Making It Big

  The next day, they arrived at the site for inspection. Construction materials were piled everywhere, and the pillars were up. The officials were convinced that construction work had started, and left satisfied. But in fact, it was a trick. To avoid losing the land, we had orchestrated false construction work at the site. At times, a ruse like that is necessary to overcome administrative hurdles.

  Once the administration was satisfied, we constructed the factory at our own pace. The deadline for commencement of production rolled near, but we were not ready, and it would have been foolish to pour money into production at that point, before ensuring that the entire north Indian market could be covered by the plant. SIDCUL, however, was in no mood to wait for us. They were struggling to cope with the growing demand for land, and were looking for an excuse to scrap their deal with any party that defaulted. Their officials started to pressure us to show proof that we had started production. Wai Wai’s Hakka noodles was the result of that pressure.

  Given the situation at Rudrapur, we needed a product that could be churned out by a small plant. We struck upon this idea of Hakka noodles, which required only a small production unit to prepare the dough and another machine to shred it. After that, we only needed to parboil the noodles before packaging them.

  This product did not come anywhere close to the quality of Wai Wai. We have never produced noodles of this kind at any of our plants in Nepal and Sikkim.

  Initially, the SIDCUL officials were reluctant to accept the Hakka noodles as our authentic product.

  ‘This is not your Wai Wai, is it?’ They had caught us red-handed. ‘We are not going to accept this.’

  ‘This is our new product,’ I argued. ‘How could you not accept it?’

  Big or small, nobody could deny that the item was an industrial product. Moreover, how could they force us to produce the same product we did in Nepal and Sikkim? The SIDCUL officials were forced to accept my logic. We started production from that plant in May 2008. Meanwhile, the Hakka noodles became extremely popular.

  Today, the plant at Rudrapur is as big as the one in Sikkim. It produces 120 million packets of noodles a year. We are planning to supply the entire north Indian market using that plant.

  In the third phase, we expanded our production to Assam. We had switched from Assam to Sikkim at the eleventh hour, but we had no doubt about the market potential in Assam. Guwahati and many other places in Assam have close cultural ties to Nepal. It was also easy to reach the markets of Meghalaya, Mizoram and Nagaland from Guwahati. The subsidies provided by the Assam government were equally tempting.

  We leased 7.5 acres of land at Chhaygaun, which is about sixty kilometres away from Guwahati. On 13 September 2008, I visited Guwahati for the first time to see the plot. The very next month, we began construction of the plant. Within a year, CG Foods India’s third factory was commissioned. It is operating at its full capacity of 150 million packets a year. We have recently set up another plant of equal capacity in Assam.

  My eldest son, Nirvana, looks after our FMCG ventures, both in Nepal and overseas.

  I realized from my experience with CG Foods India that if you do a huge volume of trade in a big market you can achieve extraordinary vertical growth.

  This had led to the suggestion from many stakeholders that we transform the company into a public holding and list it on the stock exchange in India. Many investors are also approaching us for a pre-listing placement of our company’s shares. However, I do not think the time has come for us to convert it into a public company.

  CG Foods India is now expanding at a fast pace. After our plants in Sikkim, Assam, Guwahati, Silchar (from where we can also easily cater to Nagaland and Mizoram) and Uttarakhand, we have further expanded to Chittoor in Andhra Pradesh, where our new plant has already started operations. Chittoor is fifty kilometres away from the famous Hindu shrine of Tirupati. The three major business hubs of south India—Hyderabad, Chennai and Bangalore—are equidistant from Chittoor. We are planning to carve a market of Rs 4 crore a month for Wai Wai in the region within two years. The Chittoor plant will not only cater to south India, but also address our export needs. From Chennai port, we can export our products to the Middle East and Africa. We are setting up another plant at Purnia in Bihar, which will begin operations from November 2014. Once our food park project at Ajmer in Rajasthan comes into operation, and we also start a plant at Indore, for which the Madhya Pradesh government has demonstrated strong support, we will be the only company in India with a pan-India presence of manufacturing facilities. We have plants across India with a strategy to have a plant in every three or four states, in such a way that the plants lie within a 600-kilometre radius across India. This gives us a huge advantage by way of faster penetration of the market across India. One must not forget a key rule of economics: supply creates demand.

  Over the thirty-two years of Wai Wai’s presence in Nepal, we have been able to start only five plants there, two of them small ones. Whereas, over a short period of six years, we already have eight plants in India. It is going to be nine soon. Our India production is twice Nepal’s, and is growing at an average rate of 40 per cent. Wai Wai is a company that has grown without any ATL (above the line) publicity. Our greatest marketers and brand ambassadors are the three generations of Wai Wai lovers, the people of Nepal and northeast India, and the students from Dehradun and Darjeeling who flock to the many educational centres in India.

