As an entrepreneur, believe in gut feeling. Have faith in your concept. Go ahead,” says RG Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd, politely refusing to advise budding entrepreneurs. “Too much analysis will lead to paralysis,” he quips.
Young investors would do well to take that advice, considering he is a first time entrepreneur whose company’s daily turnover now equals the cumulative turnover of its first 20 years’ in business. He was sharing his experiences on growing Hatsun, a tiny ice cream unit with an initial investment of ₹15,000 that grew to a ₹ 5,000-crore company, with BusinessLine in a fireside chat at TiECON Chennai 2017.
As a businessman unburdened by knowledge of financial management or marketing, the first 10 years had gone into “learning the ropes”, he says candidly. But the next 10 had seen “decent growth”. For entrepreneurs, such hockey stick curve is typical, he says, as the audience, mostly entrepreneurs, applauded enthusiastically. He held the participants at the conference on entrepreneurship in thrall with spontaneous responses over the next 45 minutes as he narrated his experience of nearly five decades.
Hatsun Agro is the largest private sector dairy company in India with its immediate competitor less than half its size. After 1970, when it was set up, Hatsun had stuck to making ice creams under the brand Arun Ice Cream for 23 years before expanding into milk business on its own. Since then, it has evolved from a tiny venture, to a small, medium, big and large business, he says.
“Each transition had been painful, we went nearly broke as it needed different talent and strength at every stage,” he says. A key feature of growth had been his decision to delegate responsibilities. Whether in finance or marketing individuals in the teams are more talented in their respective fields than him, he says modestly.
His son has been with him since 1999 and runs the business on a day-to-day basis, he says. “I watch and guide now. Today, I deal with strategy, finance and HR,” says Chandramogan. A lot goes into training employees. “It is more difficult to make a professional a committed person than making a committed person a professional,” he remarks.
On financing, “Those days it was a real issue,” he acknowledges. Everything went into the business. For three decades after starting the business, his family had lived in rented houses. “We decided personal assets are a liability” and to own a house only when we can without a loan. Even today “all eggs are in one basket,” he says.
He recalls with a rueful smile, when the company had gone for an IPO. “We overestimated ourselves. Everybody we knew congratulated us but did not put money.”
Branding and a distinct product identity have been very important to growth, he says. From a single product company, Hatsun is now a market leader across a range of products in various segments including Arokya liquid milk, Hatsun curd and a wide range of dairy products and cattle feed. Nearly 94 per cent of its business is based on branded products and just 6 per cent in commodity. This helped insulate the company from the fluctuations in commodity prices, he says.
Hatsun brand of dairy products have a nationwide presence while liquid milk, a perishable commodity, is restricted to South India including Maharashtra. Ice Creams go into Odisha also, he says.
On the scale of operations, Hatsun Agro procures and processes about 3 million litres of milk and makes 500 tonnes of cattle feed daily. Over 3,500 vehicles log about 600,000 km cumulatively every day, the “equivalent of going 15 times around the earth or a trip to the moon and back,” he remarks.
The company deals with over 400,000 farmers, has over 85 veterinarians, 270 staff for artificial insemination that helps produce over 100,000 female calves annually.
“If 65-70 years back Amul was created to remove poverty from villages, we are working on prosperity for farmers,” he remarked. Thousands of farmers are being trained in dairy farming. Hatsun Agro has helped develop green fodder for cattle that helps bring down cost of milk production ethically, he concluded to loud applause.