Making It Big

  ‘What do you have in these Wai Wai cartons?’ I asked.

  ‘Wai Wai noodles, of course,’ one replied.

  I was surprised.

  ‘Why did you bring so many of them?’

  ‘Yah,’ one of them said, ‘you don’t find them here.’

  I was so delighted I wanted to jump up and down. I wanted to hug them and tell them, ‘Brothers, Wai Wai is my product.’

  But I could not do that. They were not interested in me at all. Also, a part of me felt I could not claim Wai Wai as my product alone as it has been owned by so many people.

  I decided at that very moment that I would ensure Wai Wai became available across the world, or at least in those parts of the world where Nepalis lived so that they would never have to take cartons of Wai Wai with them or ration their supplies of it when they left the country.

  If export can be treated as international expansion of one’s business, we had expanded a long time ago, because we have been exporting Wai Wai to India for more than two decades. If it is the establishment of the first factory abroad that marks the internationalization of a product, then Wai Wai was internationalized more or less simultaneously with our realty business.

  The north-eastern region of India has been a major market for Nepali products for many decades. This region comprises Darjeeling, Sikkim, Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram and Tripura. Even Bhutan is considered a part of this region these days. People of Nepali origin have a strong presence in the region. We had set up a basic distribution system in the region while we were exporting Pashupati Biscuits three decades ago.

  We enhanced the distribution system for Wai Wai. We devised a new strategy for market promotion by appointing Nepali students going to India for studies as our brand ambassadors. They were not supposed to sell Wai Wai in their colleges, but only introduce their friends to the brand. This idea was a hit. Wai Wai became explosively popular, not only among Indian students of Nepali origin, but also among Indians and Tibetans.

  After successfully establishing our product in that regional market, I thought it was high time we set up Wai Wai plants at the international level.

  We established CG Food India Private Limited under Cinnovation. This fast-moving consumer commodity business was duly registered with the authorities concerned at Guwahati in Assam in 2002. The first Wai Wai plant outside Nepal came up in Assam, though we would have preferred Sikkim, a better site for us in many ways. It is a mere four-hour journey from Kathmandu to Gangtok. You can fly from Kathmandu to Bhadrapur in about forty-five minutes, from where Gangtok is just a few hours’ drive away. Also, the people of Sikkim share the lifestyle, culture, food and habits of Nepalis. An Indian from Delhi would feel an alien in Sikkim, while a person from Kathmandu would feel right at home.

  However, we faced a major problem in Sikkim—foreigners were not allowed to buy land there, and you had to give 51 per cent shares in the enterprise to the local residents who provided land for the factory. This was unacceptable to me.

  Assam was our alternative.

  At that time, the United Liberation Front of Assam (ULFA), an armed guerrilla group, was stepping up its activities across the state. The security situation was critical. The state was lagging behind in development, and poverty was widespread. On the other hand, India’s Central government was pumping billions of rupees into the state. It also introduced an industrial promotion package, which included provision for a plot of land in any part of the state to be leased at a nominal charge for ten years. Electricity was heavily subsidized, and there was a ten-year exemption from income tax too. The state government gave a transport subsidy for importing raw materials and exporting finished products. Additionally, for every Rs 1 crore invested in a project, the state government would provide a grant of Rs 30 lakh. Lured by these facilities, we decided to make Assam the first site for CG Food India.

  Meanwhile, another interesting development took place.

  I was in Delhi on business, and the senior cardiovascular surgeon at Escorts Hospital Dr Naresh Trehan took me to the site of a proposed project.

  Dr Trehan is a renowned doctor in India. He initially practised in New York, and later shifted to India to establish Escorts Hospital at the request of former prime minister Rajiv Gandhi. He has received some of the highest civilian awards, such as the Padma Shri and the Padma Bhushan. I had set up Norvic Health Care Centre in Nepal with his assistance. Now, he was bringing the Medicity project to India to provide global medical facilities under one roof, and was proposing that I open a hotel there.

