Business Times

Cargills, the‘Gedera Yana Gaman’ chain, makes way for new blood

We believed in our nation and we continued to believe in the hardest of times

For Cargills Group’s dynamic Deputy Chairman, Ranjit Page, it was a chance encounter more than 10 years back with farmers in the central region town of Hanguranketha, that triggered the events that have led to the supermarket chain becoming Sri Lanka’s single biggest buyer of farm produce – straight from the farmer.

Recalls the effervescent Mr Page: “In 1999 we were buying all our vegetables and fruits from the Manning market and at that time I was invited to Hanguranketha not knowing exactly what I was in for. I assumed I was going to see some beautiful farms and ended up meeting some farmers who challenged me. They blamed us for problems which were new to us. They blamed us for not having a market for their produce and the lack of proper return for their hard work.”

Listening to them, Mr Page says he realised that they had a huge social responsibility and convinced the management back in Colombo to start a collection centre. After sometime Cargills built systems for the backroom operation and things started to pick up.

Today the company has thousands of farmers and entrepreneurs in this network enjoying a standard price, a sure market and more importantly giving a better life to their families, he said in an interview this week, reflecting on his work, vision and future role in the company. In mid-April, Mr Page stepped down from day-to-day operations, a function now handled by his Deputy CEO Imtiaz Wahid who is also the new Managing Director of the company.

In this interview, Mr Page whose farm-to-shelf, supermarket model has been discussed in the board rooms of the World Bank, the ADB, the Bill Gates Foundation, talks at length about the company work, vision and of being a loyal son of Sri Lanka:

Excerpts: Beginnings of a supermarket chain:

I had absolutely no idea about a career as such or what I wanted to do with my life. I just wanted a job. At the time (In the early 1980s)no one actually wanted to give me a job because my family was in business and assumed that I would eventually join them. I first joined a little travel agency called Oceanic travels and used to ferry tourists up and down to and from the airport. Then the travel office I worked for got into ticketing and I was sent to sell tickets to prominent people. This is how I met Mr. Cornell Perera who offered me a job. That’s how I got exposure to the supermarket trade as a salesman for Mr. Perera when he opened up the first supermarkets in Sri Lanka.

I believe in looking at situations in a different manner. I looked up to people like Mr. Upali Wijewardena, Mr. Lal Jayasundara but I never met these gentlemen. Their companies Hayleys, Upali Group were doing things differently.

This passion for innovation is what drives me even today. In 1982 I joined Cargills and we decided to start a supermarket in 1983. Incidentally Staple Street used to be a weekend playground for kids playing football and we did not have the eminent neighbours we have today. We were able to secure a bank loan of Rs 1.8 million where Ms. Rohini Nanayakkara of Bank of Ceylon approved the loan securing the property at Staple Street.

What was it like in those early days? How hard was it to get this project off the ground and develop it to enjoy the success it does today?

We were going through a learning phase naturally making mistakes. But unless you try you are not going to succeed. At the time there was no proper organized training available for the industry neither did we have warehousing, logistics, and computerization. We basically learnt on the job. But I learnt from each mistake to keep building a stronger sustainable business. In the early 90’s we just had three supermarkets and no profit. We just kept investing and suffering losses.

In 1992 we got into meat processing by acquiring Goldi. We got into that business because our supplier for meat products set up shop next to us at Staple Street. Our meat department was the then destination department and we were depending on our supplier who became our competitor. We decided to partner Goldi and ended up buying a business. Three years ago we built a new facility for the plant spread over five acres of land. It is the only meat processing plant in Sri Lanka with comprehensive ISO certification with local and expatriate management to develop the local industry.

In 1996 we were awarded the Kentucky Fried Chicken and in May there was a major strike in the CEB. We did not have the back-power to run our refrigeration and air conditioning, we just had generators for the lights and cash registers. That financial year was a disaster year in the history of Cargills where the company suffered a loss of over Rs 60 million. At the time I was even at the point of leaving the company. But myself and Mr. Imtiaz Wahid who is now the Managing Director of the company took responsibility for this disaster and just kept learning from our mistakes.

Your first store opened in 1983 few months after the riots. What gave you the confidence to start off in such a troubled business environment?

We always had confidence in Sri Lanka. We believed in our nation and we continued to believe in the hardest of times. Even recently in 2008 after the forces regained the East we were among the first to invest in any industry in the region. Now we are in Jaffna. We can easily touch thousands of lives in the peninsula. Already we have 1500 farmers from Jaffna registered with us. Our team is on the ground at this very moment. Its simple to open a supermarket but its more complex to get the backup operation in terms of the agriculture, dairy farmers etc. But more importantly we need to touch the people emotionally and create opportunities as we have done elsewhere.

Growing the business and vision for the company:

Our focus when we first started off in 1983 was the very top end clientele. But in 2000 we began to see the future direction of Cargills. We realized the potential by just looking at the population of Sri Lanka. We were not even serving 2% of the total population in their food needs. Imagine if the whole of Sri Lanka consumed food twice or thrice a day and the less fortunate once a day and then if we can feed 20-30% of this population Cargills would one day be the biggest revenue company of this country. We were not aiming to be the biggest company but that was the opportunity we saw and the thinking that drove our strategy. But first we had to get our house in order.

We had to get out mindset right. We had to change the mindset of our shareholders as well as our team. So change took place in 2000 and we began to drive change. But to drive change you got to lead it. You can’t tell someone else to change and unless you do. So we did a total overhaul of our outlook in terms of our positioning as a company. We changed our communication from English to Sinhala and Tamil. We introduced the ‘Gedara Yana Gaman’ concept. With this we were able to touch national production in agriculture. Today we account for 1.7% of the national production in fruits and vegetables. We never aimed for this but we just looked at our nation and asked ourselves how can we feed Sri Lanka?

Shift to a mass market retailer from a top-end retail marketer:

We looked at three things. Cost of living was one. Back in 2000 Sri Lankans spent more than 50-60% of their monthly income on food. Now that’s a big number. And we asked ourselves can we help to reduce that number? To reduce that number we had to do many things. We had to re-look at the wastage within our system from collection to distribution. By reducing the wastage from 40% to 6% we were able to give a more competitive price to the consumer.

Through this we have set the benchmark for pricing in Sri Lanka. So if someone wants to compete in the food industry they need to look at how best they can compete with us in terms of their internal systems. You can cut a price for a promotion but how sustainable is that? Can you continue that price? Ours is not a promotion but about creating sustainable value for all stakeholders through effective and efficient systems and processes.

The second thing we looked at is how to help the rural community? How can we bridge this disparity between the urban and the rural? So through our procurement from thousands of farmers and small scale entrepreneurs we have been able to create the market for them not only in our supermarkets but through our manufacturing companies to reach the general market.

Thirdly we looked at the development of youth. We looked at our internal training programmes and developed them into certificate and diploma course so that our youth are recognized and remunerated better where ever they work in the world. 70% of our youth brigade is from regional Sri Lanka and 80% are below the age of 25. We gave opportunities for local graduates to be positioned as our middle tier leadership, recruiting them from disciplines like agriculture, chemical engineering, engineering, animal livestock and the economy. Over 150 graduates have been hired in the past three years.

Through all this we built a brand that was elite and made it a brand of the masses. Today its recognized as the fourth most valuable brand in Sri Lankan as per the Brand Finance Index and has earned a AAA rating. We have achieved this success through our focus on Sri Lanka.

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