Subhiksha is an Indian retail chain with more than 1400 outlets selling groceries, fruits, vegetables, medicines and mobile phones. It was started and is managed by R Subramaniam, an IIM Ahmedabad alumnus. R Subramaniam, Founder and Managing Director of Subhiksha plans on taking its chain across the country He also plans to invest Rs.500 crore to increase the number of outlets to 2000 across the country and touching Rs 5,000 crore by 2010.
The name Subhiksha means prosperity in Sanskrit. Subhiksha in Sanskrit also means “the giver of all good things in life”. It opened its first store in thiruvanmiyur , Chennai in March, 1997 with an investment of about Rs. 5 lakhs. The retail chain has seen a considerable growth by offering goods at cheaper rates and there by increasing its customer base. It is also dubbed as India's largest retail chain. Vision to deliver consistently better value to Indian consumers, has guided Subhiksha to deliver savings to all consumers on each and every item that they need in their daily lives, 365 days a year, without any compromise on quality of goods purchased. Subhiksha now has the pan Indian presence with stores across Delhi, UP, Punjab, Haryana, Gujarat, Maharashtra, AP, Karnataka and TN. It has recently commenced operation in Kerala also. Today, it is a multi-locational, professionally managed and vibrant organization. Subhiksha now has even opened Specialized Mobile shops called Subhiksha Mobile where mobiles are sold at a discounted price.

When R Subramanian became an entrepreneur and started a retail chain called Subhiksha, there were not many entrepreneurs in India. In his family too, there were no entrepreneurs. There was no precedent in his family for him to dream of becoming an entrepreneur. His father used to work for the Reserve Bank of India and his brothers too were in government service. His cousins, after studying at various IITs, went abroad. That was how it was. After obtaining an engineering degree from the Indian Institute of Technology-Madras, he decided to join Indian Institute of Management-Ahmedabad as he was sure about one thing -- that he would not leave India to go abroad.


At IIT:
He was one of the few students who didn't go to the United States for higher studies. Going to the US never fascinated him. He didn’t know why. He had always been doing unconventional things, so it was kind of offbeat not to go to the US. He preferred doing something in front of my own people rather than going to a foreign land because this gives you more satisfaction and recognition. And the sense of achievement is far greater than doing the same thing in a far-off land.Even the US was not the same US in the mid-eighties. Being one among the many workers and researchers there did not fascinate him. “India is your country and you will get as much opportunity as anybody else. If you don't do well here, you have only yourself to blame”..he says.
At IIM-Ahmedabad:
An MBA seemed a logical corollary because hardcore engineering was not really his cup of tea. Even when in IIT, he did Economics, and took electives like Accounting and kept topping those subjects. He was always doing different things from what everybody wanted to do. So, he joined IIM-Ahmedabad. At that time, his intention was to get into a good company like Pond's in Chennai and probably work in its marketing department. After his summer training at Pond's, they offered him a job too. But he got interested in the investment bank department of Citi Corp and he was one among the three who were recruited by them from IIM-A. After working there for 3-4 weeks, he realized that that was not where he wanted to work. He felt was cut off from the world and living in a world of trading. He felt he was doing more and more of the same and earning more and more money. That was not what he wanted to do in life. The thought of doing something on his own came to his mind then.
Joined Enfield:
He called Mr Viswanathan of Enfield who had given him an offer when he was a student of IIM-A and asked, 'Is your offer still on?' He said, 'Yes.' He resigned from Citibank and came down to Chennai. His family in Chennai was shocked. Resigning from Citibank to join a sick company was unthinkable. What he saw was this: it was a manufacturing company which would have all spectrums of job. He was with Enfield for two years from 1989-91.
Starts his first company called Viswapriya:
He wanted to start a company of his own and told Mr Viswanathan about it. Mr Viswanathan asked him from where he was going to get the money from? .Subramanian had no idea. Subramanian told Mr Viswanathan he would figure it out. Mr Viswanathan then told him that he would give him money to set up the company and he (Subramanian) run it for him. Mr Viswanathan provided him with the money, and in 1991, he set up his first company called Viswapriya. He got a galaxy of very good people on board. He basically did three things. He bought debentures from thousands of people who had them in very small numbers and consolidated as 1 lakh (100,000) or 2 lakh (200,000) debentures and invested in mutual funds. And the investors got a monthly income. Every time the money went to lakhs of investors, it went from Viswapriya and that way his company's name became popular.It was a good business to start and they were the pioneers in it. After he started, all the big guys got into the business. So it was good fun.
Started asset securitisation:
Today, everybody is talking about 'asset securitisation,' but in 1992, it did not exist in India. When he released a project to do asset securitisation, it was a huge hit. Three months after he did it, the State Bank of India did it, and a month later, ICICI Ltd too started. As he was the first guy, it was noticed; some small company in Chennai starting something like this for the first time in the country. It was making money, it was making Viswapriya survive and also, it made people notice it.
The big breakthrough:
The big breakthrough nationally came in 1994 when he started a new product IPO financing, which he called Prime Advancing. He created the first loan anywhere in the world for a guy who applied for shares without collateral, without guarantee. This industry and him, both, boomed. Customers were making tons of money, and he was also making tons of money. So it was a win-win situation for everybody. In 1994-95, he lent Rs 200 crore (Rs 2 billion). In 1995-96, he lent Rs 1,200 crore (Rs 12 billion). His net profit zoomed to around Rs 25 crore (Rs 250 million). Of course, competition came soon. And then in 1996, the stock market collapsed.
Entering the retail market:
There was no great logic behind entering the retail market in 1997. He made a study of two areas: software and retail. Between software and retail, he thought he was a bit late for software as Satyam, Infosys, Wipro, TCS, etc had already established by then. He didn’t want to be a small and late entrant. In retail, He thought he would be one of the early entrants, so he could have the learning curve much to our advantage. He allocated a Rs 5 crore (Rs 50 million) corpus to it and entered the retail business. There was a lot of thought process behind it. He wanted to attract not the top end customer but the aam aadmi. From his research of three months, he found that consumers prefer buying groceries from closer home. So, he decided to set up 1,000 sq ft shops all across the city and not a 10,000 sq ft big store at one location in Chennai. The next question was why would the customer come to his store abandoning the existing store? It had to be the price, because ultimately there is no difference between the branded products like say Boost or Surf or such things. So, he decided to sell branded products at a lower price.
Started Subhiksha:
He looked at all sorts of names; and finally he chose the Sanskrit word Subhiksha (prosperity) because it reflected the Indian ethos and it is a word that could be understood all over India. What he was trying to do was different from the western model; his model was truly Indian. His theme was, “why pay more when you can get it for less at Subhiksha?” In March, 1997, he opened the first store in Thiruvanmyur in Chennai with an investment of around Rs 4-5 lakh (Rs 400,000-500,000). He opened it with the clear idea that it was a part of a larger system. He thought the day he opened, there would be a stampede because the prices were low and he would sell goods of Rs 30-40 lakh (Rs 3-4 million) by the month end. But there was nothing of that sort! He sold goods of only Rs 5-6 lakh (Rs 500,000-600,000) in the first month.The consumers were very surprised, and they gingerly looked at the products and asked, are they seconds or old stock or defective products? In the first year, he opened ten stores in Chennai. He also started selling medicines at a discount. On the third day of the opening the pharmacy, there were about 100 people outside the store in the morning. He thought all of them were waiting to buy from our store. What he was expecting on day one happened on day three, he thought happily. But he soon found that they were not there to buy anything; they were chemists from the neighborhood who had come to do a dharna (protest) saying we could not sell medicines at a discount. Finally he had to go to court, and it was only in 1999 that the Supreme Court gave a ruling that he could sell medicines at a discount. He was doing quite well on the pharma front and he enjoyed all the attention he got. Another thing is the medicines that he was selling at a discount were bought mainly by the elderly who have no fixed income and they welcomed any discount. He was quite happy to be able to help them in some way. “Medicine retailing is more of a service than business for us. Of course, it is good business for us too. But our main motto is service”, he says.
Merchandise Mix:
Subhiksha had a wide range of products in its store—rice, dhal, sugar, oil, butter,
toiletries (like Lifebuoy, Tide, Surf, Colgate, etc.), jam, sauce, tea, coffee and
cosmetics (like Ponds Dream Flower

