Chaudary Group Report

A Report On

Growth Opportunities for CG in International market

Submitted by: Submitted to:

Dina Khadka Yogesh Satyal

Pavima Jajodia

Satyendra Nath Subedi

Ushma Pandey

Introduction

Nepal was primarily dominated by the white noodles, Maggie in the 80s. Detecting a need for

brown instant noodles in the Nepali market, Chaudhary Group tapped on the demand in 1984

with the introduction of the brown instant noodles, Wai Wai. With technical collaboration from

Thai Preserved Food Factory (TPFF), Thailand, the popularity of this brand has been escalating

since its introduction. There are two plants that manufacture Wai Wai, which are located in

Kathmandu and Nawalparasi. Plants and machinery have been imported from Japan, Taiwan,

Singapore and China.

Chaudhary Group is one of the largest private business houses in the Kingdom of Nepal having

diversified interests across various sectors. Team of highly qualified and experienced

professionals manages the company professionally. They have world class manufacturing

facilities of Noodles, Snacks & Beverages, & Cigarettes. Today their brands like WAI-WAI

noodles are the market leader in its segment and a household name not only in Nepal, India &

Bhutan but also in the fast growing markets across the world. By virtue of its world-class

quality & unique taste, their noodles & snacks have also been successfully accepted in the

markets of European Union Countries like UK, Austria& Germany.

Chaudhary Group (CG) is one of the largest corporate houses in Nepal. Over the last 137 years,

growing in size and strength, the CG today is a conglomerate of over 40 businesses. The group

has spent considerable time and energy looking at its core values and beliefs while focusing on

its vision of becoming a global growth company.

The CG touches every aspects of public life – with presence in industries like food and

beverages, apparel, health care, education, tobacco, real state (housing development), financial

services, steel, automobiles, hydro and electric power, and hospitality – tourism. The CG, as the

first Nepalese company, also has growing presence in South Asia’s competitive FMCG markets.

CG Growth Opportunities in international market Page 1

Being the first Nepali organization to have a distribution network spanning the subcontinent, it

has made a prominent presence in South Asia’s fiercely competitive Food and Beverages

market. With ISO 9002 certification, its Food and Beverage products have crossed borders to

become a favorite in South Asian cities.

CG operation in Nepal

An integrated food production complex of Chaudhary Group on the southern fringe of Lalitpur

district, Nepal, it offers a wide range of products of true international quality using the latest

food technology.

FUDCO is divided into 3 subunits manufacturing noodles, extruded snacks, fried pallets and fruit

juices. It is Nepal's first and only ultramodern, private industrial park, which is situated in

Nawalparasi, about 180 km from Kathmandu. It houses various units equipped with latest

technology, R& D and laboratories for manufacturing snacks, food, beverages and cigarette.

There are also ancillary units producing specialty food items to suit different lifestyles. Cg Foods

(Nepal) Pvt. Ltd. (CGFN) houses a total of 3 production units, the main being noodles

production facility which has 3 plants operating under the same roof with a combined capacity

of producing 615 packets of noodles per minute, the largest in the South East Asia. Others

plants are Potato Chips, Wafer and Bhujiya.

Products of CG

CG has increased its product portfolio to Extruded Snacks, Potato Chips, Fried Snacks, Fruit

Drinks, Chocolate Enrobed Wafer and Broken Noodles popularly known as Bhujiya. CGFN has

two manufacturing locations in Nepal which have been named as FUDCO at Kathmandu and

Chaudhary Udyog Gram (CUG) at Nawalparasi, 160 Kms south west of Kathmandu.

Instant Noodles


http://www.gmdu.net/tags-southern-fringe-p1.html

Brown Noodles

o Wai Wai 123 is a popular brown noodle (3 Seasonings) available in 2 different

flavours - Vegetable and Chicken. It is available in 75 gm packet.

o Wai Wai Quick is a brown noodle (Curry Base - 3 Seasonings) available in

Vegetable and Chicken flavours. It is available in 75 gm packet.

White Noodles

o Wai Wai X Press is a white noodle (2 Seasonings) available in Vegetable and

Chicken flavours. It is available in 90 gm packet.

o Wai Wai X Press Masala Delight is a white vegetable noodle with 2 seasonings. It

is available in 90 gm packet and 50 gm packet.

o Soaltee is a white noodle available in Chicken flavour. It is available in 50 gm

packet.

