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.
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.