The Dollar Business celebrates the success of rising stars of Indian foreign trade for them the sky is no limit, it’s just a direction!

A lot has been spoken about the important role that MSMEs play in India's economy and foreign trade. And without doubt, if India has to reach anywhere near the ambitious target of $900 billion in exports by FY2020, the country will have to bank on its MSMEs. While the government has implemented a variety of schemes to facilitate exports from this segment, the impact on the ground leaves a lot to be desired. Yet, a number of MSMEs across sectors have risen above everyday challenges and ensured a growing export base for themselves, year after year. And this during a time when exports across many traditional sectors have surrendered to troublesome storms of change. The Dollar Business analysed 16 such young companies to discover what motivates them to keep growing against all odds.

The Dollar Business Bureau | December 2016 Issue | The Dollar Business

A few issues back when we did a cover story on exports from India's MSME (Micro, Small and Medium Enterprises) sector, what intrigued us was that despite the many challenges that the sector faces, most owners and promoters that we spoke to were upbeat about the future. We got the same response from the MSME exim community when we did our annual Export Temples of India issue a few months down the line.
At a time when large companies were briefing analysts to expect lower than forecasted results and the International Monetary Fund (IMF) was cutting global growth forecasts, these young companies had the courage to think big and outside the box to achieve set goals. Surely, this was a story that needed to be told. We decided to reach out to these brave young companies to find out what motivated them to continue growing in the face of the multiple challenges. And what was it that in the first place motivated them to take the entrepreneurial route?
That is where this story begins...

Start matters

Most of the companies that we reached out to are run by founders or first generation entrepreneurs. And while their forays into entrepreneurship have been for widely different reasons, the urge to start something of their own was a key factor. One example - Pawan K. Goel, CEO and Founder of Chemical Resources, a company that exports nutraceuticals, found his wow moment while visiting a healthcare exhibition in China. Another. Raujesh Agarwal of Ashish Life Science, realised the opportunities in veterinary medicines while traveling the world to expand the family business of bulk human drugs.
Lest you think exposure to foreign markets is the only source of inspiration, Vitthalbhai Koradia of Maharaja Dehydration found his inspiration and opportunity in his own village when he saw raw onions being disposed off by farmers due to a lack of shelf life. Yogesh Gupta of Megaa Moda, an exporter of marine products, veered into the said business because his leather exports company had started making losses.
Point is, if you have the vision and ambition, there are abundant opportunities in India. Across sectors and geographies, entrepreneurs were quick to eye an opportunity and worked towards making it a resounding success. Some would say opportunities come with their share of risks, but the ability to take calculated risks is what separates men from the boys, or should we say the entrepreneur from the employee!

The First hurdle

Starting a company is not just the end of the journey. What comes next is raising finances, and that has been a stumbling block for many-an-entrepreneur. Most that we talked to had started with their own money or with support from an existing family business. David G. Blanchflower of Dartmouth College and Andrew J. Oswald of Warwick University in their paper "What makes an entrepreneur" concur. As per them, "When directly questioned in interview surveys, potential entrepreneurs say that raising capital is their principal problem."

While the government talks about giving easy access to credit for entrepreneurs, the realities on the ground are different. Financing companies also find it difficult to measure risks associated with a greenfield project and are naturally keen to lend to better established companies with a proven balance sheet. Entrepreneurs are therefore forced to put in their own capital to create a balance sheet. A case in point could be the husband-wife Applawar duo of Emmbi Industries, a leading exporter of Flexible Intermediate Bulk Containers (FIBC). They started with a capital investment of Rs.5 lakh from their own savings. It was only later that they managed to get funding from the Small Industries Development Bank of India (SIDBI), and that too at an interest rate of 21%.

Similar stories are abound in the MSME sector – difficulty of access to finance and high interest rates. Where large companies manage to raise crores from banks and markets at favourable interest rates, the next generation of our exporters, the people that we bank on to deliver growth in the near future, struggle to arrange even the smallest of credit to run their businesses.

 

The pharmaceutical sector, which needs to adhere to stringent norms,
has been the launch pad of many successful entrepreneurs across the country.

The Second hurdle

Once they are somehow able to arrange the capital, the next challenge is to acquire customers. Especially so for MSMEs in exports. It is difficult to get access to international markets and even more difficult to gain the trust of international buyers. That many customers from developed nations are still skeptical about doing business with Indian companies adds to the hurdles. Uday Purohit, MD of Neptunus Power Plant Systems, says, "Our customers based in Japan and Europe are very skeptical about doing business with Indian companies. The ‘trust’ factor takes a long time to build."

Sure the government has developed many market access schemes and encouraged MSMEs to participate in international trade shows through subsidies, but the subsidies amount to about 60% of the cost of participation and entrepreneurs short on money find it hard to raise even the rest of the cost. Buyer-seller meets that are held in India and overseas under the aegis of various export promotion councils are also great places to do business, but new businesses find it difficult to participate as established players hog the limelight.

So, most entrepreneurs have to fall back on business contacts developed in the past. And not to say, initial export orders are inevitably small. That in most cases has been the experience of entrepreneurs featured in this cover story. Naturally, entrepreneurs look at developing and emerging markets that are more accessible. The first international client for many featured in this cover package were from least developed economies like Bangladesh or from lesser developed countries in Africa. Reason? Breaking into markets like US, EU and Japan prove difficult, especially so in sectors like food processing and pharmaceuticals that demand stringent adherence to quality.

To grow their business, companies like Flair Pens are looking at brand acquisitions and joint ventures to access developed markets. Mohit Rathod, Director, Flair Pens elaborates, "All markets are difficult to enter. US, EU and even Asia are quality driven markets. The design and performance of the complete pen is tested and the tried for each of these markets. Packaging to meet distribution requirements of each of these markets is a challenge. One way of complying with these demands is through strategic JVs and brand buy-outs."

Prashant Enterprises, an exporter of decorative architectural hardware, on the other hand is opening up subsidiaries in their major markets for better access. It has recently established its UK subsidiary, Eurolink Hardware Ltd., in Birmingham and is setting up a distribution centre in Europe.

God bless the internet

Many today are also increasingly turning to Internet marketing platforms to acquire clients. Amit Kumar Drolia of D. R. Coats Inks & Resins recalls, "We received databases from different Indian consulates across the world, which was of great help. We have tried to reach out to buyers in different countries through the electronic media. And finally, in 2005, we sent out our first international shipment to Bangladesh, worth a few thousand dollars." The Internet, it seems, has come at the right time for these entrepreneurs. And that they have used it to their advantage is evident from their well-designed websites and presence across various trading platforms.

India's food processing industry has found a ready market in most continents.

The Third hurdle

While getting the first client is the first major hurdle, keeping them happy and making them come back for more is the obvious next. Where our New-Gen Newsmakers excelled though is that they kept adding to their client base while increasing volumes from their existing customer base. Certainly, that is not an easy job, as it means delivering quality products while maintaining delivery schedules. Talking about his first order, Vinay Aggarwal, Director of Kalakriti Exports, an exporter of soft furnishings recalls, "We got our first export order of jute bags in 1998 from a US-based company. They started liking us for our pricing, timely-delivery and the quality we offered."

And this is what differentiates the next generation of successful entrepreneurs from the also-rans.

The Fourth hurdle

Competition! So, how do these companies manage to hold on to their customers in the face of competition from exporters from other countries?

Talk about competition and what inevitably comes to mind is China. There is no denying the fact that China is a manufacturing powerhouse whose products have gained a wide acceptance across the globe. What's interesting though is that many of our New-Gen Newsmakers look at China as a market with a lot of potential to export to! And given that across certain product categories, China has even levied an anti-dumping duty on Indian products to keep competition at bay, their faith seems one based on good evidence. A case in point is the Virchow Group that is a large manufacturer of sulfamethoxazole, a broad spectrum antibiotic on which China has levied an anti-dumping duty. But that has not held back M. Narayana Reddy of Virchow Group from selling to customers in China. He says, "We regularly supply sulfamethoxazole to all our customers including those in China. Six years ago, China imposed anti-dumping duty on India. But, we have been exporting to the dragon country by giving price relief to our customers to the extent of anti-dumping duty. Of course, it puts pressure on our margins, but I don’t feel it’s a burden. We don't mind cutting down on profits to some extent as retaining customers is more important to us."

Similar is the case with Kalakriti Exports, which looks at China as a large potential market for its products. Kalakriti is already exporting to China and its products have found a place in Shanghai with Markor Home Furnishings (MHF), a large premium retail chain in China. 

When it comes to competition from China in the international market, our entrepreneurs like to talk about the superior quality of their product, while acknowledging that Chinese manufacturers indeed pose a threat. Says Nishant Singhal, Managing Director of Prashant Enterprises, "We do face competition but have our own USPs to combat any competition on price points, or on quality front. We are in sync with the global market’s changing trends and realities, and are prepared to adapt to them. As things stand today, I do not regard competition from China as a major threat. We (Indian manufacturers) have improved our product quality. These days, across most segments, we are outselling Made-in-China. Our product range is getting broader too. As per my experience, I can say that many buyers in US are now sourcing their requirements from India instead of China."

India is slowly but surely becoming a destination of choice for importers
of auto components. The sector is both price and quality conscious.

In another interesting take on competition from China, Vinit Jain, CFO of Universal Autofoundry, a manufacturer and exporter of automotive components, tells us that while in the domestic market the company faces competition from Chinese exporters, they do not face any such challenge across international markets, as they produce better quality products than their Chinese counterparts.

While Chinese manufacturers compete in the international market, they are also becoming a source of raw materials for many Indian companies. As Indian MSMEs go up the value chain and produce finished and branded products, it is likely that China will be a major source for intermediate goods.

The Fifth hurdle

But going up the value chain is not easy. It requires technology upgradation and investments in research and development (R&D). Though, without exception, our New-Gen Newsmakers understand the value of R&D, upgrading technology has its own policy hurdles. By definition a medium-sized company in India has an upper limit of Rs.10 crore in investments in plant and machinery. A bill to amend the MSME Development Act, 2006 (the act defines the investment limits) has been proposed by the Ministry of MSME in 2015. The 2015 amendment to the act will raise the investment limit to Rs.30 crore, but the bill has been pending in the Parliament for many months now.

Nitin Mehta of Gujarat Copper Alloys Ltd. (GCAL) brings out the importance of the amendment for technological upgradation by saying, "The copper alloy industry requires technology upgradation but a majority of MSMEs are unable to invest in plant and machinery owing to the present cap of Rs.10 crore on capital expenditure. With an objective of enhancing this cap to Rs.30 crore, the MSME (Amendment) Bill, 2015 was introduced by the Union Minister for MSME, Kalraj Mishra on April 20, 2015. But it is still pending in the Parliament. The pending Bill, if approved, will amend the MSME Act, 2006 and it will be a key factor that will help SMEs grow further on technology innovation. Unless the copper industry adopts new technology applications and modern machinery, it can’t cater to the growing requirements in global markets. We can only hope that the MSME Amendment Bill, 2015 get approval from the Parliament at the earliest."