  I have deep respect for Naresh and Madhu. They have always been good guardians to Nirvana, right from the time he joined Doon School. Naresh has stood by my side since the time my father took ill. Despite being incredibly busy with not only his medical practice but also his diverse interests in many spheres of life, he has always had the time to help, guide and assist me, whether as a friend or as a businessman. There have been many times when we have run into serious problems that Naresh solved.

  Naresh too has a high degree of confidence in me. When he was parting with Escorts and starting Medanta, he asked me to partner him. I had a few rounds of discussion with his partner Sunil Sachdev. Unfortunately, Sunil could not fulfil the required formalities suggested by our lawyers. It was a big investment for us at the time, and that too for a minority position. I told Naresh I would like to opt out of the project but would assist him as a friend if he wanted to use our investments to bridge over any problems on the way. In hindsight, I have no hesitation in admitting that I made a wrong decision. Instead of listening to the lawyers and thinking about the technicalities, I should have thought of the project as an initiative of a visionary like Naresh, and known what he was capable of creating. My involvement in Medanta in whatever small role as a partner would have taken our presence in India, our honour and our respect, to new heights. I still tease Naresh, telling him: ‘You still owe me the promised shares which you’ve not given me.’ Naresh, notwithstanding all this, remains a great friend and guide to my family.

  We were now speeding towards the site, when he suddenly swerved the car around.

  ‘Oh, my God!’

  I was bewildered.

  ‘I’m going to be finished,’ he said. ‘I have to go back to the hospital for five minutes.’

  ‘What’s the matter, brother?’ I asked.

  ‘I had given an appointment to the Sikkim chief minister, Pawan Chamling. It slipped my mind,’ he explained. ‘I’ll see him and come with you.’

  We returned to the hospital.

  Chief Minister Chamling was waiting for the doctor when we reached the hospital. He was with his wife and an aide. After finishing his brief check-up, Dr Trehan introduced me to Chamling

  The very next day, Chamling and I were chatting at Sikkim House in New Delhi—not in Hindi, but in Nepali.

  I told him how I had wanted to set up a Wai Wai factory in Sikkim but was forced to go elsewhere. ‘You won’t sell land to foreigners in Sikkim,’ I said. ‘How can you expect foreign investment?’

  He responded immediately: ‘That’s not on. We are so close to each other. Nepal is hardly three hours’ drive from Sikkim. How could you possibly go to Assam to invest? You have to come to Sikkim. I’ll make all the necessary arrangements.’

  He told me: ‘Please visit Sikkim and see for yourself how popular your Wai Wai is among us.’

  ‘But I can’t give 51 per cent partnership to others for leasing their land,’ I said.

  ‘Forget about that. Just think that you have already found a plot of land in Sikkim.’

  He put me in a spot.

  I had made all the arrangements to set up the plant in Assam, and the state government there was pledging huge subsidies. On the other hand, the chief minister of Sikkim was insisting I had to open a factory in his state.

  ‘I’m interested,’ I said. ‘But can you provide us with the same subsidies provided by the Assam government?’

  ‘Just w
ait three months. I’ll give you even more facilities,’ he replied. ‘The legislation has already been tabled in the House. It should be ratified within three months.’

  After such a strong commitment from the chief minister himself, what more could I have asked for?

  So it was that a conversation that began about establishing a hospital in Sikkim ended up about setting up a Wai Wai factory.

  ‘A hospital is a very sensitive matter,’ I told him. ‘We’ll discuss it later. But I promise you that I won’t turn down your request to set up a Wai Wai factory.’

  ‘That’s a deal.’ He rose from his seat in excitement and shook my hand firmly. ‘You are welcome anytime. Just let me know which site you like and I’ll arrange it for you.’

  We immediately withdrew our plans for Assam and started to work on the Sikkim project.

  At Rangpo, by the banks of the Teesta River where our Wai Wai plant is now located, we received seven acres of land from the state government on a long-term lease at a negligible rent. The market price of the land itself must be around Rs 15 crore in Indian currency. As Chamling had pledged, the bill was endorsed by the House within three months. We got the licence to open a plant in Sikkim, with better subsidies and facilities than offered by Assam.

