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Story of Four Entrepreneurs
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Story of Four Entrepreneurs - September 1st, 2007

http://www.business -standard. com/lifeleisure/ storypage. php?leftnm= lmnu4&subLeft= 2&autono= 293258&tab= r

The great hunger!

Suveen Sinha / Mumbai August 4, 2007


Suveen Sinha tracks the untold journeys of four entrepreneurs from penury to the accolades of super-success, big money and great power.

Meeting Sudip Dutta, the chairman and managing director of Ess Dee Aluminium, can be a surreal experience. Here he was, on a typically wet monsoon evening in Mumbai, sitting at a corner table in Copper Chimney, a restaurant that draws the reasonably well-heeled.

His Toyota Prado was parked outside, while a Mitsubishi Pajero, a Mercedes Benz and a fourth car he could not recall were at home. Clad in a tailored suit, he looked well groomed, and well fed. But when he spoke, it was of pantha bhat, which is the previous day’s fermented rice, flavoured with salt, chopped onions and pickles. It is something the poor in the eastern states survive on.

Sipping Chivas Regal, Dutta said: “Often, our family would have pantha bhat for breakfast, and we didn’t know where the next meal would come from.” That was 1988, in Durgapur. His father, a former army man, had just died.

Preparing for his higher secondary examinations, all Dutta knew was that Mumbai was the land of opportunity. Finally, the day the practical exams ended, Dutta bought the ticket. “I have everything now. But there is one thing I know. You can control everything but hunger. If you are hungry, you have to do something about it.”

As India has gone through various phases of growing up — turbulent, traumatic, fascinating and full of opportunities — people have come from everywhere and nowhere to script success stories. Dutta is part of a small group that has risen above its middle or lower middle class moorings, without legacy or capital, many of them without enough education, to spawn modern, but as yet unsung, fairy tales.

Ram Chandra Agarwal, who 21 years ago opened his first shop, all of 50 sq ft, today occupies 1.35 million sq ft of retail space. Lakshaman Dass Mittal, chairman and owner of the Rs 3,000 crore Sonalika Group, started out by getting local blacksmiths to copy a Japanese rice thresher to make a wheat thresher. Shantanu Prakash, the managing director of Educomp, saw education, his own and of others, as the way to rise above life in Rourkela, Orissa, where “no one had any money”.

Ashish Dhawan, the head of CrysCapital, which has funded many success stories such as that of BPO evangelist Raman Roy, says those from humble backgrounds work harder. They do not enjoy the networking that you might expect if you studied at Cathedral School or Harvard.

“They never forget their beginnings. Money does not change them, though it may change the next generation. The concept of thrift runs in their blood. Earlier I used to attach a lot of importance to education. But I do a lot less of it today,” says Dhawan.

When Dutta came to Mumbai at the age of 17, he joined a company that made pouches to package medicines on a salary of Rs 15 a day. He packed medicines, loaded them on trucks and was also the delivery boy. He wouldn’t go home for weeks and slept in the factory.

Opportunity knocked in 1991, after two years of toil, when the company’s owners wanted to sell it. By that time Dutta had accumulated Rs 16,000 through savings and Diwali bonuses. The cost of the pouch making machine was Rs 2.5 lakh. He offered to take charge of the company. As payment, he would give the owners all the profit after paying workers’ salaries and keeping Rs 5,000 for himself every month. In two years, he had settled the debt.

In 1994, he managed to get distributorship from Indal, which supplied the basic aluminium foil. The first printing unit was bought in 1997. Sometime later, Dutta noticed that Hindalco, which had acquired Indal, was losing interest in foils. That was the time to integrate backwards and start aluminium foil rolling.

The initial public offer of his company was floated last year, during which Dutta admits to an inability to sleep until he heard that the qualified institutional portion had been subscribed 52 times. The first television interview, preceded by frenzied smoking, made him a nervous wreck.

Today, Dutta betrays a touch of pride when he says that of his 700 employees, at least 450 are MBAs, engineers or chartered accountants. “Education only teaches you how to respect people,” he says.