While impediments remain, many entrepreneurs are investing in technology to keep up with global trends and deliver the quality that international customers want. Gupta of Megaa Moda elaborates on why he is spending Rs.30 crore to set up a new plant, "Our first priority is to focus on the US market, where we have not been able to enter yet. Since US has a different set of compliances, we need a new factory as the old factory does not fulfil those compliance requirements. The new facility, which is expected to start in April-May 2017, will help us enter the US market."

When it comes to R&D, our New-Gen Newsmakers find government policies conducive to growth. In fact, the Department of Scientific & Industrial Research (DSIR), under the Ministry of Science and Technology, has come up with a scheme to support research and development activities by corporate bodies. This scheme recognises R&D departments of manufacturing companies and provides them the status of ‘inhouse R&D centre’, which in turn provides them with indirect and direct tax benefits for their R&D activities. The government also provides financial support aimed towards improving intellectual property (IP) awareness as well as for filing of patents.

 

Scientist at work at Ashish Life Science facilty at Tarapur in Maharashtra.
 The company found the human drugs market a little too saturated and ventured into veterinary drugs.

Entrepreneurs are alive to the importance of the schemes and are keen to participate and reap the benefits of both tax breaks as well as the innovation edge that R&D can give them. Drolia of D. R. Coats Ink & Resins says, "Government has been encouraging manufacturers to invest in R&D. Concurring to it, DSIR has come up with a lot of incentives for companies that invest in R&D. We have just started the process a week ago and going forward, we hope to harvest the benefits from it. R&D will be increasingly important for any company that wants to compete in global marketplace."

Other challenges

While the going might seem good for the New-Gen Newsmakers, it is not always smooth sailing. Success has not come easy for many. Take the case of Vikaas Gutgutia of Ferns N Petals whose business took seven years to break even as he couldn't get the business model right in the initial days. "I was sitting in an AC shop with 10-12 employees and had AC vans to deliver flowers. All these costs were so high that even after selling a good quantity of flowers, making money was not easy,” Gutgutia rues, reminiscing his initial days of struggle. It was only when he started expanding, both horizontally and vertically, that he tasted success.

Another case in point could be Kanoovi Foods which had received investments and had a big market in Africa, but lacked the leadership to grow. It was only in 2012, when the present management led by Vibhash H. Trivedi took over, that the company's fortunes changed for the better.

But it is not just management or strategy that come in the way of success. Sometimes it is the government! Purohit of Neptunus tells us about an order that he pursued but could not land because of policy hurdles. He elaborates, “Recently, we had an opportunity to service a 40 MW power plant by bringing it to India, refurbishing it and re-exporting. The revenues would have been about $6 million. We pursued this opportunity for over four months. Unfortunately, we could not get our Customs to grant us permission to import second-hand equipment on a ‘repair and return basis’. This is one area we feel the government should liberalise. Allow Indian companies to bring in second-hand equipment for repair and return. It can become a significant source of foreign exchange for the country." [Note: Purohit incidentally learnt that he needed an IEC code to export while shipping his first consignment! That shows the level to which information and knowledge-sharing has to be worked on in India, if the nation has to realise the full potential of its foreign trade community.]

 

Seafood exporter Megaa Moda, based out of Kolkata, is setting up
a larger facility to export marine products to US.

Clearly, exports is not the easiest business to be in. The initial documentation required for getting IEC has been simplified, but getting the full benefits of exports is still a cumbersome process. The government has schemes in the form of MEIS, SEIS and interest subvention schemes as well as duty drawbacks. Many of our New-Gen Newsmakers were not aware of the various schemes when they got into the business, and some thought that the documentation process was too long and did not apply for the incentives. Now that these companies have reached a certain level of stability and maturity, they are more at ease with government rules and procedures.

And while today they are conversant with the rules, there are certain business realities of India that impact even the most determined of entrepreneurs. The power tariffs are a hindrance and so is the congestion at ports. The time and cost of logistics also make their products at times less competitive than those of exporters from other countries. Goods remain stuck at Customs causing inordinate delays. And then there is the issue of a severe lack of talent across industries and geographies. Sample this: Universal Foundry, which is based in Jaipur, at times has to resort to searching talent from Delhi. Neptunus too finds it difficult to find skilled talent. Purohit though feels that with perceptions changing, talent crisis (at least in his case) is not so severe anymore.

The distinct feeling that we get is that despite the best of intentions, the government has not been able to support our exporting MSMEs in a way that would encourage a new generation of exporters. 'Skill India' programme is great on paper, but a shortage of talent is the reality on the ground. 24x7 Customs Clearance is available only at a few ports, and while getting an IEC, the first step towards exporting, is supposed to be a matter of days, even today it at times takes months to come by. Constant changes in the Merchandise Exports from India Scheme (MEIS) also creates confusion while duty drawbacks leave a lot to be desired, both in terms of quantum of remission as well as process of getting the same. And it is a known fact that while India is still struggling with transparency and matters related to Ease of Doing Business, corruption will continue to thrive at large in a nation where more departments are involved in something as simple as claiming incentives for exports. Picture this - for claiming incentives under MEIS, exporters have to reach out to DGFT; for Transport Assistance subsidy (for exports of horticulture, processed food and poultry products) to APEDA; for taking advantage of the Interest Equalisation Scheme, to scheduled commercial banks; and for claiming refunds under Drawback Scheme, to CBEC. Access to multiple governmental agencies calls for more time on the part of exporters, and brings in greater room for inefficiencies that cause delays, damages and added costs. Let us point out one case – the Transport Assistance subsidy is given for air and sea freights, not surface (except for N-East states). How do mango exporters in Malda and Murshidabad (two areas in West Bengal declared as Agri-Export Zone for mango in 2003 by the Indian government) get their fruit produce to Bangladesh (one of the largest foreign buyers of Indian mangoes) while availing of the subsidy? Water and air are out of question! Notice how in the process of adding detail to our foreign trade procedures, we have killed fortunes of many-an-exporter. [For the record, the share of Bangladesh in India’s mango exports between 2011 and 2014 fell from 20% (about Rs.60 crores) to 0.2% (about Rs.88.4 lakhs) – talk to these mango growers and you’ll understand how exports could have enjoyed a quantum leap if the subsidy had been extended to surface transport as well.]

Then there is the new age surprise called the GST bill. Though it has been hailed by most manufacturers and exporters as revolutionary, more clarity, both in terms of administrative procedure as well as structure, needs to be introduced. While exports have been zero-rated, many exporters fear a VAT like regime where refunds are stuck with the tax agencies for months, creating an artificial cash flow problem for their businesses. Talking of GST and FTP schemes, it’s worth noting that last month, the Commerce Ministry also suggested to the Finance Ministry that exemptions given to exporters should continue under GST. Evidently, the Finance Ministry wants exporters to pay the required taxes first and then claim refunds on a later date. Will this proposed procedure of paying taxes and then requesting a return under GST cause hardships to exporters? That’s anybody’s guess. How about we ask the Finance Ministry this – why does it impose fines on delayed payments of individual and corporate taxes? Because if delays occur, they cause mathematical and implementation headaches to the government and result in a substantial amount of working capital being locked-up. The same issue hurts exporters for whom a “claims-post-payments” rule will mean hardships, especially for MSMEs that account for almost half of India’s exports “knowingly and officially”, and much more “unknowingly and unofficially”. In our recent interactions with heads of a few EPCs and regional export promotion associations, there was one closing question on this subject that we ended up discussing more often than not – “Where therefore lies the logic in calling certain exports ‘zero-rated’, when you are anyway taxing inputs in the first place?” One EPC chief, while speaking to The Dollar Business, even went so far as to suggest that though GST is good in terms of being a concept, it will create trouble for India’s exporters. Currently, VAT refunds take up to two years – imagine the state of exporters, who will have to first pay GST and then claim refund. Unless, of course, the government can give a written assurance that in all valid claims, refunds will result within a month of the submission of the application. Wishful thinking, you think?

 

Metal moulding in process at Universal Autofoundry in Jaipur, in Rajasthan.

To add to that, the demonetisation initiative of the government has resulted in a liquidity crunch for MSMEs. While moving to a cashless system is a lofty and commendable goal, the abrupt nature of the drive has resulted in a quagmire, where these MSMEs do not have the cash to pay for daily wages and sundry requirements. While MSMEs and exporters have asked for an increase in withdrawal limit, a decision is yet to emerge.

Surely this is not the best situation to be in for MSMEs or for that matter any business entity that is doing much to make India bigger on the world business map. A stable and clear policy regime is a must for any business to succeed and more so for MSMEs who lack the clout of large corporations.

A Brave new era

Despite these, our group of New-Gen Newsmakers are optimistic about the future with most talking about growth rates of 20% or more. And they claim this based on facts and figures and a track record of growth. They are investing in new facilities and new technologies, applying for patents and approvals from regulatory authorities. In a global economy that is refusing to grow, they are searching for new markets and opportunities. These companies are constantly innovating and changing in tune with global trends and demands. They believe that it is their and India's time to rise and shine.

Robert Goffee, Emeritus Professor of Organisational Behaviour at London Business School and Richard Scase, Emeritus Professor in the School of Social Policy, Sociology and Social Research at University of Kent had famously written, "For many commentators this is the era of the entrepreneur. After years of neglect, those who start and manage their own businesses are viewed as popular heroes. They are seen as risk-takers and innovators who reject the relative security of employment in large organisations to create wealth and accumulate capital. Indeed, according to many, economic recovery is largely dependent upon their ambitions and efforts." Going by our team's conversations with many New-Gen Newsmakers, it seems, the era of entrepreneurs has arrived in India. The government of the day has a stated goal to make MSMEs the growth drivers of our economy. And if we, as a country, have to continue being a bright star in a gloomy global economy, we need them to rise and shine.

While in this issue we celebrate the success tales of 16 neatly chosen and most unique New-Gen Newsmakers, we believe that India is home to lakhs of such unknown and unsung entrepreneurs who can catapult India into an age of high and sustained growth, while making the country a sourcing destination of choice for importers around the world!

The electronics production in India has been growing at a fast pace
and offers a host of opportunities to entrepreneurs.

 

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Chemical Resources (CHERESO), Panchkula, Haryana

Charting a new path in medicament

An urge to innovate is what set the course of his success. Pawan Kumar Goel worked for a pharma company for around eight years before starting his own venture in 2003. Come today, and his company, Chemical Resources, is a globally acclaimed name when it comes to manufacturing and exports of nutraceuticals and herbal extracts.