Snack Noodles

o Mimi, a snack noodle (2 Seasonings) available in Chicken flavour. It is available in

50gm packet.

Bhujia and Snacks

Mama Bhujia is available in Chicken flavour in three different weights - 40gm, 10gm and

20 gm.

Kwiks Potato Chips, very popular among the youngsters is available in 16 and 35 grams.

It is available in the spicy Tangy Masala and Tomato Chilli.

Kwiks Cheese Balls is made in the most modern and hygienic plant with the best quality,

they are blended with right amount of Corn, Cheese and Salt. The Cheese Balls is

available in 12 gm.


Confectionaries

The Zoom wafers are available in four Different flavors namely, Chocolate Enrobed Wafer,

Vanilla Flavor Wafer, Orange Flavor Wager and Orange Flavor Wafer. It contains Sugar,

Vegetable Fat, Wheat Flour, Milk Powder and Sodium Bicarbonate.

Fruit Drink

Gold Beverage Nepal (GBN), a unit of CG Foods (Nepal) Pvt. Ltd. was established in the year

1998 for the production of Fruit juice. It produces more than 30 Million packets per year. It

produces popular flavors like Alfanso Mango, Mixed fruit, and Pineapple under its brand name

Rio.

Natural Spring Water

CG has tied up with Raybot Springs Mineral Water Pvt. Ltd. to bottle water from natural springs

with the objective of exporting to various international markets and for domestic sales. The

plant manufactures bottled natural spring water of the Himalayas in various packaging sizes.

The bottling plant is located in Kathmandu. The unit has its own source that rivals to any spring

water from any part of the world. CG Beverages’ CG Raybot unit is taking the Himalayan spring

water to the world.

Cigarette

CG has a cigarette manufacturing unit, Perfect Blends (Nepal) Pvt. Ltd. that produces popular

brands like Bagh, Gaurav, James, Josh, Matrix, Pine, Pride and Sahasi. It was established in 1998

with the capacity of 1,500 sticks per minute. It has increased its capacity to 4,500 sticks per

minute.

Brewery


Sungold Brewery (Nepal) Pvt. Ltd. (SBN) was established in 1997 as the Brewery arm of

Chaudhary Group and has a capacity of producing 130,000 cartons of beer per month. It has its

own popular brands like Nepal Ice, Real Gold and Mustang that is also exported to Hongkong,

Japan, UK and the USA besides domestic sales. It has also tied up with international brewers like

SAB Miller and InBev International, Netherlands. SBN is an ISO 9001:2008 certified company.

CG contribution to Nepal

The Group's progress over the last sixty-seven years has been a trial-blazer on the Nepalese

horizon. In a land-locked, developing third world nation, this spells nothing short of very hard-

earned success. Apart from also being a responsible citizen, Chaudhary Group forms an intrinsic

part of every realm of life from Biotech, Cement, Education, and Electronics & White goods,

Energy and Infrastructure, Financial Services, FMCG, Hotels & Resorts, Realty to Retail.

Since its inception, Chaudhary Group has contributed to the upliftment of the nation's

economy, equalizing the infrastructure and entrepreneurial capability of Nepal with other

developing nations. As Nepal's investment potential progressively draws the attention of

leading multinationals, Chaudhary Group continues to lead, harnessing global partnerships in

core sectors and offering cost-effective procurement affiliation to corporate worldwide. The

company offers its products and services through dealers, distributors, retailers, and suppliers.

Chaudhary Group is based in Kathmandu, Nepal.

The Chaudhary Group in Nepal is the biggest group in Nepal. It has involved itself possibly in all

the sectors and has been the pioneer in the business and economy sector of Nepal. From fast

moving consumable goods to real estates, higher end products to services, automobiles and

everything, Chaudhary Group has its market share. This Group is always focused on

development and they are always on the course of innovation through investment. The

investment thus results in a nation to prosper.

It has yet to be confirmed officially but Chaudhary Group has already been into academic sector


as well. They have already invested on school and colleges. This seems to be a good move by

Chaudhary Group but some may claim, schools and colleges should not be commercialized but,

Chaudhary Group are not commercializing academic sectors. With the capital they have and the

will to develop the educational infrastructure, this move should be well appreciated.

