KZN OILS: Mission-Driven KZN Oils Upholds Lasting Legacy
Leading fuels distribution and retail business, KZN Oils, is on an aggressive growth journey in the wake of losing its long-term CEO, Rajen Reddy, in 2021. New leader Esay Reddy has taken the reins and continues to build opportunity, create employment, drive economic development, while ensuring sustainability from this family-run industry powerhouse. She tells Enterprise Africa more about exciting expansion plans for the near future.
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Esay Reddy, Group CEO at KZN Oils, sits in her office in Durban under a photo of her late husband Rajen. She thinks about progress since the family and the business lost Rajen in 2021.
“Whatever we do, we do it with kindness and consideration – maybe that kind of philosophy isn’t popular among others in the industry, but it has been three years since my husband passed and I think we have done pretty well.”
Rajen Reddy established the company in 1999, in a different South Africa and a very different world. The first venture was a closed corporation – a small business supplying products to the Port of Durban. Rajen, ever-the-entrepreneur, quickly spotted an opportunity at the largest port in Africa. Handling more than 31 million tons of cargo every year, the port is a melting pot of movement and action. The businessman jumped into lubricants and supplied various businesses at the port with products that he personally bought and sold. Quickly, he applied for his refinery license – unheard of at the time – and turned KZN Oils into a Pty company.
In 2001, he tendered for a contract with Transnet at the port, winning the tender to supply lubricants and fuels – one of the first black companies to do so. This put KZN Oils on the map and allowed the company to grow its throughput significantly. Building relationships with the majors in the petroleum industry catalysed the business and the entrepreneur.
Esay Reddy, CEO
After success with Transnet, the ever-ambitious Rajen took on another large tender, which his focus on quality saw him awarded by the State Tender Board (STB). This game-changing contract had KZN Oils supplying fuels and lubricants to SOEs, government departments, and all related sectors for 12 years. “That was a huge learning curve,” smiles Esay.
In a relatively short period, he had grown the business from idea to corporate scale, without losing the family ownership and value that had made the company appealing to so many.
“We are now a billion Rand business,” confirms Esay who has been involved since day one and took on responsibility for KZN Oils and the RR Group when her husband passed. “Volumes create the revenue. Bigger volume equal better margins. We hope to double revenue from commercial side of the business in 2024.”
MAJOR OPPORTUNITIES
KZN Oils has three main arms – lubricants, commercial, and retail. The retail side of the business offers major growth potential, and this is where Esay is particularly excited about carrying on Rajen’s legacy. In 2011, the company won a tender from Caltex (now Astron Energy) to supply retail fuels across the province. This allowed for job creation and economic development – passions of Rajen.
“We divided KZN into three sections – north, south, and central. In the north, we stretch from Ballito to St Lucia, all the way across to Vryheid and Harrismith, and down to Greytown. In the south, we work from Toti to the Wild Coast and up to Pietermaritzburg, Ladysmith, and Newcastle in lubricants only. Those were the areas we were able to build, buy, and look after service stations,” details Esay.
“We grew our cluster from 28 to 37 stations, and next year we will bring on a further 10. By 2025, we will bring on another 10 sites and that will grow our cluster tremendously. There is huge opportunity in the north where there is a big requirement for truck stops. On the N2, there is a big opportunity and that is where we are focussed right now.”
From Port Shepstone to Mthatha, KZN Oils is looking at adjacent services and alternative energy services/products to unlock the latent potential in the major highways along that route.
On the commercial side, the Port of Durban expanding is good news for KZN Oils which remains a key stakeholder in our value chain. Transnet has already announced a request for proposals for the reconstruction, deepening, and lengthening of two berths on the container terminal’s Pier 2 North Quay. Durban is to be positioned as the country’s premier continuer and automotive hub as part of the R154 billion KwaZulu-Natal Ports Master Plan. Major expansion, and job creation, is planned in the city over the next three decades, including significant back-of-port infrastructure development. Here, KZN Oils will continue with the success it has always achieved. “My husband started with one drum of oil but persevered and built a business. The port gave us the opportunity to become who we are today,” says Esay.
In lubricants, the company is a national industry leader and has a fantastic reputation for quality. Obvious expansion opportunities remain in this part of the business, especially in the northern parts of the province where other expansion strategies are already being rolled out.
“We already do around 1.5 million litres per year,” explains Esay, “but we don’t think we have tapped the full potential in KZN – and there is major potential. We are looking at expending our distribution network through our franchise, The Oil Spot. We will offer a target and business plan, and mentor certain people in certain areas to go and sell our lubricants and our brand.”
Again, the focus on job creation remains as the business also looks for opportunities through its CSR work. “We had a very hard time in the last three years. It is imperative that we create employment here, and that is what we are busy doing – especially for the youth,” highlights Esay.
