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June, 2002 |
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CORPORATE FOCUS |
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Nina & Hager
Within the Family Till a decade ago Nepal used to import almost all of its requirement of sausages and other processed meat products. It still does import such products, but in case of sausages at least the process seems to have reversed. Four or five leading brands of chicken sausages from Nepal are being exported to India though the volume is still small - between 400 and 500 Kg. per month. Revealing this, Chandra Tiwari, proprietor of Nina & Hager (N&H), a fast growing meat processing firm in Kathmandu, sounds upbeat. But he is not ready right now to tap the export market despite the tempting potentials. The reason : he wants to keep his operation as a family business. Before being trained and experienced in Hager, a place in Nurnburg of Germany, Tiwari had started his business way in 1988 itself with the help his friends about whom he is still full of praise. He also mentions his wife as another most important contributor for the business. “It was on the strength of my wife’s support that I ventured to continue this business”, he says praising his wife for her support in the business. That time, the couple used to do some 20-25 Kg. of chicken a day processing it in their own kitchen and making sausage with a hand-filling machine donated by a friend. Now the daily raw material requirement has increased to about 600 or 800 Kg. per day and still it is growing and the firm is as tiwari says, not able to meet the demand. But Tiwari wants to remain small. “Because, the secret of the success of my business lies in being a family business. That way I’m able to maintain the quality. And quality is the major success factor in this business". Though small, Tiwari had selected a niche market. As the market that time had seen only buff sausages, arrival of chicken sausage meant a new product. Hence, it was readily accepted by the consumers. But
it was only since 1994 that Nina & Hager, as the firm is known now,
started the full-fledged business. “Before that it was a sort of trial
period”, says Tiwari. Between 1992 and 1994, Tiwari was in Germany by
a chance happening. He got a sponsor to finance his training as a
butcher and chef in Hager, Germany. Upon returning home Tiwari had, in
addition to the newly acquired skills, about Rs. 300,000 saved from the
generous scholarship that the Germans had provided. He then restarted
the business, again with his wife as the support. And though Tiwari does
not reveal the transaction volume, he says, it has grown very much. Management N&H offers one interesting case in the management style of a small family owned Nepali firm. Tiwari employs 14 persons, still he complains that the number is very high from international standards when seen against the volume of transaction. The high employment is obviously because of the labour-intensive technology. For example, the deboning is still being done manually because deboning machines are very expensive “and we can’t afford them right now”. Still the operations are sufficiently mechanized to ensure international standards in hygiene, he adds. The firm has two production divisions – Male and Female. The gender activists may frown upon the practice, but Tiwari shows that the division is a sort of flexitime arrangement. Males arrive at work at 7:30 am while females come at 8:45 am. All the work, including the cleaning, is finished by 3:30 or 4:00 pm. The staff have both breakfast and lunch at the office. “The salary is equivalent to that of the government officer”, says Tiwari. That sounds fantastic when seen against the fact that the highest qualified workers at N&H are ninth grade drop-outs. Marketing The expatriates and upper-middle and high class families comprise the main market for N&H. Among the raw material, the chicken, (slaughtered and dressed) is supplied by a Chitwan based poultry farm. But buff comes mainly from India, “because of the pathetic condition of buff slaughtering in Kathmandu” as Tiwari puts it. Also the lamb and the duck are imported. Equally pathetic is the situation about pork, Tiwari adds. Therefore, N&H have to procure pork from places designated by the bulk buyers, who are generally from the expatriate community. “For example, we buy pork from the ex-British army people who have been running their own piggeries”, says Tiwari. One interesting point Tiwari makes in this regard is that while Nepali people are going abroad to work, sometimes in piggeries and sheep farm, foreigners have come here and breeding pigs. He gives the example of a German who has a piggery in Chitwan and which is one of the few parties from whom N&H procures the pork. "This is an example of reverse migration", he thinks. Regarding
the sales too, N&H has been following the principle of remaining
small. Though the volume of business has expanded several multiples over
the last eight years, Tiwari does not want to make his brand a mass
consumption item. That is in contrast to what his competitors have been
trying to do. And he has a strong reason for his attitude: it is very
difficult for market supervision if it is a mass consumption item. Explaining the point, Tiwari says, meat must be stored at a temperature preferably below 17OC, and N&H provide the freezers to the shopkeepers for exactly this purpose and for exclusively storing N&H products. But many shopkeepers keep the freeze turned off because they think the meat is already cold. The customer may not notice the difference while purchasing, but the quality definitely gets deteriorated. “We have to monitor it closely and we stop supplying to such outlets that do not conform to our standards”, says Tiwari. “Such a monitoring is not possible if I supply to every grocery store”, he adds. The result is that N&H products are available only at some select outlets and there is only one outlet in one locality. For example, Bhat Bhateni in Tangal and Fresh House in New Road. In total, there are only 6 or 7 provision stores in Kathmandu valley storing N&H products. So, bulk of the sales are through direct supply, such as to the diplomatic community. About 25 families buy daily from the factory premise itself. Interestingly, N&H do not supply to big hotels (except to Radisson) because of the policy of the hotels to ask for a three month credit. As for the payment collection from the market, Tiwari says there is no problem of long overdue. “First I offer my terms to the retailer. But I’m equally open to the terms that the retailer may propose. However, when we agree upon the terms, we are very particular in compliance”, says Tiwari. Outside Kathmandu, the firm’s products are available only in Pokhara through a dealer, Saleways Department Store. Now Tiwari also wants to open his own outlet and the new outlet will be also a restaurant, according to him. The origin of the restaurant concept is in the fact that Tiwari was initially a food enthusiast and loved cooking. What about exports ? Tiwari says, he will think about that only after his two children complete their studies. He had tried for exports by expanding the capacity a couple of years back. But the excess capacity so created was absorbed by the local market itself. Regarding the problems of this business, Tiwari names “lack of a slaughter house” as the number one in the list and “lack of a sense of hygiene among the meat shops” as the second. “The second problem will be relatively easier to tackle once there is a proper slaughter house”, he says. Despite being in the meat processing business, Tiwari does not like the idea of entering the slaughtering business because “slaughter house will be better if initiated by the government given the present situation” he suggests. One slaughter house would be enough for Kathmandu valley, he reckons on the basis that Kathmandu consumes 50-60 average sized buffalos and 100-150 pigs a day. The cost for such a facility would come out to be between Rs. 15 and 20 millions. For chicken, there is no problem of a slaughterhouse. |
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