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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?'"

___________________________________________________

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.

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 ... More