Aamir H. Kaki | December 2016 Issue | The Dollar Business

“There is no success mantra except sheer hard work,” says Pawan Kumar Goel, CEO of Chemical Resources (CHERESO), a globally acclaimed Indian company engaged in exporting nutraceuticals and herbal extracts. The unbridled curiosity to know ‘the benefits of natural products in pharmaceuticals’ struck Goel, just a few years into his career, and led him to quit his lucrative job with a pharma company and do something innovative. And the move paid off well. What started as a small trading company, with a nominal capital of just Rs.50,000, in 2003, recorded a turnover of $7 million last year. 

Small Beginnings

While working for his erstwhile employer, Goel was once travelled to China to participate in an exhibition on health and healthcare products. It is here that he saw conventional pharma products laced with natural ingredients, and these products struck a chord with him. The unique field of natural health products, as against the routine western medicines, sparked the entrepreneur in him. He started studying in the innovative uses of these natural ingredients. He says, “After delving into the details of companies at the exhibition China, I thought I could start something similar in India.” And that's where it all began.

Not a Smooth journey

As they say there is many a slip between the cup and the lip, the journey has not been that easy for Goel. “Mere idea of starting a business does not fetch anything. I did not have sufficient funds to turn my dream into a reality. But I stuck to my decision and quit my job to start a small trading company, with the purpose of arranging intermediates for pharmaceutical companies,” says Goel. 

The research and development team of Chemical Resources at work at its Panchkula 
facility in Haryana. The company invests 7-8% of its annual revenues in R&D.

He also talks about the difficult road to finance his dream and says, “For almost 7-8 years, till 2003, I just did trading till I was able to arrange a reasonably good amount for investment. Then, I started Chemical Resources for manufacturing and exporting nutraceuticals and standardised herbal extracts.”

Starting a company is not the end of the journey. It's the beginning of a new challenge. And since the products he was dealing in were fairly unique, Goel faced many challenges to make a mark for his company in the market. In fact, he still faces some even today. “The major problem we faced was that the Indian market was not familiar with nutraceuticals and health management system. Even today, to an extent, people are not aware of such products. The main problem was awareness and the integration of the benefits of nutraceuticals and herbal extracts into allopathic medicines, especially related to chronic disease,” says Goel.

Leveraging Change

However, due to increasing awareness about fitness, health and the changing lifestyle, India’s nutraceuticals market, which stood at $2.8 billion in 2015 and is likely to reach $6.1 billion by 2020, has great potential. The international market for innovative products, based on herbal extracts, is also growing at a rapid pace. The global nutraceuticals market, which is measured at $182.6 billion in 2015, is likely to cross $262.9 billion by 2020, and as such provides a great opportunity to Indian exporters.

In fact, CHERESO has clocked a turnover of $7 million, just from the exports, last year and is now also exploring new markets for its products. “We already have a very good market for our products in US. We are now planning to explore some new markets and will soon be entering the Euro region,” shares Goel. He is confident that the industry is bound to grow at 15-20% annually going forward. “People are aware that for any chronic disease long-term medication is needed. So, they have now started looking for alternative medicines that are developed from plant based resources, plant based ingredients, etc,” justifies Goel.

With his sheer enthusiasm and dedication, Goel is setting new targets for himself and his company. “In manufacturing, we have set a target of 15-20% growth. But our main objective is promotion of research-based products.” In order to achieve Goel is on the lookout for companies that can partner with CHERESO and invest in the idea.

There is absolutely no doubt that CHERESO has been a success story so far. And, if one goes by the confidence that Goel has in the unique products his company offers, there’s no reason why the future can’t be as magical.

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Ashish Life Science Pvt. Ltd, Mumbai, Maharashtra

Creating wealth in Animal health

Established in 2002, Ashish Life Science Pvt. Ltd. has grown to become a known name in the Indian veterinary dryg export market. The company today exports cutting-edge products to more than 50 countries across the globe. And it all started when a young entrepreneur decided to take a risk and tread unchartered territory.

Niladri S. Nath | December 2016 Issue | The Dollar Business

Mumbai-based Ashish Life Science Pvt. Ltd. (ALS) has rapidly positioned itself as India’s leading manufacturer and exporter of veterinary or animal healthcare products. “The passion to be recognised as the Indian multinational company in the veterinary healthcare segment is good enough to motivate and spur me towards achieving my dream. I want to leave behind a unique legacy,” says ALS Director Raujesh Agarrwal, as he welcomes us into his office in Andheri, a busy suburb of western Mumbai. Clad in a blue t-shirt, he was wearing his passion on his sleeve – the ‘ALS’ logo was prominently embossed on it. Beyond financial success, Agarrwal also believes in delivering a meaningful service to the society.

Fast Mover advantage

Agarrwal was only 18 years old, pursuing graduation in commerce, when he joined his family business in 1993. Founded by his father Premsukh Agarrwal in 1975, Ashish Group of Industries, at that time was primarily engaged in trading (including exports) plastic products, chemicals, dye intermediates, medical devices, bulk drugs, etc.

While in his family business, Agarrwal had the good fortune to travel to more than 75 countries. These trips provided him unique business insights. “Thanks to our business interest in bulk drug exports, some years ago I realised that although there are several Indian pharmaceutical companies in the international human health market, the global animal health segment is totally under-represented, with European firms dominating this lucrative segment,” he shares.

Having successfully managed his family business, convincing his father and family to venture into animal healthcare product segment wasn’t that hard for Agarrwal. And, he went on to establish ALS in 2002. Subsequently, a 9,000 sq. ft. manufacturing unit in Palghar was set up with an initial investment of Rs.40 lakh, financed from internal accruals. The company soon got its first export order from Ethiopia. And thereafter, the volume of its exports kept increasing year-after-year. In fact, ASL is among the first few Indian veterinary pharmaceutical products manufacturers that started exporting. For, Agarrwal was aware of the untapped potential of the global veterinary medicament market.

Veterinary medicines being prepared at the Palghar manufacturing facility of Ashish Life Sciences.
The facility has grown from 9,000 sq. ft. to 65,000 sq. ft. over the last few years.

A Rewarding risk

From a turnover of a few lakh rupees in the first year of operations to an annual turnover of Rs.60 crore in FY2016, ASL’s growth has been rather impressive. The company has also expanded its product portfolio to include nearly 200 cutting-edge products, which it exports to more than 50 countries.

ASL’s product portfolio is a mix of mass and niche products. The company formulates molecules to manufacture a range of animal healthcare medicines such as dewormers, endectocides, ectoparasiticides, antiprotozoals, etc., for dairy and poultry animals, companion animals, equines, etc. In addition, ALS is also doing contract manufacturing for some European firms.

So, what's the secret to the company's success? “Risk-taking is an unavoidable part of business. I could have failed. But my passion and sincerity in the initial phase and later my vision and effort paved the way for growth,” says Agarrwal while reminiscing the early days.

Exports constitute the lion's share of ASL’s business, accounting for 97% of the annual turnover. With quality and competitive pricing as its USP, the company has developed a strong market for its products in Africa, CIS countries, and Middle East. Ashialben, an Albendazole-based medicine, is one of its highest revenue grossing products. ASL’s key market is Africa where it competes against some bigger players such as Ceva Santé Animale, Laprovets, Alfaxan, Kela, BImeda, to name a few. Constant innovation sits at the heart of ASL’s business strategy, as it looks to gain further traction in foreign markets.

Expanding frontiers

ALS is now gearing up to expand its footprints in the highly-regulated European market. Since manufacturing cost in India is 25-30% lower compared to other developed countries (though he admits that cheaper Chinese products are a threat), Agarrwal is planning to soon introduce new molecule formulations – an injectible line and a range of nutraceuticals – in the European market. “I’ll be travelling to Europe in January next year to meet some prospective distributors”, he informs us, exuberantly.

Over the last decade, the company has grown to become a respectable name in the Indian veterinary export market. Well, for the future, Agarrwal has already charted a growth path for ASL that passes through the developed European market. And that says it all!.

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Maharaja Dehydration Pvt. Ltd, Mahuva, Gujarat

Converting waste to wealth

Vitthalbhai Punabhai Koradiya saw a business opportunity in raw onions that farmers usually dispose off because of poor quality and shorter shelf-life. And Maharaja Dehydration Pvt. Ltd. came into existence in 2003. What started as a small manufacturing unit is today a known name exporting dehydrated vegetables to 134 countries.

Niladri S. Nath | December 2016 Issue | The Dollar Business

Vitthalbhai Punabhai Koradiya isn’t armed with a management degree. But his entrepreneurial eye saw a great opportunity in onions that farmers disposed off due to poor quality. He relied on the nuanced understanding of onion farming and worked relentlessly on developing a sustainable business model based on advanced manufacturing facilities, price competitiveness and an ever-increasing network of clientele worldwide. Interestingly, Mahuva, his hometown in Gujarat, is one of the largest onion producing belts in the country, offering best quality onions. Koradiya leveraged that advantage to the fullest.

Set up in 2003, Maharaja Dehydration mainly manufactures and exports dehydrated onion and garlic along with dehydrated vegetables such as cabbage, carrot, potato, beetroot, tomato, bitter gourd, etc. Dehydrated onion makes up the lion’s share of company’s exports i.e. 70% whereas garlic takes up 20% and vegetables the remaining 10%. Equipped with five continuous dryers, two cold storages and a lab for maintaining stringent quality control, Maharaja Dehydration’s plant, spread across six acre of land, churns out 1,500-2,000 tonne of dehydrated onions spices and vegetables annually.

The company is exporting its products to countries like US, South Africa, Germany, France, Poland, Spain, Hungary, Ukraine, etc. When it comes to the domestic market, it supplies products to some renowned seasoning manufacturers and food and beverages producers. “It’s painful for a farmer to dispose off a sizeable portion of the onion harvest that he is not able to sell in the market, which ranges between 15% and 20%. Being a farmer, I can feel the helplessness. Through our business, we are offering a return on investment on those onions to the farmers,” says Koradiya.

Raw onions being dehydrated in an advanced automated machine at
Maharaja Dehydration's factory at Mahuva in Gujarat.

A New beginning

Koradiya began his entrepreneurial journey as an exporter in 1998 by launching a company called Five Star Food Exports with a close associate. At that time, he used to export products through an agent in Mumbai. The company employed conventional methods of dehydration such as sun drying or tray drying.

However, in 2003, he set up Maharaja Dehydration, his independent venture with an initial investment of Rs.1 crore and started supplying directly to his overseas buyers. He also configured continuous dryers to increase the production capacity. “It was a challenging time for us. However, we got support from the Agricultural and Processed Food Products Export Development Authority and India Trade Promotion Organisation. They helped us by offering booth-space in various international exhibitions at a subsidised rate. Banks also assisted us at a later stage in processing the exports orders and payments, as we were new to the exports market,” says Koradiya.

