Mohinani Group: Manufacturing of Packaging and Plastics, Trade and Distribution in Ghana

Interview with Ashok Mohinani, Executive Director of Mohinani Group

What is your assessment of the sector? What are the trends in Ghana and West Africa? You are present here, in Nigeria, and are thinking about going to Laos.

Ours is a diverse business, but our principal sector is manufacturing and packaging. The sector is growing based at the back of agriculture development here. Food processing is growing. We have seen a decent amount of growth in Ghana as well as in the neighboring countries. Trends keep changing and there are far more efficient methods of producing packaging. Environmental issues are becoming a big talking point and so, going forward, anything we need to do has to have a solution on the environment as well. The entire West African region has seen growth in this segment, but Ghana specifically, in various aspects, because there has been a lot of new investments over the last couple of years and we have seen an upscale in demand, not just in traditional packaging, but far more innovative solutions that customers are demanding. On the newer businesses, we have seen appetite change in the food segment. One of our businesses is QSR fast food services. We were one of the newer entrants in this market trying to bring fast foods closer to the Ghanaians’ accessibility. Six years later, we now have 15 KFC restaurants. We see that trend changing. We are trying to bring other concepts into the area and we are also looking at expanding the retail food segment into our neighboring countries as well. The trends there are changing the space of hospitality, the hygiene level, the thinking, and the speed. That is what we have added in addition to what the brand and the taste have to offer. But it did not exist six or seven years ago. Whoever comes in will find that the consumer is far more demanding because they have gotten used to both the service level and the hygiene level which has set a benchmark. The other aspect we deal with is consumer retail. We have consumer electronics, and we also have a division which deals in three wheeled and two wheeled automobiles. On the consumer electronics side, even though there has been a big trend and a lot of talks in e-commerce, we still see a demand for going into traditional consumer electronics retail stores, where people want to touch and feel products. Especially for things like a TV set, they still want to try out the latest gadget. Even though we thought a few years ago that the shift to e-commerce would be far larger, in reality, it has not been the case. This is something we did not forecast, but now we see that it has been a big growth area. Another division of ours is selling motor bikes and three wheelers. The three wheelers are very interesting because they provide transport in rural areas where it is difficult when the roads are bad for lorries to get to. It is a conduit. If someone gets dropped off on the side of the road and he needs to get 20 minutes in, this form of three wheelers is an affordable solution. We have also seen that people who have gone into the higher purchase of this particular vehicle have found it as a decent growth opportunity because there is no other form of transport. We have an assembly plant at the moment that we want to automate a bit more in three different areas of the country. We are also looking at expanding the same concept into three or four of the neighboring francophone countries as well. Because we are in such diverse industries, we are able to have the advantage in Ghana, specifically in being able to gauge consumer reaction because the consumer base is across all income levels. From dealing with the manufacturers for food packaging, to consumers walking into an electronics store, to the day to day food, we are able to gauge what the trends are.

You are present in so many sectors. Which one brings the most revenue? Is packaging your core business?

Our core business is manufacturing and packaging and that is still our largest business.

Among all this diversity, which area will bring more revenue in the future?

We keep adding new lines, but in the existing stable it is packaging. The area we want to focus on and where we think has decent potential is the poly tank sector. There is enough penetration of water tanks, but we are trying to focus on the sanitation side in solutions, on the portable toilets and rain water harvesting and in other aspects of that segment where we think there is a lot of scope.

Do you feel that there will be potential there?

The majority of those items are actually imported ready-made, but we are not in that specific importing sector. We are trying to get a patent to produce our own, but we do not produce or import at this time.

What are your competitive advantages?

There is potential growth in Ghana but if you want to leap frog, you have to piggyback on the neighboring countries as well. If this is not purely by manufacturing, it is by opening up service centers and distribution centers.

Our competitive advantages are the technology we have in our various aspects. Through our brand name, we have provided a consistent service for over 50 years and have built trust with our customers and our distributers, and they know we are here and we provide warranties and quality products in case of any issues. Whether that is a competitive advantage or not in today’s world, I would not know, but that is what we have built our strength on and we keep trying to evolve the product and the space that we play in. For example, with water tanks, we are looking at sanitation and trying to grow within that segment to see what is required. We will try to see what we can value add over time in that space.

How do you approach the technological aspect? Do you have a research and development team, or do you look at the innovation done abroad?

