Business: The Emami Way

BUSINESS

THE EMAMI WAY

R.S. Agarwal and R.S. Goenka as narrated to Pramod Shah and Jayeeta Ganguly

CONTENTS

FOREWORD

PREFACE

INTRODUCTION

1.THE BASICS OF BUSINESS

2.LEADERSHIP QUALITIES AND YOU

3.BUILDING YOUR WILLPOWER

4.NEED FOR FAITH AND DISCIPLINE IN BUSINESS

5.WATCH THOSE HABITS

6.IMPORTANCE OF DECISION-MAKING AND COMMUNICATION

7.TIME MANAGEMENT

8.MANAGING YOUR MONEY

9.IDENTIFYING YOUR CONSUMER

10.MARKETING AND BRANDING

11.NEED FOR INNOVATION

12.HUMAN RESOURCE MANAGEMENT AND DEVELOPMENT

13.FAMILY-OWNED BUSINESS: BENEFITS AND PITFALLS

14.THE READY RECKONER

SPECIAL THANKS TO

Photographic Inserts

About the Book

About the Authors

Praise for the book

Copyright

FOREWORD

‘W hat does one write or for that matter how does one write the foreword to a book that has been penned by a man who is always thinking forward?’

This was the first question that crossed my mind when I was asked to write the foreword to this book that encompasses the business mantras, philosophies and life-lessons of R.S. Agarwal – my best friend – whom I affectionately call Radulal and with whom I share this inexplicable bond of brotherhood and familial conviviality.

As many of you are aware, I have known Radulal since childhood and we have, well, set exemplary records as life-long friends and also as business partners, but till date I find it very difficult to think of the right set of words that will do justice to the qualities that my dearest friend possesses. Imagine then writing an entire foreword! This was a big challenge for me – one which I hope to fulfil without further ado.

Let me start by stating that my friendship with Radulal continues to be one of the most enriching journeys of my life and I am delighted with his latest literary endeavour. I feel that all fourteen chapters in this book bear testimony to Radulal’s expertise in the field of business and also in the journey called life. It has been written in an easy-to-follow language and style that makes it reader-friendly. The question-answer format makes it compelling and thought-provoking for me and I am confident that the anecdotes will motivate the readers as they unfurl invaluable lessons that are real and awe-inspiring.

The book took me on a nostalgic journey as I revisited the old days and thought about the lessons that life, our trials and errors in the field of business and our myriad experiences have imparted to us – invaluable lessons that went on to shape our personal lives and which also enabled us to carve a unique identity for the Emami Group.

It reminded me of the time when Radulal and I started our first venture – Kemco Chemicals – way back in the year 1968. We were two office-going professionals back then who diligently fulfilled official duties until sundown and then rolled up our sleeves post 6 p.m. to accomplish our dreams.

Time seemed to zoom past us, day and night merged into one as we learnt the A-Z of business. We did everything on our own – right from buying the raw materials to joining the small team that manufactured the beauty products, to manually lifting and placing the 40-kilo vats over the ovens to selling the products – we did it all. We toiled hard but before long, we lost it all – including our capital. From being two enthusiastic entrepreneurs, Radulal and I became losers in the eyes of the world. Although this was one of the most trying times of our lives, we did not give up. We had to re-start from scratch.

Each day brought in new challenges but I did not see my best friend waver even on our worst days. His confidence and faith gave us the strength to interpret the word ‘Impossible’ as ‘I’m possible’ even then. We stood by one another, gathered funds and started our journey all over again. Emami was born in 1974 and the rest as they say is history.

This book is a gem and I hope that the readers will make the most of this opportunity and learn not just lessons pertaining to business and management, but also life-lessons from the author who is, today, rightly hailed as a visionary par excellence and whom I blithely continue to address as Radulal.

R.S. Goenka

PREFACE

I have known Mr R.S. Agarwal, Founder and Executive Chairman, Emami Limited, for many years now and I must admit that even today I avidly wait for our weekly conversation sessions where Agarwal -ji imparts valuable life-lessons and knowledge in myriad fields that continue to enrich my life in more ways than one.

