April 2006
Personality

Vijay’s Winning Track

Vijay now seems focused entirely on pharmaceuticals. While the traditional businesses inherited from the family are being run in the same traditional style, he is planning to add a unit in the pharmaceutical factory for manufacturing injectables. He is also developing a plant to start exporting drugs to Africa.

Carrying on with the traditional family business would be a challenge for most of the scions of the business houses. While some try to introduce modifications, very few dare to venture into unknown territories. Vijay Dugar, 44, belongs to the second category.

Though his parents wanted all their children to receive a good education and young Vijay was sent to good schools in Nainital and Darjeeling, India, he did not like to pursue higher studies. He dropped out of the B. Com in 1977 as he did not find it so relevant for real life and got busy in his family business in Biratnagar.

And he feels he made the right choice. As his family was involved in a wide range of business (manufacturing as well as trading, including import and export), he could expand his experience across a wide spectrum of business management. “This is the advantage of a joint family,” he says.

With almost three years of experience in Biratnagar, he was sent to Kathmandu with the responsibility of looking after the cold store (Kathmandu Cold Store later renamed Kohinoor Cold Store) at Balaju that was just acquired by the family from Nepal Industrial Development Corporation. It was seized from another party which had defaulted on the debt obligations. In this project, Vijay expanded the capacity and added a section for making ice blocks. During that period he also spotted the opportunity in the fruit drink market. Though other members of his family were not supportive of the idea initially, he used his persuasion power and triumphed. Thus the factory which produced the fruit drink ‘Frooti’ under franchise from Parle Agro of India came into existence. This was the first time that the Dugar Group took a bank loan. Though the Frooti unit now belongs to his cousins after the family separated in late 1980s, Vijay is happy that they are running it well.

The major business strategy of Vijay is simple: spot a new trend, expand into that, consolidate and expand. That pattern can be seen in his operations both before and after the separation of the family.

For example, he did not jump straight into setting up the factory for Frooti. He first imported the drink from India for about a year and marketed it in Nepal. Only after being convinced of the success of the test marketing, did he set up the factory.

After the family separated, most of the family businesses that came to Vijay’s father were traditional ones – i.e. agricultural processing and trading. Therefore, the first business venture he initiated was to expand the traditional line. Thus came up the flour mill in Balaju. But while the other two Dugar families are expanding further in agro products, Vijay has chosen to go a quite different way.

Thus the bottled water business (Aqua mineral water) came about in 1989. Till then it was quite beyond the imagination of ordinary Nepalis that even drinking water could be packaged and sold. Also the banker who lent him the money to start this business laughed at it first, as he recalls. Though the same banker lent the money after a couple meetings, the basis of the lending was not the product but the reputation of the family. “That banker friend still recalls this incident with amusement. It is typical case of marketing myopia. Both of us have learnt,” he says. Till then, the producers of Star Beer were selling drinking water in bottles to a limited extent as one of the product mix. Dugar set up separate unit for water and started selling it in 20 litre jars as well.

The idea for the water business came from two sources: The water problem in Kathmandu. Though the problem of availability was not as serious as it is now, during those days the problem was that of quality and people were spending a lot on purification. Second, “I had seen water being sold like that in many foreign countries and it was a good business,” he says.

Meanwhile, Vijay came into contact with Hoechst, the multinational in pharmaceutical field. They had a pharmaceutical factory in Nepal and they wanted to sell it. Again Vijay persuaded his family to venture into this totally new business line.

Acquisition of the Hoechst factory not only provided the case of the first traditional Nepali business house entering this sector. Soon, this unit also started manufacturing drug in bulk and exporting to India. Though this bulk drug export business has now stopped as the changed duty structure in India rendered this business unviable, Vijay is now planning to revive it as “the local pharmaceutical industry has already expanded to create an economical market size”.

In fact, Vijay now seems focused entirely on pharmaceuticals. While the traditional businesses inherited from the family are being run in the same traditional style, he is planning to add a unit in the pharmaceutical factory for manufacturing injectables. He is also developing a plant to start exporting drugs to Africa.