Below is the edited transcript.
BR Research: Give us a little history of Forward Sports, and what has been learning so far?
Khawaja Masood: There was a time when hand stitched balls were in vogue, of which producers in Sialkot had about 70 percent of the world market. Then about ten years ago, the technologies started changing and machine stitched balls gained popularity. More recently thermo bonded technology came in, which is a seamless ball and is very high tech.
Since it was difficult for local producers to adopt this expensive technology, Sialkot businesses started to go down, our own firm's business also started to go down. Then we tried to catch up with the technology, both machine stitched and thermo bonded.
To this end, the credit goes to my son Khawaja Hasan, who studied Management of Engineering from the UK, for implementing thermo bonded technology--a job he did fairly quickly, since his university actually teaches sports technology. On that note, may I just say that the problem with our industrialists is that their children obtain irrelevant education? In this day and age, technology is constantly evolving and that is why the orders keep shifting. Winning back the orders is not easy. You have to compete and exceed expectations not only in technology but quality and price as well you have to do something extra.
BRR: Tell us how you won the FIFA World Cup deal?
KM: Yes. So we got the thermo bonded technology in 2008, therefore, we were able to manufacture hi-tech balls, which is why the Champions League ball was awarded to us about two years ago. Initially, the Chinese were asked to do the job, but since it was a very difficult ball to make and they were a little reluctant on their part to produce it, so we were asked to produce it and we said why not.
After the Champions League ball, we got orders for thirteen major leagues sponsored by Adidas like the French League, German Bundesliga and so forth. In the meanwhile, we got the 2012 Olympic official match ball as well. After that we became a larger company than our Chinese competitors, both in terms of capabilities and production.
Meanwhile, the World Cup ball was with this Chinese competitor but he was running low in capacity so I was asked to do the ball and again I said why not and I took the chance. It took the Chinese six months to set up the lines, but we managed to do the job from scratch in thirty-three days.
BRR: How come you were able to do it in Pakistan, when even the Chinese couldn't do it?
KM: You are right. Customers don't want to come to Pakistan and we have to travel to them to get business. Plus in China, there is a lot of media support and projection of businesses; in Pakistan there is no such thing. But you have to do a little extra; and work a little harder to get the results.
The thing is that within the thermo bonded technology it was an advanced technology ball. The machines to produce that ball were not readily available. It included robotic machines and very complicated soft wares, which we produced indigenously from start to finish. There was no other option, as nobody would have given us the technology. There was only one company producing on that technology and had locked its machinery vendor.
You see the Chinese had capacity issues but realistically they could have gone further. Yet they did not opt to do so. Our firm, however, gladly took the challenge. When the experts came in to inspect the ball, they only required a minor adjustment before it was finally approved by FIFA. The balls were produced between August 2013 and April 2014.
BRR: You told a foreign news agency that Pakistan's share in football market can increase from its current 18 percent share to 50 percent in the next four years. What is your assessment based on?
KM: Like I said earlier, about two and a half years ago nobody in Pakistan was making machine stitched balls. Now we are the biggest manufacturers in the world. Likewise if other players in the market adopt the technology, the country's total share will definitely go up.
Not everyone can get the thermo bonded technology, but they can definitely go into machine stitched balls. And the liking for machine stitched balls is huge. A worker can make four to five hand stitched balls in a day but he can make thirty five to forty machine stitched balls. So productivity is higher, whereas the cost goes down, and the quality goes up. So whoever catches up with the technology will start getting orders.
BRR: How many machine stitched balls are you producing, and do you have new orders?
KM: We are producing about thirty thousand balls per day. However, this number will go down slightly after the World Cup. Ninety percent of our production is for one brand, Adidas, which has leading share in the world. Our demand goes up with events; we have thirteen leagues for which we have exclusive rights.
BRR: Generally Sialkot-based businesses and many other SMEs in Pakistan are known for their good production and craftsmanship but branding is somewhat wanting. What have been your own efforts from marketing and branding point of view?
KM: We have our own brand launched by the name of Forward and we have a contract with Pakistan and some other world football federations. So, we are moving slowly towards building a strong brand. We are doing whatever effort we can put in but it is a game of billions. For events like the World Cup you have to bid and we don't have that kind of resources.
BRR: Have you thought about going into the local market?
KM: We are thinking on it but there are issues both in business regimen and in demand stability.
BRR: People say that the current business is pro-business; what positive steps do you think they have taken in the last year or so?
KM: Exporters are not too happy about the rupee appreciation of about ten percent in such a short span of time. China does revaluations as well but in small increments of one to one and a half percentage points; in China it would have taken five years to do such a massive appreciation. Here 9.7 percent is a big impact; our deals are locked in dollars and the customer does not revise prices. Nobody speaks about it but the minimum wage increase of Rs2,000 also had an impact on compliance businesses like us. Labour is a commodity in the job market and minimum wages ought to be based on supply demand situation.