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Techno-commercial success

February 25, 2014

The father and son duo of the Nimbus Group—Jagadish Agrawal and Anand Bagaria—has given the animal nutrition business a professional and competitive look. Such is their growth that Nimbus is one of the country’s fastest growing businesses. What separates Nimbus from others is that the group started the business in 2000, when the country’s business environment started to deteriorate. Anand Bagaria talks about the meteoric rise of their group in the last ten years.

 The beginning

We came from a non-business background. My father, Jagadish Agrawal, had spent most of his life working for other companies. His stint with Nepal Brewery exposed him to the world of business and provided him the technical skills. That was our background.

When I completed my graduation in 1995, I had three choices—continue study or engage in a job or do business. I was more interested in business—be it very small or big. Our first venture was a ball-pen manufacturing company—Global Writing. But, we failed to make a mark. The failure did disappoint me, but my desire to do business was still intact.

I was keen in doing something new. As my father was from an industrial background, and I being an industrial engineering graduate, we started looking for new areas.

Our group’s move into the livestock business was not exactly planned, but is an accident. It was a meeting with a tycoon of the animal nutrition business that prompted us to get into animal nutrition.

Until then, this business was being run in Nepal with traditional approach and without proper management. Therefore, we were confident that we could do something better and succeed. We started in late 1999 and moved ahead gradually. Initially, we exported to India.

At first, we prepared feed supplements. Then we started producing feed grain—feed grain processing and feed grain trading—just to understand the industry. In 2004, we started feed milling for the first time. We started from feed supplement and then veterinary medicine and feed grain and feed milling to oil extraction. These five activities were started one after another. The plant we have in Birgunj was started on 10,000 square feet land. Today, we have 100,000-125,000 square feet. That’s how it grew. The journey was not that easy though.

Establishing our products in the market was not that easy. We were confident that our products would be accepted, but the challenge, however, was to replace the then existing indigenous products. We had a team of technical people, including veterinarian and JTAs. We first tried at our own end because we had to install the confidence within our own team. There was a trial; we saw the result; and once we were confident enough, we entered the market, mobilising our techno-commercial team. We selected farms and sold them our products. We assured them that our feed would yield better results without increasing the cost of production. We promised that in case our product fails to deliver, we will compensate them. We had assumed that was the beginning of a multiplier effect. One success could influence ten other farms. We were right and we won 97 out of 100 challenges. And the effect was huge.

Turning point

The first turning point was 2000, when we decided to venture into this sector. The most important thing while doing business is to identify the area of specialisation. The second turning point was when we decided to install feed mill in 2004. It was a big decision. It required a huge investment, as the plant we were installing was 50 times expensive than the then existing feed mills. It was very challenging as well as interesting.

In the period between 2009 and 2010, another turning point came. As the business kept on growing, we decided to get into some other areas. The preconditions were—it should be technology -based, should have high turnover and ability to scale up. So, the projects are currently going on and success is yet to be seen.

Now, Nimbus is a holding company which has various business interests. The cumulative turnover of Nimbus should be around Rs 6 billion. Similarly, the turnover of Probiotech, the animal feed company, should be around Rs 3.5 billion. In terms of feed, we hold a market share of around 20 percent.

Success Mantra

We consciously tried to brand the company rather than branding ourselves. Nimbus was the first priority. Our belief was that the promoters might not be there in the long run, but the company will always be there. We decided that we will run the company under a system, in which the company comes first.

I think there are two-three things responsible for our success. First, it was the recognition of the sector and second, our move to bring technology and the third, techno-commercial approach. Most important among them is the techno-commercial approach. It had seen either people becoming too much technical like government-funded research programmes or too much commercial forgetting the technical side. But the combination of two is essential for sustainable growth. We realised this fact right in the beginning and we are also investing in technology now. We always think of doing things differently—which has not been done in terms of technology and approach. Today, we are proud to say that we have one of the largest rural distribution networks. Challenge at the moment is to leverage that rural distribution network and it could be our next turning point.

Future

Our plan is to make Nimbus a Rs 10-billion company by 2015. Recently, our group ventured into LPG business, acquiring Nepal Gas. We got into the business considering the fossil fuel business. This business is more based on distribution and is here to stay. The way fossil fuel business is done here can be done differently. It is a service-oriented industry and can be made much simpler and transparent.

We are also looking at some chemical industries. We also see our growth in service sector, especially in investment banking. One more area where we are doing lot of homework is the retail sector. As far as Nepal’s retail business is concerned, we see that the price and product standardisation is missing and, of course, a lot of legal addition is missing. We plan to bring all three things together to win consumers’ confidence. I think we have a strong network and our fossil fuel business is another network that is coming together. If we find a synergy between these businesses, so we have big market to tap into. Unlike other business houses, we are not averse to going public. However, the issue of premium is stopping us. We think a company is not only about its net worth or asset, but its ability to do business. We are in touch with legal and financial consultants, and hopefully, we will announce an IPO soon.

For us, it is not just an IPO, but a participative business model. It is the responsibility of entrepreneurs to open up. For a business to grow beyond a certain volume, you need lot of resources. People say it will be difficult to work, but you can’t miss a huge opportunity fearing that.