Ram Chandra Agarwal, CMD of Vishal Retail, cannot recall the name of the company he joined for his first job. He only remembers that it was into rolling shutters and paid him Rs 300 a month. In a year, he was fed up. His father’s small business of “suiting and shirting” beckoned — his two elder brothers had already joined it — but it was not big enough to accommodate the youngest son’s dreams.

He opened his own shop of readymade clothes, Vishal Garments, in Kolkata’s Lal Bazar Street, occupying 50 sq ft rented at Rs 1,200 a month. The big jump came in 1989-90, with the frenzied response to his discount sale of MNC brands like Pepe. With this came the enlightenment that salvation lay in discount retail.

The first showroom came up in 1995-96 in Tiger Cinema, Dharamtalla, over 5,000 sq ft. Following the principle of competitive pricing, it had up to 300 people queuing up to get in at the time of Durga Puja. Soon, Kolkata was not big enough.

Agarwal moved to Delhi in 2001 and opened a showroom in Rajouri, charging 15-20 per cent less than the competition. By this time he had travelled across Europe and became convinced of the efficacy of the hypermarket system. His first came up four years ago on the outskirts of Delhi. “Garments alone were not enough. I wanted a big role in retail.”

Agarwal, who enrolled for a five-year law course at Surendranath College, only to drop out after three, reels off the numbers with panache. In the four years to 2007, Vishal has grown at a compounded annual growth rate of 86 per cent while the profit after tax has grown at a CAGR of 166 per cent. “Education helps, but you cannot teach hard work, leadership or quick decision-making.”

Vishal Retail’s initial public offer, in June this year, was subscribed 70 times, and ended at Rs 750 a share on its stock market debut in July, against the issue price of Rs 270. Agarwal’s target is to be among the top three retailers in the country. For now, his Ford Endeavor, which he uses for the 10-minute drive from home to office, has nearly as much space as Vishal Garment, 9, Lal Bazar Street, Kolkata.

Some 44 years ago, Lakshaman Dass Mittal stood lamenting before his friend from the Ludhiana Agriculture University. “Achchha faida hua teri dosti ka (nice reward I have reaped for being your friend).” The Mittal family, which had been led by the young Lakshaman Dass into putting all its money, and that borrowed from friends and relatives, in making wheat threshers, had just gone bankrupt.

The machines, returned by the farmers, had been assembled by local blacksmiths who had copied the rice thresher at the university. Mittal’s father was a foodgrain and seed dealer who made his money by sharing in the produce of the farmers.

Since it took up to two months to separate the grain from the chaff using bullocks, the harvested crop was susceptible to the vagaries of the weather. When storm or rain destroyed it, the young Mittal would hear his father sob through the night. The solution lay in quicker threshing, which could only be done by a machine, of which there was none.

The university friend, reeling under the charge, managed to identify the problem. The blacksmiths had installed straight cutters on the machine, not curved, as they should have been.Mittal persuaded more money out of family and friends and made the threshers all over again.

This time, they took off. Success bred more adventure in the form of forays into other farm implements. In 1970, three generations of the Mittals danced with joy when they sat down to count their wealth, clothes thrown in, and found it to have touched Rs 1 lakh.

The inevitable extension to making tractors happened in 1996 and, recently, the group launched a multi-utility passenger carrier, in collaboration of MG Rover of the UK. “I have seen the worst in life. As a child I had weak eyesight, but could not afford spectacles. So, I sat as close to the blackboard in class as possible. Often, the teachers would rebuke me,” says Mittal. Today, a large monitor on his desk shows the goings-on in various parts of the office.

In 1994, Shantanu Prakash, the managing director of Educomp Solutions, was back to the proverbial square one. He had parted ways with a college friend, who kept the brick-and-mortar education business they had started together after Indian Institute of Ahmedabad in 1988. Joining IIM-A was the culmination of a journey that took Prakash out of Rourkela to Delhi Public School, Mathura Road, and then to the famous Sri Ram College of Commerce in Delhi University.