Towards the end of 2013, during one such session, Agarwal-ji informed me about his dream to write a book on business and management that will be based on the wisdom, the experiences and the first-hand management lessons he has learnt in his life.

Agarwal-ji also stated that the book should be written in dialogue form and in simple language. He wanted this book to be a beacon and a guide for the common man (who wanted to learn more on management), new entrepreneurs as well as those who are already established in the field. He entrusted me with the duty to do the needful and thus began my journey with this book.

During the project, I would ‘attend’ one-on-one lecture sessions where Agarwal-ji shared his insights on management. He talked about the hurdles that Goenka-ji and he had faced and how they dealt with each problem. He shared the lessons that each experience taught them. I also had to read more than thirty books on management that Agarwal-ji had lent to me from his personal library. It might interest you to note that each book was duly marked at the proper places. I even leafed through some of the books on business and management in my own library. I studied them minutely and after gathering enough knowledge and confidence, I approached Agarwal-ji with the questions for the book.

While writing this book, the following points have been kept in mind:

We have tried to lay down the fundamentals of business in a language that is simple and easily comprehensible. Allow me to explain why: In every era experts have not only played an important role in their own fields, but have also helped to define and shape society by communicating their knowledge in a language that the common man can readily understand.

For example, the late Firaq Gorakhpuri was one of the greatest Urdu poets of the twentieth century and an eminent professor of English. In his lifetime, Firaq wrote many books, but the one, entitled A Garden of Essays, meant for students preparing for the intermediate, degree and competitive examinations, became a bestseller. The reason behind its success was that it was written in plain and simple prose that was easy to understand. We too have followed in this scholar’s footsteps and presented this book in a language that is easy to comprehend.

It is important to note that although in this book we have used examples from outside India and included quotations of well-known international personalities, a conscious attempt has been made to include stories, myths, memoirs, anecdotes and poems that celebrate India and its earthy flavour. The basic idea is to make the reader ‘feel-at-home’ so that they can identify with the people, places, culture, situations and problems, and learn from them.

We see that all great writings in ancient India have been recorded in the form of dialogues. We are a nation rich in the oral tradition. There is no doubt that a person learns more from discussions than from lengthy running matter. Thus, we have adopted the Q & A mode, i.e., the interview format in this book.

I am sure that you are all looking forward to reading the book. I shall now therefore leave you to learn from the master, Mr R.S. Agarwal, who is a legend in his own right.

Pramod Shah

INTRODUCTION

For years now, I have been toying with the idea of chronicling my experiences in the field of business in a manner that will benefit the lay reader, aspiring entrepreneurs and established businessmen. Although I have no desire to proclaim myself as a ‘know-it-all’ guru or guide, I do want to share the knowledge and wisdom I have acquired over a period of forty-five years.

During this journey, I have seen life oscillate between success and failure, triumph and despair. Every time it did so, it taught me invaluable lessons and helped me develop insights. I want to share those insights and life-lessons with discerning and interested readers who have the thirst for knowledge and the will to achieve.

It took me a while to give shape to my ‘idea’, but today you are holding it in your hands. I believe that this book is like a river where ideas flow and are joined by new streams of innovation and inner-vision to lead you towards the vast sea of knowledge. I hope you will agree with me once you have finished reading the book.

Before I sign off, I would like to state that my friend since childhood and business partner, Mr R.S. Goenka with whom I share the ‘advaita’ bond has been both, my guiding light and my life-force. The divine and sublime energy that emanates from him rejuvenates me. This endeavour of mine is the result of the immeasurable inspiration that I continue to receive from him every day.

I would like to thank Mr Sushil K. Goenka, managing director of Emami Limited, for spending considerable time with the editorial team of this book and sharing details pertaining to the measures employed by the Emami Limited to fulfil its Corporate Social Responsibility (CSR). And I must also inform the readers that this book would not have been possible without the co-operation of ‘the children’ of the family who are also the second generation promoters of Emami Limited. Thus, I would like to thank and bless Ms Priti A. Sureka, Mr Aditya V. Agarwal, Mr Harsha V. Agarwal, Mr Manish Goenka, Mr Mohan Goenka and Mr Prashant Goenka for meeting the editorial team time and again and sharing the success stories of the brands mentioned in the book, Emami’s marketing and branding strategies and how the group continues to rule the global market. I pray that each one of you will continue to steer the Emami Group towards new heights of success.

