Entrepreneurs for Nepal

Success does not come overnight. Most of us have learnt this lesson the hard way. And this holds true for Anand Bagaria too, the managing director of Pro Bio-Tech Industries and Nimbus International Co, one of Nepal’s leading agro-business enterprises.

Mr. Bagaria, while sharing his story of being an entrepreneur on October’s ‘Last Thursdays program, said it took him about fifteen years to reach where he is standing right now. Like any other kid in school, he too wanted to become a doctor, an engineer or a pilot while growing up. However, in the second year of his college, he realized that he was not made to take jobs under anyone owing to his own temperament. He thought either his boss would go crazy or he would, if he took up a job under someone else. In his college days, he worked for his pocket-money which instilled the value of money in early years. He started to export handicraft from Nepal when he was staying in India during his college to the US. He sent a few consignments but he was unable to make money from it. But this only resulted in strengthening his desire of doing something on his own. In 1994 or 1995 when he finished his engineering, he came back to Nepal and his options were either to go for further studies or get in to business or “dhannda”. He chose business with the determination that, even if he only started a shop, he would be his own boss. And that counted a lot for him.

Even though he had no money in his pocket, many business ideas ran through his mind, like running a consultancy, open an advertising agency or a motor garage. But while he was figuring out a business to run, his dad put together some resources to start a ball-point pen manufacturing company. The ball-point manufacturing company turned out to be a venture which sustained a great loss. However, that came with a lot of learning as Mr. Bagaria explains “One thing that I always had in me is that every time I fail, I jumped back with more vigor, enthusiasm and determination.”

Lesson 1: Never give up.

As such, he again started with trading of products like confectionaries, biscuits etc which were imported from India and distributed across Nepal. But later he realized, his heart was not in that. Hence, while he was juggling with a few things that came his way, he came across this gentleman who was the agent for the largest enzyme producing company in world. He was the agent for India and Nepal and he told Mr. Bagaria that there was an enzyme which sold about five tons a month in the poultry sector in Nepal. Even though Mr. Bagaria knew nothing about poultry, especially about enzymes, what the agent said made a great deal of sense to him and he got into it right away. That was probably a big mistake but a pleasant one, says Mr. Bagaria.

Two or three months into the business, he sadly realized that the market for the enzyme was much smaller. But in the whole process, he learned a lot about the poultry sector in Nepal. He met a lot of poultry farmers, especially in Chitwan and he thought he finally found his niche. He felt that the sector was highly under-represented. Only after getting into the sector, he realized, poultry was not just an ordinary business, but it was a science. He found out that there was more research on poultry nutrition than human nutrition. Another interesting thing was, it was very high on turn over. Poultry industry alone stands somewhere around 15 to 20 billion rupees of turnover annually. The value of livestock is close to 50 billion rupees, which is a significant amount in Nepal’s context. What got him further interested was that there were no big or organized or corporate players in the sector. He recognized the opportunity but he knew nothing about the technical aspects of the industry. Being an engineering student, biology was something he needed to master over a short period of time so that he knew everything about running the business.

In this environment, he met up with one of the very fast growing Indian companies to establish an arrangement between his company and the Indian company where his company would produce poultry feeding supplements. His company produced supplements in Nepal because of advantages in producing that supplement in Nepal than in India. While he was doing this, he also simultaneously started to move around the market here, trying to understand how it worked. He was amazed by grain trading, vitamin trading and saw a lot of other prospects. The feed they were producing here was unique and different from the product being sold worldwide. So the idea was to get new technology to Nepal to increase production, which meant that a lot of capital had to be invested. That period, he recalls, was a difficult phase in making judgments and taking decisions. Managing the resources, analyzing the risks, etc., were some of the issues he faced. But after lots of study, discussion and persuasion by international experts, he decided to take it forward. He can now proudly say that the entire dynamics of the business has changed due to the technology.

Lesson 2: Study new technology and embrace it if it meets your need.

When he went to farmers in his initial days, the farmers would not accept his products easily. For that he came up with an idea: if the farmers lost money by using his product, he would compensate and if they made profit, they had to tell others about the product. That worked very well for him and his company. In 2004, when he first started, in the first month, 100 tons of feed was sold. Second month he sold around 200 tons a month. Today, they sell 6,500 tons of feed every month with a target of reaching 10,000 tons per month.