Market Share

Wai Wai has an annual turnover of Rs 3 billion, while in Nepal it is approximately Rs 1.40 billion.

Wai Wai is the most affordable food product. Earlier when the noodle was introduced, it had a

small market as consumer’s awareness had to be created and the noodles market back then

was dominated by Maggie. Soon, many competitors joined the market. The market size

increased with the introduction of instant noodles brands like Mayos and Rum Pum in 2000.

The last decade has seen a cut-throat competition as awareness and penetration of noodles

brands has reached every corner of Nepal. Instant noodles are the most advertised and

promoted brands in Nepal. Wai Wai has stood the pressure of competitions and prevailed as

the best instant noodle.

The reasons for securing the top position are due to its unique taste, innovation and constant

upgrading that includes adopting better and safer packaging. Wai Wai was the first brand to

introduce food fortification in Nepal in 2006. New flavors have been introduced. Quick, a

variant of Wai Wai comes in various flavors like Schezwan chicken, Manchurian veg, Chicken

curry, Veg curry, Chicken pizza and Kimchi. Mayos used to be the biggest competitor but

currently Wai wai is at the top.

The annual growth rate for instant noodles has been 20 to 25 per cent in the last few years.

Chaudhary Group as a company holds a market share of 42 per cent and Wai Wai as a brand

holds a market share of 25 per cent in Nepal. The brand plans to continue its innovation and

introduce new flavors and products.


Chaudhary Group as an International Enterprise

The Chaudhary Group is regarded as the third-generation Nepali Marwari family business that

has become Nepal's first multinational with over $500 million in assets and revenues

that Forbes Asia recently called 'among Nepal's richest non-royals'.

Chaudhary's Cinnovation group with its hotel division has invested in tourism, manufacturing

and trade, owning hotels in New York, Malaysia, Maldives and Sri Lanka. The group is still in full

expansion mode with partners to set up luxury hotels in Singapore, Thailand and Bali islands of

Indonesia.

The Chaudhary group still sees Nepal as his base. The owners of Chaudhary group believe that

they have to have a certain mindset to be a global player. With constant persistence and

commitment, the group has been able to spread its wings around the globe.

Today Chaudhary Group has over 40 Companies under its umbrella and an investment outlay of

over $1Billion. Being the first Nepalese organization to have a distribution network spanning

the subcontinent, it has made substantial presence in South Asia's fiercely competitive Food

and Beverages market. Its Food & Beverages products have been a common household name in

Nepal for decades. With ISO 9002 certification, providing the lead, their F&B products have

crossed the borders to become a favorite in South Asian cities.

Global Presence

Hospitality Industry

The Chaudhary Group (CG) of Nepal has joined hands with Thailand based InVision Hospitality

with a plan to open 30 hotels across Asia by 2013. For this purpose, a company called Zinc

InVision Hospitality (ZIH) has been formed as a joint venture of InVision Hospitality and the


Singapore based investment company Cinnovation CG, which is part of Chaudhary Group

family.

InVision Hospitality currently manages five properties in Thailand. Cinnovation CG holds 51 per

cent of the initial fund of ZIH which is $170-180 million, states the release. The remaining 49

per cent is held by InVision. The fund will be invested on 30 hotels across Asia, including Nepal,

Thailand, UAE, the Philippines, Sri Lanka, India, China and Malaysia.

Zinc InVision Hospitality has seven hotel and hospitality brands already developed: Zinc City,

Glow Studios, Zinc Edge, Zinc Living, Zinc Journey, SOMA, and Touch by Zinc. Each one

caters to a unique market segment -- luxury resorts, hip business hotels, value-oriented

urban travelers, long-stay and residential living, heritage travel, and spa and wellness

retreats.

Out of 30 hotels, Glow Studios, Edge deluxe hotels, The Farm, a Touch by Zinc spa and wellness

retreat will also be established in Nepal by 2013 while the latter by 2011.

The creation of Zinc InVision Hospitality marks the arrival of a formidable hotel management

company and fresh brand offerings in the Asian hotel and hospitality arena. Cinnovation CG

has the financial depth and hospitality background to support the growth while InVision has

the depth of experience and hospitality know-how to execute all elements of technical, sales

and marketing and operating activities.

