Tracing the history of India’s largest dairy company

Despite the instantaneous nature of information in the digital age in which fake news, spoofed images and videos travel across India in no time at all, many readers will be surprised that there is a world beyond. beyond Amul. Many readers of this book review will hear about the Arokya brand of milk and ice cream for the first time.

Harish Damodaran, national editor for rural affairs and agriculture at the Indian Express, documented the story of Hatsun Agro in the book Pierced. This is the story of Hatsun Agro, India’s largest dairy company.

Harish Damodaran
Pierced
Viking penguin (August 2021)

Hatsun Agro is not a child of the information technology revolution in India. Neither is it the venture capital financing of a “start-up” which is now the subject of a craze for budding companies. Rather, it is the story of a business started by a dropout, not living in a large prosperous city. It traces the vicissitudes of a business, the generosity of some and the failure of several business ideas.

RG Chandramogan, the promoter of Hatsun Agro, was from Thiruthanga, a town in the district of Virudhunagar in Tamil Nadu. Her mind went blank while writing the chemistry paper in the pre-college exam and walked out of the exam room. He went to watch two movies in a row that night, Thangai and Maadi Veettu Mappillai.

This book is the fascinating story of someone who failed his pre-college exam, but then started a business that has now grown into a leading private sector dairy company in India. Its brands, Arun Ice Creams, Arokya milk, Hatsun Curd, Hatsun Paneer, Hatsun Ghee, Hatsun Dairy Whitener, Ibaco and Oyalo may not be known in northern and eastern India, but in the states of south, these products are widely consumed and highly regarded. These are household names in Tamil Nadu and Karnataka.

Chandramogan started his professional life in 1967 as an employee at a lumber merchant in Villupuram, 160 km south of Madras, with a monthly salary of Rs 65. His breakthrough was provided to him by an uncle who gave him the idea of ​​an ice cream factory. It was an investment of Rs 25,000, of which Rs 12,000 was a loan from the Tamilnad Mercantile Bank and Rs 13,000 came from the sale of three stores belonging to his father. It was in April 1970.

Sold in carts, Arun Ice Cream made a profit of Rs 40,000 on sales of Rs 1.15 lakh.

The rest, as they say, is history.

The book documents how Chandramogan explored new markets for Arun’s ice cream. It was IIT Madras that made Arun Ice Cream a breakthrough. Annamalai University in Chidambaram, 225 km from Madras, was the next big market. He traveled to other smaller towns in Tamil Nadu and conquered the market there. It was much later that Arun could become the best-selling brand in Chennai itself.

The book provides an interesting account of how a store owner’s request for a freezer to set up an ice cream parlor was turned down.

Management students from various business schools will find it interesting to learn how Arun competed with Kwality, Joy, and Dasprakash, all of which were well-established ice cream brands. The small steps taken in the early years to promote the Arun brand are not only interesting but also very motivating. These were innovative, inexpensive but very impactful.

In March 1986, Hatsun Foods Private Limited was incorporated. By 1990, Hatsun had become the market leader for ice cream in Tamil Nadu.

The author’s account of the switch from carts and tricycles to delivery by refrigerated trucks is interesting to read.

Equally fascinating is the story of how the company entered the dairy business. Aavin was a popular brand of the Tamil Nadu Cooperative Milk Producers’ Federation. How could a new company, a startup in today’s parlance, hope to compete with a well-established cooperative that had government backing?

This is where the book becomes captivating for the reader. The economic reforms of 1991 are hailed as precursors to India’s success in achieving high economic growth in the following years, particularly from 2004 to 2012. Being a barrier for new entrants to the milk sector from the UK. private sector. Registration with the Union government was required if the milk processing capacity exceeded 75,000 liters per day. The MMPO was only lifted in the 2002-03 Union budget. From then on, the “Arokya” milk brand took off and sales of milk generated higher turnover than the sale of ice cream.

When Arokya milk was launched in July 1995, the company’s sales were 1,800 liters per day. In 2020-2021, Hatsun Agro had twelve dairies, processing around 50 lakh liters of milk per day.

It’s pretty much the same as Amul!

The book covers all aspects of the business, from cost of production to branding to diversification. The professional help provided by the company in various aspects of the business would also be of interest to existing businesses, and not only in the dairy sector.

In this book, Harish Damodaran examined the role played by developers, his employees, salespeople, consultants and others. It is not common for a local business to compete with existing brands that have enormous acceptability. Management students will find the book engaging and useful.

In today’s business environment, private equity financing is quite readily available to those with compelling business ideas. This book is about a business enterprise in the earlier days, when the entrepreneur was largely alone.

While the credit for the White Revolution in India would undoubtedly go to the cooperatives in Gujarat, the role of private sector dairy companies like Hatsun should be appreciated as they work without any financial support from the government. Hatsun also follows the model of buying milk directly from farmers. However, it should be noted that it is the milk producers who provide milk (ten to fifteen days) on credit to Hatsun as well as the cooperatives!

We need many more books on similar topics so that the efforts of previous generations of businesses created by first generation entrepreneurs are documented for posterity.

Siraj Hussain retired as Union Agriculture Secretary. Currently, he is Visiting Principal Investigator, ICRIER.


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