Paint manufacturer Crown Paints has moved its Tanzania operations from Dar-es-Salaam to Arusha in an effort to cut down on operation costs.
According to the Business Daily, leasing space in Arusha is much more affordable than in Dar-es-Salaam and the move could save the company approximately Ksh. 7 million annually in rent and operation costs. Prior to the relocation, Crown Paints paid Ksh. 500 (US$ 5) per square metre in Dar-es-Salaam while in Arusha a square metre of space goes for Ksh. 150 (US$1.5).
Apart from cutting down on costs, the company’s relocation decision was also informed by the fact that the Dar-es-Salaam office has been one of the firm’s most poorly performing outlets in the year ended December 2018. The poor performance of the Dar outlet as well as two other branches in Rwanda and Uganda pulled down the company’s overall profits in the period under review. The subsidiaries made a combined pre-tax loss of Ksh.275.4 million in the year to December 2018 and this contributed to TransCentury’s net profit in the period under review falling to Ksh.183.8 million up from Ksh.223.2 million registered in 2017.
“We are cutting our operating expenses in Tanzania and we have already moved offices from Dar es Salaam to Arusha. The market has so far remained flat and we are reducing the costs before it picks up,” Crown Paints CEO Rakesh Rao said according to the Business Daily.
Mr. Rai similarly revealed that the paint manufacturer will transfer the Arusha’s outlet data entry jobs to Kenya in a move that could spell layoffs for approximately 30 Tanzanian nationals working for the manufacturer.
In an effort to grow its books, Crown Paints announced two years ago that it would focus on improving the performance of its existing subsidiaries as opposed to expanding into different parts of the region. To this effect, the firm last week launched a Ksh. 30 million facility in Nyeri County to improve its local profit margins.