Bidvest Prestige

BIDVEST PRESTIGE

BIDVEST PRESTIGE

People Are The Power

Of Bidvest Prestige PRODUCTION: Manelesi Dumasi

Bidvest Prestige CEO, Jegie Padmanathan says that his 40,000-strong workforce is growing by 6-7% each year; more people are gaining training, development and upskilling; and the company continues to look for expansion opportunities to bring about further opportunities for people to grow. “Our biggest asset as a company is our people; it’s what makes us different,” he says, while talking to Enterprise Africa about the success of this first-class South African services operation.

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INDUSTRY FOCUS: OUTSOURCING

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Founded in 1969, Bidvest Prestige has achieved phenomenal grown over the past 48 years, becoming an important contributor to both the wider-Bidvest Group and also the South African economy. The company is the largest leading specialist of world class outsourcing solutions in South Africa, Southern Africa and Mauritius. Its focus includes the supply of contract cleaning, event staffing, caregivers, specialised cleaning services, mobile toilet hire, training and landscaping.

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Falling under the umbrella of the Bidvest Services division, Bidvest Prestige employs around 40,000 people and it is this provision of such widespread opportunity that delights CEO Jegie Padmanathan.

“We’re proud of being able to provide employment to a part of the labour base of South Africa that may not have been given opportunities elsewhere,” he enthuses. “We’re very proud that we are able to give people a choice. The bulk of our labour force comes with limited education and we have put in

place technical and operational processes to undertake a lot of training and give people the tools to earn income. Most importantly, we have the opportunity to change people’s lives and our biggest asset as a company is our people; it’s what makes us different. We can give people skills that they may not have ever known they could have and we’re hugely proud of that. It’s very complex; we operate across a vast landscape and all employees have to be skilled differently but that is why we have developed the necessary

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processes to focus on upskilling to ensure growth. We’re very lucky that people put up their hand and say, ‘consider me’ and very happy that people take our challenges on board.”

In June, South Africa’s official unemployment figures increased to 27.7%, the highest level since September 2003. In the first quarter of 2017, approximately 6.2 million people were classed as unemployed.

Negativity stemming from a bleak economic outlook has been blamed in some part for the rise, but Padmanathan insists that pessimism is doing no one any favours and tries to inspire confidence throughout the workforce.

“We are one of the largest workforces in South Africa outside of the resource industry,” he says. “We service in excess of 5500 contracts

across a diaspora of industries and therefore it is critical that positivity is instilled across the employee base as it helps and inspires people and gives alternatives to negativity in the media.”

This negativity stems from the country’s recent dip into technical recession and downgrade by international credit agencies, both of which have dampened confidence and installed a feeling of uncertainty. However, already a player across a number of industry sectors including commercial, retail, healthcare, education, hospitality, mining, food and beverage, and more, the lacklustre economy has inspired Bidvest Prestige to increase its aggression when it comes to widening exposure and spreading its risk.

“We’re very cognisant of the

fact that we are in tough times economically in SA and it’s critical that we have a diversified business model in order to protect ourselves.

Playing in such a widespread number of industries protects us from slowdowns and that continues to be a key focus for us – to be sure that we are consistently strong role players across all markets to protect the bedrock of our business,” says Padmanathan.

“Ultimately, we continue to be a very stable country, we continue to have a mature economy, our stock exchange continues to trade a near record highs, and our currency has remained reasonably resilient. One would think that times are a lot worse considering the noise you hear out there but I prefer to look at the glass half-full and control our own destiny,” he adds.

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BIDVEST PRESTIGE

BIDVEST PRESTIGE CEO JEGIE PADMANATHAN

CLEAR GROWTH Despite the country’s economic plight, Bidvest Prestige continues to grow. Where many companies are choosing to consolidate and hold back on investment until certainty returns to the market, Bidvest Prestige, and the wider Bidvest Group, continues to aggressively pursue growth.

For the half-year ended 31 December 2016, Bidvest CFO Peter Meijer reported Group revenue was up 4.1% to R36 billion and trading profit was up 3.2% to R2.8 billion.

Bidvest Services CEO Alan Fainman said that ‘Prestige showed pleasing growth in new business and noncontractual revenue’ with Services having a ‘positive outlook’ – all of this while South Africa’s economy contracted by 0.7% in the first quarter.

Padmanathan mirrors the positivity voiced by his colleagues: “In tough economic times, we always see opportunities. It’s about how we can get those opportunities to work for us. We continue to aggressively go out and try and gain new market share and grow the contract portfolio base, and those opportunities are there, it’s just about how we structure the business to accommodate the peaks and troughs in the economic cycle.

“In terms of growth outside of the South African landscape in the services field, there’s a strong view within the company that there are opportunities which could comfortably bolt-on to the Bidvest Services division. Services is a growing industry in several parts of the world and can give reasonable returns in terms of shareholder value. Depending on where you are, it seems to be consistently growing consistently at around 4% annually through a difficult global economic climate.”

Proving its positive mindset, and backing its sentiment with action, Bidvest Prestige recently completed

the acquisition of a complementary African business to bolster its service portfolio.

“In August 2016, we bought a business in Mauritius – a cleaning services business and a trading company business that sold equipment into that market – and for Bidvest Prestige it was a major transaction,” explains Padmanathan.

“It was a good bolt-on for us as we have an existing landscaping business in Mauritius and we wanted to grow into the cleaning services space.