Koradiya got the first order from Germany where he exported 15 metric tonne of dehydrated onion, and ever since, the company's exports have witnessed a significant growth, year-on-year.

Opportunities galore

Koradiya’s business season usually starts in January with procurement of raw onions from farmers as the crop is cultivated between January and June. Simultaneously, he also starts processing the crop and preserves dehydrated onions, along with other spices and vegetables, in cold storages and exports them round-the-year as per the order inflow. He also controls his manufacturing based on the global market dynamics. “For instance, China leads in dehydrated garlic exports, while India holds the second position. Our export grows when the price of Chinese garlic goes up. We regulate our supply to seize those opportunities,” he explains. Sometimes, high onion prices in domestic market also put him in a tight spot and forces him to reduce manufacturing. “We are competing with US, Egypt and China. When the price of raw onion price goes up, our products become unviable. Ideally, the cost of procuring from the wholesale market should be in the range of Rs.5 per kg.”

As the global ready-to-eat segment is poised to grow at a steady pace, Koradiya expects a spike in demand for his products. “Due to change in lifestyle, this segment is growing fast. What is needed is government support in terms of incentives, subsidies and duty drawbacks,” Koradiya tells The Dollar Business.

Koradiya is now eying bigger opportunities. “I am planning to set up a new plant to increase production. I am also looking forward to turn my business into a limited company, which will help us get easier access to finance. The trust of our clients will also grow,” Koradiya signs off, beaming with confidence! 

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Neptunus Power Plant Services, Mumbai, Maharashtra

It all began with the greeks!

20 years ago, when Uday Purohit, Managing Director & Founder, Neptunus Power Plant Services Pvt. Ltd., left a lucrative career in marine engineering to start a business of his own, he knew he was tapping into an existing opportunity. That his optimism was not misplaced is visible from the growth that his company has achieved so far.

Proyashi Barua | December 2016 Issue | The Dollar Business

Uday Purohit, Managing Director and Founder of Mumbai-based Neptunus Power Plant Services Private Limited, a company reckoned worldwide as a quality exporter of engines and engine parts, as you might expect, is passionate about engines.

A thoughtful Purohit avers, “We are committed to finding engineering solutions to extend the life of our customer’s equipment. I mean let’s not discount equipment as a mere inanimate entity. After all, people in our country worship machines and equipment. People do get attached to the equipment that they depend on for their day-to-day earnings and even for conveniences.”

The Milestones

So, what inspired Purohit to take a plunge into the entrepreneurial domain? “A marine engineer by profession, I sailed for over 15 years with multinational companies such as Mobil and Dole. It was then that I saw a huge opportunity in the service sector, especially in the diesel engine space and eventually Neptunus was born in 1996,” is his simple answer. He recounts, “In the inception year, we were an engine services provider for industrial clients in India. Today, we provide one-stop-solutions from sourcing capital equipment to service support for mechanical equipments in the marine, offshore and industrial sectors. We operate from offices in India, UAE and Tanzania, serving markets in Europe, Africa, Middle East, South and South East Asia. We were no exception to the challenges that almost every SME encounters. Be it talent acquisition, finance or expansion we contended with our share of teething challenges.”

So, how did Neptunus achieve this enviable scale is a short period? I did not have to wonder long as Purohit proceeds to elaborate, “We realised that we can address all our challenges if we have a strong customer base and we understood that a loyal and robust customer base can be obtained and retained only if we have state-of-the-art and differentiated products and services. Though this seems like a cliché, let me tell you that not many entrepreneurs know the formula that will endear their products and services with existing and potential customers. It is actually quite simple and happens when the management takes conscious steps to align all the internal process and people within the organisation to productivity. And for us, technology was the key to alignment.”

In the last two years, Neptunus has implemented the SAP ERP, enabled seamless access to data across the globe through the cloud-based ‘Google for Work’ platform and adopted Slack, a new-age team messaging platform aimed at reducing the burden of email.

A Z-pellar component being overhauled at the Mundra facility of Neptunus Power Plant.
The facility can handle rebuilds and large component overhauls.

Export excellence

Purohit is a stickler for uniqueness and believes that a differentiating edge in terms of service is a recipe for success. “If I have to put it in business jargon, we strive to integrate ourselves with our customer’s business processes, creating a partnership to help them manage their assets. This means increasing the life of assets, reducing operating costs and increasing reliability,” he informs us with a spontaneous shift of his previously informal tone. In East Africa, Neptunus represents Weichai, the world’s largest engine manufacturer by volume and Niigata Engines of the IHI Group.

Neptunus’ biggest export destinations are Europe and Japan. The staple of exports constitute non-ferrous alloys to leading propeller manufactures. “Both of these are very easy countries to do business in,” says Purohit. Africa is the next big export destination for the company. Purohit also sees opportunities in East Africa, Kenya, Tanzania, Uganda and Zambia. Neptunus has been awarded a sizable contract by the Kenyan Navy.

Gaining strength

Neptunus secured its first big order in early 1997. “We sold a refurbished generator set to a Greek owner. Since then, the majority of our revenue continues to come from export sales. Our first big consignment was a big learning curve. We had to get an IEC code. We learnt that it is possible to negotiate forex rates with the banks. Export credit was and is always a big risk that we have learnt to mitigate over the years,” is Purohit’s lucid yet comprehensive account.

Currently about 75% of Neptunus’ revenue is derived from export sales. And not to say, Purohit wants to scale new heights going forward, both in terms of total revenues and export sales. Purohit’s ambition is evident when he says: “We want to double our revenue every five years.” It seems Purohit's penchant for customer service with a difference is bound to pay big dividends in future.

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Emmbi Industries Limited, Mumbai, Maharashtra

A journey from vision to reality

If one must eulogise a company that can inspire the multitudes of SMEs in India, Emmbi Industries Limited is an exemplary case. This company has been winning several prestigious awards for its contributions to India's foreign trade. Makrand Appalwar, CMD of Emmbi Industries Limited, shares an inspiring story.

Andres M. Molier | December 2016 Issue | The Dollar Business

Marriages, they say, are made in heaven. In reality though, it isn’t easy to find a spouse who shares the same passion and dream. However, the story of Makrand Appalwar (Chairman & MD) and Rinku Appalwar (Executive Director & CFO) of Emmbi Industries Limited is quite different.

“Rinku, my wife, and I are both from typical middle-class working families. After university, all our friends were migrating to US, but we wanted to do something different – something that wasn’t traditional. We wanted to become entrepreneurs, make more money and generate employment,” proudly narrates Makrand Appalwar, who was seated on a comfy sofa behind a chic wide desk, surrounded by numerous certificates and trophies that his company has won in the last 10 years.

Burning Ambition

Steadfast with the vision to do something different, in November 1994, the Appalwars invested Rs.5 lakh and laid the foundation for Emmbi Industries Limited. Little did they know that it will one day grow into an exemplary SME in the country. In the initial days, Emmbi was only a polymer trading company. However, in 1996, the pair borrowed some money from Small Industries Development Bank of India (SIDBI) at a 21% interest rate and invested in the company. “There was a revolution in India. Metals were slowly being replaced by plastic materials, and suddenly, the availability of plastic raw material increased in India. Also, we were young and passionate, willing to take the risk,” says Appalwar. And the risk paid off!

The state-of-the-art technology set-up at Emmbi Industries Limited's
manufacturing facility at Rakholi in Dadra and Nagar Haveli is one of the major reasons behind the company's success.

Rapid strides

Today, Emmbi Industries Limited is one of India’s most recognised SMEs in the field of woven polyethylene and polypropylene product manufacturing. It specialises in manufacturing flexible intermediate bulk containers (FIBC) and woven sacks, and various woven polymer-based products such as container liners, protective irrigation system, canal liners, flexi tanks and car covers. What's more? India’s exports of FIBC is around Rs.1,800-2,000 crore per year, out of which Emmbi Industries Limited has a commendable 5% share. The company today exports to 52 countries.

According to Appalwar, the polymer industry has gone through a series of changes in the recent years. “There was a time when India was one of the largest importers of polymer. But, today, we have surplus production. India is the third largest polypropylene processor in the world. In fact, we are larger than China,” says Appalwar with lots of conviction in his tone.

Though Reliance Industries commands 40% share in the domestic polymer market, there are many other companies such as India Petrochemicals, Haldia Petrochemicals, Grace Corporation, etc., that are doing very well. But can the industry accommodate new players? “Indian is a big polymer processing destination for countries in Middle East, and Singapore, etc. There is scope for new players,” he admits.
So, what could be the secret of the companys' success – are the many prestigious awards helping the company stay on the front line? “Besides my own satisfaction, awards also motivate us to work harder, which results in better rewards, and better remuneration even for people who work for us. But more importantly, the achievements help clients make faster decisions, which is always a bonus,” he answers. Some recent trophies that were kept in the neatly maintained shelf inside the cabin were Top 20 Shining Stars of Indian SME Sector (2016) and India SME 100 Awards (2016). The Appalwars are sure going places!

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D. R. Coats Ink & Resins Pvt. Ltd, Mumbai, Maharashtra

Changing track to be on fast lane

It was some 20 years ago when Directors at D. R. Coats Ink & Resins Pvt. Ltd., decided to change course and head in a new direction. And since then there’s been no looking back for this Mumbai-based export house. Come today, the company is already present in 35 overseas markets and is targetting half a dozen more in the next six months.

Andres M. Molier | December 2016 Issue | The Dollar Business

Curiosity surely does not kill the cat every time. To the contrary, it has been the key to success for D. R. Coats Ink & Resins Pvt. Ltd. Who knew that a small family-owned company that was experimenting with new products back in the late 1990s, earning a mere Rs.91 lakh, will one day grow into an star export house?

“In 1997, we were known by the name D. R. Coats Ink Pvt. Ltd. and were manufacturing liquid printing inks for flexo and gravure printing. But soon we realised that there was a scarcity of raw material and whatever was available in India was below international standards. So, out of sheer curiosity, we explored the possibility of manufacturing synthetic resin,” says Amit Kumar Drolia, Directors of D. R. Coats Ink & Resins Pvt. Ltd.

A Change in fortunes

It worked out in their favour! By 1998, the company was already selling synthetic resin to Indian manufactures. And, later in 2003, the company changed its name to D. R. Coats Ink & Resins Pvt. Ltd. “I must tell you this. In a way, we were competing with our own suppliers,” says Drolia.