We bifurcate the product ranges we are in and we ask ourselves what the key global events are. In packaging, there are trade fairs, seminars, groups to belong to internationally, both in rotational molding and injection molding. We are members of those specific international groups and we attend those events at least twice a year and many of them have seminars and updates on trends. We have a captain at different levels attending those seminars and shows to find out what is going on, which may not be relevant to us today and maybe we are five or ten years away, but at least we know what is happening in the far more developed countries and we can understand what we think will happen to us in the years to come.

Do you face any competition from countries, such as products that come from Asia?

In the manufacturing side, from time to time, we do get cheap imports coming in from predominantly Asia, but it is not consistent. People are able to do import these products for a period of time and we try and counter that saying to the authorities that it needs to be checked, but it is not consistent enough to worry about. For electronics, it is all imported anyway so your competition is from a cheap alternative. The consumer is right to choose what he wants, provided he knows the specs are different and what he is paying cheaper for is also of a cheaper quality.

What strategy do you have for the distribution side?

Distribution has been a challenge in the sense that the growth has been slower than what we would like it to be. That is more on distributors having the affordable capital to grow. At the incubator stage, we have had to fund distributors, which is basically financing their working capital needs. If you do that, then you become a bank rather than finding a distributor who is loyal to you, because if he puts his money in, he is obviously keen to make it successful. So, we have found that in certain sectors we are in, when we try to grow the distribution, that the distributor was halfhearted. They came in more because of the financing. And that has been a challenge. But because we have distributors in various product ranges, that does not hold for all of them. If my goal was to grow distribution to the maximum, one of the challenges would be the cost and the raising of the finance. If the distributor is going to borrow at the levels he is, he is going to have large overhead and he will not be able to be successful. So, as an incubator, we have had to fund that and nurture the distributor to get on his feet where he can build up enough capital and it is not purely debt. Debt only in local terms is too expensive and probably not sustainable.

Are you interested in partnering with companies or attracting investors towards some of your projects? How do you approach this aspect?

Ours is a family business, purely privately held. Up until a few years ago, the founders and chairman were still active in the business. It was a closed doors mentality where we were not open to investors. But the next generation, my generation, has felt that if investors come in and are value adding in the same sector and in a far more developed country technology wise, that is when we would look at bringing them on. It would not be for capital expansion because we have access to capital overseas which is cheaper than borrowing.

What is your footprint and your impact here in the West African region?

So far, our physical presence, as in offices, is in Ghana, Nigeria, and Burkina Faso. We have a presence in some form in East Africa in the business of distribution of chemicals. My focus has been on trying to expand West Africa and the synergies which we can leverage from Ghana and the various products we are doing to build a bigger base within this sub region.

In a place like Côte d’Ivoire, would you go out on your own or would you be interested in partnering with someone who is already present there?

Our technologies in West Africa are similar, so if we were to piggyback on a relationship, the ideal would be looking at someone in a far more developed technology and bringing them someone who did not have a presence in West Africa. Many international companies still do not have a presence in these regions and that is where we come in.

Project yourself in two to three years’ time. You have an aim to grow in several different sectors you are present in. How do you see yourself developing if you manage to achieve your vision?

It will all scale up. We would keep up with what is going on in technology. If you look at manufacturing, you probably see more units in different countries, but a similar product range. We should have a larger footprint in manufacturing, specifically in neighboring countries, not only West and East Africa. In the other sectors, whether foods or distribution, we expect the same. There is potential growth in Ghana but if you want to leap frog, you have to piggyback on the neighboring countries as well. If this is not purely by manufacturing, it is by opening up service centers and distribution centers.

Is the environmental aspect important?

The environment aspect obviously poses challenges in the packaging space. We are trying to make sure that anything new that we do is not in the mainstream, that it is the old school way of packaging where people did not have concerns. Luckily, our main business is to the multinationals. We also have the research and development center on new trends. With anything we do, even if today there is a potential space in a specific area which has environmental issues, we will not touch it. As and when those machines become obsolete, they go off. Any new projects are at the back of what the M&C trends are globally and finding the solution for that specific area and what we are in currently. For example, in PET recycling, we are working with the multinationals on trying to find a solution for both Ghana and Nigeria and we are in high-level talks on how we can partner and set up the recycling side for all of them. Those are the sort of partnerships we are in dialogue with. There is a lot of work in progress and it will be interesting to see how we execute in the next 12 to 18 months on this.

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