The pandemic period gave us an opportunity to focus on R&D

Sashin Joshi is Group Executive Director of Jawalakhel Group of Industries (JGI), one of Nepal’s leading business groups with a major interest in alcoholic beverages production. A former banker, Joshi ventured into the manufacturing sector in 2018 by joining JGI after spending over three decades in the banking industry during which he led two commercial banks — NIC Asia Bank and Nabil Bank as CEO. As the Group Executive Director of the JGI, Joshi has been successful to consolidate the group’s business as well as expanding its product portfolio. The HRM caught up with Joshi to talk about his shift to manufacturing, his experience with the JGI, the impact of the Covid-19 pandemic on the liquor business, and the new products of JGI. Excerpts:

After spending over 30 years in the banking sector, you ventured into the industrial (manufacturing) sector three years ago. How has this shift been for you?
I was very apprehensive in the beginning. When I left banking, I actually thought I am not going to engage in a full-time job again. I was approached by Raj Bahadur Shah who requested me to manage the Jawalakhel Group of Industries (JGI). He told me that they are not looking for someone who has domain knowledge about the liquor business but someone who can manage and provide leadership. I also met with the group’s Chairman Vijaya B Shah who told me that they don’t want to run the group as a family-run business but as a professionally run corporate structure.

I told them until we work together, it will be difficult for each of us to actually access each other’s position. Hence, I said to them that I would be joining the group in an advisory capacity for three months which will allow us to each other and also help me know the business. Since then, it’s been an interesting journey that I have found extremely interesting. It’s very different from the banking business.

We have multiple companies in our portfolio which include five factories, a distribution company, a research and development company, and a management company. We have brought about quite a few changes within the organization. Three years back when I joined, the group was going through a bit of challenge because one of its main brands was in the downturn. Since then, we have managed to do a lot of corrections, making improvements not only in terms of marketing and sales but also on the production side. Over the last three years, the group’s performance improved significantly. It’s been extremely difficult and challenging the last two years, especially after the Covid-19 pandemic. But we sailed through quite well.

Banks are well-disciplined in terms of everything from business, human resources management to client service. How is the manufacturing sector in this respect?
Unless we have consumers accepting our products, we stand nowhere. It is the consumers’ acceptance of our products that determine whether the company is successful or not. And, we have been successful to that extent. In the liquor industry, we are the market leader and command a market share of more than 60 percent. One of the brands we sell is the top-selling vodka brand in the country.

In the beer business, we are still new and are a relatively small player. As we have invested a lot of money in new technology, state of the art processes, and also has tie-up with best international brands, we believe that we will be a force to reckon with in next three to five years.

What differences have you seen in people management in these two sectors?
Look, people everywhere I think is the same. In banks, because of the inbuilt system and processes that have been developed over the past three decades with the entry of foreign banks, most of the banks run on laid down systems and processes. So, there is only a question of training people which then would make them flow and worked with whatever is required. In the private sector, usually, we find that systems and processes and policies are not really very clear and not very established. So, the first thing that I find different is, actually is getting the system and process in place. After that, people are people. As long as you have good leadership, good work environment, you can build a culture where people will be aligned to the vision and mission of the company. But it takes time.

How are you deploying management knowledge and tactics of the banking sector in the manufacturing business?
First and foremost, we believe in total transparency, full compliance with the laws and regulations. Not only compliance with the laws and regulations internally but also externally with our people. We ensure that we have people who are fully empowered, at the same time, they are also held accountable. These are some of the things I think we have been able to implement within the organization which has also help in bringing positive changes.

How is Nepal’s manufacturing sector emerging from the Covid-19 crisis? What major challenges are there for business groups like JGI and what opportunities do you see?
The challenge has been that basically with regard to the health and safety of our workforce. One of the things that we decided on day one, was that health should be our foremost priority. We ensured that not only our staff but also their families are also taken care of. As of now, 99 percent of our workforce including workers (that includes outsourced people) have been vaccinated with at least a single dose. Two-thirds of our people have been fully vaccinated.

We had to close the factories and shut down our business for few months. Even then we did not lay off anyone. We also provided adequate psychological and financial support to employees who were infected. We did not retrench any person despite all the financial difficulties we went through.

In terms of our logistics management, we had a system in place to face the lockdown. We formed a crisis management group with distinct responsibility to address the problems as soon as possible.

Also, we spent a lot of time, energy and money on training our staff. Also, we built a culture where we can conduct business online, which that been a great improvement. As we have a strong R&D team, we also spent a lot of time and energy on new product development. I believe that we can come up with new products in the future. And, the pandemic period gave us an opportunity to focus on R&D.

How can we expect the market situation to be for liquor industries post-Covid? 
The consumption of liquor came down slightly, mainly because of the fear psychosis as well as the closure of hotels and restaurants. We have found that there is a need for support and also in terms of enforcement of legal provision by the government, is in controlling illicit liquors where the government does not get any revenue. There is also a problem of infringement of packaging and labeling designs of our brands by small companies. This is an infringement of our intellectual property rights.

We feel that in terms of enforcement of our legal rights, support from the government is lacking. And also, liquor is taxed too heavily, probably one of the highest taxes in the world. I think the government should change the mindset about how it looks up liquor as not only a source of taxation but also that this is a business. We employ nearly 2,000 people and generate a lot of revenue for the government.

The main festival is season is just around the corner. Last year it was rather disappointing in terms of sales due to surging Covid-19 cases. How is the situation now?
The lockdown opened about three weeks ago, we are very hopeful. Even now the bar and restaurants are not fully opened. And, if they are opened, the footfall is not as much during the normal times. During the festival season, yes there is an increase in the consumption of alcoholic beverages. So, we are quite hopeful. At the same time, because of the still impact of the pandemic, we feel that the consumption will not be as much as that during normal times.

We have seen JGI focusing on the beer segment in recent years after you join the group. How are Warsteiner and Budweiser performing in the market? There were also plans to launch Haywards 5000 beer in the domestic market. When will the new beer be introduced?
Warsteiner is one of the best beers in the world. However, it did not go quite well in terms of acceptability to common people. Those who like beer and know about beer, what I would like to call the premium segment, loved the Warsteiner. However, most of the consumption in Nepal is in the non-premium segment of beer with a high amount of alcohol. Because of this, the sales of Warsteiner is limited to those who are the connoisseurs of beer.

Budweiser, however, is a totally different brand. The way we positioned Budweiser, and internationally also, is for young target group i.e., 20-30 year-group. Budweiser has been very well accepted. Unfortunately, within few weeks after its launch, the lockdown happened. But now, with lockdown being lifted, it is picking up very well. Initially, we launched Budweiser only in Kathmandu, but it is now being launched in other cities also. The traction that we are getting in Budweiser is extremely good. We believe that we will be able to establish Budweiser as the brand to reckon with in the premium segment within the next year. We are planning to launch Haywards 5000 in the next two months.

JGI is one of the fastest growing business groups in Nepal. Is the group is looking beyond the liquor business? 
We have plans for backward integration of our distillation plant. The byproduct we produce in a distillation process is the remains of grains called sludge. Sludge is high in protein and nutrients and is a very good ingredient for producing animal feed. We in fact have two subsidiary companies that we plan to get into this business. So, our future plan is to get into the animal feed business and fishery. We are also looking at possibly, not high on the priority right now, into animal husbandry.

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