Lesson 3: Best way to sell your product is to offer a win-win situation for your customer.

Explaining how the animal nutrition industry develops, Mr. Bagaria puts it like this, “first, you identify farmers who are progressive in nature, who are willing to experiment with new technologies and new ideas. One has to be patient enough to capture the opportunity, keeping in mind the present situation and the previous context.”

Another area where his company works closely with the farmers is in creating better market access i.e. getting good prices for the farmers’ products. Once the farmers specialized in the production, their efficiency would go up and if the efficiency went up, naturally the profit would go up. The company is also working to improve its distribution model. The company developed about 14 depots across the country keeping in mind the situation of the country. Situation of countless “bandhs”, road strikes and other instabilities had to be dealt with. So instead of storing all their products in one factory, his company stored it across the country in 14 different depots. That turned out to be a sound idea which made things easier.

Lesson 4: Open depot close to your customer to deal with “bandhs”

Starting from 100 tons a month, Nimbus International today sells around 6500 tons of feed a month. In terms of turn over last year, the company closed at 2 billion rupees and this year they are heading for 3.5 billion. To sum up in one sentence, Nimbus essentially is into animal nutrition and agricultural inputs. It basically started with animal nutrition and later moved on to agriculture inputs because 90% of its raw material is agriculture products. Nimbus buys a lot of maize, soya, wheat and different kind of products to make the feeds. In the last ten years, it has been able to establish itself as a good and reliable brand in terms of quality. It has a large network of farmers and dealers. It has about five hundred dealers across the country, mostly in rural areas. The next plan would be to leverage its rural network and attempt to provide rural population with micro financing and micro banking which would essentially help the agriculture sector and establish the company as a major catalyst in bringing another change in the agriculture sector of Nepal.

Q&A:

Please tell more about creating the linkage between the farmers and micro finance.

One of the reasons why micro finance has not reached rural farmers despite high demand is that the cost of delivery is very high. So, what I am proposing to lots of the financial institutions here is, as I have the network and connection to the farmers through my business, I could be the physical presence at the rural level. If there could be some methodology that the finance sector and we could put together, we could be the vehicles to disperse and collect back the loans that the rural sector needs. And similarly when I said micro finance, I also meant micro banking. When I say micro banking, I mean that if somebody needs to deposit ten thousand rupees instead of keeping it in his cupboard, there could be a teller counter where you could deposit that ten thousand rupee. My ultimate dream would be that my dealer outlet became a multi bank teller.

What percentage of your raw materials go into the feed?

Any kind of feed is ninety-five percent grain and five percent of products like amino acids, vitamins and stuff like that. In terms of quantity, seventy to eighty percent of the grain that goes into the feed is locally produced but in terms of value, it would be around sixty to sixty-five percentage of the grain that goes into. Broadly, animal feed is about maize, rice, soybean and sunflower cake. So maize and rice are sources of energy and soybean and sunflower are the sources of protein. In our own country, the source of protein is not abundantly available. Very interestingly, we have just setup a plant as a backup for our own feed mill where we are crushing soybean to make soybean “pina” and soybean oil. Now instead of buying “pina” from India we are buying soybean seed and we use “pina” in our factory and sell the oil.

What is the difference between mach-feed, pellet feed and organic feed?

Mach-feed is all about the grinding the grain, mixing it with some other nutrients and feeding it to animals Pellet feed is about grinding the grain, mixing it together with other nutrients, cooking it and then forming it into balance diet. So every pellet feed is a balanced diet by itself. It was the technical advancement that we brought, which has resulted into more profit for the poultry farmers.

Organic feed is possible but it is not competitive. There are many farms in India and western countries where they produce organic feed, organic egg and organic chicken but the cost of production is very high. So, the question always comes, is our market ready to buy organic products? There are two ways of doing it, either convincing the customers or imposing a law. Right now, the Nepali market is too pre-mature to handle that.

What were the mistakes you’ve made in business and what are the lessons you have learned from those mistakes? Also what were some challenges while doing business?

I started with a failure. The first project I did was of feed mill but it was a failure for various reasons. I think it was fundamentally wrong to get into business in a rush which everybody should learn from.