Buying Procedure:
The customer chose products from the display on the PC and paid at the cash
counter against a composite bill, which did not contain item details. The stocking
department processed the order, keyed in the details, and a shop assistant
collected the items and delivered it at the delivery counter. The detailed bill was
printed only if the data entered by the stocking department matched the
composite bill. The bill also showed the market rates and the savings made.
Subhiksha’s strategy did not allow the customers the pleasure of feeling the
goods before purchasing as in supermarkets. But Subramanian argued that
Subhiksha did not sell fashion, it sold food and grocery items which did not
require touch and feel by the customer. The closest that the store got to touchand-
feel was a store in Tambaram, where there were wall to wall displays of
samples of the products sold in the store.
Brand Image and Identity:
The brand image that Subhiksha aimed at portraying was of a trustworthy,
reliable store that cared for the customer and ensured the best deals or lowest
prices for them. It aimed at being perceived as a trusted source of household
needs, easily accessible and one that offered great prices and savings.
Brand Positioning:
Discount retail chains like Subhiksha needed to position themselves against the
neighbourhood stores, which were their major competition. The latter offered
personalized service and had small scale operations. However, they were not
technology savvy and did not have economies of scale. They were seen as
profiteers rather than relationship builders. The unique position of Subhiksha
stemmed from the relentless focus on value delivery.

Brand Strategy:
By opting for smaller outlets, Subhiksha increased its presence. The aim was
that no one should be further than 2 km away from a Subhiksha outlet. The target
obviously was the masses. To succeed, the discount chain needed to integrate
backwards into the supply chain, cut out middlemen and offer better prices to
consumers. Organized discount retailing was still relatively unexploited in India,
and Subhiksha was cashing in on this opportunity.
Subhiksha worked on the premise that it would do business with the customer for
the next 30-40 years. Therefore, the focus was on building a lifetime relationship
with the customer than merely a transactional one. In this respect, the company
attempted to know the customers—where they lived and what exactly their needs
were.
Branding through Advertising:
Subhiksha had initially used only print advertisements and mailers to promote its
services. It began advertising on television before the Diwali firecracker sale and
also to position itself as a retail store brand which gave a value offering to
customers that contributed to better savings and hence an improved lifestyle.

