitahi said SMEs need to instil greater professionalism in their operations to grow their businesses, which are owned and managed by the founding families for the most part.

“We need to raise professionalism because that is how we will grow,” he said during the Top 100 awards ceremony that was held at the Carnivore Restaurant grounds in Nairobi on Friday night .

KPMG East Africa CEO Josphat Mwaura called on business leaders to hold the government to account, noting that a conducive investment climate is critical in supporting business growth.

“It is the business of government to create an enabling environment for businesses which create jobs and fund the State through tax and other contributions,” he said.

The survey showed that SMEs have stepped up their hiring, with 50 per cent of the firms employing over 50 staff on permanent terms compared to 39 per cent in 2010. “The number of staff has continued to grow by a tenth since 2011 to 189 in 2012,” reads part of the report.

“The likelihood of increasing staff numbers is high, at 60 per cent. This increment is attributed to the expected growth of the economy and amongst certain sectors.”

Telecommunication and professional service firms were among those that recorded the biggest growth of more than 80 per cent. The performance was linked to quality offerings and good marketing strategies that won the firms more clients.

Half of the companies are looking to the region for expansion opportunities compared to 61 per cent last year, signalling increased focus on the local market.

Almost half of the firms surveyed have annual turnovers of between Sh70 million and Sh499 million, while five per cent had sales of between Sh900 million and Sh1 billion.

The firms continue to rely heavily on founders’ savings as the source of start-up capital, underlining the difficulty of getting banks and other investors to back new enterprises.

The survey showed that Kenyan firms are increasingly attracted to form joint ventures with foreign investors as a way of tapping more capital and expertise to fuel their growth.

The share of joint ventures among firms surveyed rose to 17 per cent compared to 13 per cent last year. This came as those fully owned by Kenyans dropped to 76 per cent compared to 83 per cent in 2008.

About one-third of the businesses aspire to list on the Nairobi Securities Exchange (NSE) in the medium term.

The survey was sponsored by the NSE, research firm Synovate, UAP Life, Strathmore Business School, and software firm Sage Pastel that is also set to offer $100,000 worth of free training to accountants of the top 100 firms.