Lesson 5: Do your homework. Never start a business in a hurry.

I would not call it a major failure but there were many wrong decisions in terms of investment decisions, product selection decisions, people decisions, not hiring people decisions etc. But then I realized that making a decision is very important as opposed to not making any decision at all.

Lesson 6: Don’t be afraid of making decisions.

We made mistakes and we faced a lot of oppositions and constraints but every time you face a problem, the biggest challenge is to learn from it. I would like to share one example; in Nepal we have a culture of working in a syndicate system. After being into the same business, we get together and try to make a profitable situation for ourselves. I think in the whole process the damage that we do is to ourselves. We lose our efficiency by getting into the syndicate. We make a margin and make money by creating a cartel. When I got into this business, like every other business, there was a cartel and they were affiliated to the farmers and so lots of bad mouthing went around, lots of resistance was put across. But then our approach was to go to every farmer and explain this is how we can benefit and it worked. In business, it is called the multiplier effect that we created and it worked for us. That was probably the biggest challenge that we came across.

For me, an additional challenge was that I was a failure in my previous business attempts. So the problem was where to approach for money. So, we consciously identified people who had good credibility with the bank and who could invest in our business plan. Then we approached a few of my dad’s old friends they gave me some ideas. So, if you have a good idea and if you are confident about it, something or the other comes your way and this is how you get started.

Lesson 7:  Believe in your idea, and find ways to make it happen.

Despite the situation in the country, what made you stay in Nepal and start your own venture? What are the key ingredients you think that you have put in to survive and come out even during the crisis time of the country?

When I came here in 1995, the political stir had just started and no body thought that it would reach such a height. I had family and friends in Nepal and I didn’t want to take any job and I had too many limitations around me. My only choice was to dive in and see what happens. I remember my dad telling me that lots of millionaires were made during the First and Second World War. So, if there are challenges, there are also opportunities.

So I jumped in and by 2000, lots of businesses were lying low, some businessmen even started investing outside. So, the competition was little lesser than before. Another reason why I wanted to be here was as I moved around the poultry circles, I realized that the poultry industry was rather inefficient in Nepal and somehow, I could make business out of that inefficiency, trying to convert it into productivity.

My inherent habit of countering challenges is what kept me through these ten or twelve years of insurgency. I even started enjoying the whole process of taking up challenges and converting them into results. Now I am planning to buy hub for chicken or any other meat product and am planning to set up a modern slaughter house and then putting up a chain of retail stores, where you could buy the same meat at a same price. It is a huge project; to start with it will cost around 2 billion rupees. As in the current political situation in Nepal I am trying to be as inclusive in business as possible, trying to include more and more people. If you can create a model where many people can benefit out of it, you will create a big team for yourself.

Lesson 8: “Success doesn’t come in isolation; it is often a participative and collective process.” This is what I am trying to do.

In case of slaughter houses that you are talking about, what are the responses from the government in terms of having it as a mandatory or standard practice?

This is why I like Nepal very much. Very interestingly here you have to do something good and the rules are framed around that. Yes there are several laws about meat products but it is not implemented, the laws are not effective. If you do a good job, if you create something, then the laws comes into effect later. This is what happened in the banking sector, the bank came first and the laws came afterwards. So, in case of processing meat and slaughter houses, there are laws that could easily be met. But you need to raise bars and force the government to raise the bar as well.

This is a summary of the Last Thursdays where Entrepreneurs Speak: With Kiran Shrestha of Nepalaya

The name Nepa~laya was derived from the words “Nepa”, which means Nepal in Newari language and “laya”, which means music in Nepali. It also sounds similar to “Himalaya”, the name by which Nepal is known internationally. Kiran Krishna Shrestha, Team Leader of Nepa~laya explained that Nepa~laya is a book publisher, event manager, music producer, movie maker, and photo exhibitor. When this company was established in 2001, they started with music and worked in a single room in his house with just 3 people. Today the area of their office in Kalikasthan is 8,000 square feet.  “There was not much market for music then and it is not much different now. When we got into publication a few years later, the market for Nepali books was almost non-existent and though it has grown since then, it is at an unsatisfactory rate. We have also made documentaries in the last few years. People don’t seem to have a good perception of documentaries as they are not commercial films but independent films,” shared Mr. Shrestha. Based on his work experience in various sectors, Mr. Shrestha shared his knowledge and inspired the 70 or so entrepreneurs and students gathered at the “Last Thursdays” interaction program organized by Entrepreneurs For Nepal (E4N) and Samriddhi at Hotel Dwarika’s, Battisputali on 26th August, 2010.

