1. Aachi Foods — A Recipe for Growth

Since the final years are going for their In-Plant Training from the next week, I thought of sharing some new real life stories about people who have made it big in the Food Industry to bring out the entrepreneur in them. As our 1st  first feature we have the story of Aachi Foods from my/our own Tamil Nadu. Hope you all enjoy the feature and give your responses in the comments section below.

 1. Aachi Foods — A Recipe for Growth

“Nothing gives me more pleasure than seeing my brands stocked on the shop shelves,” says Mr Padmasingh Isaac, Founder Chairman, Aachi Foods, to a question on what he does to unwind… his hobbies?

If this is his idea of fun, he certainly must be a very happy man.

‘An Agent in Every Village'

In just over a decade since 1998 the ‘Aachi' group of brands has grown to over 160 products with plans to add even more. An agent network of about 3,500 across South India, ‘an agent in every village' ensures shelf space in 10 lakh retail outlets.

“What more do I want in life?” he asks. Lots more, it becomes evident, as he shares his recipe for growth.

He is in the process of making Aachi an umbrella brand to cover a range of food products, just about everything that is found on the kitchen shelves in any home.

More than three-fourths of the Indian food industry is in the unorganised sector, unbranded and commodity based. This is an opportunity to organise the unorganised and integrate them, which is what Aachi Foods is doing, he says.

As Mr Isaac sits in his office sharing his views on what the food processing industry offers to the entrepreneurs, there is a continuous stream of visitors – office staff consult him on pricing a new product, he instructs another to dash of a letter to a supplier to make up his mind.

There are over 5,000 food products that can potentially be branded whether masalas, the spicy powders that go into the making of mouth watering dishes, pickles, instant mixes that make life easy for someone cooking… the list goes on, he says.

This is one of the reasons that multinational companies are keen to enter India, says Mr Isaac, as he veers off to launch a tirade against the proposal to allow foreign direct investment into retail. “In India, there are more vendors than office goers,” and each of them is an entrepreneur. Foreign retailers will edge them out, he cautions.

The Government should support the domestic food processing sector and farmers both of which are crucial to the rural economy. Infrastructure such as cold chain is needed; entrepreneurs have to be encouraged with funding assistance and simplified procedures, he asserts.

Somebody has to organise the domestic food sector, and it is not a job for one person. Aachi Foods may have been conceived by one person but within a few years he had realised that growth could be bigger if shared with like minded individuals. Which is why he opted to outsource production to other entrepreneurs, says Mr Isaac.

Common Brand

There are a couple of dozen companies which have teamed up with Aachi Foods. Their units make food products for the common brand. Many of them have invested up to a couple of crore rupees and report a turnover of Rs 5-10 crore a year. Willingness to invest, a viable idea and the discipline to stick to good manufacturing practices, those are the common theme that link Aachi Foods with its suppliers, he says.

This is a model that can be replicated to include a few hundred entrepreneurs. As of now just about 60 per cent of the turnover, about Rs 300 crore is from production directly under Aachi Foods and the balance of about Rs 200 crore is from outsourced production.

Aachi has become a household name and a trusted brand known for its quality, he says. Its products are available across South India, Maharashtra, Delhi and 20 countries.

He will lend the brand name, back it up with an extensive sales network and advertising, and contribute to the business by suggesting products that can be made, sourcing raw materials and facilitating bank finance. Aachi Foods has decided to further tighten the ties between manufacturer and itself by taking a stake of up to 26 per cent in the equity of the company, says Mr Isaac.

The objective is to ensure quality and consistent supply.

“I have now developed a passion for this concept,” says Mr Isaac. In India, manpower is the strongest capital and that has to be tapped. The biggest challenges in developing an entrepreneur are instilling a sense of quality and the mindset to stay committed to it. “People typically believe that anything that is produced can be sold.”

But in food processing quality and consistent supply are keys to staying in the market.

For a bankable project funding is not a major challenge. But banks need to be proactive and support the small entrepreneurs and the large players like Aachi which have proved themselves.

So What Next?

Aachi is looking at backward integration to get into contract farming but this is after 2012, he says.

The company is planning a major investment in cold storage infrastructure and production of pure and blended spice powders at Gummidipoondi to the North of Chennai. Another project at a cost of Rs 15 crore is coming up near Red Hills to manufacture packaged drinking water, pickles and fruit juices.

With half a dozen brands in addition to the food range, brands such as Blesso, Twinkle, Twin Birds, Rani, Ponni and Sabash to cover the gamut of household items ranging from ayurvedic products, edible oils, cleaning agents, Mr Isaac's hobby will take up more of his time. 

Written by R.BAJAJI for The Hindu Business Line. Find the original article at http://www.thehindubusinessline.com/features/article2706774.ece