Expansion plans:
By March 1999, he started expanding rapidly. From 14 stores, we expanded to 50 stores by June 2000. In the next two years, we had 120-130 stores across Tamil Nadu. Another big thing was, in 2000, ICICI Venture invested in his company. He saw to it that the moment He got into a city, He started as many stores as possible there. Only that made business sense. Then, till 2004, he made sure that he consolidated before he expanded, though there was a lot of pressure on him to expand nationally. He decided to look at every part of India which is significantly literate and is a significant consumption market. He wanted to be everywhere. He looked at the telecom companies as our role model. They employed capable regional managers and expanded. His business is also extremely local. He couldn’t sit in Chennai and run a store in Chandigarh. He decided to have very good quality people to run the region, area, town and the store.In 2004-05, he decided to have 420 stores in places like Gujarat, Delhi, Mumbai, Andhra and Karnataka by 2006. In 2005, he started recruiting people in various regions. Today, he has 500 plus stores in all the places that he had planned. He became India's largest retail chain store with 500-plus stores. “India is a large country and there are still opportunities to avail of. Though now, the thought of opening stores outside India is not tempting because there are enough opportunities in India. We may look at overseas markets too. . . Maybe later, after we open 2,000 or 2,500 or 3,000 stores in India”, he says.
Financial crisis:
In early September, there were allegations that the firm was not paying its suppliers, and reports said that the firm had sold a 10% stake to billionaire Azim Premji for Rs230 crore. Then, the company said that after its merger with Blue Green Constructions and the subsequent renaming of the firm as Subhiksha India, the merged entity would seek a listing (Blue Green is already listed on the exchanges). Employees at some Subhiksha stores in New Delhi and its environs report that the retailer had not paid them salaries for August.
“As an organization, we have 5,500 or so (employees) across the country and every single employee has been paid whatever salary is due and payable for the month of August in the month of September. There is not a single employee that has not been paid by us” says Subramanian..
As of January 2009, Subhiksha has been facing severe financial crises pertaining to liquidity. This has lead to shutting down of a large number of stores across the Nation.Cash-strapped retail chain Subhiksha Trading Services on Monday, February 09, 2009 ruled out declaring bankruptcy and said it may consider selling stake to raise funds as it struggles to arrange Rs300 crore to meet immediate operational requirements. The company is currently undergoing a corporate debt restructuring (CDR) exercise with lenders reviewing its books.
“No, not at all, as that (declaring bankruptcy) is not a solution. We have a viable business which is cash-starved and CDR will help us revive this,” Subhiksha Trading Services managing director said. He said the company, which has a total debt of around Rs750 crore, may have to look to the equity route to raise money in order to find cash for preventing the company from stopping its operations. “If there is no money, we can’t run operations but if there is no debt, we have to look at options like equity,” he said. The company’s lenders, including 12 foreign and Indian private sectors banks, have sought a review of its balance sheet to speed up fund raising process.“As part of CDR, the banks would need to get a current balance sheet rather than a 31 March 2008 balance sheet and they also want to ensure that events of the kind that happened in the last three-four months do not recur,” he said.
The company would be able to raise Rs300 crore, required for meeting operational expenses, only after completion of the CDR process, managing director R. Subramanian said.
“We are coordinating this review as this helps us as well...We are wholly part and parcel of this review and the idea is to ensure that the revival plan (for the company) is well crafted with learnings from the review,” he said. The company’s accounts are audited till 31 March 2008, and a review would take into account the period after it. On the issue of payment of employees and property owners, he said the company was “trying for emergency cash”. Subhiksha’s operations have come to a standstill for the past few weeks due to non-payment of employees salaries, huge debt burden and arrears to suppliers, and the company is seeking liquidity infusion to the tune of Rs300 crore to revive its operations.
In many parts of the country, the company’s stores and warehouses have been subjected to vandalisation and ransacking by unidentified elements for the past one week. Subhiksha had expressed helplessness in the matter saying non-payment of dues to security agencies have left its assets unguarded and vulnerable. Subramanian said the company is taking steps to protect its stores and assets but it has been crippled due to shortage of staff.
Work life:
He works hard. He usually works from 8 in the morning till about 10 in the night. He relaxes at home reading or listening to music. He reads a lot, mainly online. He leads a reasonably balanced life. Working 12-13 hours a day six days a week, is his working pattern. He doesn’t work on Sundays. He keeps Sunday evenings and afternoons only for family. But he travels 12-15 days a month visiting all the Subhiksha regions.

Steve jobs, at The Electronics Club at Homestead High School.

'You've got to find what you love,' Jobs says

This is the text of the Commencement address by Steve Jobs, CEO of Apple Computer and of Pixar Animation Studios, delivered on June 12, 2005.

I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. Today I want to tell you three stories from my life. That's it. No big deal. Just three stories.

The first story is about connecting the dots.

I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?

It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?" They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would someday go to college.

And 17 years later I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.

It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:

Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.

None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, its likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.

Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

My second story is about love and loss.

I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.

I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.

I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.

During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the worlds first computer animated feature film, Toy Story, and is now the most successful animation studio in the world. In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.

I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.

My third story is about death.

When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.

Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.

I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.

This was the closest I've been to facing death, and I hope its the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:

No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.

Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry. Stay Foolish.

Thank you all very much.

RAMALINGA RAJU,
FORMER CHAIRMAN ,MD,
SATYAM COMPUTER SERVICES LTD.
Founded: 1987
Headquarters:Hyderabad, Andhra Pradesh, India
Key people: Ramalinga Raju-now resigned Chairman
Industry: Information Technology
Revenue:As Reported by the Company:▲ 2.1 billion USD
Actual Figures: Unknown
Employees:52,865 (As of September 30, 2008)

