A dairy man’s arduous journey to prosperity

I final met RG Chandramogan, Chairman of Hatsun Agro Product Ltd, in March 2020, simply earlier than the pandemic hit and the lockdown occurred. I had travelled to Thiruthangal, his house city, in water-starved Virudhunagar district, and simply 5 kms from the firecrackers city of Sivakasi. I used to be visiting to see the world class badminton academy Chandramogan had put up with an final objective of manufacturing Olympic champions. He had at all times been a badminton aficionado; having performed the game for 35 years and having gained the TN state doubles veterans (above 45 years) championship, 72-year-old Chandramogan is passionate in regards to the recreation.

Within the night, in opposition to the setting solar, with floodlights on and scores of youth taking part in the favored native recreation of tennikoit (a recreation performed with a rubber ring throughout a web), Chandramogan stated it was a manner of giving again to his house city; Hatsun invested ₹26 crore to arrange the badminton facility and a further ₹2 crore for a working monitor and tennikoit courts for the native youth to play.

However, the wherewithal to sponsor badminton and indulge his ardour got here solely in his later years as an entrepreneur when Hatsun Agro had change into a big firm.

As journalist Harish Damodaran writes in his guide,

Broke to Breakthrough: The Rise of India’s Largest Non-public Dairy Firm, Chandramogan’s profession was cast within the arduous grind of entrepreneurship, from the time, because the dairy man says in his introduction within the guide, when he began in 1970 as an ice sweet maker with a capital of Rs 13,000, three workers and 15 pushcarts. It’s been a 50-year lengthy arduous journey and really in contrast to lots of at present’s start-ups which hit Unicorn standing in a matter of few years. Right this moment, Hatsun, maker of Arun and Ibaco ice lotions and different dairy merchandise, is a big firm with a turnover of Rs 5,570 crore (FY 20-21) and a web revenue of Rs 246 crore however Chandramogan’s story is that of many entrepreneurs who struggled in a Licence Raj setting and have been lastly in a position to break away and rise above the numerous constraints and change into profitable. I had first met Chandramogan within the early Nineteen Nineties for a function for the enterprise journal I labored for, and several other instances through the years, and witnessed the expansion of Hatsun at shut quarters.

Lifelong impression

Chandramogan, who moved to Madras (now Chennai) for his education, had failed Class X and felt dejected, however determined to repeat the identical class in English, moderately than in Tamil that he had studied in until then. His instructor of Maths and English, a PK Srinivasan, was to make a lifelong impression on him, when on the final day in class, Srinivasan advised the scholars: “If in any respect we meet some years from now, please don’t introduce your self as a peon, stenographer or clerk whom I had as soon as taught. I might think about that as an insult. Introduce your self solely if you’re an engineer, physician, lawyer, police officer, artist or a pacesetter of your chosen career,” have been his phrases. Little did both know then that Chandramogan can be a pacesetter within the dairy trade sooner or later. They’d meet once more, a few years later.

Damodaran’s guide is a painstaking account, abounding in figures and trivia, of each stage of Chandramogan’s journey – from ice sweet to ice cream maker after which ultimately to India’s greatest personal sector milk participant. Chandramogan had transitioned from an ice sweet maker to a milk-based ice cream maker although, as he says, in 1981 his turnover was simply Rs 4.25 lakh. His break-out components was to go to new, underserved markets outdoors Chennai in all of the smaller cities the place Arun grew to become a strong model. Serendipity additionally had a job to play when franchisees within the smaller cities created a mannequin of sit-and-eat parlours, which additionally aided the model’s recognition. That mannequin was ultimately replicated in Chennai, the place all the massive manufacturers similar to Kwality and Pleasure competed in.

A cornerstone of Hatsun’s technique has been an unrelenting give attention to model constructing. Chandramogan realised early on together with his innate really feel of the market that model can be the differentiator. He even invited American model gurus Al Ries and Laura Ries to Chennai for a session together with his crew on branding. His emphasis on branding was displayed when Arokya milk was launched. As an alternative of competing with the TN authorities’s milk model, Aavin, on worth, he marketed the upper fats content material of 4.5 per cent in Arokya, as
‘naalaraipaal’ or 4.5 per cent fats milk, a technique Al Ries had additionally endorsed. That aside, Hatsun was fast to understand the potential of packed and branded curd for working girls. Curd is now Hatsun’s second highest income supply – after milk and on par with its ice cream.

Hatsun’s many firsts

Damodaran writes in regards to the many firsts by Hatsun alongside the way in which: sourcing milk straight from farmers by constructing a community and paying them on time by digital transfers (demonetisation didn’t influence the Hatsun milk suppliers as a lot); serving to farmers develop high-yielding fodder with larger crude protein content material in order that their cows yielded extra milk; chilling milk at supply by its lively bulk cooler system; transporting packed milk and curd in refrigerated vans versus mere insulated tankers from its crops to keep up chilly chain integrity and preserving its merchandise more energizing for the last word shopper.

HAP grew to become a Rs 5,000 crore-plus firm simply earlier than it turned 50 on April 7, 2020. As Damodaran says, it traversed each stage of an enterprise: from tiny and small to medium within the late ’80s onwards to large within the mid-2000s and eventually massive submit 2015. As Chandramogan says within the guide, “The mixed turnover of my first ten years wasn’t even Rs 25 lakh, which HAP now grosses in under 25 minutes. Our cumulative gross sales over the primary 20-30 years would, likewise, have been about Rs 12 crore and Rs 450 crore, which we, throughout 2019-20, did in lower than a day and simply over a month, respectively. The Rs 5,308.33 crore of final fiscal was equal to our gross sales over the primary forty years.” And, all this, as Damodaran factors out, was from an preliminary fairness capital of Rs 13,000 mobilised by promoting a portion of ancestral property in Chandramogan’s hometown! It wouldn’t be mistaken to say he milked his technique to prosperity.

Take a look at the guide on Amazon