“In most of our work, people generally don’t know us but they recognize the people we work with,” said Mr. Shrestha. Since 2000, the folk-rock band Nepathya is being managed by Nepa~laya. They also started the Paleti series with renowned artists of yesteryears. On the publication front, they have published books of Narayan Wagle (Palpasa Café and Mayur Times), Kunda Dixit (A People War trilogy) and Sanjeeb Uprety (Ghanchakkar). In documentaries, their first project was Bheda Ko Oon Jasto in 2003. “I made that film myself as I am a film-maker by hobby” said a proud Shrestha. “That film was an opportunity to redefine documentaries in Nepal. We tested how we can successfully show non-fiction films to the public. Probably Bheda Ko Oon Jasto was the first non-fiction film to be released in a cinema hall in Nepal”, he further elaborated.

When Narayan Wagle was writing Palpasa Cafe, Nepa~laya conducted research to assess the book market but what they found was not encouraging. “While talking to different publishers, what I realized was that none of the publishers was author-oriented,” lamented Mr. Shrestha. (LESSON #1) He believes that the author is the property and books come and go, so if publishers promote the authors, they will be encouraged to write more books. “What I felt was that nobody was investing in the writers. We identified this scope and hence started publishing books,” Mr. Shrestha said. For the market research, they created very simple questionnaires and conducted two types of surveys, one among general readers and the other among book stores of Kathmandu. “When we asked the publishers about the number of copies we should publish, we received very discouraging suggestions. Most of them recommended to print 1000 copies, a handful advised to print 2000. But challenging ourselves, we told Narayan Wagle that even though this is our first publication, we can sell 5000 copies” said Mr. Shrestha on the brave decision they had taken.

Five years ago, Nepali books were generally priced between Rs. 50 and Rs. 125 and production quality was not given much importance. Even Narayan Wagle hesitated to price his book for more than Rs. 100. So Nepa~laya went back to the market and surveyed again on how expensive books are being sold. They discovered that foreign books with a price tag of around Rs. 500 were having good sales but there was no Nepali book in that price range. After getting feedback from shopkeepers and book readers, they came to the conclusion that their first book can be priced at Rs. 250. (LESSON #2: Conducting research is essential for making important decisions.)

Nepa~laya also went on a book tour with Narayan Wagle to different places around the country. Some people criticized Nepa~laya for degrading the value of books by making it commercial. “For me, book readers are the consumers. From a marketing perspective, you have to let people know that the product is launched and available in the market. And more importantly, you have to make the product available and accessible to the consumers. In the current situation, we never know what books are being launched in the market and if we want to buy a book in a nearby book store, we will not find it,” defended Mr. Shrestha. This approach led to Mayur Times being available in book stores across 46 districts of Nepal on the day of the launch and also informing the public about the book shops where the book would be available. “I got a quick feedback the next day from Baglung. The reader said that this was the first time he found a book in a book shop the same day it was launched,” said a satisfied Mr. Shrestha. The launch of Mayur Times dispelled the general perception that the book market in Nepal was limited to Kathmandu. This time, 10,000 copies were sold out in two weeks and 40 percent of the sales was made outside Kathmandu. (LESSON #3: Kathmandu is not the only viable market in Nepal.)

When asked why Nepa~laya only selects “celebrity” kind of people to work with and whether they can provide a platform for unknown people with potential, Mr. Shrestha acknowledged that they do face this criticism. He further commented that working with Narayan Wagle was risky because he was known as a journalist but they had to present him as a fictional writer. Ghanchakkar written by Sanjeeb Uprety is apparently his second book. People assume he was already well known though most people don’t know about his first book. He shared Nepa~laya’s plan of publishing 2 books this year, one of which is being written by a resident in Rolpa and the other by a retired government employee.