Some said it was hard work that paid off, while some said the family got utterly lucky! But, D. R. Coats Ink & Resins Pvt. Ltd. kicked off with a whopping 15% growth from the year it started with the new product line. “We were very sure from the beginning that we will not get into the volume game, but deliver quality and customised products. And I think that helped us move ahead in the market,” shares Drolia. The company went on maintaining a smooth 15-20% growth year-on-year. And, today, it has become one of the leading manufacturers of synthetic resins, catering to coatings, printing ink and adhesives industry.

Technology focus

The company today has over 450 domestic clients and 120 international customers, and exports to about 35 countries. And, within the next six month, its export destinations are very likely to increase by another half a dozen. “Our continuous efforts in developing and upgrading products have enabled us to become a leading organisation in the field of synthetic resins globally. Our R&D facility strives to develop new products, which are designed to meet the customers’ requirement. We have a state-of -the-art R&D laboratory staffed with technocrats who have more than three decades of experience in the industry. I think this gives us an edge in maintaining good relations with our valued customers and help us grow sustainably,” says Drolia.

An employee of D. R. Coats Inks & Resins Pvt. Ltd. keeping a watchful eye on the production process at the company's
manufacturing facility at Malad in Mumbai. Safety and quality are keys to efficient production in this industry.

Just about a decade ago, the company's annual production was hardly 140 tonne, but within a short span of time it has scaled up its capacity to 15,000 tonne. “This is a business that has a lot a scope. Unlike a decade ago, household income has increased throughout the world. Even in India, people are painting their houses more often. And if we speak about business houses, hotels, restaurants, etc., they’re all spending more and more on renovation and maintenance. So, if one can consistently maintain quality, business will flourish, both in India and in international markets,” adds Drolia with an air of confidence.

When we question Drolia on changes in the industry, he replies, “Some new companies have come up in India, including some international companies, and, of course, the volume and capacity have grown, and pricing has become very competitive throughout the world. New technologies are being rapidly introduced and those players who cannot keep up with the changes are slowly fading away from the scene.”

They say, you need to keep up with the changing times, if you want to taste success in business. And that's what Drolia did a few years ago (and is doing it even today!). A shift in gear – decision to move away from inks to resins and chemicals – has paid off Drolia well! It's time to enjoy the fast lane! 

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Ferns N Petals, New Delhi, Delhi

On A flowery journey

Ferns N Petals' journey began in 1994, when Vikaas Gutgutia opened India's first floral boutique outlet in New Delhi. Over the years, it has grown to become India's biggest flower retailer with 250 outlets across 93 cities. What's more? It is already exporting to 156 countries!

Neha Dewan | December 2016 Issue | The Dollar Business

Sprawling across an expanse of 9 acre, the head office of leading floral chain, Ferns N Petals, is tucked away in Gadaipur area in the national capital, a zip code synonymous for its green cover and hip farm houses. As you walk inside, the frenzied pace is hard to miss amid the busy boardroom meetings, extravagant order requests and hushed up discussions.

From recreating the grandeur of Buckingham Palace at wedding functions to doing up ambitious themes such as F1 tracks for bachelor parties, the brand has a beeline of such imaginative requests that it caters to every other day.

A Small Beginning

Vikaas Gutgutia, the man behind it all, narrates nostalgia as he recalls the early years. Sharply dressed in a blue suit, he looks sombre and poised in his demeanour, even though a flurry of phone calls keep demanding his attention. Starting off with a single outlet in 1994, he pumped in Rs.2 lakh as initial investment with the help of his partner. Today, the brand has grown to 250 outlets in 93 cities, clocking in revenues of Rs.275 crore in FY2016! Yet, it took Gutgutia a good seven years to break even. “The whole backend economics was not allowing it to be profitable. I had very high costs and most of the florists who were competing with me were sitting on the roadside. They had zero costs whereas I was sitting in an AC shop with 10-12 employees, managers and had AC vans to deliver the flowers. So, all these costs were so high that even after selling good quantity of flowers, making money was not easy,” he rues, reminiscing the initial days.

The dynamics changed when Gutgutia decided to up his game. He branched out into two new areas after the first three years, and set the ball rolling. “I realised that I had to make money and only selling flowers in the shop will not make me rich. I thought that firstly I could become a wholesaler by getting flowers from all over the country and selling it to the local market. And the second option that struck my mind was weddings. So, for a couple of years, I was able to do pretty well with these two ideas and things only skyrocketed after seven years!” he says with a beaming smile.

An array of flower arrangements at a flagship store of Ferns N Petals in New Delhi. 
The company delivers flowers and flower arrangements to 156 countries.

Spreading Wings

The company today has seven running verticals, which include FNP E-commerce, FNP Weddings and FNP Retail among others. Going forward, the plan is to make the company go global in a big way. At present, FNP already has an office in Dubai and intends to also tap Philippines and Indonesia for ecommerce. “My aim is to become the richest florist in the world,” he asserts. The company already delivers across 156 countries worldwide, with plans to broaden its geographies in the near future.

About 10% of the company's products are imported from countries such as Thailand, Europe and China. “Import is like an icing on the cake, though the Indian flower industry does not rely on imports anymore. In fact, the dependence on imported flowers is getting lower and lower with each passing year,” Gutgutia says, while reasoning that India is becoming more of an exporter now in this industry.

Focused Strategy

Quiz him on why he doesn’t choose to also be a grower and he has his logic in place. “I would rather focus on my core competencies which are my diverse years of experience and knowing my business like no one else! Moreover, growing flowers is a long process – it would take atleast 4-6 months for the seed to become a flower. Whereas in our business, we get flowers in the morning, sell it during the day and I have cash in my pocket by the evening! Once you start doing that, you don’t have patience to wait for six months,” he reasons nonchalantly.

But all this is not to say that Gutgutia did not taste failure. He made an entry into the food industry with ‘Chatak Chaat,’ but things did not unfold as envisioned. “I think I made more mistakes than right decisions all my life. And every bad decision has taught me a lot. Chatak Chaat started in a very big way but did not work. I think, I tried to grow too fast and that was not a very wise strategy,” he candidly admits. He does feel though that more can be done from the government as far as the flower industry is concerned. The government should have some courses in the universities and colleges where people can take up courses and become professionally qualified florists. Can you imagine hotels without hotel management institutes? So, there should be a similar approach in place for the floral industry too,” he adds.

With or without government support, Ferns N Petals is poised for growth in India and abroad, and that is evident from Gutgutia's confident demeanour. From one flower shop to 250 outlets, he has had a phenomenal journey so far!

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Kalakriti Exports, Jaipur, Rajasthan

Adding Life to Homes, globally

Way back in 1995 when Vinay Aggarwal started his entrepreneurial journey, little would he have imagined it to grow into what it is today. What started as a small unit producing jute bags has come a long way to become a well-known name in home furnishing exports business.

Manishika Miglani | December 2016 Issue | The Dollar Business

From receiving one export order in two months to getting 7-8 monthly orders, Vinay Aggarwal, Director of Kalakriti Exports, has come a long way as an exporter. A Chartered Accountant by qualification, Aggarwal took the plunge into business when he started his chemicals venture during the mid-1990s. “After practising as a CA for a few years, I realised my real calling in life, which was to run my own business,” reminisces Aggarwal.

But it was as a CA that he got to learn the basics of running a business. “While providing consulting services to other companies, I learnt the ropes of business and became inclined to start something of my own,” adds Aggarwal. Unfortunately, the chemicals business had to be closed down due to non-profitability.

The Turning Point

Aggarwal, however, was not deterred by the failure! Instead, he started manufacturing jute bags in 1995. “We got our first export order of jute bags in 1998 from a US-based company. They started liking us for our pricing, timely-delivery and the quality we offered,” he recalls.

In fact, the same company encouraged Kalakriti to diversify into other products, such as chair and table covers. And according to Aggarwal, it was the turning point for his business. “Once we diversified, we started getting a lot of enquiries for other products in the top-of-the-bed category and that is when we started expanding our horizon and reached where we are today,” he shares with us with a satisfying smile in the face.

In 2004, Kalakriti received a big export order from a Brazilian company for bed covers, and since then there has been no looking back for the company. It was also the time when Vinay Aggarwal's wife, Jyotika Aggarwal, quit her advocacy practice to join him in the business – she now works as the Creative Director of Kalakriti Exports.

After five years, the company secured another big export order during one of the trade shows in Hong Kong. “Trade shows play a huge role in consolidating the business of every sector and have been instrumental in our progress as well,” says Aggarwal. By 2011, the company, which started production in a small premises, was now in a position to come up with a big production facility.

Skilled workers carefully sewing white beads on table mats, 
one of Kalakriti Exports most customised and exported handicraft items.

Expansion Spree

Kalakriti Exports plans to further expand its business by establishing an in-house testing lab next year. It will be followed by setting up of another manufacturing facility, which according to Aggarwal, is his biggest challenge at the moment. The major share of the company's revenue comes from exports of cushions to US and Europe. But, by next year, Aggarwal plans to start manufacturing and exports of floor coverings as well.

The company currently exports to several reputed names across 19 countries. It largely exports to the US market and caters to clients such as Calvin Klein Home, Polo Ralp Lauren, Barbara Barry, Vera Wang, Kelly Wearstler and Kate Spade, to a new a few.

The company's clientele outside US also comprises well-known names like Mitsubishi Corporation in Japan, United Colors of Benetton in Italy, Hadas in Israel, Chamois in Sweden, Orval Creations in France, Sissy-Boy Homeland in Netherlands, Markor Home in China, The Importer (a premium chain store) in New Zealand and Zedtex in Australia.

Kalakriti is also a regular supplier of bedspreads and bed skirts to some 7-star hotels in Dubai. While it's a prestigious business, the volumes are low. “We export to a company in Dubai that is into hotel accessories. But our focus will remain big departmental stores because hotels are a very small market for us,” clarifies Aggarwal.

Quality is king

Aggarwal feels that the soft furnishing sector can boom further if the government comes up with right policies and provides a right working environment to all stakeholders. “India needs a 'hire and fire' policy to set the tone right for the existing labour problems. We also need to deal with the unorganised sector, which has become a huge source of competition for companies like us,” retorts Aggarwal.

Having said that, Aggarwal feels that it is important for companies to be employee-friendly, as the real assets of the company are its workers. “We started with one worker, but today we have over 100 workers on board with an enviable attrition rate since 2011. Nobody has left us in the last five years, which shows the trust we have built,” says Aggarwal.

Aggarwal sums up saying that it is the quality of products that does the actual business at the end of the day. “If you offer a good quality product at right price, then nothing can stop you. And we also believe in the idea of slow but steady growth and are confident that this approach will take us even further in the game,” concludes Aggarwal. The approach has definitely brought Kalakriti this far. Well, the game is still on!

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Megaa Moda Pvt. Ltd, Kolkata, West Bengal

Netting success in a new venture

A struggling leather industry and the desire to do something new led Yogesh Gupta to venture out with his long-time friend, Shankar Ramalingam. They started a seafood export company. Despite initial challenges, the profits have been encouraging so far.

