Mirchandani: Local Sourcing for Agro-allied Products is Our Priority


The Chairman, Sona Group, Mr. Arjan Mirchandani, spoke to Ugo Aliogo on the efforts of his company to source raw materials locally

What is the key focus of Sona Group?
We are world Class Company and we produce so many consumable goods. But we concentrate on raw materials sourced locally in order to allow us produce for the local market and then export. Importation is not a challenge for us, but it is price fluctuation of foreign exchange. We also produce for export. We have been exporting and there is a great potential demand. Presently, we came out with a new item which is the chocolate. As you are aware, cocoa has been exported for sometimes in Nigeria.

I believe that potentially, you have to survive within your own product rather importation, it is a matter of time and government policy. This present government policy on importation has really been helpful, though there have been issues and challenges, but it can be addressed. You need to be courageous and God will definitively help you grow towards self-sufficiency.

What have you been doing differently to stay afloat in the light of the economic reality and challenges?
It is very simple; we have to look for new items and innovations. Following is easy, but it is also deceitful. You have to catch up with your own initiative and determine. We as an industry are based on local raw materials because it is the better solution to stay afloat. We do local biscuits and chocolate, and we are also looking for other items such as drinks. We can manufacture drinks. People have taste for importation. The standardisation of products is regulated by National Agency for Food Drug Administration and Control (NAFDAC) and Standard Organisation of Nigeria (SON). Our product packaging here is 100 percent locally manufactured. We have everything locally sourced.

In 2010, Sona Group sold six breweries due to stiff competition. What are you doing in this regards to stay strong?
I think the reason was not competition. We started the brewery in 1994 and went on to 2010, but failed. We have friends in Heineken. Though we had good locations, but people didn’t want to pay for transportation as it was too expensive. If you produce in areas such as Benue, and Akwa Ibom, people in such regions feel it is their own brewery and this gives them some sense of pride. We produce 100 percent from local Sorghum. If you are good in your quality and standard, there is no reason to think that importation is special.

It is no special at all. It is because over time, the perception has been imported goods are more valuable than locally made goods. Agencies are trying in regulating this which is good.
Today, they are new companies producing drink and they are focusing on local raw materials which are sorghum. This sale of this raw material puts money in the hands of farmers and creates jobs for the unemployed along the product value chain. Therefore, there is the need to look at how the local sourcing of raw materials can benefit us as a country, rather than import. For instance, the chocolate we are making is 100 percent local. The product has export potential, it is 100 locally sourced cocoa.

We also make use of sorghum, and we buy 40,000 tonnes. So consider how many farmer you will be helping through this efforts. We have four trucks for recycling waste. There is a lot of revenue in this and we can create raw materials from it. There is no reason why we need to import raw materials. I think innovation is the key for our growth as a country.

What is your assessment of the consumable goods market in Nigeria?
The Nigeria market is a great market and people look at the market from the angles of capital, and size. The country’s population is huge and the neighbouring countries of West Africa rely on Nigeria. What manufacturing can do here is to create a large-scale industry which would be cheaper. Small countries cannot have these types of industries and still remain sustainable. The chocolate we are producing here is half the price of imported chocolate and it is approved by SON and NAFDAC. As a company you have to remain committed to your core values. Our company is located in Ota, Ogun State. This is where we have our own infrastructure and we produce our own electricity (natural gas). We get our local gas from Shell Nigeria to power our plants in order to continue production. We have individuals who are working with us that need to be paid and sustained. Therefore, we ensure that they are actively engaged.

How have you been able to tap into the Lagos market since the market is being viewed by many to be the leading economic hub in West Africa?
It is not through that the Lagos market is the leading economic hub. We have the ECOWAS market which is 450 million people. The population of the ECOWAS market is huge. It is bigger than America and Europe. The capital maybe low, but you produce goods that meet the demand of the ordinary man. To achieve their production needs and scale, you need to focus on local raw materials.

In terms of your profit margin, how are you able to break even, taking into account stiff competition from other producers who are specialised in producing consumable like yourself?
When you have economy of scale, the cost you incur will allow you to compete with anybody. The other factor to be beat competition is that you must have quality. If you don’t have quality and presentation, it is very difficult to sell. Therefore, you need to consider a number of things to make the package and bring it across. In the packaging you have to be careful because there is imitation in the market. Packaging plays active role in the production of a product, therefore as a producer you have to consider that. In the production of our biscuits, we use local cashew nuts.

Twenty four years down the line, what has been the achievements of Sona Groups in terms of Corporate Social Responsibility (CSR), sales and revenue?
Looking at the Nigeria market it is very good. The perception with the market has changed totally. In 1994, 1995 and 2000, everything was imported and they were no local industries here. Now you can see that imported is not better than locally made. What we achieved over the years is value, and we have also grown. Our aim is to stay local and patronise locally made goods. We are growing at the rate of 100 percent yearly because we are continuously improving adaptation of machinery yearly in the production process. We are expanding even in the time of recession; we did not stop our expansion. Our capacity and turnover is growing every year. The new things we are doing to stay afloat in the market is innovation. If you are not innovative you cannot stay long in the market. We are the only one introducing plastics recyclable machine. Our team always tries to find out what is new by visiting trade fair technology events in Germany to find out the latest machine, then bring them to Nigeria.

What should the market be expecting from you this year?
This year we are introducing chocolate we recently produced. We have gotten complete turnaround machine from Turkey. We are not importing any raw materials, it will be locally sourced. We are producing in Nigeria. We are bringing new machine for the production of new varieties of biscuits. We are also importing new technology to meet the printing. We are the only one importing these machines in Nigeria. Doing this is capital intensive and we are not giving back any dividends, they are just bringing back to the system. We are not selling any assets. In 2011, we diversified from the brewery and we started expanding to other industries.

Where do we expect to see Sona Groups in five years?
In my own Sona Group in the next five years will be a great company. Our growth is very good and robust. Compared with other companies, we are growing very faster, first we are in the consumable goods market which is growing at an alarming rate. So what happens is the pressure which helps you to earn more and more value. We want to provide the consumable goods at a low price for the ordinary man in the street. In terms of focus on the consumable goods market, the world is focusing on few markets India, Brazil and Nigeria, not even China, and the developed countries. Nigeria came out of recession in six months and IMF projected that Nigeria will get to 2.6, 2.7 and 2.8 in growth; even South Africa will not achieve that. Consumption is increasing in Nigeria and the perception is changing. People are more drawn to made in Nigeria goods than imported goods. If consumption is higher, definitively Gross Domestic Product (GDP) will grow. We will guarantee our product. There is assurance in the market and to the public that we will stand by our quality.

What is your advice to entrepreneurs in the Nigeria economy on how to grow businesses?
Our company is based in Nigeria. I feel personally happy to have located the company here in Nigeria. Raw materials for production are readily available and we can manufacture locally. The future of Africa is based on self-sufficiency, which allows the production companies to stand on their own. I am a great believer that Nigeria is a great place and there is no reason why the economy cannot survive. The citizens are very intelligent, industrious, enterprising and courageous.