According to him, there are two ways of marketing – one is through Public Relations and the other is through advertisements. Mr. Shrestha opined that the general tendency of our media is to be concerned about ‘whose’ book is being published, rather than ‘what’ the book is about. This attitude has to change for the media to be mature and professional in Nepal. Pointing out possibilities, he said that in today’s world, print and television are not the only means of advertisement and various other platforms like Facebook can also be used for promotion.

During the making of the documentary Bheda ko Oon Jasto, he met a Nepali film maker at a party who said that he made commercial movies targeting rickshaw drivers and other low income earners as audience. Mr. Shrestha told him that he knew only two kinds of films, good or bad. When asked what film he made, the film maker argued that people like Mr. Shrestha don’t watch Nepali films but complain about the quality. Mr. Shrestha’s response was, “You just told me that you made films for rickshaw drivers. Make a film for people like me and I will watch it.”

Nepa~laya showed Bheda ko Oon Jasto in different places around the country. They were about to show it in Jai Nepal Cinema in Kathmandu but coincidentally a Shah Rukh Khan film was released. But their friends from the cinema hall’s management allowed them to show the documentary once a day. Initially they had planned to show it for a week as they thought that very few people would turn out to watch a documentary with such expensive ticket price. But even though the length of the documentary was 85 minutes and the price of the ticket was the same as that of a regular show, 90% of the tickets was sold! “This explains that there is scope in the market but you should know how to tap it (LESSON #4),” said Mr. Shrestha. He shared that they also invite film making crews from abroad. They have sent some footage for a program for National Geographic channel and recently, they worked on producing the footage of Lukla airport which was featured in History Channel’s program on the world’s most dangerous airports.

On the music front, Nepa~laya also organizes the Paleti series. “People ask me why only old artists are invited to perform in the Paleti series. My reply to them is that we don’t need to invite artists who are selling or promoting their music themselves. We want to bring back those artists who have been out of the musical arena for some time. We need to bring them back and it is also a good opportunity to archive our music history,” said Mr. Shrestha. When doing the first Paleti in 2003 with Phatteman, people reacted in strange ways; some didn’t even know that he is alive and some doubted if he could still sing. Till date, Nepa~laya has invited 37 artists like Amber Gurung, Kumar Subba, Prem Dhoj Pradhan etc. and for most of them, it was their debut solo concert even though they were in the later phase of their life.

Mr. Shrestha thinks that there is no culture of solo concert in Nepal. Normally concerts are organized by clubs and social organizations for charity. “In the entertainment sector, organizers think of concerts as Parents’ Day in schools and include everything from singing to dancing and other activities. But we only organize solo concerts. In Nepathya’s concerts, we don’t even hire MCs because I have seen MCs being booed.. People come to watch musicians play and I don’t want to pay someone to be booed by the audience,” analyzed Mr. Shrestha. Nepa~laya organizes concerts outside the valley and maintains the same quality everywhere. He highlighted that they always start and end the concerts on time. “We project the clock at the concert venue and if the concert has to start at 2 then it will start exactly when the clock strikes 2. Everyone has appreciated this effort,” he commented. Satirically, Mr. Shrestha observed, “The news on radio and television always start on time. Assembly in our schools started on time. Even today, in programs like these, 60 to 70% of the audience arrive on time. But we give unnecessary value to the remaining people by waiting for them. If only we start on time will we be able to finish on time.” He also informed that they are coming out with Nepathya’s new album in September. There are difficulties in selling music because the music market is not yet developed in Nepal. But he and his team are committed to try to change the scenario. He also shared  that though it is challenging to work with artists, he is happy that all the artists he has worked with are satisfied with Nepa~laya’s work.

He said that they want to contribute to the sports sector as well. Two years ago, they toured Nepal with NRT football club and organized matches against local clubs. This year they had planned to bring an English semi-professional club to play matches with local teams here but the volcano in Iceland prohibited their trip to Nepal. The club will be here next year.

According to him, the work they do is not for commercial purposes hence one cannot plan and focus on profit/loss too much beforehand. For him, this business is passion driven and they thoroughly enjoy what they are doing. In conclusion, Mr. Shrestha said, “Till date, we have published some books, made a few documentaries and worked in music. Whatever we have achieved was driven purely by our passion for what we do.”