Interview with Mr. Rafiq Rangoonwala, Chief Executive of Cupola Group
Can you please tell us about your educational and professional background?
I did my bachelors fromPakistanand then went toAmericafor an Executive Development course from theUniversityofNew Hampshirewhich was equivalent to an Executive MBA inPakistan. After that, I did an MBA in Marketing. I have also completed almost 100 courses from different parts of the world includingAustralia,Singapore,Dubai,England,AmericaandCanada.
I started my career in 1980 inHoustonand joined KFC as a cook in order to support my self as I did not want to take financial help from my parents. After working there for a while, I decided to take up this profession. KFC believes in the investment of their employees and helps significantly in terms of financial assistance and working hours. I was very fortunate to work for this company.
Initially, I was working for domestic KFC and was based inMiami. I was keen to work in KFC International as the growth opportunities domestically are normally low. In 1985, I was transferred to KFC International as there was an opening in the Middle East and I was assigned to meet the franchisees inCairo. After some time I was transferred toRiyadh,Saudi Arabiaduring the Gulf war. I was also transferred to Jeddah and then toDubai. I went back toAmericafor some time to give trainings and then returned toDubaifor 2 years. In September 1999, I moved toPakistan.
Give us a brief introduction of Cupola Group?
Cupola group was started inPakistanduring the mid 90s by Mr. Arif Naqvi, the CEO of Abraj Capital. The group was first started in Middle East and then enteredPakistan. Cupola Group was given permission for opening KFC franchises inPakistanin April 2001.
Cupola was always in the retail business and thus has a firm understanding of the retail market. At the time of General Musharraf’s Marshal Law, Cupola had franchises of alpha graphics, pizza express and a few others which closed down. Cupola was in its struggling phase at that time and I was approached by the chairman of Cupola board to join hands. This is a very progressive organization and has investments in projects that are ahead of their time. Cupola group initiated the concept of mini malls.
What is the present situation of business in Pakistan especially in the food and retail business?
Food or any other retail business is an economic indicator which shows where the country’s economy is shifting and whether the business policies are effectively functioning or not. Right now, all businesses are facing struggle as the cost of conducting business has risen immensely. The profit margins are now in low single digits which is less then the interest rates in the banks. This situation has become a struggle for the food and the retail industry. If circumstances do not change in some time, some businesses will close down which has already happened in the textile sector.
Another problem is that the playing field is not leveled. If a person is paying tax, he feels as if he is the only one as there are a number of people who are not paying taxes and therefore are making great profits in their businesses. I know several businessmen in the food industry who are paying only 0.75% GST whereas we are paying 17% GST. The authorities know about this but do not take any step to remedy the situation.
How has the security situation in the country affected the food business?
I think it is more the economic situation than the law and order state which is affecting the businesses. People do not have money because the profit margins are decreasing. Utility cost, labor cost and regulatory duties are on their peak. Factors like these are causing problems for the average businessman. If you are paying minimum wages honestly to your employees and at the same time paying taxes to the government then you are at a loss. Those businessmen who are not paying their employees and are evading taxes are growing at a fast pace. The government has to bring people into a tax net. It should try to minimize the cost of conducting business. Indirect ways of acquiring money from the business community should also be eradicated.
The government should revisit their policies for the business community. It never consults the businessmen before setting up policies. For instance, the government never took the traders community into confidence before taking the decision of closing shops at 8 pm. A shopkeeper is paying rent for the full day; he also has to pay full salary to his employees, utility bills and other such expenses then why he is not allowed to work for the entire day. His real business timings start from 8 pm in the evening. The government has confiscated the generators of those shopkeepers who were open after 8pm. No one knows the benefit the government is gaining from this step.
I think the policy makers of the country need to get the stake holders on board and create an environment which is conducive for big investments and also take steps to discourage the tax evaders.
How do you compare Pakistan in terms of government policies, business environment and consumer behavior?
In general, business environment can be investor friendly when there is political and economic sustainability and law & order stability. Every country has problems andPakistanis no different then the rest. All the governments of different countries collect taxes from its people and businesses but they also provide level playing field to all. They collect tax equally from every businessman and also have equal policies for everyone.
The consumer behavior in western countries is very mature and educated. If you do not have the registration of tax and government papers, you can not run a business. We need to work greatly to reach that point. Everything should be implemented with sincerity and not for media or political interest.
What investment opportunities do you see in Pakistan?
I still feel that there are enourmous opportunities inPakistan. People say thatAmericais the land of opportunities. It is only because the opportunity is created and provided to the entrepreneurs. We need to do some groundwork inPakistanto make every one equitable. The government also needs to facilitate investors here.
There are numerous problems in getting licenses, registration processes and dealing with regulators. If the government can remove these kinds of hurdles then there is no other country better to do business thanPakistan. All we need to do is to change our system. We have to attract foreign investors to our country and also need to shift our mindset towards foreign investors. Our government needs to re-examine its policies towards the business community. There are some management issues which when sorted out can makePakistana land of opportunities as well. We have to be positive, think positive and show positive.
There is a shortage of millions of houses inPakistanwhich can be a great opportunity for investors but the government has to improve its policies for tenancy and construction.
We have profitable prospects in sectors like agriculture, retail, food and information technology. If a western country had a beach like Gwadar, they would be earning billions of dollars from it.
We can also promote our tourism industry to a whole new level as a tourist is the best investor. When a traveler visits a country, he uses the national airline, transportation, hotels, food industry and many more.
I do not entirely blame the government because as members of this society we all have to work for development. We need to fill the trust deficit between the public and the private sector and develop public-private partnership.
The expatriates of our country can also play a role in this. They can invest inPakistanand also work to invite foreign investors here.Chinahas attracted foreign investors in a similar manner. Our businessmen are still top class businessmen and can compete anywhere in the world.
What is the best quality of an entrepreneur?
To be an entrepreneur, one needs to be resilient and patient. An entrepreneur is someone who has a dream or a vision and can turn that vision into a profitable reality.
Who is your inspiration in the corporate world?
There are a few people who have always impressed me. Mr. Saifuddin Zoomkawala, the Managing Director of EFU General Insurance is a very proficient professional. Others include Yasin Teli of Pakistan Beverages, Hussain Dawood, Razzaq Dawood and Babar Ali. They are all icons in their own respect and a guiding light in the society. There is always a ray of hope for a country which has these kinds of business leaders.
What is the secret of your success?
The secret of my success is a good team. I am fortunate to have a very dedicated group of employees working with me. Any company’s success depends on its team. If a person says that only he is responsible for running his company then in my opinion, his professional growth has stopped. My team has great patience, commitment and motivation.
At this point in your professional life, does money still motivate you?
Money is always important but there is a sense of achievement which is given more priority than money.
What are your Future Plans?
Currently, we are in the food business and are also operating Café Indulge, Casa (retail bakery) and My Super Stores (super market chain). At present, we are executing a wait and watch policy. Even if we expand, we will still remain in the retail sector as this is our specialty.
What advice would you give to young entrepreneurs?
Prepare yourself for the worst but work for the best and do not let difficulties discourage you. Avail any opportunity to go abroad to learn so that you can come back to serve your country. With all the problems we face, it is still our country and we should always be positive. An entrepreneur also needs to have tolerance as everything takes time and nothing happens overnight.