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March, 2004 |
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Young Achievers |
KL
Dugar Group had only two units in 1991 when the Dugar Group separated
into three groups - HC Dugar, TM Dugar and KL Dugar. Now it has 12 units
with business spreading across the length and breadth of the country.
Kumud was instrumental in this expansion. First
major business handled by young Kumud was setting up of a 20 ton per day
(tpd) capacity vegetable ghee plant in Biratnagar which was made
operable in record six months. The factory has now expanded to 150 tpd. How
he managed to do that? He credits it to his father who provided the
backing while total freedom was granted to him. "Moreover, the time
also was good. There were very few risks in business in those days.
Equally important was the challenge brought to the family from the
separation. I felt challenged to do better than the cousins," adds
Kumud. But
how exactly did Kumud manage to achieve that expansion? "The
important point is that you should concentrate on what expertise you
have. As my father had a good experience in agriculture sector, we
focused on agriculture and related businesses", he says. The
expansions were started from Nepalgunj where Kumud acquired three bighas
of land with the idea of developing the plot into an industrial complex.
First he set up an oil mill there and started producing Dhara brand of
mustard oil. And the brand is now almost a generic name for mustard oil.
Though Dhara is a brand also in India and it is used for oil also there,
Kumud says it was first registered in Nepal. Moreover, in India the
brand is used for a vegetable oil produced there and marketed by the
Indian government owned unit. The Nepalgunj complex is now spread over
20 bighas of land. After
the establishment of mustard oil unit in Nepalganj, he started a dal
(lentils and other pulses) mill in Birgunj taking the facility on rent.
Meanwhile, he continued expanding the Nepalgunj oil mill which now has
an annual turnover of Rs. 800 million. Since it was not possible to
manage all these units remaining at Biratnagar, Kumud had to shift to
more centrally located Kathmandu. The present status is such that now a
rice mill and a chiura mill are coming up in the same Nepalgunj complex,
as Kumud informs. Meanwhile,
his younger brother came home with an engineering degree and Kumud
handed over to him the responsibility of looking after the units in the
eastern region while he himself started the western front. Another
major turning point in the family business due to Kumud's ideas was the
entry into the media sector about three and a half years ago. The idea
came up looking at the sort of monopoly being enjoyed by the Kantipur in
the print media. As Kumud recalls, when he consulted his friends about
the idea of entering into media, they suggested that the Nepal
Samacharpatra was a good unit to invest in to compete successfully with
the Kantipur. But upon talking to the then owners of Kamana
Publications, the publisher of the Nepal Samacharpatra, Kumud realized
that it was not that easy to run a newspaper business. So he consulted
another business house, Murarkas, who he knew were also interested in
print media. "We developed a confidence that with the combined
strength of the two business houses added to the capacities of the
existing owners of Kamana Publications, it will not be difficult to run
the business successfully. And the calculations we made showed that
profits would start coming after one year." So Dugars and Murarkas
together bought 60% shares in the company and the business was going on
as expected for some time despite some initial problems in the
transition from the old management to the new one. However, the business
was gripped in a number of problems soon. Most
important was the Maoist pressure to ban alcohol advertisement in the
print media. Though the problem was there only for a few months, the
damage inflicted lasted much longer. Then there also emerged more
competition. The Gorkhapatra came in colour and the Rajdhani was
launched. That was followed by The Himalayan Times and the Annapurna
Post. The most important, however, was the royal massacre. Though the
Nepal Smacharpatra was the first in reporting the event and the
circulation of the newspaper on that day reached 200,000 copies, there
were no advertisements. "Thus we lost a lot in that issue
alone," laments Dugar. "However, the brand image of the
newspaper improved a lot and the losses figure is coming down every
year." Innovations What
business innovations were introduced by Kumud Dugar in Nepal? "I
am the first person to start advertising mustard oil brand in Nepal. But
only a good advertisement is not enough to sell the product, so I was
careful to give also a good quality product and I was successful. Our
brand Dhara was priced higher than the ordinary mustard oil and the
Nepali consumers are highly price conscious. Still, it sold well because
I was successful in convincing the consumers about its quality. And I'm
proud of the quality of my brand," says Kumud. He
proudly informs that in a maternity hospital in Butwal, Dhara is used
for cleaning after the baby is delivered.
The
other innovation that Kumud claims credit for is the idea of advertising
over the NTV in the middle of news bulletins. Business
Model For
success in business in a small market of Nepal you need high turnover.
The turnover of one business alone will not be sufficient, reminds Kumud
and says he found only foods as the products in which it is possible to
have a big turnover. "As Marwaris we have some limitations. For
example, we could not go into alcohol. Though our family once had the
licence for cigarettes production we abandoned the idea as it was
harmful to people's health. We also had a licence to operate an
international airline, but we abandoned also that as we knew that it
required serving non-vegetarian food on board." So, that left only
food industry as the next most viable field. But
in foods the group had to compete with small millers who would be able
to sell at price lower than that of the big corporates. "However,
these millers were not aware of the changing lifestyle that was
affecting the Nepalis, particularly the urbanites, who are influenced by
the global trend. They are gradually going for packaged and branded
food." To
benefit from this knowledge, Kumud started a two-pronged strategy. One
was to go for quality food and the second was to have branches all over
the country to do direct sales. Again it was a costly affair, but Kumud
says it has been paying well. Then
he went for smaller packages in all the commodities that the group
deals. The
next innovation of Kumud in the family business is strengthening
accounting and financial management and management information system.
Looks very simple, but in the context of the prevailing practice of that
time in Nepal in a family business, it proves to be a revolution. The
taxation system then can be described as "fixed income tax
system". You were required to pay an X amount as tax for the year
no matter what your actual business volume was. That system made it
unnecessary for the business house to keep proper account of the
business. But
that was not a good system, says Kumud. It stymied the growth as the
business owner had to be involved physically in each transaction.
"My aim was to increase the turnover and expand the business
nationwide. That sort of business would not be possible to manage
without a good accounting system. So, despite the existing tax system
not requiring it, I went for the introduction of a good accounting
system in my family business, started using chartered accountants and
computerized all my accounting. And I also introduced good management
information system (MIS). As a result, I started to get the daily
reports of my business every morning at my table. Since foodgrains are
such commodities in which the prices keep on changing almost every hour,
each transaction has to be monitored by the directors of the Group, and
this is now possible even remaining faraway from the transaction centers
due to the good MIS that is put in place with the help of computers,
e-mails and faxes." Despite
the achievement so far, Kumud says it is just the beginning. "The
basic infrastructure is prepared, but we still have to take off." Then
what are his plans for the future? "My
personal ambition is a situation in which every Nepali consumes Rs. 100
worth of KL Dugar product per month. That will give a turnover of Rs.
250000 million", he says and informs that to achieve that a number
of steps are already underway. First,
a big project is coming up at Birgunj which is scheduled to be
commissioned on March14th. And there are other five or six projects in
FMCG categories in the pipeline. "Besides
that we would also like to diversify into cement, packaging industry and
tourism," informs Kumud. Success For
Kumud, success means job satisfaction. As he puts it: "After full
day's work when you ask yourself in the evening 'what have you done?'
and if you find that what you have done is satisfactory to you, then you
are successful." And
he is indeed satisfied. He has been decorated with Prabal Gorkha
Dakchhin Bahu 4th. He is the President of Nepal Floor Mills Association,
and presides over FNCCI's SAARC Trade Committee and Domestic Trade
Committee. |
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