Milky Way
Mongolia’s largest dairy firm--Suu Corp., dating from the Soviet era--is being transformed by the Dagvadorjs. Visitors don white coats and surgical masks, just like all the workers who operate the gleaming pasteurizing and packaging machines. Churning 200 tons of dairy products a day, they turn out everything from Spider-Man chocolate ice cream pops to fresh milk and dried curd that’s in demand from Britain to China.
The plant they bought opened in 1958 when individual herders were still bringing containers of milk into the city, where residents boiled it, hoping it was long enough and hot enough to kill bacteria. Max Group took over the plant, in part to keep it out of the hands of Russian oligarchs who wanted in on “privatization” in their former satellite. The brothers had bigger ideas.
“They saw a great potential here,” says Dugarjav Munkhjargal, the plant’s young executive director, the product of Bangalore University, a leading Indian business school. “They were telling me if a Russian wants it, it must be valuable. They’ve got a different mindset-- an entrepreneurial mind-set.”
It was clear to the Dagvadorjs that this could be another high-margin operation--a characteristic of every sector they’ve touched. The plant alone can do at least 15% net margins, they figure, but by adding satellites in remote locations--closer to the herds and to customers, such as in China--they can leverage their know-how. “They want to build this plant from a Russian to a very modern, up-to-date internationalstandard factory, so now we have a team moving toward this.”
With a small public float on top of the family stake and no import duty on foreign machinery, Suu has been bringing in equipment and global expertise. After two years Munkhjargal has snagged an expansion loan from the World Bank’s International Finance Corp.--at a mere 9% rate (compared with the 13% that’s the going rate in Mongolia). Sales of $24 million are up from $1 million in 2005, and the staff size surged 70% in the past year. Time for more mechanization. --D.A.A.
The plant they bought opened in 1958 when individual herders were still bringing containers of milk into the city, where residents boiled it, hoping it was long enough and hot enough to kill bacteria. Max Group took over the plant, in part to keep it out of the hands of Russian oligarchs who wanted in on “privatization” in their former satellite. The brothers had bigger ideas.
“They saw a great potential here,” says Dugarjav Munkhjargal, the plant’s young executive director, the product of Bangalore University, a leading Indian business school. “They were telling me if a Russian wants it, it must be valuable. They’ve got a different mindset-- an entrepreneurial mind-set.”
It was clear to the Dagvadorjs that this could be another high-margin operation--a characteristic of every sector they’ve touched. The plant alone can do at least 15% net margins, they figure, but by adding satellites in remote locations--closer to the herds and to customers, such as in China--they can leverage their know-how. “They want to build this plant from a Russian to a very modern, up-to-date internationalstandard factory, so now we have a team moving toward this.”
With a small public float on top of the family stake and no import duty on foreign machinery, Suu has been bringing in equipment and global expertise. After two years Munkhjargal has snagged an expansion loan from the World Bank’s International Finance Corp.--at a mere 9% rate (compared with the 13% that’s the going rate in Mongolia). Sales of $24 million are up from $1 million in 2005, and the staff size surged 70% in the past year. Time for more mechanization. --D.A.A.
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