Mr Pramod Shah and Ms Jayeeta Ganguly have taken great efforts in interviewing me and then giving final shape to the book. I would like to thank both of them for their constant assistance and support during this endeavour.

Radhe Shyam Agarwal

1

THE BASICS OF BUSINESS

Let’s start from the very beginning – the basics of business. It is not only the best place to start, it is also the place to start.

Just as a flourishing tree has its ‘life’ in the seed that was planted, similarly in life and in business, one needs to sow the seed first, then carefully nurture it and watch it grow bit by bit. Therefore, business too cannot be hurried and one will have to give it time to develop and thrive.

To begin with, let us discuss the strategies you need to apply when starting a new venture. Let’s see if my experience and insights can answer some of the many questions in your mind.

Question: You left a very lucrative job with the Birla Group to be an entrepreneur. What prompted you to take such a step? And how was Emami actually born?

Answer: You will get the details about my initial life in the book, Ek Aur Brahmaand, but here I would like to say that there comes a time in your life when your dreams do not let you rest until you have taken the first step towards fulfilling them. I found myself in a similar situation when I took the leap.

I was very happy and comfortable with my job. I received support and respect from my boss, Mr Aditya Birla. He was an expert in the field of management but was not a man of accounts. He, however, had a deep interest in the subject and learnt to understand the intricacies of finance, balance sheets and accounting from me. I truly enjoyed working with the Birla Group, but in my heart, I was restless.

I wanted to venture out on my own, start my own business. Although I was aware that this path would be fraught with obstacles and challenges, nothing could dissuade me. Human beings have boundless energy but are often undone by fear. However, the day one starts to realize one’s own power and energy and decides to overcome this fear, half the battle is won.

I started the business with my friend Radhe Shyam Goenka whilst still working with the Birla Group. I had to balance the two and tread carefully. Despite the long hours, sleepless nights and great risks that were our constant companions, we were determined to succeed. Neither criticism nor hardship stopped us and we took everything – the good, the bad and the ugly – in our stride.

On the footpaths of Kolkata, you will find hundreds of booksellers selling books on a variety of subjects. When Goenka-ji and I conceived our business, we would wander from one footpath to another browsing for books that would help us to come up with the perfect formula for cosmetic products. But, alas, no such ‘perfect’ book could be found. The search seemed endless, but we kept on reading, researching, experimenting and innovating. Eventually, we succeeded and thus began our journey.

When Goenka-ji and I decided to branch out on our own; we were inundated by many thoughts and ideas. However, as it was not wise to work on all of them simultaneously, we selected the idea which had the most potential, was ‘workable’, and we concentrated on making that a success. Innovative products pertaining to beauty set the ball rolling and look how far our dream, Emami, has come today.

Question: Goenka-ji and you faced many hurdles in your initial days. Can you share some of those with us?

Answer: There were so many. Let me think … During our early days, I remember both of us manually hoisting 40-kilo vats and placing them over the ovens. We borrowed money and worked on the shop floor alongside our workers in a workshop that ‘spread’ across a mere 150 square feet. When the products were ready, we had to deal with excise and other legal hurdles. We had to face the inquisition of the government inspectors and many such problems however, we ploughed on.

As you are aware the production processes for creams and talcum powders have to pass through many complex steps and procedures. I remember how we had to deal with various authorities who used to put up many impediments on the pretext of the Drugs and Cosmetics Act, 1940 and the Medicinal and Toilet Preparations (Excise Duties) Act, 1955. There was nothing wrong with our processes. We took care and did not indulge in anything that would harm the users. But, the authorities tried to encumber us from following our processes. As you can fathom, most of them had vested interests. Sometimes the ‘problems’ would relate to the stock register, production registers, raw material register … the authorities would haul us up on flimsy grounds but we learnt to tackle such authorities – tactfully and intelligently. Each new experience and each new situation taught us life-lessons that prepared us for the journey ahead.