Products

After successfully serving the Nepali customers for decades, the CG has started serving the

international markets also. The CG has gone beyond exporting its foods and beverages to

international market by establishing their plants and manufacturing units in India. CG's WaiWai

instant noodle is a recognized and established brand not just in Nepal but in 20 different

countries.


CG Foods is expanding its facility by setting up a State-of-the-art manufacturing unit in

Rudrapur, India in addition to its already two functional manufacturing plants in Assam &

Sikkim with a combined capacity of 270 million packs. The new facility opening is aimed at

boosting further growth in one of the world’s largest and fastest growing food and beverage

markets. Current plans foresee a further acceleration in 2011 and beyond, spreading into the

Western part of the country and capacity expansion in Assam.

Spread over an area of 3 acres, the new plant will have a production capacity of 120 million

packs, thus accelerating the production of its star product WAI WAI to new high. With an initial

investment of Rs. 20 crores, the Rudrapur facility will add a new dimension to the growth

strategy of CG foods in North India. The new investment is expected to directly generate

approximately 500 new jobs in and around the manufacturing plant’s operation. Sikkim and

Assam’s unit employ about 1500 people in India.

Consumers in North India will now be able to consume array of locally-produced CG foods

products- WAIWAI, MIMI and WAIWAI Xpress.

CG Foods has a turn-over of INR 150 crores in India and a global turn-over of INR 350 crores.

The company plans to grow to Rs 1000 crores in next three years. The CG group claims that it

has 70% market share in North East, Sikkim and west Bengal combined. In the whole country,

their market share is around 14-15% in the 1200 crores noodles market. The company is

targeting a market share of 25% by 2014.

Including these two important sectors, Chaudhary Group has over the last 65 years nurtured

and maintained global alliances and this growth has taken place through a deep understanding

of local markets, people and customs. The followings are the industries with which CG

maintains a strategic relationship:


Toshiba Corporation Japan

LG Electronics Inc. South Korea

Thai Preserved Food Factory Co. Thailand

Zinc Hospitality Thailand

Crimson Logic Pte. Ltd. Singapore

AES Corporation USA

Sab Miller South Africa

Western Union Financial Services USA

Mani pal K-12 Education Pvt. Ltd. India

Videocon Industries Ltd. India

Onida India

Kelvinator India

Cinnovation Group Singapore

Setting up a business in any new country or place calls for a lot of risk and research.

Understanding the political, economic and social conditioning of the place is extremely

important. CG has been running their businesses in different countries with great success

inspite of certain difficulties. While entering into international and after it entered, it faces

many opportunities as well as challenges.

Some of the opportunities are:

Growth opportunities

A conglomerate of over 40 businesses, The Chaudhary Group in Nepal is an organization

touching every aspect of public life and has its presence in more than 18 countries. The Group

has been operating in Nepal for around 70 years now and continues to grow with each passing

day.


Introduction of products

It has world class manufacturing facilities of Noodles, Snacks & Beverages, & Cigarettes.

Chaudhary’s Cinnovation group with its hotel division has invested in tourism, manufacturing

and trade, owning hotels in New York, Malaysia, Maldives and SriLanka. The group is still in full

expansion mode with partners to set up luxury hotels in Singapore, Thailand and Bali.

Brand image

A successful business player in Nepal literally ‘Touching Life Everyday’, as the company’s motto

has it. CG’s WaiWai instant noodle is a recognized and established brand not just in Nepal but in

20 different countries. WAI-WAI noodles are the market leader in its segment and a household

name not only in Nepal, India & Bhutan but also in the fast growing markets across the world.

Higher acceptance

In order to enter in international market they operated their business ethically and care for the

customer expectations in quality and cost. By virtue of its world-class quality & unique taste,

our noodles & snacks have also been successfully accepted in the markets of European Union

Countries like UK, Austria& Germany.

Quality focused

Its F&B products have crossed the borders to become a favourite in South Asian cities with ISO

9002 certification, so it will continuously focus to maintain its quality.

Economies of scale in production

CG operates with 100 per cent local talent and utilize the local resources as far as possible. This

help to reduce cost and gain economies of scale.