Deepak Kumar | December 2016 Issue | The Dollar Business

Sometimes it is okay to not to be okay, and have Plan B in action! For Yogesh Gupta, the Joint Managing Director of Megaa Moda Pvt. Ltd., a 100% export-oriented seafood company and winner of one of the Axis Bank Top SMEs, the back-up strategy led him to the end of the rainbow, where the jackpot lay buried.

When questioned why a Plan B after spending a decade in leather exports business, Gupta answers, “I was on the verge of setting up a new leather plant. But after the 2008 downfall of the Lehman Brothers, followed by the economic slowdown in Europe and major parts of the world, I reviewed my decision. India’s leather exports industry had then begun to suffer losses. Also, the global business outlook was not improving and it seemed unlikely that the industry would pick up anytime soon.”

Gupta sold his leather business in 2011, but retained the company. And just when he was in search of a profit-making idea with better prospects, he ran into Shankar Ramalingam (Megaa Moda's other Joint Managing Director), a man with over 25 years of experience in the seafood exports business. And when Gupta narrated his ordeal with the leather business to Ramalingam, Ramalingam suggested that they start a 100% export-oriented seafood export company. And that's how Megaa Moda Pvt. Ltd. was founded.

Teething problems

Well, the new business wasn’t a cakewalk for Gupta! His first challenge was to procure the desired quantities of seafood ingredients from the local farmers. And seafood being perishable by nature, the company largely had to concentrate on buying seafood from the local farmers in Odisha, Andhra Pradesh and West Bengal. It eased the business, but, Gupta had to constantly work towards smoothening the procurement process by improving payment methods and giving a competitive price to farmers.
The other challenge was to identify and access new export markets with significant demands. However, with Ramalingam’s decades of experience in the same, it didn't come as a brain teaser.

Employees packaging frozen shrimps at Megaa Moda's facilities in Kolkata. 
The company is in the process of setting up a new factory to enhance production

Early triumphs

Despite the initial challenges, the company registered an impressive turnover in the very first year, FY2013. “Our first year’s revenue was limited because we did not invest much. We were only outsourcing seafood material. But, Rs.6 crore was still very impressive,” shares Gupta. The FY2013 turnover was also dragged down by a financial crunch as the company’s bank limit was not in sync with the total requirement. However, in FY2014, the company's revenues grew to Rs.22 crore, followed by Rs.35 crore in FY2015 and Rs.75 crore in FY2016.

The company's targeted revenue for FY2017 is $16 million and Gupta assures us that it has been a good year so far. The company exports about 1,200 metric tonne (MT) of seafood products to several Southeast Asian countries such as Japan, Vietnam, China as well as a few European countries, including Belgium, France, Netherlands and Germany.

Charting Ahead

Gupta is now working to expand the company’s global outreach. “Our priority is to focus on the US market, which we haven’t been able to enter. And since US has a different set of compliances, it has compelled us to build a new factory,” shares Gupta. The company is now setting up a new factory, with an investment of Rs.30 crore, in West Bengal. The new facility will be operational in 2017, with an annual processing capacity of 8,000 MT. And according to Gupta, the company’s long-term global expansion plans is to ship about 60-70% of its seafood products to US. With the commencement of operations at the new facility around the corner, the company has set its revenue goal at about Rs.200-250 crore within the next three years. In addition, Gupta is betting big on the Indian seafood market. “When we stabilise the new factory and the desired production is achieved, we may start to target the domestic market because we do see immense scope in the country,” he shares.

Future OUTLOOK

The only problem for Gupta is a sluggish global economy, which does not promise growth in the short run. Besides, India’s seafood exports has already witnessed a decline last year – from about $5.24 million in FY2015 to $4.48 billion in FY2016, and is less than 5% of the world’s seafood export pie.
Gupta however believes that the seafood industry will grow at 5-10% rate for the next few years. The size of exports from West Bengal, meanwhile, is improving every year, and touched Rs.5,000 crore last year. With better incentives from the government, Gupta is hopeful that seafood exports will get back on track soon. “And that will happen soon,” says Gupta with confidence. Well, his intuitions seldom go wrong! 

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Prashant Enterprises, Aligarh, Uttar Pradesh

Busy Adorning the world

What started as a small trading house some three decades ago has today become a 100% export-oriented company that ships products to over a dozen First World markets. It's an inspiration for Indian MSMEs who dream to go global.

Ahmad Shariq Khan | December 2016 Issue | The Dollar Business

The trade landscape of the country is flooded with many shining examples of SMEs that have made a name for themselves in their chosen niche. And Aligarh based Prashant Enterprise is one such name. Nishant Singhal, along with his brother Prashant Singhal, has made the impossible possible and managed to script a success story in today’s cut throat, ever competitive sphere of decorative hardware.

In a relatively short time, thanks to the sheer grit and determination exhibited by the Singhal duo, their firm, a 100% export-oriented enterprise, has made remarkable progress and emerged as a leader in exports of decorative hardware and home improvements, which include brass, aluminium, steel and malleable iron architectural hardware.

Fighting the odds

Prashant Enterprises was founded by Nishant’s father Ramesh C. Singhal. And, just as is the case with any emerging firm, the Singhals also have had their own share of trials and tribulations. Despite challenges, Prashant Enterprises has continuously been among the biggest exporters in its segment and the Singhal duo is very proud of this fact and quite deservedly so. Ask Nishant, how it all started and he says, “My father didn't have much money when he started off, but then he never gave up. While initially, we did face issues arranging finances for keeping the factory open, we never lost hope for brighter days ahead.”

Banking on family

Working with his father to help grow the Prashant Enterprises brand, the Singhal scion says he found enough motivation from his iconic father. “My father Mr. Ramesh Chandra Singhal started from the ground up, becoming a supplier first and then working his way up the ladder. Continuing the legacy, today are the Singhal brother together with their life partners Pooja and Megha. Due assistance has also been given by two of Nishant's cousins – Abhishek and Chirag Jain – in facing the new challenges.

Brass door adornments being produced at Prashant Enterprises' Aligarh facility.
The company is planning to expand its product lines and export basket.

Expanding Horizons

Today, thanks to newer modus operandi adopted by the Singhal duo, Prashant Enterprises has its wings spread across the globe. They have recently opened their UK subsidiary Eurolink Hardware Ltd. in Birmingham (UK) and are setting up a distribution centre in Europe.

At the helm of marketing and planning affairs, since the company’s inception, Nishant Singhal has been instrumental in the growth saga of the brand in a relatively short span of time. Indeed it’s his sharp business acumen and foresight that has helped Prashant Enterprise soar heights in international trade, achieve rapid expansion and a good presence in various EU and US markets.

When quizzed on the USP of his brand, Nishant Singhal says, “Over the past 30 years, we have built an excellent reputation in serving our customers with the a wide range of product offerings, excellent quality, reliable service and most competitive prices. Today, our products are stocked by large UK and mainland Europe retail outlets. Our company’s quality, environment and health & safety achievements are recognised by our customers in UK, EU, and US.”

Making in India

A firm believer in Prime Minister Narendra Modi’s pro-manufacturing 'Make in India' initiative, Nishant says that with this clarion call, the PM has kick-started a sort of manufacturing revolution in the country and his company which is placed right in the centre of the action, will benefit from it. “Today, the made in India quality is not at all seen as inferior to the Chinese quality, but rather regarded to be on par,” says Nishant Singhal, mentioning that his entire product line is 100% made in India. Interestingly, the company exported goods worth Rs.140 crore in FY2016, 60% of which were shipped to EU. Nishant Singhal is looking at doubling the company's revenue by FY2020.

Success Mantra

When we asked him about his business idol, Nishant Singhal says, “I believe in the ideals of J.R.D. Tata, admire him for his unrelenting thrust on quality and durability across his product lines. I wish to emulate him in all my endeavours.”

While emphasising on the importance of relationships, Nishant Singhal says that honesty forms an integral part of his success story. He considers transparency an ingredient that helps make a world class product. “This philosophy has worked for me and I am sure it would work for everyone else too,” he signs off with a smile on his face. Well, we could not agree more! 

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Virchow Group, Hyderabad, Telangana

Bulking up really fast

India's pharma sector has been one of the few sectors that has shown commendable growth in exports in a dull global economy. And Virchow Group, has been amongst the sector's flag bearers. 50% of its production are meant for exports. Estimates are, that number will only grow in time.

Sreenivasa Rao Dasari | December 2016 Issue | The Dollar Business

In the midst of cut-throat global competition, Hyderabad-based Covalent Laboratories Private Limited, a part of Virchow Group, is witnessing a continuous double-digit growth rate and churning over 70% of its revenues from exports. M. Narayana Reddy, Managing Director, Virchow Group, stands behind this success story.

Reddy started his journey 25 years ago and transformed Virchow Group into a world leader in antibiotics. The list of Virchow Group companies includes Virchow Laboratories Ltd., Covalent Laboratories Ltd., Virchow Biotech Ltd., Virchow Drugs Ltd., Virchow Petrochemical Ltd., Andhra Organics Ltd. and Emmennar Pharma (P) Ltd.

Virchow Laboratories Ltd. is world’s largest manufacturer of sulfamethoxazole (SMZ or SMX), which is an antibiotic and widely used in medicines for treating bacterial infections such as urinary tract infections, bronchitis and prostatitis and is effective against both gram negative and gram positive bacteria such as Listeria monocytogenes and E. coli.

Reddy says, “Four of our 10 companies are USFDA approved. Two companies are intermediate manufacturers for the group companies. Overall, our group companies together are garnering over 50% of our revenues from exports.” Covalent Laboratories produces oral and sterile Cephalosporins for the global market, with a manufacturing capacity of 1,200 MT per annum while Saraca Lab produces ranitidine. “We are supplying to several countries. We are not exporting ranitidine to China, but rest of the major global markets. Covalent Laboratories has witnessed a good growth rate during the past 13 years,” says Reddy.

Exports: A lifeline

In today's world, exports have become very important for the industry as no company can survive just catering to the Indian market. Exports are lifeline for any company to attain business growth. Any company can grow when it caters to the global market. “Now-a-days, we are not considering India as our market as we have emerged as the world’s largest manufacturer in most of the products we make. We target global markets for our business activity,” says Reddy with pride.

The Virchow Group has a large sprawling manufacturing plant with advanced
production and R&D facilities at I.D.A. Jeedimetla in Hyderabad.

Cost of logistics, however, is a problem for the company. Telengana being a landlocked state, the company does not have direct access to seaports. Access to seaports would have given Hyderabad-based exporters like Virchow a cost advantage. The government though has approved four dry ports in Telengana, which should ease the problem.

