As published in (FAO) Infofish Marketing Digest No. 4/1984 Malaysia
Company Profile
By Ron Baynes
"Why not?" --- An attitude which built Mekran Fisheries Ltd of Karachi.
With do-it-yourself resourcefulness and attention to quality, this fast-moving company has become the largest shrimp exporter in Pakistan.
Interviewing Mazhar Butt, the restless 35-years-old President of Mekran Fisheries in Karachi, you soon notice that one of his favorite expressions is "why not?" Butt has built his career and his company -- Pakistan's largest seafood exporting enterprise -- by repeatedly asking himself that question, sometimes finding no satisfactory answer.
At various times, Butt has asked himself why he shouldn't write science fiction and poetry and get it published, fabricate his own stringed instruments, construct his own shrimp trawlers, design and build his own processing equipment, or teach himself to be a professional refrigeration technician. "I asked myself -- 'why not?'" says Butt. "I decided there was no good reason. And I went ahead and did these things".
Butt's company, Mekran Fisheries Limited exists because of just such a question. Early in 1976, sitting in the office of his father's Karachi firm, Mazhar Butt opened an envelope containing a letter which was to shape his future business life. A Qatar fish importer needed 50 cartons of sole and was asking for an immediate quotation.
The letter was a mistake -- the firm was not in the export business. "But," thought Mazhar, "why not fill the order anyway and see what happened?" Driving to Karachi fish harbor, he hunted down one of multitude fishermen he knows by name, purchased some sole, had it cut by a professional and paid a friendly plant manager to freeze it. Next morning, Pakistan's newest fish exporter delivered his first shipment to the airport.
Says Butt, "When I calculated the economics of the transaction, I was well on the profit side. And I asked myself, if I could do so well on one small consignment why not get into exporting in a bigger way?"
Finding no satisfactory answer, Butt moved into the shrimp export business, operating out of a small processing plant. Then, another opportunity emerged.
Some of the shrimp-exporting companies lining the trawler-jammed fish harbor in Karachi were doing well, some were getting by and others were in deep trouble. One that had failed completely was Mekran Fisheries, a Japan-Pakistan joint-venture company which had been struggling along since 1966 and which was now bankrupt. Among its creditors was Muzaffar Din Butt, Mazhar's father and one of the Karachi's most respected shrimp brokers. In the course of setting accounts, the debtors asked the Butts whether they would accept their facilities in payment.
Shrimp export is a highly competitive business and Karachi's waterfront was littered with the corporate carcasses of shrimp companies that did not make it. This did not stop Mazhar Butt from taking the suggestion seriously. Nor did the disaster which had overtaken the joint-venture business -- an enterprise with strong technical and financial backing -- whose managers were now blaming the debacle on an alleged "lack of dedicated Pakistani Labor".
"I was sure we could do better," says Butt. "I had helped in my father's business since I was a boy, so I knew the product from that end. I had my experience in the rented plant. As for the lack of dedicated labor," he says dryly, "we didn't think that was really the problem and I must say our experience over the past seven years has proved the point."
So, looking at the Mekran situation over in 1977, Butt found himself once again saying, "why not?". Unable to find a convincing answer, Butt teamed up with his younger brothers, Azhar and Aziz, bought out one of Mekran's two factories, and refloated the capsized Mekran Fisheries Limited. Mazhar was managing director, Azhar director of marketing, and Aziz the production director.
From scratch
Describing the new company's first day, Butt says he had inherited a shell. There was a generous site close to the harbor and a building.
But the plant had been down for a year, the electricity had been turned off, all of the equipment was obsolete and some of it did not work.
Butt set about putting the plant back on its feet. Although he placed orders for new contact plate freezers from Japan and Britain, Butt set out to fill many equipment gaps himself. Working sixteen-hour days with the enthusiasm of a born do-it-yourselfer, he reconditioned the plant's cold storage facilities. He needed new shrimp grading equipment. With a healthy disrespect for professional mystique in general and consultants in particular, Butt decided he would design and build the grading machine himself. "I collected manufacturers' trade literature, articles and equipment advertisements from trade magazines, photographs, everything I could lay my hands on about grading equipment," says Butt. Then, calling in a welder and working in a corner, Butt soon had the grader he needed.
Market Building
Studying the competitive shrimp export market, the Butt brothers decided the world did not need another high -volume get-rich-quick venture. Taking aim at premium markets, they instituted a production system that sacrificed volume in favor of stringent quality controls.