As entrepreneurs, we also had to deal with local hooligans and face their dadagiri. They would ask for ‘donations’ and if we did not oblige, they did not let us work in peace. The police did not offer any protection against them. Initially, these issues bothered us and there were times when Goenka-ji and I wondered if we had taken the right decision to take the plunge to set up a business. Fortunately, things settled down over time. We realized that if we wanted to do something for the greater good, we had to make things work within the existing set-up of systems in our country.

Question: Sir, according to you how should a first-time entrepreneur examine his / her readiness to take the plunge??

Answer: Before starting any business, a would-be entrepreneur should take the time to analyse his or her own mind. There are certain questions he or she should ask:

Why do I want to go into business?

What kind of business should I start and what is my goal?

Do I really have the desire, the passion and the drive to fulfil my dreams?

Am I ready to put in long hours, be deprived of sleep, sacrifice not only my peace of mind, but a lot more to reach my goals?

Am I really ready to ‘rough it out’ without complaining and losing faith?

Do I have the willpower to fight all odds and face fresh challenges every day?

Am I confident enough and do I have the faith to keep me going?

Every ‘first time’ entrepreneur should ask these questions everyday – make them a part of his/ her self-analysis programme. You will not be able to cross the Rubicon to taste success until your desire and your passion becomes your driving force. This force will make you feel restless and compel you to give it your best shot every time. Although the dreams that one has when one is wide awake are the ones that are the most difficult to realize, they are the ones that shape and give meaning to one’s very existence.

Question: What are the important things that a new entrepreneur must do when designing or planning the business?

Answer: Every first-time entrepreneur should:

Study the ‘history’ of the business that he or she is planning to get into.

Study its viability and analyse its growth factors.

Collect and read relevant data, government policies pertaining to the business.

Make a note of the changes that have impacted upon such businesses in the past and those that might affect the business in the future.

Carry out a market research and analyse the sustainability of the ‘idea’ in the long run.

Know his or her competitors in the field; analyse their strengths and weaknesses. Only then can an entrepreneur formulate plans to defeat (or amalgamate) the competition.

Draw a financial chart after making a thorough research about the proposed venture. It is important to know exactly how much investment is required and from where one can procure the required finance.

Always keep long-term goals in mind and remember that there is no ‘shortcut’ to success.

Keep in mind whether the business will contribute towards the process of nation-building.

A first-time entrepreneur has to come to terms with the fact that in the field of business there is no linear ‘career-graph’. You are bound to have your share of pitfalls before emerging to bask in the glory of success.

Before setting up a business, it is necessary to think of the ‘size’ of the enterprise. Begin with a size that you are confident of managing comfortably and one that will require moderate investment. You should also plan well in advance and aim for realistic goals/targets that will be achievable within the timeframe that you have stipulated.

Question: Can you share more tips with regards to business selection and how this helps to succeed?

Answer: Business selection is of utmost importance and it is advisable to opt for a line that will be in demand for a long time and where the chances of losses will be minimal. It is mandatory for any newcomer to follow the motto ‘Be Innovative’ at all times. There is no point in starting yet another ‘Me Too’ kind of business and joining the rat race.

When we started out, we specialized in fast moving consumer goods (FMCG) business. Both Goenka-ji and I knew that they would be in demand and that we had to be different and thus was born our motto: ‘Be Innovative’. However, after achieving considerable success in the FMCG field, when we started our paper mill business, we forgot this motto. As a result we were fighting with small production houses and other paper mills. We felt we were fighting a losing battle. So, we went for a course correction and changed our tactics. We shifted to quality newsprint paper and it spelt success with a capital S.

It was then that we really realized that ‘Be Innovative’ had been more than our motto. It was our strength, and since then we have not deviated from it or forgotten about it and Emami has continued to prosper.

Question: According to you, what are the qualities or factors that hold a business together?

Answer: The qualities or factors that will hold your business superstructure together include value-based principles, ethical ideology, good work environment, an integrity-based managerial system and perfect team work.

Question: There are so many laws that an entrepreneur has to abide by before and