Ram Ottapathu: Elephant in the room or serial entrepreneur?
- Competitors decry the Ram axis and its likely ‘abuse of power’
- Competitors want Ram’s business expansion stopped by CA
- Ottapathu on a multi -billion pula buying and selling spree
Ramachandran Ottapathu is the CEO of the Choppies Group, a multinational grocery and general merchandise retailer with over 100 stores in Botswana, Zimbabwe and South Africa. Headquartered in Gaborone, the company is listed on the Botswana Stock Exchange and is the country’s largest retailer. The Choppies Group won the Transformational Business Award at the 2014 Africa Awards for Entrepreneurship.
Ram cannot separate himself from publicly listed Choppies: he is the face of the retail chain which is the most prominent element of his business empire. But vertical integration means he not only wields the power at the retail chain, he also plays in the wholesale space.
A massive sell off of some companies he co-owned with Farouk Ismael took place which were the bulk of “related party transactions” in Choppies’ books. The companies supplied Choppies stores with everything from services such as distribution, grain packaging, milling, pharmaceuticals’ distribution, and air conditioning supplies among others in a confounding P450 million deal that saw the duo offloading their shares to an international consortium. This deal was advised by the Botswana Stock Exchange to ensure that Choppies operates with proper corporate governance structured as a listed company.
Then another pay day came when Ram put 21 percent of his P1,2 billion Far Property Company on the stock exchange early this year.
Now Ottapathu is buying more power in the form of Warbler Holdings, a company that holds in its nest: IT4Africa (Pty) Ltd, an information technology firm and Goldtech (Pty) Ltd, a major Samsung mobile devices supplier. Healthwest Africa (Pty) Ltd and Solid Logistics (Pty) Ltd are also subsidiaries of Warbler. Bluehearts, the acquiring enterprise, is solely owned by Ram, the CEO of the Choppies Group.
But a game of musical chairs is playing itself out, where typically, there are more bums than seats and somebody will be left standing, when the rush for the limited chairs happens, soon as the music stops.
Other business players in the market say what Ram is doing with the proposed purchase of Warbler, is tantamount to abuse of the power he wields in the market place.
Using an opportunity offered by the Competition Authority to publicly state issues of concern, at the public hearing held yesterday, some stakeholders such as Cash Bazaar Holding’s Odirile Merafhe raised a red flag, warning of possible job losses as a result of Ram’s proposed transaction. “We currently have an unemployment situation in this country,” said Merafhe.
But Ottapathu quickly stated that no jobs will be cut when the purchase of Warbler is completed.
But fellow retailers, Sefalana Group went a step further and wrote a letter to the Competition Authority, prior to the hearing, warning of a breach of the section 30 of the Competition Act which makes reference to dominance and abuse of power in the marketplace. “We are of the view that allowing this proposed transaction would result in abuse of power in the market,” wrote Sefalana executives, in reference to Ram’s purchase of Warbler.
Sefalana Group Finance Director, Mohamed Osman said that Ram and Choppies’ dominance, if allowed to buy the company, will likely mean that the competition at the retail end will likely extend to the electronics and devices, where Sefalana is also a player.
“Sefalana currently procures a wide range of products from the targeted company and has done so for a number of years,” stated the letter.
“One of the targeted companies under Warbler, is the sole supplier of Hisense products and if they don’t suppy us because we will be competitors, we would have to source the products from South Africa,” Osman told The Botswana Gazette.
The Competition Authority will announce its decision in 30 days.