EARLY LIFE:
Having made a humble beginning to rise to the dizzy heights of success and become one of the richest Indians, Byrraju Ramalinga Raju is described as the pride of Andhra Pradesh and the pride of Telugus. He was born to a farmer B. Satyanarayana Raju in Garagaparru village in West Godavari district of coastal Andhra Pradesh September 16, 1954. Satyanarayana Raju moved to Hyderabad in the 1960s. Ramalinga Raju's grandfather was an enterprising farmer who ventured out of traditional agriculture into agribusiness and bought a sugar mill. The venture backfired and the family lost a fortune. It then scattered into different parts of Andhra and Satyanarayan Raju, Ramalinga Raju's father, whose name inspired the group's name Satyam, moved to Hyderabad and became one of the first farmers to start commercial grape production around Hyderabad. The family recovered and Ramalinga Raju, the eldest son, was sent to the US in 1975 to get an MBA degree from Ohio University after he completed his B.com from Andhra Loyola College at Vijayawada. Ramalinga Raju had a stint at Harvard too. He had attended the Owner/President course at Harvard. He has two brothers and a sister. Raju is married to Nandini. They have two sons, Teja Raju and Rama Raju, and a daughter, Deepti who is married.
In India, as a commerce student at Vijayawada, he had been a carefree young man, from a well-to-do farming family, with not a worry in the World. To begin, when Ramalinga Raju came back from the US in 1977 armed with ambition and new ideas, he tried to build new business for the family. Ramalinga Raju moved away from the traditional agriculture business and set up a cotton-spinning and weaving mill named Sri Satyam. Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions This earned him his bread and butter. Out of curiosity he had brought a small computer back with him from the US. It was a glorified programmable calculator. He realized that information technology would be big in the future and took the plunge in this new business, about which he had limited knowledge.
Satyam Computer Services Ltd:
Satyam (Sanskrit for 'truth') Computer Services Ltd was founded by B.Ramalinga Raju along with one of his brothers-in-law, DVS Raju in 1987 in Hyderabad. He was so influenced by his father that he named the company after him. It was a humble beginning for Satyam with only 20 employees. Satyam Computer Services Ltd was incorporated in 1989 and it went public in 1992. He learned a great deal during his time at OU and in the United States. During that time he foresaw the upcoming trend of outsourcing and the future prominence of computers. He started an IT company with 20 employees and bagged a multitude of IT projects from US companies. The company went public in 1992.Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries.Ramalinga Raju very soon realized that there could be higher margins if one could convince companies abroad that Indian companies could develop the software in India and upload it to the US companies mainframe computers through a satellite data link. Satyam was one of the first companies to get a dedicated 64kbps data link for such "offshore" development. Satyam was among the first Indian companies to make the unique paradigm shift from onsite-led operations to offshore driven ones. Raju also found Satyam Infoway, now called SIFY, an Associate Company of Satyam and India’s largest Internet service provider and first Indian company to get listed in NASDAQ. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market. Through his managerial skills and quality leadership, Ramalinga Raju built Satyam into a multinational company and bagged several key contracts, especially from the US. Satyam began trading on New York Stock Exchange in 2001. With each passing year, Satyam strengthened its position and extended its operations to various locations.
The Transformation:
Satyam also became one of the few companies in the world to attain the top rating -level5- in the capability maturity model (CMM) instituted by Carnegie-Mellon University's software engineering institute. Satyam's foray into corporate data and Internet services too was path breaking. While several e-mail companies were languishing in the pre-Internet days due to unreasonably high license fees and port charges by Dot, Satyam Infoway moved into this space in 1995. It invested heavily in TCP/IP networks when the only internet service provider was the government monopolized VSNL. At that time companies could only be listed in India after three years of profitable business, while Internet play required large funding for infrastructure and acquisitions. Satyam quickly moved to list Satyam Infoway (SIFY) on Nasdaq with great success. On 19 October 1999 it became the first internet company from India to be listed in the global markets. Satyam Infoway reached a milestone with its subscribers base crossing the two lakh mark. SIFY posted a profit of Rs 67 crore for the year ended March 31,2000 against Rs 10 crore in the previous year.
Setting Standards:
While high-flying SIFY has caught people's imagination, the flagship Satyam ComputerServices, a software services company, has grown from a turn over of less than Rs4.7 crore in1993 to Rs679 crore in 2000(146 times) and its net profit 149 times from Rs 90 lakh to Rs134 crore. Satyam today has become folklore in Andhra Pradesh. Satyam now has six development centers in India, seven overseas and marketing offices in 30 countries. To increase technology competency continuously, the company has started a Tech Guru scheme. These are top line tech professionals from the global IT industry, who come to the impressive Satyam Technology center (STC), Hyderabad and conduct courses for about two weeks. Already nearly 30 such professionals have been to the center. A brainchild of Ramalinga Raju, STC is perhaps the most impressive corporate campus in India and would be well placed in the rest of the World. IN THE PICTURE:Satyam Development Center
Choosing the right partner @ speed of thought:
Choosing the right partner in software services the world over, has been the key strength of Ramalinga Raju. The November 1999, the all-cash Rs499 crore India-world deal looked astronomical. It made several people to sit up and take notice. Nasdaq certainly did. It gave an even higher valuation to Satyam's subsidiary - Satyam Infoway (Sify), than before. Consequently, its market cap went up by $800 million.
It has tied up with Computer Associates international to provide online access to advanced E-business applications for small and medium enterprises. The venture will have an initial investment of $3million.It has also entered into an agreement with Texas-based Enterprise Inc. to enable E-market solutions for traditional businesses and dotcom companies worldwide. Focusing on the auto sector, Satyam decided to tie up with TRW under which the latter will outsource to the venture at least $200 million worth of projects, spread over a five- year period. Satyam Infoway Ltd took 25% stake in the popular Cricket website Cricketinfo.com by issuing $37 million worth of American Depository shares (ADS) in an all stock deal. SIFY's buying spree continued. It has signed an agreement to buy-out 100 per cent of IndiaPlaza.com for $8.1 million. It is an all-stock deal. Satyam computers is tying up with CCMB(Centre for Cellular and Molecular Biology) in bio-informatics, a hot new field which combines molecular biology with data mining and warehousing in information technology. True to its reputation for speed, Mr.Raju is in advanced discussions with CCMB for setting up an International training center in bio-informatics, among others.
How he runs the Company:
Raju has always felt that to really succeed one must have a vision and must be ready to take risks. That's the reason Satyam's management style is unique. It does not function as a normal pyramidal hierarchy. Every department or division is formed as a circle where the head operates as a CEO of an enterprise, with all the responsibility of running an independent company, including making profits. Even though the perks in Satyam are lower than the industry standards, What holds the staff together is Raju's unique "power in one" philosophy that promotes togetherness on the mind's plane, including the singing of a corporate anthem together. Its staff attrition rate is a half of the industry's turnover of 15 per cent per annum. Content wise, the crux of the philosophy is Japanese. Raju received the Ernst & Young Entrepreneur of the Year Award for the Services sector. In the manner true to him he explained that he was receiving the award on behalf of all Satyam associates.
The Person:
Raju is a very soft-spoken person and quite accessible. His passion is reading and has anextensive library at home. His reading interests include philosophy, science and management subjects. Raju showed a strong social orientation and has been furthering the cause of social transformation through Byrraju Foundation and EMRIEMRI.