  I had attended the Invest MP Summit along with Naresh Trehan and Ravi Jaipuria, and met with Minister Yashodhara Raje Scindiajee (sister of Vasundhara Raje Scindiajee). She is the minister of industry and in charge of promotion of new investments. We had a brief chat during the summit and promised to keep in touch. I was amazed to see that on my return after a few weeks, she reached out to me first. I see her as a minister who operates like a business CEO. She is available on BlackBerry messenger, on her mobile and on the Internet, and loves to engage with investors, much as a businessman does with his partners. She often says, in a lighter vein, that the job of promoting business does not belong to the babus alone.

  Although we had bought a site in Gujarat to start a plant to cater to western and central India, comprising the states of Gujarat, Madhya Pradesh and Maharashtra, and although we had also been looking to cover these geographies with our Ajmer food park, we decided to explore the Indore option seriously. Many trips have been made to Madhya Pradesh, and our proposal is in the final stages. I hope the dynamic leadership of Madhya Pradesh and the persistently persuasive approach of Shree Yashodharajee sees us starting a plant there within the next year.

  Even after setting up so many plants in India, we never had to advertise our product. That happens by word of mouth, as mentioned earlier, by the two or three generations who have grown up eating Wai Wai and who are our real ambassadors. They will not consider any other brand.

  Having achieved for our company a pan-India presence, the time has now come for us to launch our brand in the Indian media. This will give another boost to Wai Wai in terms of its presence in the market, visibility, brand image and sales volumes. There will come a day when Wai Wai will give tough competition to Nestlé, or even take over as the top-selling brand of noodles in India.

  We are expanding globally too. Construction of a Wai Wai plant has begun outside Dhaka in Bangladesh. We have finalized our deal with a very reputed group in Saudi Arabia to set up a plant there. We are actively engaged in expanding our business to Africa too.

  Our experience so far shows that regional presence is crucial in the noodles market. Rather than one big plant in one place, I prefer to have smaller plants in many places within a country so that our product can be easily transported to any part of the country, thereby expanding the market for it.

  Looking at the international noodles market in general, the biggest company in any country covers 55 per cent to 60 per cent of the market, followed by a distant second player with a coverage of 20 per cent to 25 per cent. The rest of the companies ge
t a 5 per cent market share each approximately. Data from Japan, Malaysia, Thailand and many other countries show this pattern. In Nepal, we are undoubtedly the biggest player. In India, Maggi is ahead of the rest but we are a strong contender for the second position.

  Utilizing the rights we have obtained from Thai Food, we have also begun exporting Wai Wai to Bhutan, China, Malaysia, Hong Kong, Singapore, Brunei and most of the countries in the Middle East. We also export to the United Kingdom, the US and Canada. We export to Bhutan from Sikkim. Once we gain a share in these markets through exports, we will set up plants in those countries. This is what we are doing in India.

  I have summed up our general plan; however, I am contemplating something deeper.

  To grow into a global company, we now need a two-pronged approach—organic and inorganic. Our growth so far has been organic; we have been adding one plant after another and enhancing the capacity of the earlier ones. Insofar as inorganic growth is concerned, an established company is acquired rather than creating a greenfield project. This approach expedites the rate of growth. We will now give equal priority to both organic and inorganic growth. We are looking for powerful FMCG companies across the world that we can take over for the diversification of our production and expansion of the market. These companies must have their own plants, products, brands and markets. For instance, we are yet to find a proper market in China. We can find one overnight if we acquire an established company in China instead of starting one from scratch. The same applies to ASEAN, Africa and the former Soviet Union. We are mobilizing investment bankers to facilitate our entry and growth in these potential markets.

  Our organization has already reached a point where there is no alternative to growth and expansion. We have to consistently increase our investment in order to maintain the momentum of our organization. Our dream is to establish a global empire for Wai Wai in ten years from now. I am confident that we can achieve this goal.

  According to the World Instant Noodles Association (WINA) data, around 100 billion packets of instant noodles are sold around the world each year. We are producing 1 billion packets out of Nepal and India. In other words, we account for 1 per cent of the total instant noodles produced in the world. If we can raise our share to 10 per cent in ten years, Wai Wai would become one of the five biggest instant noodles producers in the world. In that case, our company’s capital, market, and trade should be around twenty times larger than they are now.

  There are many stopovers and destinations in this journey. I, of course, do not know where this journey is going to end. Every time I reach a stopover, I vividly recall those young faces I saw in Dubai airport. They could not go without Wai Wai, even when they were compelled to go abroad in search of work. Think then about scores of our compatriots landing in airports all over the world with their cartons of Wai Wai. Many more must be urging their friends who are heading home for holidays to bring back some Wai Wai for them when they return. They must be using their own Wai Wai supply sparingly in case they run out of it.

  I am not going to end this journey until I am able to at least take Wai Wai to all those places where the generations that grew up with Wai Wai are now located.

  Given the current situation, what I can say confidently is that CG Foods (Global) will be listed on the New York Stock Exchange through the stock exchanges in India and Singapore.

  This also means that I am going to realize my dream of building a billion-dollar company.

  I received a proposal from Rabobank India: some companies were willing to invest in CG Foods, even as minority shareholders. I have been getting such requests for a long time now.

  Ever since we expedited our expansion plans in India, many investment banks have been approaching us with proposals from many interested companies. They are even ready to pay an incredibly high price to become part of CG Foods.

