‘Too much analysis will lead to paralysis’

“As an entrepreneur, believe in your gut feeling. Have faith in your concept, go ahead,” says RG Chandramogan, Chairman and Managing Director, Hatsun Agro Product, politely refusing to further 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.

He was sharing his experiences on growing Hatsun from a tiny ice-cream unit with an initial investment of ₹15,000, to a ₹5,000-crore company, with N Ramakrishnan, Senior Associate Editor, BusinessLine , in a fireside chat at TiECON Chennai 2017. As a businessman unburdened by knowledge of financial management or marketing, the first 10 years went into “learning the ropes,” he says candidly. But the next 10 saw “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 entrepreneurship conference 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 being set up in 1970, 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 a large business, Chandramogan says. “Each transition was painful; we nearly went broke as it needed different talent and strength at every stage.”

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. Chandramogan’s son has been with him since 1999 and runs the business on a day-to-day basis.

“I watch and guide now. Today I deal with strategy, finance and HR.” 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, he acknowledged that “it was a real issue those days.” Everything went into the business. For three decades after starting the business, his family lived in rented houses. “We decided that personal assets are a liability” and to own a house only when we can do that without a loan. Even today “all eggs are in one basket,” he says firmly.

Chandramogan recalls with a rueful smile about the company’s 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. Hatsun is now a market leader across a range of products in various segments including liquid milk, 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 to insulate the company from the fluctuations in commodity prices, he says.

Hatsun brand of dairy products have a nationwide presence, while Arokya liquid milk, a perishable commodity, is restricted to South India and Maharashtra. Ice-creams go into Odisha, too.

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 ago, Amul was created to remove poverty from villages, we are now working on prosperity for farmers,” Chandramogan remarked. Thousands of farmers are being trained in dairy farming. Hatsun Agro has helped develop green fodder for cattle that helps to bring down cost of milk production ethically, he concluded to a loud applause.

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