SATYAM TODAY:
Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries. Satyam Computer Services Limited offers consulting and information technology (IT) services worldwide. The company operates in three segments: IT services, Business Process Outsourcing (BPO), and Software Products. The IT Services segment provides a range of services, including software development, packaged software integration, system maintenance, and engineering design services. Its BPO segment provides services covering human resource, finance and accounting, customer contact, and transaction processing. Its Software Products segment engages in the product development and creation of propriety software.

IN THE PICTURE: Ramalinga Raju (left), Founder and Chairman, Satyam Computers, and Ravi Narain, Managing Director and CEO, NSE, at a listing ceremony of company’s shares at NSE in Mumbai .

The company offers services to customers in a range of industries, including insurance, banking and financial services, manufacturing, telecommunications, transportation, and engineering services. The company markets its services primarily to companies in the United States, Europe, the Middle East, and the Asia-Pacific region. The company has a strategic alliance with MindFlow Technologies Inc.
Satyam's network covers 67 countries across six continents. The company employs 52,000 IT professionals across development centers in India, the United States, the United Kingdom, the United Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam. Satyam is listed on the New York Stock Exchange and Euronext. Today, Satyam has a global presence.It serves over 654 global companies, 185 of which are Fortune 500 corporations. The company, whose revenues crossed $2 billion in 2007-08, became the first Indian company to list its American Depository Shares (ADS) on Euronext, which is one single cross-border trading platform of NYSE Euronext Group.
AWARDS AND ROLES:
Raju has won several awards and global accolades, which include

• Ernst & young entrepreneur of the year services award 1999.
• Andhra Pradesh Academy of Sciences medal 1999.
• Dataquest IT Man of the Year Award 2000.
• Asia business leader award 2002.
• CNBC’s Asian Business Leader – Corporate citizen of the year award in 2002 .
• Hyderabad Management Association life time achievement award 2006.
• Honorary doctorate by Jawaharlal Nehru Technological University 2006.
• E&Y Entrepreneur of the Year 2007.