In our business model, cleaning, landscaping and cleaning equipment sales all work together - the synergies are there, and we felt that would create opportunities for us to grow into the Indian Ocean space. Over the past 11 months, we’ve been bedding in that acquisition and we continue to look for acquisition opportunities within the South African landscape as well as outside of South Africa.

“We are looking for organic and inorganic growth and part of our strategy is to ensure that, within our existing portfolio of contracts, we ensure efficiency and growth in tough economic times. At the same time, we’ll look for opportunities to acquire at fair value, at a decent multiple, where we can seamlessly integrate and grow the business. It’s certainly something we’ll continue with throughout 2017 and in years to come,” he adds.

LEADING THE INDUSTRY Across the industry sectors in which Bidvest Prestige plies its trade, competition is rife and growing all the time. Although Prestige is undoubtedly the industry leader, there remains a need to deliver service of the highest quality, at a competitive price, in a timely manner. Fortunately, the company’s reputation is immense and is backed by almost five decades of successful operations.

“We are the dominant player because we have been in the industry

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INDUSTRY FOCUS: OUTSOURCING

for more than 40 years, we have a strong track record, and we are Bidvest – a top-ten listed company in SA. All of this gives us traction and reputational value in the market,” says Padmanathan.

“However, it’s a highly competitive space with a lot of players. The reality is that there are a number of smaller players that have the opportunity to gain work as there are companies that do not think cleaning is an important part of business and they just look for the cheapest option.

“Cleaning is not capitally intensive and the barriers to entry are almost non-existent. We must remain focussed on what we do best and what we have done best for the past 30-40 years. We can’t rest on our laurels, we must be

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humble, and we must customise where necessary to ensure service for the client. Competition is good as it creates innovation and out-of-the-box thinking,” he adds.

But even with the documented successes of the company and the sector, does Bidvest Prestige, and the entire the industry, face a threat from an idea that outsourcing is a threat to job creation? Not so according to Padmanathan: “Sometimes people talk of insourcing versus outsourcing and its impact on job creation but the significant number of corporates realise that to remain competitive, they must focus on their core business and outsource their non-core business.

There’s a strong view that outsourcing

is positive for the country; we’re growing our labour force on average by 6-7% per annum and that shows the opportunities that are out there.”

This view is supported by Deloitte which said in its 2015 report on outsourcing in South Africa that: “To say a country that allows companies to outsource in order to obtain efficiencies and cost reduction causes job losses is naïve and uninformed. Statistically, there are more employees that get retrenched annually because of company failures (mainly where the revenues cannot cover the overheads of that company), than job losses caused by efficiencies through outsourcing. South Africa has identified outsourcing as an enabler for economic and social growth.”

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Another area where job retention has been highlighted is with the rise of technology in the industry and advances that could see human jobs replaced with machines. But Padmanathan is confident that at Prestige people will not be sacrificed to mechanisation, although it will be used to enhance service delivery where possible.

“The nature of cleaning equipment is changing. Largescale machinery is commonplace and you can now get the same level of work done with a lot less inconvenience, and invariably it’s a lot more healthy and hygienic,” he says.

“A cleaner will always have to clean but we can give the tools to improve from a speed and efficiency perspective. Technology is becoming a bigger component in the industry as our clients demand it, and there is sometimes no choice due to the nature

of the industry. It also opens up new contractual opportunities with new clients. Mechanisation is becoming a significant part of the business but we will never not need a large labour force.”

The CEO’s attitude surrounding people is admirable. During these tough economic times, where global markets are so uncertain, management are so often forgiven for focussing attention on survival rather than growth and profit rather than people but Padmanathan, a self-confessed optimist who has only been with Prestige for 11-months, is resolute in his drive for improving people and, as a result, improving service delivery.

Under his stewardship, it is clear that Bidvest Prestige faces an exciting and positive future, one where people are at the core of the business.

“I believe that as a company, we

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CLEANING HYGIENE PROGRESS

Hychem was established in 1989, and offers a complete range of cleaning solutions, from the supply of chemicals, dispensing systems, accessories and training thus ensuring that customers hygiene standards in all aspects of their establishment are achieved.

Hychem has been appointed as an exclusive distributor in the Hospitality Sector in South Africa by Chrisal NV. The range of natural Probiotics in Progress products, called PIP for short have taken the environmentally friendly products to a new level in cleaning efficacy. Four of these products carry the EU Ecolabel namely PIP Control, an odour neutraliser, PIP Result, a floor cleaner, PIP Unidose, for floor scrubbing machines and PIP Universal, an all purpose cleaner and degreaser.

Hychem’s focus is on adding value, training, support, equipment and servicing thereby assisting customers to achieve optimisation of their resources Hychem assists customers to implement good hygiene practices within their Housekeeping, Kitchen and Laundry Departments in their quest towards becoming HACCP compliant.

continue to punch above our weight,” says Padmanathan. “Where there’s opportunity, we’re taking advantage, despite the economic circumstances that we’re faced with – there is work out there. This means we can grow the company, grow the labour force, change people’s lives, give opportunities to people who wouldn’t have had them, bring fair returns for shareholders and overall, in the cleaning space in SA, there’s enormous opportunities to grow further,” he concludes.

HY CHEM “Planned approach to hygiene”

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Issue No.61

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JEGIE PADMANATHAN:

People Are The Power

of Bidvest Prestige ALSO IN THIS ISSUE:

CCI South Africa / Thebe Tourism Group / RPP Developments / ALG Estates

A S F E AT U R E D I N

ENTERPRISE AFRICA

AUGUST 2017