If things turned out as planned, the business would grow gradually on the solid base as Mekran's quality advantages came to the attention of customers astute enough to see the difference. The Butts were hoping, in particular, to catch the eye of the world's most discriminating shrimp buyers; the Japanese.
The problem, they soon discovered, was that shrimp buyers do not like to take chances. "In this business, an established reputation is half the battle," says Butt. "We tried to tell the market that there was a new company to choose from, one with new quality standards.
Unfortunately for us, the buyers had heard this story before from many places." By 1977, Butt was becoming worried. "We weren't getting anywhere," he recalls... "We had visited all the Japanese trading companies doing business in Karachi. The answer was always the same -- 'you're new, we don't know you'."
Then, one afternoon, after a day of trying, Mazhar Butt and his brothers nailed down an appointment with Hiroshi Yoneta, a traveling representative of Yuasa, a Tokyo trading company. Unfortunately, the meeting came at 9:00 PM and Yoneta was booked on an early morning flight to Bombay. It would be impossible, Yoneta said politely, to visit Mekran on this journey -- perhaps on his next visit. Mazhar Butt is a very persistent man. Eventually, Yoneta finally agreed to a short visit to the plant.
As it turned out, he was there until dawn, having spent the night defrosting and inspecting a dozen shrimp blocks, checking cartons, examining equipment and looking the plant over from corner to corner, "all through that time," says Mazhar Butt, "Mr. Yoneta made no comment at all. Around 4:30 AM, he looked at his watch and said, 'well I have to be leaving for the airport'. We were depressed -- maybe even a little panicky. And I said, 'Yes, but first, what do you think of our quality -- do we have any prospect of doing business with you?'"
At which point, Mr Yoneta said words that were sweet music to the embattled shrimp producer's cars. "Mr Butt," he said, "our company deals with many buyers here. Your quality is the best I've seen. I intend to send a report to my head office as soon as I reach Bombay. You'll get a telex within 24 hours."
A few orders later, Yuasa asked Mekran to agree to sell shrimp to it and to no other Japanese importer and the relationship has been flourishing ever since. Mekran's frozen shrimp shipments rose from 211 tons in 1978 to 1460 tons in 1983. in that year, the value of its shipments reached US$ 11 million, nearly-triple that of the number two Pakistani exporter.
Mekran's main product is still shrimp, shipped in block, IQF and (for certain customers) in semi-IQF forms and it has developed other seafood lines, including lobster, pomfret, ladyfish (kissu) and solefish.
With its Japanese business secured, Mekran expanded into other markets ranging from the Middle East to Europe. At the moment, the fastest expansion is in the UK where the company's shrimp sales have been growing by 15% annually in recent years. "The UK market is particularly strong for medium to small counts -- 31-35 to 71-90," he says. "That's what their consumers want and not even Japan or the United States can match the UK as a market for these sizes." With friendly help from Yuasa, the company has also entered the US market and Mekran is now Pakistan's largest exporter of shrimp to that country.
Mekran's strategy has been tailored to match the special blend of obstacles and opportunity facing business builders in developing countries. A particular challenge for shrimp exporters is importer wariness about product quality. The Butts have dealt with this obstacle in the only realistic way, through a steady build-up of consistent performance. "Quality is ceaselessly monitored at Mekran, "says Butt. "We process one day and we check the next, picking random samples, defrosting them and inspecting them individually." Mekran also stamps production dates on every master carton. In addition to certifying product age, dating gives the company an identifying tag with which to investigate any complaints. Azhar Butt, marketing member of the Mekran management trio, pays regular visits to overseas markets to check customer acceptance and to stay abreast of market requirements. Through such measures, Mekran has gradually broker through the attitudinal barriers in key foreign markets. In a recent demonstration of this success, Azhar Butt recently journeyed to Madrid to accept the international gold medal for quality awarded to Mekran by the Spanish food trade magazine EL Comestible. Even more recently, Mekran emerged as one of the winners of the Africa International Away 1984.
Self-made equipment
Another common problem for producers in developing countries is the cost of the equipment and the difficulty of getting it on site. Butt has responded to challenges of this kind with cost-effective resourcefulness. One was the difficulty, familiar to many shrimp producers, of turning out small, peeled undeveined shrimp free of fragments and other minute contaminants that get into the products during manual processing. Butt could not find a shrimp waste separating and washing machine that would do the job, so he invented and build one. "it's based on a very simple principle," he says, "but it's very close to 100% efficient in removing shell fragments, legs, gristle, hair and other small contaminants. Customers who have come in to see it tell me it is the most efficient system they have seen." He has applied for US and Pakistan Patents.