More opportunities

The businesses with a global perspective have more opportunities to grow and succeed. It can

coordinate operations across world markets and allow for the transfer of learning from

operations in one part of the world to another

Global network

Being the first Nepali organization to have a distribution network across the subcontinent, CG

has made substantial presence in South Asia’s fiercely competitive Food and Beverage market.

So by it can operate globally through its extended network.

Every country has its own political, social and economic conditions. Setting up a business in a

country other than one's own, requires a lot of research and understanding of the place and the

business condition there. Also, there might be times when a particular country can be facing

some sort of an upheaval too. Some of the major challenges faced by CG are:

Some of the challenges are:

Competition

New boundaries of competition and new sources of competition emerge when a company

enters into new market. Moreover the basis for competition also changed. As CG enters into

new market it faces many competitors.

Environmental issues

There may exist different environmental issues indifferent aspects like demand for recycling,

more efficient use of resources, greater responsibility for protecting the environment, limiting

toxic waste, as well as to educate consumers and to develop more "user friendly" products are

all compounding the tasks and demands placed on the organization.


Localization

Establishing a strong local presence by developing new products and adapting to local tastes

and preferences is a difficult task. Similarly CG faces many problems when it enters into other

Asian countries and western countries. It should spend lots for research to meet the tastes and

preferences of consumers.

New Technology

Technology is rapidly altering the nature of competition and strategy in many industries. It is

costly and difficult to cope up with changing technology. For instance, the objective of CG-Mani

pal Schools would be to provide quality education at a reasonable cost to the children of Nepal.

The schools would be designed to use the right combination of technology and pedagogy for an

effective learning process. But as technology changes rapidly its difficult and costly to meet the

objectives as stated.

Difficulty to meet international level of quality

"Quality is never an accident. It is always the result of high intention, sincere effort, intelligent

direction and skillful execution. It represents the wise choice of many alternatives and as we

entered the 21st century, the gleaming horizon awaits our vision towards globalization”. So

meeting high level of quality to satisfy foreign consumer is also challengeable.

Other general challenges

Differences in consumer response to marketing mix elements

Differences in brand and product development and the competitive environment

Differences in the legal environment, some of which may conflict with those of the

home market

Differences in the institutions available, some of which may call for the creation of

entirely new ones (e.g. infrastructure)

Differences in administrative procedures


http://en.wikipedia.org/wiki/Competitive

http://en.wikipedia.org/wiki/Product_development

http://en.wikipedia.org/wiki/Brand

http://en.wikipedia.org/wiki/Marketing_mix

Differences in product placement.

Differences in the administrative procedures and product placement can occur

Growth opportunities for Chaudhary Group in International Market

With more than a century of exposure to business Chaudhary Group do have strategic and

global alliances with various international groups beyond borders. After serving the people of

Nepal they are looking forward to expand their horizon in the international market place also.

While maintaining good relationships with companies from Japan, Thailand, Singapore, India,

USA, South Africa and more the opportunities for international growth looks very eminent for

CG.

CG Foods, a unit of Singapore-based Cinnovation Group, are looking to invest Rs.100 crore in

India during the next three years to expand its manufacturing capacity in the country.

In an interview CG Foods’ managing director Nirvana Chaudhary said ‘We plan to set up two

new manufacturing plants in India this year and also expand the existing plants. By 2014, we

will be investing Rs.100 core in India,’

They are also looking for acquisition opportunities to expand the business in southern and

western part of India. Nirvan Chaudhary said the company was ready to invest upto Rs. 1,000

crore on acquisitions in a bid to consolidate its position in the country.

CG Foods has an annual turnover of Rs.150 crore in India. The company targets nearly 40-50

percent annual growth for the next three years. So, not only in Nepal but also beyond it

Chaudhary has already started its global expansion.

As also highlighted in the report above CG Foods is expanding its facility by setting up a State-

of-the-art manufacturing unit in Rudrapur, India in addition to its already two functional


manufacturing plants in Assam & Sikkim with a combined capacity of 270 million packs. The

new facility opening is aimed at boosting further growth in one of the world’s largest and

fastest growing food and beverage markets.

Current plans foresee a further acceleration in 2011 and beyond, spreading into the Western

part of the country and capacity expansion in Assam.