  This is what I call an investment-friendly climate!

  Now it was my turn to fulfil my promises to Sikkim. I opened the factory in a record time of seven months.

  CG Foods India’s first factory came into operation in April 2006. The plant has a capacity of 11,000 tonnes of finished noodles, or 120 million packets a year, and is operating at full capacity. We are producing, in addition to Wai Wai, Kwiks cheeseballs, bhujia and other snacks at the factory.

  While issuing the licence for the factory, Chamling told me, ‘The state government does not expect a penny from you. We’re giving everything to you. I also don’t want any personal favours from you. I would, however, ask you for one thing: the people of Sikkim must be employed in your factory.’

  I gave him my word: ‘Chief Minister, I will be the largest employer in Sikkim within two years. This is my promise to you.’

  I fulfilled that promise, employing around 500 Sikkimese people in the factory within two years. That year, we added another plant of even higher capacity in Sikkim, our second phase of expansion in that state. More than one thousand local residents were now working for us.

  The establishment of the Wai Wai plant in Sikkim created great astonishment across Nepal.

  This was probably the first instance of a huge investment by a Nepali entrepreneur outside the country. Not only that, investing in India was itself a controversial matter. How could the Chaudhary Group invest in India in a blatant breach of the Act that prohibits a Nepali citizen from investing outside the country? However, I had not flouted any law. The factory in Sikkim was registered in the name of CG Foods India and not the Chaudhary Group. And CG Foods is a company owned by Cinnovation, a Singapore-based company.

  I am eternally grateful to Kantipur, the leading national daily of Nepal, for its firm support to me. At a time when a heated debate was going on in the country for and against our decision, Kantipur gave us support. The message was clear: if foreign companies could have unhindered access to invest in Nepal’s market, a Nepali company must also be allowed to invest abroad. My Wai Wai factory in Sikkim was a wake-up call to the policymakers and politicians in Nepal. Shortly afterwards, the finance minister and the governor of the central bank publicly stated that the government had initiated the process to bring restaurants and other companies run by Nepalis outside the country within the ambit of the law. ‘Many Nepalis are using back-door means to invest abroad. We shall let them invest using the front door by bringing those investments within the realm of law,’ Finance Minister Dr Ram Sharan Mahat said.

  Even at the time of writing this, we are yet to get permission to invest abroad through the ‘front door’, as envisioned by Dr Mahat, but the Act that forced us to use the back door has been amended. And all the stakeholders seem unanimously in favour of reform.

  ‘Please do come and invest here. After all, Sikkim is yours.’

  This is what Pawan Chamling had told me during our first meeting.

  He has always kept his word to me. It is not that I did not face any administrative hurdles in Sikkim, but I do not remember anything that seriously impeded the project. If I approached Chamling with a problem, he would summon the ministers and secretaries concerned and settle the matter immediately.

  One problem we faced related to the land we had leased at Rangpo. It belonged to the state-run Mining Corporation. From the time we began construction there, the managing director of the corporation started to harass us under one pretext or other. Many times, he switched off electricity and water supply to our site. We also had to use the corporation’s gate to reach our site, as we did not have a separate entrance. One day, the MD padlocked the gate, so our employees could not enter the site, and their vehicles were lined up outside the gate.

  When the employees told me about this incident, I immediately telephoned Chamling. He instantly transferred the managing director out, purely on the basis of what I had told him He later requisitioned the land and moved the Mining Corporation elsewhere.

  The last time I met him was on 11 September 2008.

  He had given me an appointment at 7 p.m. that day at his official residence in Gangtok. I arrived there with Lily and Nirvana. He was busy in another meeting, but after twenty minutes or so, he turned up, apologizing for making us wait.

  ‘Oh, I made you wait for so long!’

  We had brought khadas in his honour. He offered the same khadas to us, saying, ‘You are the guests, not I!’