  I have a readymade answer to all those proposals: ‘I am on a campaign to transform Wai Wai into a global company of a very high standard. This is the fire driving that campaign. And this fire is not going to be doused.

  ‘Also, tell those who are sending proposals to buy us out that we are willing to buy their companies in India or other parts of the world, should they have any.’

  Those who come up with such proposals mince their words. But I know very well that Nestlé India Limited is eyeing Wai Wai. I also know that they are willing to forge a partnership with us for products such as Lactogen and Nescafé at the cost of CG Foods India. Hinting clearly at Nestlé themselves, I have told them, ‘Let’s keep the instant noodles aside for now. We are always ready if Nestlé wants to partner with us in Nepal.’

  I take these proposals as a very positive sign reflecting our market value and stature.

  On 11 January 2011, Wai Wai held its first formal press conference in India at the Taj hotel in New Delhi. Dozens of journalists from national newspapers and television channels had gathered for the conference. We were publicizing Wai Wai’s latest sales figures.

  The first question from the media was: Are you here to sell your company?

  In those days, many entrepreneurs were setting up small companies so that they could sell them off to business houses once they had some presence in the market.

  The question raised by the journalist reflected that trend.

  ‘We are not here to sell our company,’ I told them. ‘We are here to buy more companies.’

  19

  The Forbes Story

  One fine day, Forbes magazine invited me to attend its global conference in Singapore. I was very happy, though not very surprised; happy at the invitation from Forbes as I was not on its list of billionaires at that point, and not surprised as I was already an invitee to numerous functions of the World Economic Forum and similar global platforms. What really made me happy was Forbes’s recognition of my institution. It gave me a huge sense of satisfaction.

  I attended that conference, which gave me an opportunity to meet the who’s who of the corporate world and leading policy-makers from across the globe. There was also an interaction with Lee Kuan Yew, the legendary leader of Singapore. At the end of the conference, I felt the people I met there had many things in common. They were, basically, ordinary people like me who were either self-made or who had taken their modest businesses to the global level. I also had a lively talk with some of the regional editors of Forbes present there. Obviously, I felt elated about the event, but nobody gave me the faintest clue as to why I was invited.

  I returned home and started going about my business. Soon afterwards, the Forbes guys started approaching us, inquiring about our activities. They even approached our bankers and legal advisers, seeking details of our global partnerships. It did not call for a lot of imagination to deduce they were probably doing some kind of background check on us. I think many businesses lose a Forbes listing because of an error of judgement at this point. They become apprehensive about giving out details about their businesses. I too was not completely without reservations; it did occur to me that the information they were seeking could be exploited by the wrong people, possibly by my competitors. But I thought it was a risk worth taking. What did I want to achieve through my business? Some entrepreneurs might want to retire after achieving the goal of just establishing their businesses. But my aim has been to establish the largest, most dynamic and most professional business group in Nepal in the first phase, and to take it to the regional level in South Asia and South East Asia, China, the Middle East and Africa in the next phase, to one day become a global player. So I assigned certain people from our organization to interact with the Forbes guys. I also started receiving feedback from our partners and bankers that somebody was inquiring about me. Forbes continued to invite my family to their events. This went on for more than two years.

  Then, one day, Tim Ferguson, international editor of Forbes, telephoned me. I was already acquainted with him.

  ‘Binod,’ Tim told me. ‘We want to do a story on you. I’m sending our Asia editor, Naaznee
n Karmali, to Nepal. She’ll come from Mumbai and our photographer will come from Thailand.’

  ‘Fine,’ I said. ‘Send them.’

  Naazneen Karmali came to Kathmandu to interview me. She came across as very sharp, serious and thorough, yet frank and charming too at the same time.

  ‘But this business is not just about me. It’s about my family and my partners.’

  ‘Yes, it will be a story about what you represent as the head of your family and what your group has achieved.’

  Naazneen and I have become very good friends since then. What I found most impressive about her was her knowledge of the corporate world of the region, especially India’s, like the palm of her hand.

  Forbes went on to publish that story, which also mentions Nirvana and Rahul.

  From the moment the magazine hit the stands, the deluge of response the story fetched overwhelmed me. Never in my life have I received that kind of response from all over the world for any of my achievements. There was a flood of congratulatory messages by email, on social networking sites and on the phone. It was like a volcanic eruption! To be brutally honest, a part of me was apprehensive that I might face attacks from certain quarters out of jealousy at the level of attention I was getting.

  But I had nothing to worry about, and I am happy to say the article did not result in any kind of negative publicity. In fact, that was the first time I was convinced that people with positive energy outnumber the cynics and my critics in Nepal. The Nepali psyche is essentially a positive one, especially when it comes to anyone and anything that does the nation proud.

  People, including those from the media, have often asked me how I feel about the recognition from Forbes.

  I have said this repeatedly, and the media have also published it: there is no provision for a businessperson to get the Nobel prize. Recognition by Forbes is the highest honour a businessman can expect. I cannot ask for anything more.