Spread over an area of 3 acres, the new plant will have a production capacity of 120 million

packs, thus accelerating the production of its star product WAI WAI to new high. With an initial

investment of Rs. 20 crores, the Rudrapur facility will add a new dimension to the growth

strategy of CG foods in North India. The new investment is expected to directly generate

approximately 500 new jobs in and around the manufacturing plant’s operation. Sikkim and

Assam’s unit employ about 1500 people in India.

Consumers in North India will now be able to consume array of locally-produced CG foods

products- WAIWAI, MIMI and WAIWAI Xpress.

In the International arena Chaudhary's Cinnovation group with its hotel division has invested in

tourism, manufacturing and trade, owning hotels in New York, Malaysia, Maldives and Sri

Lanka. The group is still in full expansion mode with partners to set up luxury hotels in

Singapore, Thailand and Bali islands of Indonesia.

The Chaudhary Group (CG) of Nepal has joined hands with Thailand based InVision Hospitality

with a plan to open 30 hotels across Asia by 2013. For this purpose, a company called Zinc

InVision Hospitality (ZIH) has been formed as a joint venture of InVision Hospitality and the

Singapore based investment company Cinnovation CG, which is part of Chaudhary Group

family.


So Chaudhary Group not only has the potential to expand and grow in Nepal but also has

tremendous opportunities in the global space which it has already started to work on and

capitalize.

Conclusion

Chaudhary Group as one of the largest private business houses in the Kingdom of Nepal has

diversified interests across various sectors. They have world class manufacturing facilities of

Noodles, Snacks & Beverages, & Cigarettes. Today brands like WAI-WAI noodles are the market

leader in its segment and a household name not only in Nepal, India & Bhutan but also in the

fast growing markets across the world. By virtue of its world-class quality & unique taste, its

noodles & snacks have also been successfully accepted in the markets of European Union

Countries like UK, Austria& Germany.

Wai Wai has an annual turnover of Rs 3 billion, while in Nepal it is approximately Rs 1.40 billion.

Wai Wai is the most affordable food product. Earlier when the noodle was introduced, it had a

small market as consumer’s awareness had to be created and the noodles market back then

was dominated by Maggie. Soon, many competitors joined the market. The market size

increased with the introduction of instant noodles brands like Mayos and Rum Pum in 2000.

The annual growth rate for instant noodles has been 20 to 25 per cent in the last few years.

Chaudhary Group as a company holds a market share of 42 per cent and Wai Wai as a brand

holds a market share of 25 per cent in Nepal. The brand plans to continue its innovation and

introduce new flavors and products.

Avenues of its products range from noodles & snacks, confectionaries, fruit drink to naural

spring water, cigarette and brewery. Since its inception, Chaudhary Group has contributed to


the upliftment of the nation's economy, equalizing the infrastructure and entrepreneurial

capability of Nepal with other developing nations.

As Nepal's investment potential progressively draws the attention of leading multinationals,

Chaudhary Group continues to lead, harnessing global partnerships in core sectors and offering

cost-effective procurement affiliation to corporate worldwide.

After successfully the domestic consumers Chaudhary Group is now expanding and exposing

itself into the international market. Chaudhary's Cinnovation group with its hotel division has

invested in tourism, manufacturing and trade, owning hotels in New York, Malaysia, Maldives

and Sri Lanka.

The CG has gone beyond exporting its foods and beverages to international market by

establishing their plants and manufacturing units in India. CG's WaiWai instant noodle is a

recognized and established brand not just in Nepal but in 20 different countries. Consumers in

North India will now be able to consume array of locally-produced CG foods products- WAIWAI,

MIMI and WAIWAI Xpress.

International market opportunities are what CG is interested in now as they are eagerly

expanding their wings across borders and oceans.

While maintaining good relationships with companies from Japan, Thailand, Singapore, India,

USA, South Africa and more the opportunities for international growth looks very eminent for

CG.

But along with opportunities comes challenges as well. Going overseas and conducting business

is not as easy as it seems. There will be various barriers, laws, policies to negotiate with. While

the organization will be looking for growth it has to deal and cope with various local issues,

meeting consumer demands and preferences, differences in cultural aspects, administrative

procedures, etc.


Taking these mitigating points into considerations and working in favor of those and utilizing

ones strength will obviously lead CG to create a lasting image in the international arena as well

as it has already done in the domestic settings.


Chaudary Group Report

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