“This will ease the situation for exporters located in Telangana. The Telangana Rashtra Samithi government is also seriously working on this and we welcome this move. If this can take place fast, our growth will be higher,” observes Reddy.

Bullish on trade

After China, the major markets for the company are US and EU. Virchow Group doesn’t see any impact of the US Election results on exports business. “The export market for us is business as usual. I don’t think Trump or Obama, or anybody will affect global markets as individual aspects don’t matter. Even, Brexit will not impact foreign trade. As long as there’s no war or controversy among countries, there wouldn’t be any problem when it comes to foreign trade. As long as we maintain a competitive price in international trade, our business will grow. However, bilateral agreements and political disturbances may impact foreign trade,” says Reddy.

Virchow Group produces 8,000 MT of sulfamethoxazole per annum. And, there’s a huge gap between Virchow and the second-largest producer. In this situation, the company doesn’t expect any hiccups when it comes to its export performance. Environmental issues though are rocking the pharma industry. Reddy says, “Environmental issues are creating a huge problem as it was not addressed properly by the government and industry earlier. Lack of knowledge, awareness, old technology, and government firms caused damage to the environment. This led to a situation, where new companies were not allowed to function properly. This is because of the bad legacy experience. Today, new technology applications have come. For instance, by deploying modern technology applications, we have reached zero-discharge level. But the government has not recognised our achievement in environment protection.”

Virchow and its group companies are surely taking the right steps for sustainable growth. And with the right policy support and encouragement, the company, which is already on a high growth trajectory, has the potential to become a name to contend with in pharmaceutical exports segment. You would agree!

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Flair Pens, Mumbai, Maharashtra

Exporting The Writer’s Sword

In a market that is fast digitising, you would expect a manufacturer of writing instruments to be worried. Mohit Rathod, Director, Flair Pens Ltd., though is a picture of calm. The company is on a brand acquisition spree and has entered into the calculator market to hedge risks.

Sairaj Iyer | December 2016 Issue | The Dollar Business

A pen is to me as a beak is to a hen," Tolkien’s quip hits us while capturing Flair, the pen-maker’s story. Legendary philosophers, critics, poets, novelists run through my mind as we enter the office of Flair Pens in Mumbai. With a turnover of Rs.500 crore, Flair is already a household name in India.

The Making of a pen

Ever since K. J. Rathod started the business, Flair has used best-in-breed innovative technologies to manufacture pens. The traditional product-line involves writing instruments of various categories such as pens, pencils and white boards, and today has veered into production of calculators. There are also plans to venture into the digital space.

An export revenue of Rs.150 crore has been achieved at a time when students are more comfortable with the keyboard than the pen. The rising trend of digitisation and the soaring demand for digital instruments such as PCs, computers, smartphones and tablets have unfortunately resulted in a slowdown for pens and accessories. But a large market remains untapped. Sunil Singhi, Vice-President at Flair agrees, “With 125 crore Indians and growing, a pen in each pocket is still a distant dream. Pen is fast becoming a very serious accessory for women and men of all ages who feel incomplete without pens.”

Precision driven

While holding a Writo-meter pen, a Flair product, we sensed the precision and art that goes into converting plastic and metal into a pen. Singhi shares that various parts of the pen are designed, molded and then assembled into a cohesive piece. These are aesthetically packed and distributed to 2,45,000 retail outlets and 75 export destinations. “We have to drill through a thin wire, give it shape and precisely place a ball within the tip. The machineries that we use are also used by Boeing and Rolex for their products,” Singhi explains with pride.

An assembly of moulding machines that produces pens of various forms
and sizes at Flair Pens' manufacturing facility in Mumbai.

Flair’s facilities, spread across 600,000 sq. ft. in Mumbai, Daman, Surat (SEZ), and Dehradun together generate an output of 50 lakh plastic pens and 1 lakh metal pens a day. And with nearly 10 factories across India, and one in Kenya, production numbers are only anticipated to rise. Speak of production, and we are told that nearly 70% or 2,800 of the 4,000 employees and personnel at Flair are women. No mean achievement.

Global footprint

Flair, under the banner of National Pens and Plastic Industries, exports to nearly 75 countries worldwide, and China is one notable export destination. Exports in the past five years constituted nearly 30-35% of Flair’s turnover. US and South American markets constitute a bulk of the exports, although Flair has also been able to penetrate into EU, South East Asia and Africa. The rise of the African market prompted Flair to launch a factory in Kenya. The Kenyan factory produces a million pens per day. The Kenyan facility does not export presently due to a scarcity of dollars in the African market.

The pen maker owns the brand Pierre Cardin in India, and has recently purchased Hauser, a popular German brand that also enjoys popularity in US market. Exports are also driven through contract manufacturing and strategic tie-ups with other global brands. One such association is with Pentel, Japan’s top manufacturer of pens.

While a majority of raw materials are procured locally, molds are often imported either from Korea or Japan. Singhi shares that besides ink, most of the materials are either assembled or manufactured in-house. Since ink is a specialised product requiring a different technology, ink is procured largely from Smooth-Line or High-Shine.

Beyond Pens & 2016

Flair’s venture into the calculators sector a few quarters ago can be inferred as an opportunistic move. Anti-dumping laws during 2015 led to many SMEs shutting shop, leading to a large demand but insufficient supply. Flair’s calculators are priced between those of Orpat, the mass market leaders and Casio, the global giant in scientific calculators. The move is largely a domestic activity and still far from being successful. But, it does look like an effort to diversify beyond writing instruments. Sustenance has come up as one strong mantra for Flair in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world, but Singhi believes that export numbers will definitely rise in the near future. He concludes affirmatively suggesting that an 8% rise in export is the target for 2017. Fingers crossed!

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Gujarat Copper Alloys Ltd, Mumbai, Maharashtra

Playing a high volume Game

When companies are playing the wait and watch game in a turbulent global economy, Gujarat Copper Alloys Ltd. has taken the road less travelled by increasing production volumes to offer customers better prices. And that's working well for this fast-growing company.

Sreenivasa Rao Dasari | December 2016 Issue | The Dollar Business

What could be the best business strategy to stay afloat in global market, which is suffering from adverse conditions such as an economic slowdown, a drop in commodity prices and liquidity crunch? While many companies prefer to cut down costs and production, Gujarat Copper Alloys Ltd. (GCAL) prefers to play a high volume game.

Speaking to The Dollar Business, Nitin Mehta, Manager, GCAL, says, “There’s pressure on margins as international copper prices are declining. But, we’ll increase our business volume in overseas and domestic markets. When the industry is suffering from thin margins, it’s better to maintain higher volumes.”

However, in a cut-throat competitive market, maintaining higher volumes is an uphill task. But GCAL is confident of maintaining higher volumes by adhering to global quality standards, customising their products and constant innovation.

Under pressure

Of late, the copper prices in the global markets are under pressure. Copper prices on London Metal Exchange (LME) fell to $5,200 a metric tonne (MT) from $6,400 during the past six months. The copper alloys industry is feeling the heat of lower prices in the global markets. In the face of these challenges, Gujarat Copper Alloys is focusing on product innovation and customising products to specific needs of customers. “When prices are under pressure, it’s better to focus on product innovation,” adds Mehta.

The other issue that has been the reason for sleepless nights for many exporters is the lack of liquidity in the market, and non-realisation of payments from importers. GCAL though does not feel these pains. For, company avails the Export Packing Credit (EPC) facility, which makes their job easier. Shrugging off any adverse impact of export finance on the company, Mehta says, “For us, there are no issues on export finance. After getting an export order, we avail an EPC loan from banks. The loan is available at low interest rates for exporters with a good credit standing. So, there is no problem as far as finances are concerned.”

Copper wires being produced at Gujarat Copper Alloys Ltd.'s production facility at
Khanvel in Silvassa. The facility uses hi-tech machinery to adhere to global standards.

Technology upgrade

Technology upgrade involves enormous amounts of money and loss of productive time for SMEs. Several SMEs depend upon in-house technology or sometimes on technology consultancy services. Gujarat Copper Alloys however gives utmost priority to research and development (R&D) activity. “We invest in research and development. We have invested Rs.10 crore in modern machinery already and keep investing Rs.2-3 crore every year to upgrade technology. This is part of our philosophy of constantly enhancing capacity and improing quality standards,” says Mehta.

Gujarat Copper Alloys offers all temper grades of copper adhering to international quality standards. Its copper products are used in several applications including electrical equipment, switchboards, switchgears, busduct, non-electrical products and aluminium smelters.

The Future of copper

Interestingly, copper has performed well among commodities in the past one month. Prices of the base metal rose 20% on hopes of improving demand from top consumer China and a steady decline in stocks at warehouses. The rally was further fuelled by optimism over robust demand from US on forecasts that there will be huge infrastructure spending under president-elect Donald Trump, who has pledged to spend $1 trillion on infrastructure over the next 10 years. This is supporting copper prices.

ICSG Copper Market too forecasts a deficit of 8,000 MT in 2016. This could bode well for a company like GCAL which has taken the volumes route to success. The company though has seen a slowdown in demand from Middle East, and is looking towards US and Australian markets to ease off the pressure.

Expansion plan

The company is adding capacity in anticipation of an increase in global demand for its products. “We see good demand for copper alloy products in the global markets. If there is a slowdown in one market, there will be demand in other markets. As long as there is a basic requirement for copper, we will be fine. We anticipate high demand for copper, and that should help us grow faster,” says Mehta with confidence.

For GCAL, adapting to the needs of the market and innovating to suit the requirements of customers seem to be paying off well. The company expects a 50% growth in turnover in FY2017. And with well-thought off volume game in place, we are sure the company will reach new heights going forward! 

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Universal Autofoudary Ltd, Jaipur, Rajasthan

Smelting Iron...And Profits

Coming out of nowhere, with little cash in hand, and then setting up a large foundry in Jaipur (Rajasthan) – this is an incredible story of the people behind Universal Autofoundry Ltd., a company that has become a leading name in manufacturing and exports of iron metal castings.

Ahmad Shariq Khan | December 2016 Issue | The Dollar Business

Today, Universal Autofoundry Ltd. is known in India as a world-class manufacturer and exporter of iron metal castings, iron castings in grey iron and ductile iron machined castings. Indeed, in a relatively short time, the company, based out of Jaipur, about 250-km away from the national capital, has made remarkable progress. Thanks to the sheer grit and determination exhibited by the founders, it today caters to not just various markets within the country but to several developed economies across the globe including US and EU.

Representing the second generation, Vinit Jain joined the family business in 1997 and went about expanding the company's product offerings and simultaneously tapping demands at various foreign shores. “I represent the promoter group. My father Vimal Chand Jain and the other founding member Kishan Lal Gupta were friends in college, and it was then that they decided to jointly start a company in the foundry segment. The place chosen was Jaipur and that’s how we initiated our first foundry in Jaipur.”