For his achievements and contribution to society, he has been awarded Doctorate by Anna University Chennai on 14 Dec 2007.
Raju has played a key role in taking the Indian IT flag globally, and is presently on the
Executive Council of National Association of Software and Services Companies (Nasscom), the apex forum of the Indian IT industry( NASSCOM) National Council of CII, Board of Indian Institute of Foreign Trade and on the Consultative body of Ministry of IT, Govt. of India. He is also a member of International Advisory Panel of Malaysia’s Multimedia Super Corridor. He speaks at several forums in India and abroad on behalf of the industry and the country.
FRAUD:
Raju was involved in a controversy involving the company Maytas and margin selling of his shares. It eventually ended in Raju admitting to an accounting fraud to the tune of 7000 crore Rupees or 950 million pounds, and subsequently resigning from the Satyam board. The Indian subsidiary of PricewaterhouseCoopers was the auditor of Satyam.
FRAUDS AND CONTROVERSIES:
Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance, despite concerns raised by independent board directors and was later stripped off the award. In 2008 the company attempted to acquire two infrastructure companies - Maytas infrastructure and Maytas properties for $1.6 billion. Both companies are owned by Satyam CEO Ramalinga Raju's sons. His sons Teja B. Raju and Rama B. Raju are running Maytas Infrastructure and Maytas Properties. This eventually led to the probing of the deal by the government, a veiled criticism by the vice president of India and Satyam clients re-evaluating their relationship with the company. Satyam investors lost about INR 3,400 crore in the panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism all around as Satyam's shares fell 55% on the New York Stock exchange as well. Considering that none of the independent board of directors questioned the deals, investors are expecting a complete revamp of the board. In line with this three members of the board of directors resigned on Monday 29th December 2008. The World Bank has banned Satyam from doing business with it for 8 years due to inappropriate payments to the World Bank's staff. The World Bank in its own statement has denied allegations of "data theft/ malicious attacks", but confirmed the bribery and improper invoicing allegations. UK mobile payments company Upaid Systems is suing Satyam for over 1 Billion dollars on charges of fraud, forgery and breach of contract.
MAYTAS CONTROVERSY:
India's fourth largest IT bellwether Satyam Computers Services late Tuesday drew a barrage of criticism after it announced a decision to spend $1.6 billion (Rs.79.2 billion) to buy real estate and infrastructure firms run by the sons of its founder-chairman B. Ramalinga Raju. In a hurriedly convened conference call, investors and analysts questioned the move by the Hyderabad-based software exporters to pay such a huge sum to acquire companies linked to Raju and raised concerns about corporate governance at Satyam and its credibility in the eyes of global clients and shareholders. Wall Street made its displeasure known by pummeling the Satyam stock, which lost over 50 percent of its value on the New York Stock Exchange (NYSE) to $5.71 at 10.40 p.m. (IST). Ramalinga Raju, however, justified the decision, saying it was part of a 'good diversification strategy' and that it was only 'incidental' the target companies were controlled by members of his family. The listed firm informed the stock exchanges that it would spend $1.3 billion (Rs.64.35 billion) to buy a 100 percent stake in real estate firm Maytas Properties and $300 million (Rs.14.85 billion) for a 51 percent stake in Maytas Infra. Hyderabad-based Maytas Properties is run by Rama Raju, the younger son of the Satyam founder, and Maytas Infra by Teja Raju, the elder son.
Ramalinga Raju told analysts the privately held Maytas Properties was owned by a 'combination of some members of the immediate family and other related investors' while the promoters owned a 36 percent stake in the infrastructure firm.Satyam proposes to acquire a 31 percent stake in the listed Maytas Infra from the promoters at Rs.475 per share and make an open offer for a 20 percent stake at Rs.525 per share. Ramalinga Raju said he expected the process to be completed in about three months. The infrastructure company's stock lost 2.26 percent to close at Rs.486 on the Bombay Stock Exchange (BSE), while the Satyam stock gained about 0.5 percent to Rs.226.50 in Tuesday trading. Satyam's announcement was made after trading had ended.
When analysts and fund managers wanted to know why Satyam's robust balance-sheet was being saddled with acquisitions that would dilute margins, Ramalinga Raju argued that the infrastructure sector in India was poised for high growth in the years to come and that there would 'not be much of dilution, especially at the earnings-per-share level.' 'The business model of IT services has become riskier and depends on the export market and currency fluctuations. Rather than buying just another IT asset, we decided to de-risk and diversify,' he maintained. Satyam posted sales of Rs.81.37 billion and net profit of Rs.17.16 billion during the last fiscal to March 2008. At the end of September, the IT firm had cash and bank balances totalling Rs.53.13 billion. Representatives of institutional investors on the conference call were highly critical of the fact that Satyam had taken a decision which would change the face of the company without consulting the shareholders and warned of their strong opposition to the planned deals.
Ramalinga Raju said Satyam had to make a 'judgment call' and came to the conclusion that buying businesses unrelated to software but related to him personally was the best course. Representatives of investors such as Templeton and Motilal Oswal complained that Satyam had no business buying real estate or infrastructure companies and that their investment in Satyam was because it was engaged in providing software services. There was a 'fair amount of analysis and evaluation' before the deal was announced but there was 'no dialogue' with companies other than those which Satyam decided to buy, Ramalinga Raju added. Rama Raju, the vice-chairman of Maytas Properties, would have no role to play in Satyam while a decision was yet to be taken about what part Teja Raju would play in the affairs of the software company. The Satyam founder predicted that the share of the software and BPO business to the company's revenue would fall to 50 percent over four-five years, with the rest coming from the acquired entities. Maytas Infra posted a net profit of Rs.969 million on sales of Rs.18.74 billion during the 12 months to March 2008. Asked if the decision was reversible, Raju declined to give a direct reply, only observing that 'there are other parties involved'. He also argued that the credibility of Satyam would not suffer in the eyes of its clients. ' If we do the right things and make the right moves, there is no way the acquisition will dilute our ability to service our existing clients.'
ACCOUNTING SCANDAL OF 2009:
On the 7th January 2009, the company Chairman Ramalinga Raju resigned after notifying its board members and the SEBI that he had falsified accounts. Raju affirmed in a letter to the board that neither he nor the managing director had benefited financially from the reporting of inflated revenues. He confessed that none of the board members had any knowledge of the situation in which the company was placed. He noted that Satyam’s balance sheet as on the 30th of September, 2008, carried inflated figures for cash and bank balances of Rs 5,040 crore(as against Rs 5,361 reflected in the books). Furthermore, it carried an accrued interest of Rs 376 crore which was non-existent. An understated liability of Rs 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of Rs 490 crore (as against Rs, 2,651 crore in the books).

He stated that: What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.” Raju had appointed a task force in the last few days before revealing the news to address the situation .Satyam’s official website notes that
"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation” said Mr. Ram Mynampati, Interim CEO (pending ratification by the Board) and Member of the Board, who has been mandated by the Board to steer the company through this crisis.”

AFTERMATH:
Analysts in India have termed the Satyam scandal as India's own Enron scandal. Immediately following the news, Merrill Lynch (Now with Bank of America) terminated its engagement with the company as Credit Suisse suspended its coverage of Satyam. It was also reported that Satyam’s auditing firm PricewaterCoopers will be scrutinized for complicity in this scandal.
RAJU’S RESIGNATION:
The New York Stock Exchange has halted trading in Satyam stock as of January 7, 2009.India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-SHARE index from january 12. Ramalinga Raju resigned as the company chairman after confessing to a Rs.40 billion ($823 million) fraud that was going on for years.
Satyam was the brand image of Andhra Pradesh, Hyderabad was identified with this company, and its founder-chairman B. Ramalinga Raju was a hero to youngsters. But overnight, arguably the biggest fraud in India's corporate history has reduced the chairman and his company to a big zero. The man who spent three decades in IT services and built Satyam into India's fourth largest IT services firm, was described as a visionary, a global business leader and a thinker. Now, the angry shareholders want him to be put behind bars. The man who was once described as pride of Telugus, is today the target of their wrath.

