From selling newspaper subscriptions to heading a 300-crore organisation
Ram Charan started its trade and distribution in 1965 with limited resources, knowledge, manpower and capital. In the last 10 years, the business has grown from Rs 70 to Rs 300 crore, from a two location distribution hub, in the south and east to 19 locations across the country handling a range of materials from powders, liquids, solids and pre-mixes. While the frontend business itself was growing, servicing the requirements of customers through product offerings, technical service led to the establishment of a one-of-a-kind lab in Chennai. MindYourBusiness caught up with Director and Business Head Kaushik Palicha to talk more about his life and the organisation.
I was born in Chennai where I also grew up. I studied in Chennai right up to my graduation. Thereafter, I did my post-graduation at Hyderabad. I specialised in finance and valuation.
No, this is not my first job. I have worked in the past for financial institutions and firms selling soft drinks. I even sold newspaper subscriptions!
I knew I had to work at Ram Charan Private Limited (RCPL) someday. In the last five years, a lot has changed within the organisation, from what is was when I joined in 1998. Even today to say that the promoters are running the organisation is a misnomer as a collection of committed, enterprising and risk-taking individuals have taken up key responsibilities and use their experience to manage the business and stakeholder interests.
We were established in 1965 as a partnership firm selling raw materials and are now a US$ 40 million organisation with a pan-India presence, rated among the top 150 chemical distribution companies in the world.
We source raw materials for customers who manufacture finished plastic, ink, coating, rubber products and sell them across the country, from 12 locations. We give our customers the choice of buying a product from their preferred location bundled with other products, at a delivery time and location of their choice and back this up with technical service and testing facilities, for small and medium category of consumers. What we do is not rocket science but a sensible service proposition is offered to customers, at efficient costs to ensure that they remain competitive in a tough market, and we remain in business."
RCPL is one of the fastest growing industrial distributors in India, consistently surpassing industry growth rates over the past 10 years. While we started as a trade and distribution organisation, we are now headed towards selling products made within our own brand. The trust and reputation that we have successful built over the years can help us build products Indian consumers that we believe will be suitable to their requirements. While Indian companies are making very apt and innovative products for Indian consumers, and demanding end users – they seem to be dependent on multinationals to bring in technology from elsewhere and help them upgrade. We believe we can give them an Indian product, which understands their need for performance, efficiency at a competitive price line – to this extent we have developed two products and are looking at more, in the current year.
The firm started in 1965 and is a third generation business. Till about 2004/05 we were a plain vanilla ‘ trade’ firm – but since then we realised that to add value, we need to increase the offering of our products, the placement of the products and services – both technical and otherwise. This led to a scaling up – which we believe and now the industry understands was not so revolutionary, but just forward thinking and we managed to change the perception of the distribution business, for this industry.
The secondary market for our products in India is close to Rs 6 000 crores. Demand is fragmented with the ability to service your customer, determining the sort of customer base that we have. For instance our largest customer buys about 140 tons per month and our smallest customer buys about ten kilos across three months. The customers are spread across the country and reach is very critical – as also is the consistency in quality and the product range in offer as a lot of customers are multi location and do not want any variations.
The arrogant, pompous and honest answer to this questions is – no, we do not have competition. No one in this country can handle product placement in the market the way we do to using the varied methods that we employ. Our model is unique in terms of innovation as well as both technically and in terms of strong logistics. Besides, no one can offer the customer a solution for testing and feedback for their formulations. This – our customers can confirm, so can our partners and suppliers – who have seen our capabilities.
We have grown stock points across the country and are within 36 hours of any customer – with one Ram Charan warehouse every 800 liner kms in this country. This makes us an easy to access storefront – unheard of in industrial distribution where the focus is on costs, and not on the service offering. Imaging a retail ecommerce site, at an industrial physical level - that's what we are.
Nobody in the country can match this – bundle this up with our scale, product options and a lab – located at Chennai, set up in association with Lanxess India Private Limited – we have become a preferred supplier. The tech centre we call the lab is a strong service point for us. For instance, small and medium customers typically find it expensive to test their formulations and also don’t have the right expertise to organise a test – this is where we come in. We help them by suggesting the right tests, having them done at the tech centre and giving them helpful inputs in the formulations. If SMEs can fight the marketplace competition on quality they stand a better chance against the larger players who have a lot of muscle. More importantly, if quality goes up for the industry as a whole, the end user will have more trust on the committed performance of Indian manufacturers.
While this sounds nice and preachy, we have seen live examples of such cases, happening in the industry and the incremental growth in the business is lower than the cost to the tech centre.
We see the growth being positive, in the range of 25% and above for the next three years at least. We have grown four times since 2009-10 and in the near future, we have a lot of head room to grow in new geographical markets, with a few new products coming in. While a trade driven organisation understands the market fragmentation better and can increase its product basket quickly, the reverse also means an erosion of our customer base, if we do not manage growth well. Consolidation of business at regular intervals and redefining the goals are an important aspect of how we plan, map and achieve growth.
I am the third generation managing the family business and probably the last who will be a part of the ‘family managed’ firm. We are more professionally-run now than when the organisation started out and as we progress, I see that trend changing to a mostly professionally-managed firm in the near future. In my little time here – I have learnt that people, their confidence, their trust of themselves and the organisation make all the difference. You may have a great product with great placement and promotion strategies, but without the right people, life could get difficult.
I am still learning though and I must fess up that I don’t know even marginally how it all is happening."
I have a brother – we have bounced off ideas, thoughts, arguments, aspirations and innovations off of each other over the years. Divyesh has been a part of the business since 1989, and is a bridge between the first and the current generation. While he has been a quiet contributor, his sense of automation – bringing in computers in 1993, spread – creating the first branch in 1995, innovation – adding new product lines since 1998 and spirit – have been the backbone of the firm, and our spirit of entrepreneurship often, if not always has been fuelled by him. A combination of common sense and quiet performance, has always been something for me to look up to.
Every human element is an important aspect of any business. Each of these stakeholders are people who have different goals and aspirations in the business and it’s quite a challenge, as an organisation, for us to make sure we all gain. It is a very Indian thing to want the best deal, with the easiest process to achieve the deal. What we have done differently, or innovated is to understand that the scope of the deal goes beyond its price. It covers the entire experience of buying a product and ensuring you get what you ordered at work, and at a time that you wanted it to be there and to understand and appreciate that the price you pay for it.
It is important to deal with each of the above with the right balance of responsibility, rationality and reverence to ensure that we drive home happy.
My underlying principle is growth and innovation."