Talking about initial financing, while building the company, Jain mentions that in those days a government scheme, under which soft loans were being given to engineering degree holders, came in handy as both company founders were engineers from Osmania University.

Awards galore

Jain says, “Our company’s core strength lies in the extensive experience gained by our promoters – who possess more than 40 years of experience in this field. This enables us to deliver quality products to our customers while continuously improving process efficiency.’’ Thanks to the in-house state-of-the-art machine shop, tool room and latest simulation software, Universal Autofoundry, in recent times, has emerged as a major player in the segment. The company today boasts of many distinct accomplishments, which includes the EEPC Award (Star Exporter) in 2015, the India SME 100 Award in 2016, Skoch Achievers Award in 2015,  Escorts Tractors Limited Best Cost Effective Supplier of the Year Award in 2015 and Rajasthan Energy Conservation Award in 2014. “These accomplishments have helped Universal Autofoundry stand tall amongst competition,’’ adds Jain.

Iron castings being produced at Universal Autofoundry Ltd.'s Jaipur production facility.
The company has invested in latest technologies to produce world-class products.

Future opportunities

In terms of opportunities in the future, Jain tells us that the rapid growth of the automobile industry has resulted in an incremental demand for CI and SG iron casting. His confidence comes from the recent growth witnessed in India’s automotive components and foundry sectors alike. When it comes to exports, the company is already exporting about Rs.15 crore worth of products every year to developed markets like US, EU and several Asian countries. Not content with that, Jain tells us that the company plans to broaden both its export basket and geographic spread in the near future.

Usual Woes

Elaborating on the strengths of the company and its competitive positioning in international market, Jain says, “Our company believes that quality products enable us to compete with the other players in the market. Our company also believes that the investment in technology shall allow us to provide quality products to our customers and will differentiate us from other competitors.”

While citing some weaknesses of the sector, he says, the products in his domain are generally as per the customer’s specification, and in the case of a rejection there is no general market for the rejected items. Also, shortage of skilled workforce is negatively affecting the sector – Jain meets his workforce requirements from Delhi NCR.

High power tariff is also a major pain point for the industry. Jain also finds the state government’s recent decision to close many foundries in and around Jaipur in the name of curbing polluting completely arbitrary.

Flying High

Going forward, coupled with a firm faith in the 'Make in India' scheme, the company plans to keep investing in high quality machinery and equipment.

Jain also stresses on the importance of maintaining a close relationship with the customer. He believes loyal customers are a major source of new customers and that there is no better marketing tool than a satisfied customer. He believes that a satisfied customer goes a long way in creating a brand. And looking at the long list of loyal clientele that Universal Autofoundry has managed to garner so far, we are sure the company is on the right path to success.

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Kanoovi Foods Pvt. Ltd, Gandhinagar, Gujarat

Not a cookie cutter tale

Kanoovi Foods, a young company incorporated in 2012, is already exporting biscuits and allied food products worth Rs.31 crore to Africa. But this 100% EOU doesn't want to stop here. It has set itself a revenue target of Rs.200 crore for FY2020, and is going ahead full throttle to achieve it.

Neha Dewan | December 2016 Issue | The Dollar Business

By his own admission, he has an expertise in bootstrapping companies and making them run successfully. His diverse experience as an entrepreneur combined with an inherent instinct of knowing what the customer wants has worked to his advantage over the years. Perhaps, this is why when he saw an opportunity in Kanoovi Foods, he decided to buy 100% stake in the company. “It’s unbelievable how much volume of biscuits are exported to Africa every month,” says Vibhash H. Trivedi, MD at Kanoovi Foods, a leading manufacturer and exporter of a wide range of biscuits to African markets.  

The company, incorporated in 2012, saw revenues of Rs.31 crore in FY2016 and the target is to scale Rs.200 crore by FY2020! Is that not an ambitious target?

Conquering markets

Trivedi believes it is not all impossible. “Our products have reached East Africa, Central Africa and West Africa and we’re opening up one new country every quarter. The rate at which we have been growing, this is pretty much achievable. For the current financial year, our target is Rs.75-80 crore,” he says without a trace of doubt in his voice.

Trivedi started off with Africa as his first market. And it turned out to be a prudent decision. “African markets lack largely on the manufacturing side – they rely on imports from all over the world. Indian products have an edge on food products over China and other competitive countries. And within India, we had figured out how to make quality products at affordable prices, thereby offering them at discounted prices to clients. Hence, we were and will continue to be bullish about Africa,” he reasons.

The company’s first export order was to Britannia Allied Industries Limited Uganda in 2012. He recalls that it all went quite smooth, thanks to the organised nature of the market. “It is a misconception that there is no ease of business in Africa. The only challenge that we have faced has been related to currency fluctuation. We now know that keeping a cushion of 2-5% is advisable for more lucrative operations,” he says.

Adhering to packaging norms of importing country is a challenge in this business

The Next frontier

The plan ahead, naturally, is to soon expand across geographies. South America is on the radar, followed by Australia and Japan eventually. “We would like to be the No.1 company in perishable food products. We also have plans of adding more confectionery products in our line up,” Trivedi reveals.

He has a word of advice for all those who want to take a similar path of entrepreneurship and carve a success story for themselves. “Work hard, work smart. Know what you are doing and have the passion to carry it forward. Don’t do it just because Steve Jobs or someone else did it. Do it because you have the vision and faith for what you are doing,” he tells us in an assertive tone.

A self-confessed workaholic, Trivedi unwinds by playing golf, listening to music and playing with his three-year-old daughter which totally charge him up. “I have very little free time. But when I do, spending some time with my family keeps me going,” he says.

It definitely seems he has earned a little family time as it is a promising time for this aggressive start up. What stands in the company's favour is an intensive R&D system, which helps it develop recipes and do market trials that can stand out in the specific market. For instance, since South Africa is a price conscious market, the company came up with recipes which tasted good as well as suited the pricing budget of customers. Besides this, the company has also developed Indian biscuit industry’s first ERP system which helps synchronise all departmental information into a single dashboard.

“We offer 42 different product ranges to our direct export customers, which are varieties of biscuits packed in different designs. Contract manufacturing for companies that would like to use our machinery to manufacture their brands is also possible. Customers are always foremost for us,” signs off Trivedi.

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Supriya Lifescience Ltd, Mumbai, Maharashtra

Getting Its Formula Right

Supriya Lifescience Ltd. has grown manifold since it bagged its first export order in 1992. Come today, and four state-of-the-art manufacturing facilities, awards and registrations in 35 countries, and a turnover of Rs.300 crore speak volumes of its global stature and success.

Sairaj Iyer | December 2016 Issue | The Dollar Business

If you ever visit Supriya Lifescience Ltd.'s office at Goregaon East in Mumbai, you’re likely to be flabbergasted by the sight of all the trophies that it has won in the last few decades. Well positioned in the office front-desk area, some that unmistakably caught our attention were the President of India Award and the Chemexcil Exporter of the Year Award – awarded to ‘Satish Wagh’ for his remarkable achievements.

Many know Wagh as the former Chairman of CAPEXIL (Chemical and Allied Products Export Promotion Council), a renowned figure who has spent over 40 years in the pharma and chemical industry. But lest one forgets, he is also the Founder and Managing Director of Supriya Lifescience Ltd.

Laying the foundation

“I worked as a plant supervisor in a bulk drug manufacturing company. But, after spending a decade in the industry, I convinced the MSFC (Maharashtra State Financial Corporation) to lend me Rs.3.80 lakh to start a textile-auxiliaries company,” shares Wagh. In 1986, the dream to start something new became a reality for Wagh. However, the dynamics of the industry soon began to change, pushing the textile companies in Mumbai into remote locations owing to lower price margins and the closure of the textile market in Mumbai. He continues, “The move was drastic, but it benefited us because we were remotely located and it made us diversify our products.”

When the dust started to settle down, the company decided to manufacture an anti-allergy cough syrup for overseas markets. “In 1992, many European multinational companies were producing a similar product and the Indian domestic market was full of Hyderabad-based MNCs. So, exports was our only option,” Wagh recollects. And, where there is a will, there is a way!

In 1992, the company bagged its first export order of 500 kg a month from Government Pharmaceutical Organisation (GPO), a Thai public institution. And, a year later, it formed a bulk drugs business division, focusing on products such as chlorpheniramine maleate. “The initial capacity for chlorpheniramine maleate was only 350 litre a month, but we saw enormous opportunity in exports,” he clarifies.

An inside view of the Research & Development centre at Supriya Lifescience Ltd. The well
maintained, state-of-the-art laboratory is the core strength of the company.

Leap in Exports

What took off as a small-scale industry is today one of the most prominent manufacturers and exporters of APIs, such as anti-histamines, anti-allergics, anti-asthmatics, vitamins, smoking-cessation drugs and nearly 18 other intermediaries. It enjoys a sizable annual turnover of Rs.300 crore, and exports 90% of its products to 73 countries.

Entry barriers

So far, so good. But the journey was not always smooth! Wagh rues, “After 2000, the industry has been going through several issues, but most prominently, those related to support from the government and FDA compliances.” According to Wagh, the entry-barriers in regulated markets such as US and EU are severe while the semi-regulated domestic market have intellectual property rights issues. The US markets necessitate API manufacturers to register their products for commercial sale via Drug Master File (DMF). Similarly, European markets require European Drug Master File (EDMF) as a tool of compliance. Both DMF and EDMF are routinely checked and monitored, leaving no scope for an error. However, Supriya does not worry about the stringent compliance rules, as it is the domestic market that Wagh feels the company needs to focus on.

Wagh also feels that the aid from the government is largely limited to incentives. “India exports about $3.25 billion worth of APIs every year, but I don’t think the aid from the government constitutes even 1%. Government must work towards creating a friendlier environment for businesses,” he suggests.

Soaring Upwards

The decline of China as a manufacturing hotbed has had a great spin-off benefit for India. “We have already seen in other industries that the Chinese buying power has driven the Indian export sector, this can be anticipated for the API market too,” shares Wagh. Besides China and US, Wagh is bullish about ASEAN, LAC (Latin American and Caribbean), Africa and CIS (Commonwealth of Independent States) as potential export markets in the future.

Wagh believes that more states joining the chemical business will lead to stronger exposure for the industry. “There is a decent political leadership, good growth and large markets. Although the government has been playing a facilitative role, the incentives are feeble and there is scope for improvement,” he adds.

Going forward, Wagh's mission is to make Supriya Lifescience a Rs.1,200 crore company by 2020 – the company is expecting to close this year at Rs.800 crore. With two new products on the anvil and USFDA approving two more factories of the company, we believe, Wagh is all set to succeed in his mission.