LPG INNOVATION
Working from its roots in fuels, the company will be streaming a next generation, innovative energy product, designed specifically for rural regions of South Africa that brings safety and affordability as key offerings. A new LPG cylinder – refillable, eco-friendly, and serving a basic need of people around energy for life, this new concept is already gaining traction.
“We want to bring in a composite cylinder – not made from steel. Ours is made of spun plastic with an outer covering which is very light. My vision is to give that to human settlement camps. We want to introduce gas to communities to be much safer when compared with using paraffin,” explains Esay.
Already selling around 30,000 kgs of LPG each month, this product will complement the KZN Oils portfolio.
“We have laid the foundations and we have a distribution programme in place with the manufacturer of these cylinders.
“Normally when you buy LPG gas in a cylinder, you exchange the bottle. We don’t need you to exchange. We are giving the bottle, and we have a scale. With composite gas cylinders, you can buy however much gas you want – whatever you can afford, take it out and put it on the scale, see how much you have, and take it home and cook. It’s basic and it is a need here in South Africa.
“This is a project that is close to my heart as I know it will help people,” she adds. “Recently, we had a fire in Durban that wiped out more than 100 homes and people just stood in the road and watched as it went down – that is not acceptable in this day and age. Our cylinder is light, you can wash it, it’s safe, and it is SABS approved. All the approvals are international standard.”
CONTINENTAL VISION
Longer-term, KZN Oils has big ambitions, and Esay is following a path laid by Rajen that will see the company immerse itself deeper on the commercial side of the industry. Currently, the country struggles with storage and refinery capacity, limiting the ability of petroleum businesses to make sustainable, long-term plans, and often impacting on pricing.
“The energy industry is hard to be in right now. Everything impacts the industry,” she details. “South Africa has only one refinery working to full capacity and the others are not up to standard. Our country needs to bring in finished product and that is a huge challenge right now. We are optimistic and we think that situation will turn around, but it has taught us to strengthen competencies – we are busy with that now, we actively want to build storage solutions.”
The company is busy finalising paperwork to cement its position in the market and bring it to the level required to build storage capacity. Esay is unequivocal in her call for more storage in country.
“We have a lot of vehicles on the road, we transport a lot across the borders, and we must create storage so that we have enough fuel. We also distribute fuel to Botswana, and that means there is a lot of work to do here.”
Even with major opportunities in KwaZulu-Natal, and across South Africa, the ambition within KZN Oils continues and Esay has been exploring prospects in Africa, specifically Ethiopia and Mauritius, which she describes as very forward thinking and equally ambitious nations with clear plans for economic development.
“We have been to Ethiopia and we are looking to build service stations there. Because the country is landlocked, you have to transport fuels 920km from the Port of Djibouti. We were approached to look at building storage so people could access fuels without having to go into Addis Abada. We have looked at Mauritius where we also want to build service stations and where storage is also an issue.”
Internally, the company is also growing and changing. In this new era under the leadership of Esay (and a 100% female leadership team), there is encouragement to update, adapt, and improve – even where long-standing processes continue to serve a purpose. Modern technology is the first step, and a change process is under way.
“We want to run our company paperless,” explains Esay. “We have been looking at various systems and software to drive our usage down. We are an old school business when it comes to digitisation and we are trying to get our people to become more comfortable with digital tools. We are creating platforms so that people can use technology more effectively and it is for us to convert those who are used to doing business in a certain way, that works, and help them to adjust.
“We have a fantastic young team who are creating systems that give us access to information anywhere it is needed. Covid left us no choice but to adapt, and we are getting there. We will need to accelerate this because we have big plans to expand into Africa,” she says, again highlight a burning ambition for development.
HELPING PEOPLE FIRST
Since 2021, KZN Oils has not only done well, it continues to transform and improve with not small, iterative gains but large leaps forward, benefiting the 300 people in the group as well as the wider communities across its network.
“We are all in business to make money, but we add another element. We try to do business that helps people first – that is why the LPG project is close to my heart,” says Esay.
“What separates us as a brand is that we are well-known – that is a legacy Rajen leaves us with. In South Africa and Africa many people recognise us and that is half the battle won. They know you are ethical, they know you are trustworthy, and they know you are reliable when it comes to the supply of petroleum based products. Those are the core elements of the company and they have been since my husband was here.
“Our values guide us and we have been successful,” she concludes.
In 2022, Esay was labelled as the Standard Bank KZN Business Personality of the Year, highlighting her innovation and ambition, and her dedication to upholding Rajen’s legacy of helping others.
Clearly, KZN Oils is in good hands and is doing great things. And, with so much opportunity on the horizon, the story will continue because of the mission-driven nature installed by the family.