.

M Krishna,
Managing Director,
KAM-AVIDA ENVIRO ENGINEERS.

Business: Manufacture and maintenance of sewage cleaning equipment Based: Hinjawadi, Pune Year of inception: 1994 Big break: World Bank-aided five-year contract for Navi Mumbai 5-6 years ago Employees: 70 Captial: About Rs 8.5 crore Revenues: Rs 25 crore (2007-08) Plans: Rs 100 crore revenues by 2012 Fifteen years ago, M Krishna lost his job when the cleaning equipment marketing company he was employed in shut shop. That led him and a partner, Pankaj Malhotra, to set up KAM-Avida Enviro Engineers, now a Rs 25-crore company that makes and maintains sewage cleaning equipment. Krishna, who is on the verge of closing a deal for Rs 25-30 crore in private equity investment from a US-based firm, aims to hit Rs 100 crore in revenues by 2012. "Our growth in the next three to four years will be powered by four lines of business: drain cleaning equipment, compacting garbage disposal trucks, industrial vacuuming machines and street sweepers," says Krishna, seated in his no-frills office at Hinjawadi, Pune. The company’s factory premises, which need urgent expansion, are an oddity in the otherwise snazzy neighbourhood dominated by IT/ITES companies, including Infosys. "We’re going to acquire more land in this area to expand our manufacturing capacity," says Krishna. His expansion plans are based on a spurt in growth that is expected in each of the markets that his four business lines address. Garbage trucks currently constitute the largest chunk of his revenues—Rs 20 crore—and this market, currently estimated at Rs 25 crore, is expected to grow to Rs 200 crore in five years. "This segment is getting privatised very fast. About 70% of our buyers are private contractors," he says. The company’s second largest business is drain-cleaning equipment, which is what it began with originally. KAM-Avida started out as a marketing outfit for a Chennai-based company called Southern Powertech, which used to manufacture the drain cleaning machines. It subsequently diversified into other businesses and reduced its focus on sewage cleaning equipment, leading Krishna and his partner to start manufacturing their own machines. "The company I worked for earlier shut down because it didn’t have manufacturing capabilities. We couldn’t make that mistake," he says. But getting into manufacturing was not easy given that neither Krishna nor Malhotra had relevant experience. Fortunately, a common acquaintance introduced them to Porus Dadachandji, an engineer who worked at Varun Shipping and was looking for an onshore job. Dadachandji became the third partner in KAM-Avida and now leads its engineering operations. Once manufacturing capabilities were in place, KAM-Avida’s next challenge was to create a market for drain-cleaning machines in India. Krishna recalls that even five years ago, most people (municipal corporations) did not see the need to use machines, as the job could be done inexpensively using human labour. Krishna and his team were eventually able to sell the machines on the efficiency plank—over a period of time, using machines was actually more economical. In the initial years, business was also slower because of bureaucratic slowness in municipal corporations. Much of it is still controlled directly by the civic authorities, but processes have become relatively smoother now, and this will improve further with contracts now being given out to private companies. Bright future Today, the market for drain cleaning equipment, which essentially consists of tankers fitted with suction pipes that eliminate the need for human labour, is estimated to be worth Rs 12-15 crore. This market is expected to grow to Rs 50-100 crore in five years, and much of this growth will come from the sewage rehabilitation projects being undertaken in tier-I and tier-II cities. Sewage rehabilitation simply means that drainage networks are cleaned and cased with silt-resistant material, which is the only solution, because building new sewage lines would mean breaking down overlying road networks. Unlike the garbage disposal business, which is led by the private sector, drain cleaning is government (municipality)-led. The industrial vaccuming and street sweeping business are relatively new ones for KAM-Avida. The company has sold 10 street sweeping machines, for which it has a technology tie-up with US-based Johnston, in the last 12 months. It expects business to expand with the NHAI’s Golden Quadrilateral project nearing completion. "With 10,000 km of road to sweep, machines are inevitable," says Krishna. This apart, city municipal corporations are also prime customers, and again this market, now at just Rs 5 crore, is expected to grow to at least Rs 100 crore in five years. Industrial vacuuming (machines that vacuum spillage such as cement and oil), which is already a Rs 100 crore market, is the company’s newest business and it has deployed a couple of machines so far. M Krishna, Managing Director, KAM-Avida Krishna plans to fund the expansion required to address these growing markets with private equity money, for which, the company will dilute 48% equity. So far, about Rs 5-6 crore in bank loans and Rs 2.5 crore in borrowings from friends and family have gone into financing the business. "Part of the PE money will also go towards repaying debt," he says. The company got its first break from the World Bank-funded drain cleaning project for Navi Mumbai about six to seven years ago, which included a five-year maintenance contract. Today, 10-15% of its revenues come from operation and maintenance contracts, while the balance comes from selling equipment. Yet, raising money has never been their biggest problem. "In India, cleaning is considered taboo. When we started out, a lot of our work was educating people, convincing them that machines were necessary. It required, and continues to require, a big change in mindsets. I think of myself as a cleaner who has dignity," says Krishna, though even after over 15 years in the business he is not sure if mindsets have changed enough to transform a Mumbai into a Singapore or a Shanghai.

Business: Manufacturing, exporting egg powder

Based: Erode, Tamil Nadu

Year of inception :1995

Clients: Food companies in Japan, Europe

Big break: Being accepted by Japanese customers at a time when indian agri -products were shunned due to the pesticide problem.