Perhaps because his own path was paved by education, Prakash was convinced that future success lay in helping to educate others. Information technology was a new thing at that time. Prakash, who saw himself as a pioneer, an evangelist and something of a romantic, admits to fantasising about the potential of e-learning and digital education.

“There are 100 million kids out of school in India. What can we do about them? The non-profit and charitable concept has destroyed education in India. What Educomp is doing in education is like private healthcare and making it affordable as well as profitable,” says Prakash.

The beginning was tentative. With Rs 1 lakh in capital and two employees, he set up Educomp and set up the computer lab at Stuart School, Cuttack. The students had to pay Rs 30 a month for using it. “It was not easy. Schools are difficult to change. To get in and set up the lab was a huge challenge,” he recounts.

Today, Educomp has 1,500 employees, 10 offices, a fully-owned subsidiary in the US, a recently acquired company in Singapore and 3.6 million students on its rolls. It is the first listed educational company of the country. Its attrition rate is only 3 per cent. “It is easy to become passionate about education, rather than making colas. That is a huge component that keeps people here,” he says.

The next is back to where it began, setting up 100 schools across the country, brick and mortar stuff.

K N Memani, who began many years ago as an employee at S R Batliboi, at that time a small firm in Kolkata, and retired as the chairman and CEO of Ernst & Young India, says there are many who have the potential to be successful and know what to do.

But it is the fear of failure that thwarts most of them. “Luck, timing and decision making are all important, as is a wholesome perspective. But, in the end, you have to have to courage and fearlessness.”

(With Kausik Datta in Mumbai)

CMD, Vishal Retail

Age: 42
1985: Joins a rolling shutter company at Rs 300 a month
1986: Opens his garment shop, all 50 sq ft of it, rented at Rs 1,200 a month, in Lal Bazar Street, Kolkata
1989-90: Organises discount sales of MNC clothing brands
Now: Vishal Retail, of which he owns 65 per cent, occupies 1.35 million sq ft and is increasing it to 8-10 million sq ft “in a short period”
“Extraordinary work can be done by ordinary people if they have the passion and a good leader”

MD, Educomp Solutions

1988: Son of a SAIL employee in Rourkela, “where no one had any money”, cracks IIM- Ahmedabad
1990: Set up a brick-and-mortar education company in partnership with a college friend
1994: Sets up Educomp with two employees and a scraped-together capital of Rs 1 lakh
Now: Along with wife Anjlee, controls 60 per cent of Educomp, whose market capitalisation stands at Rs 4,115 crore. (The first venture, which the friend kept, has shut down)
“I have an unshakeable belief that I have a larger purpose in life — to change the world through education”

Chairman, Sonalika Group, and Consul General, Republic of Macedonia

Age: 75
1962: Makes a wheat thresher with the help of local blacksmiths in Hoshiarpur
1963: The family goes bankrupt
1970: The net worth of three generations of Mittals — clothes included — touches Rs 1 lakh
Now: Owns the Rs 3,000 crore Sonalika Group, whose tractor plant is certified by Washington-based Environment Protection Agency
“Once I applied for dealership of Maruti Udyog but was rejected. Today, I give out dealerships”

CMD, Ess Dee Aluminium

Age: 35
1989: Comes to Mumbai to earn a living and joins a pouch making company for Rs 15 a day
1990: Watches his first film in a theatre
1991: Persuades the owners of the foil company, who had lost interest, to sell it to him for deferred payments
Now: Owns 65 per cent of Ess Dee, whose name is the phonetic form of his initials and whose market capitalisation is Rs 1,413 crore
“If you give me a balance sheet, I will not be able to discuss the schedules, but will tell you what the problem with the company is”

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Nikhil Gadodia
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Re: Story of Four Entrepreneurs
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Shylender Alooru
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Re: Story of Four Entrepreneurs - September 6th, 2007

nice one man ... used it for my project
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