  I thanked him for the support extended by the Government of Sikkim to help us establish the Wai Wai factory at Rangpo. He would only smile.

  ‘Sir, do you remember how we accidentally met at Dr Naresh Trehan’s place in Delhi?’ I said, taking him down memory lane. ‘Our Sikkim journey started from that point.’

  ‘How could I forget that!’ he said, folding his hands. ‘You are our masters. Is there anything else I can do for you?’

  I thought it was a good opportunity to ask of him a favour. ‘A lot of the land of the Mining Corporation is still vacant. If you let me utilize that land, I’ll set up an industrial park there.’

  I pushed my sofa a bit forward and leaned towards him to explain my plan. ‘We can bring investors from abroad. We can build roads and other infrastructure to develop an industrial centre.’

  He nodded.

  ‘Well, we’re operating hotels and resorts in Sri Lanka, the Maldives and India. We would like to set up hotels in Sikkim too.’

  ‘Please do that,’ he said.

  ‘Sir, we need land for that,’ I said.

  ‘We are constructing an airport at Pakyong,’ he told me. ‘We are planning to build big hotels, casinos and malls there. We have acquired 500 acres of land for the project so far and plan to acquire 500 acres more. We can lease some of that land to you. You come up with a master plan, I’ll go through it.’

  I could not have asked for anything better! I had merely wanted to propose a small industrial park, but he wanted to include me in his extensive plan for the airport!

  ‘If you provide me around 100 acres, I promise to build a world-class hotel, park and mall there,’ I told him.

  ‘You just lodge a formal proposal for the airport project. I shall take it forward,’ he told me as we were about to leave.

  I thanked him profusely.

  ‘You don’t have to thank me,’ he said, grabbing both my hands firmly. ‘I am here for you. You are most welcome to invest here. After all, Sikkim is yours.’

  Our vehicle of international expansion embarked on its journey from Sikkim. We were easily penetrating India’s north-east. However, as Wai Wai was equally popular in north India, including Delhi, Dehradun, Punjab and Chandigarh, we had to install a plant in that region to supply those markets. It was not
feasible to transport the product from Sikkim to north India. We would have had to increase the production capacity of our plants in Nepal if we were to export Wai Wai from Nepal to northern India. It was wise to build a plant somewhere in north India itself.

  Rudrapur in the Indian state of Uttarakhand became our next destination.

  The chief minister of Uttarakhand, Narayan Dutt Tiwari, had launched a special campaign aimed at industrialization and generation of employment in the state. As part of the campaign, he had acquired 2500 acres of land at Rudrapur to establish an industrial district. It is now known as the State Industrial Development Corporation of Uttarakhand, or SIDCUL. We were requested to take a plot of land there. We were looking for a site for a plant in north India, but we were not very sure that Rudrapur was a good choice.

  We got three acres of land at Rudrapur just before the deadline for the land acquisition expired. Even after leasing the land, we did not immediately start work on the site. Our interest was finally roused only after the Tatas, Bajajs, Nestlé, Dabur, Haldiram, HP, Delta and other big brands started to throng Rudrapur. The Tatas operate on nearly half of the industrial estate, in around 1100 acres. Ashok Leyland has also established a huge plant at Rudrapur, but just outside the industrial district.

  When these huge brands were coming to Rudrapur, why would we hesitate to go there?

  In the first week of August 2006, we laid the foundation stone for the plant in Rudrapur. I thought the deadline for industrial production had been extended up to March 2010. I discussed the matter with the local officer of SIDCUL.

  ‘The Central government has decided to extend the deadline. We’re not concerned about that,’ he said. ‘However, if you fail to initiate construction work by 10 August, the entire plot of land will be revoked.”

  I was crestfallen. August 10 was less than a week away. I had to convince the SIDCUL officials within a few days that I had started the construction of the factory. We began gathering construction materials. Without even a basic design, we put up pillars at the four corners of the plot. Once they were up, we took photographs of the site and showed them to the SIDCUL officials, a day before the deadline expired.