Another challenge, when the Butts reopened Mekran, was refrigeration. Here too, Mazhar took the direct approach. Cross-examining refrigeration technicians, immersing himself in textbooks and product literature, Butt quickly graduated in status from amateur to serious hobbyist, to expert. When new contact plate freezers arrived, and an engineer could not be found, he directed installation himself. Butt is now a member of the American Society of Heating, Refrigerating and Air Conditioning Engineers. Mekran is also an associate member of the American National Frozen Food Association, Inc.
Close to the fish harbor, Mekran is Pakistan's largest seafood processing plant and its two-storey building fills most of a 4000 square yard site. The plant has 70,000 cubic feet of sub-zero Fahrenheit cold storage space, a spacious blast freezer plus chill rooms. Its contact freezers are capable of quick freezing 25 tons of shrimp in 24 hours, and the plant produces 45 tons of ice a day.
Mekran's once-busy canned shrimp section has been closed since 1981 and Butt is not optimistic about its prospects for reopening. "Frozen shrimp is blooming but canned shrimp is almost finished in Pakistan," says Butt. "Frozen shrimps gets a better price, imported tin cans are too expensive while local cans are both expensive and unreliable for packing shrimps. There's no hope of restoring the shrimp canning industry until inexpensive cans of good quality become available."
Butt would, however, meet this challenge with his new strategy. With simple modifications and adjustments in plant and equipment, he has ingeniously formulated another useful and wider application of his idle and in fact doomed shrimp cannery. Fruit juices and ready-to-serve foods are now being canned in this section for exports as well as domestic consumption. "A living industry had devolved from a dead industry -- that's our bonus," Butt is happy to note.
In addition to its processing operation, Mekran now builds fishing trawlers, and operates a fleet of 26 of its own vessels. While working in his father's company in the 1970s, Butt built four of these wooden vessels using pinewood, Burma teak and redwood. Engines were a problem, but not for long. Butt scoured the scrap yards of Karachi. Coming up with salvages Caterpillar engines from bulldozers, he fitted these with reduction gears and installed them in the vessels.
Industry involvement
An active spokesman for the processing industry and a sometimes outspoken critic of Pakistan's Seafood Association, Butt has outlined his own strategy for developing Pakistan's fishing industry to its full potential. Butt says that the nation's shrimp export totals have leveled off over the past few years because its trawlers are too small and fragile to follow the shrimp into deep water. He has appealed to the Government to give financial backing for the development of a fleet of ocean-going vessels, equipped with modern fish-finding equipment... He has also pointed to the need to modernize refrigeration and other equipment throughout most of the processing sector.
The importance of quality
For potential shrimp producers in developing countries, Butt has these words of advice" "To get into a market and to capture it, the most importance requirement is quality, But not just quality -- you also have to match the product requirement of that market. Take Spain, for example; you can export a frozen block of shrimp of the finest quality to them -- they will throw it away because in Spain they want a semi-IQF block. You do not have to go to Spain to find that out, but you do need to stay in touch with prospective buyers. The other important factor is the aesthetics of the product. Your shrimp not only has to be of good quality, it must look that way -- free of tears, marks and other injuries caused by rough handling."
In spite of his penchant for technological innovations, Butt does not think producers in developing countries should assume that success requires them to mechanize on the scale or in the manner of their counterparts in developed nations. "You've got to look at your local situation," he says. "We've achieved excellent quality without going into full automation. We employ 200 plant workers and that makes sense of use because the reality of our situation is that there is an abundance of cheap labor and people need all the work opportunities they can get."
On the new ventures
Mazhar Butt's latest venture is entry into the fishmeal business. The Company recently completed construction of a fishmeal plant at Korangi, an industrial park, 15 miles from Karachi harbor. Producing 30 tons of fishmeal a day, it will be managed by a younger Butt brother, Imtiaz, aged 21. "We see an opportunity for both domestic and export sales," says Butt. "But we'll start locally. There's heavy demand in Pakistan and local prices are bette than export. We also see some interesting opportunities in West Germany and elsewhere."
One interesting possibility: sale of fishmeal to Mekran's Japanese clients, not for home use but as bartering chips. "China needs fishmeal for their aquaculture," says Mazhar. "Our friends in Japan are considering an arrangement where they would supply fishmeal in return for Chinese cultured shrimp. The Japanese have asked us if we're interested in pursuing this proposition. It sounds like a good idea as we've said to our friends, 'yes, why not?'"
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Ron Baynes is Communications Consultant for Baynes Communications Inc., specializing in publicity and public relations for the fishing industry. He is Consultant Editor to Infofish.
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