Revenues: About Rs 100 cr (2007-08)

Profitability indicator: Net profit of Rs 10 cr

Employees: 140 regular (plus 100 contracted)

Plans :Triple revenues by 2011-12, start selling branded eggs

Conventional wisdom need not always work. At a factory at Cholangapalayam village, 20 km from Erode, Tamil Nadu, SKM Egg Products has all its eggs in one basket, in a manner of speaking. The firm produces 1.1 million eggs daily at the Erode unit. It doesn’t stop there—the eggs are then broken. After removing the eggshells, SKM workers, using machines, ensure that the mixture is processed and undergoes treatment from a high-pressure spray before making its way out as egg powder, ready to be exported to 24 countries.

Customers, a proud CEO SKM Shree Shivkumar says, include Kraft, Heinz and an arm of Unilever. The multinationals use egg powder as an ingredient in their food products. Shivkumar’s father SKM Mailenandhan started SKM, the group that runs SKM Egg Products. Mailenandhan started his career as a general store merchant. In time, he became a poultry feed dealer, and then, a manufacturer too. His modus operandi was to not only sell feed to farmers, but also collect eggs from them for further trade. By 1993, when Shivkumar joined his father’s business, SKM was making money in the feed business, but losing it in egg trading. That was despite SKM being a major player, with daily volumes of 1.5 million eggs. "I got involved to set the business right," recalls Shivkumar. "Some improvements happened, nothing dramatic. The fact is, we were competing with small companies."

The shift

That was when a new window of opportunity opened up for SKM. The Tamil Nadu Industrial Development Corporation (Tidco) sought a co-promoter for a venture thatwould export eggs in processed form. SKM applied, and was chosen. SKM Egg Products was set up in 1995 in technical collaboration with Belgium’s Belovo. Tidco took an 11% stake (currently 7.6%). The plant at Cholangapalayam was set up in 1997, with a breaking capacity of 1 million eggs a day, capable of processing 3,500 tonnes of egg powder a year. This has since been upgraded to 4,600 tonnes.

The egg-powder exports segment is indeed a niche. Three players—SKM, Venkateshwara Hatcheries and Ovobel—constitute a market worth about Rs 230 crore. Venkateshwara has a capacity similar to SKM’s; it can process about a million eggs every day.

The ease with which SKM Egg moved into the processing space couldn’t, however, be sustained when the business was up and running. Trouble hit almost immediately. The problem was pesticide residue. It was an issue that shook the whole Indian agri-products industry, and SKM took time to beat the negative perception about the country’s products. After over three years, things started looking good.

Shivkumar attributes the turnaround to a seminar that SKM conducted for potential suppliers and distributors from across the globe ("there were guests from 27 countries") in December 1999. "Seeing is believing," says Shivkumar, "and all of them could see our processes for themselves." In 2001, when SKM Egg broke even, all the high-interest debt had been done away with.

The breakthrough had come from Japanese customers. It didn’t take long for others to sign on. About 40% of the company’s Rs 100 crore revenues (for the year ended March 2008) came from Japan, another 40% came from Europe and the rest from other countries. SKM hasn’t tried the US market despite it being a big egg-powder user. That’s because, Shivkumar points out, the cost of hosting full-time US inspectors at its factory, as also incurring the duties, is not something SKM is keen on now.

At the other end of the business process are suppliers. They form the most important part of the SKM business. That’s because one of the parameters that the company prides itself on is quality. And, in an egg powder business, quality hinges mostly on the input supplier. SKM has tie-ups with farmers across 16 farms who, together, supply 1.1 million eggs daily. To ensure product quality, SKM has its own supervisors and veterinary professionals at the venues.

SKM is now tweaking the model a bit by investing in its own farm. The target is to produce 600,000 eggs daily. Simultaneously, the company will set up a feed mill and also increase its egg-powder processing capacity to 6,000 tonnes a year. All this would entail an investment of Rs 58 crore (the outlay for this year). About 1.5 million eggs a day would be needed to make those 6,000 tonnes of egg powder a year. That leaves 200,000 eggs in its bag. And that’s the starting point for SKM Egg’s debut in the domestic market.

Branding eggs

The plan is to float branded eggs in India. Market research done, the idea will enter its test-marketing phase by October 2008. It might not be easy for SKM to taste immediate success in branded eggs, a nascent market where the likes of Suguna Poultry already have a presence. But SKM could take heart from the fact that egg

SKM Shree Shivkumar, CEO, SKM Egg Products

consumption is often propped up by strong economic growth, and a branded egg typically fetches at least a 50% premium over a normal one. Shivkumar says: "Five years back, the per capita consumption of eggs in the country was 38 per year. Now, it’s over 50." SKM could also have numerous variants in this business, including protein-enriched ones. Of course, a product targeted at the domestic market has another use: it won’t be hurt by currency fluctuations.

The plan, then, is to hard-sell branded eggs in India and consolidate the egg-powder business overseas. India, Shivkumar says, isn’t a market for egg powder. There would be an opportunity only when bakeries gain in size, or institutional users are mandated by law to use pasteurised eggs. Increasingly, SKM is looking to market value-added products, like mayonnaise mixes, overseas. This strategy is expected to up SKM’s net margin to 15% (from 10% currently). The company is targeting revenues of Rs 300 crore by 2011-12. One-third of that could be from branded eggs.

There could be better opportunities if the world market is opened up, says Shivkumar. For instance, egg-powder makers have for years been lobbying with the government to make Russia open up, but in vain, he says. The threats are from diseases like bird flu, which could hit its eggs business. But, Shivkumar believes SKM’s accent on quality could help tide over such crises. For the time being though, SKM is happy breaking eggs. And lots of them!