Too big to handle
Chandigarh based Checkmate International has the distinction of making chess pieces for Gary Kasparov’s signature brand and for upmarket retailers like Harrods and Hamleys, however, doesn’t boast of a balance sheet worth a king or a queen
By Deepshikha Monga & Vikas Kumar, TNN |
Chandigarh based Checkmate International is about 30 years old. The company, which has the distinction of making chess pieces for Gary Kasparov’s signature brand and for upmarket retailers like Harrods and Hamleys, however, doesn’t boast of a balance sheet worth a king or a queen.
The impending retail boom in India and the current wave of global outsourcing was just the time to make a few quick moves, but promoter Satish Mehra says he isn’t too keen. And then he adds with melancholy, “I think the company will die with me.” Not that Checkmate doesn’t have the wherewithal to grow big. Mehra’s problem is that both his children will not take up his business.
So, why should he grow big?
As they climb the rungs of the growth ladder, small businesses are often faced with the dilemma: “Are we growing too big?.” Concerns about quality, creativity, management control and competition from the biggies all start raising their heads. The promoters of these companies have spent years in building their little kingdoms almost single-handedly. They have handpicked their loyal soldiers and worked within set boundaries. But when it is time to cross the wall, many of them dither.
“It happens even now. But it happened so many times before when we were growing so fast. I used to think maybe we should stop. If I didn’t, things will go out of hand,” says Girish Patel, chairman of Ahmedabad-based FMCG firm Paras Pharmaceuticals, which makes brands like D’Cold, Borosoft, Moov, SetWet and Livon. Today, Paras is a Rs 700-crore company that dares to compete with giants like Hindustan Unilever and Smithkline Beecham.
Not all promoters are as adventurous as Patel. Hipolin, a cross-country FMCG firm showed promise in the 1980s but restricted growth thereafter. “We don’t want to grow dramatically. We can sustain the current growth rate and still remain a bigger force in a niche market,” the director of the Rs 23.7-crore (2006-07) company recently told ET.
Agrees B P Agarwal, chairman of the Rs 350-crore Surya Foods, which makes Priyagold biscuits, “It’s a constant challenge for us to fight at our level with the bigger companies. This means continuous investments in marketing and technology upgrades to minimise costs.”
When a small business grows out of a personal belief and passion, the transition to the next level isn’t an easy one. Take the case of Dubden Green, an organic food venture born out of Ganesh Eashwar and his wife Jayshree’s desire to “give back to nature”. Three-and-a-half years ago, Mr Eashwar relinquished his position as director at ad firm RK Swamy/BBDO while Jayshree left her own qualitative market research consultancy and travel portal to devote their energies full time to farming and selling organic products.
Today, while the business is limited to a single store in Shapur Jat in south Delhi, and a shelf presence in 20-odd retail outlets, the Eashwars have bigger plans — 100 exclusive stores and a presence in over 500 retail outlets in the next five years. With big retail chains like Wal-Mart interested in buying organic food on a regular basis for their stores in India, the Eashwars can afford to dream big. But in the opportunity also lies the catch.
The fallout: There will be enough firms supplying organic food which won’t truly be organic. “We’d like to grow big but without compromising on quality. What scares us is that if the organic movement tries to grow faster than the organic output, we’ll all end up compromising on standards,” says Mr Eashwar. Apart from concerns about quality, there is also apprehension among small businesses about losing the creative freedom in pursuit of bigger numbers. Take the case of Happily Unmarried, which is in the business of taking “boring products and making them interesting”, as founder Rahul Anand, a former JWT hand, says.
Mr Anand teamed up with Rajat Tuli (ex-Mudra) to start this unusual business five years ago. The duo add their touch of quirkiness to ordinary objects ranging from T-shirts to mugs and from door mats to bottle openers. Though it’s just a Rs 1-crore company now, Mr Anand and Mr Tuli are aiming for the Rs 10-crore mark soon.
But there is the problem of escalating real estate prices. So instead of setting up standalone stores for their products — they currently have one in Goa — the duo is working on establishing a wider presence in big retail chains. Mr Anand says his biggest concern today is preserving the creative culture of the company as it expands in size. “Today, we have 60 products in our range and we have both been involved in every single product from idea to production. But when we scale up our range to over 1,000 products, we’ll have to make sure each new product has the ‘fun’ spirit we stand for,” he says. Prof Anil Gupta of IIM-Ahmedabad and a consultant at Milagrow, which advises small companies, says that the dilemma of growing too big is inherent in companies, which do not invest in R&D and innovations. “When they innovate, they know they are not making themselves redundant. They can only grow big and big.”
The impending retail boom in India and the current wave of global outsourcing was just the time to make a few quick moves, but promoter Satish Mehra says he isn’t too keen. And then he adds with melancholy, “I think the company will die with me.” Not that Checkmate doesn’t have the wherewithal to grow big. Mehra’s problem is that both his children will not take up his business.
So, why should he grow big?
As they climb the rungs of the growth ladder, small businesses are often faced with the dilemma: “Are we growing too big?.” Concerns about quality, creativity, management control and competition from the biggies all start raising their heads. The promoters of these companies have spent years in building their little kingdoms almost single-handedly. They have handpicked their loyal soldiers and worked within set boundaries. But when it is time to cross the wall, many of them dither.
“It happens even now. But it happened so many times before when we were growing so fast. I used to think maybe we should stop. If I didn’t, things will go out of hand,” says Girish Patel, chairman of Ahmedabad-based FMCG firm Paras Pharmaceuticals, which makes brands like D’Cold, Borosoft, Moov, SetWet and Livon. Today, Paras is a Rs 700-crore company that dares to compete with giants like Hindustan Unilever and Smithkline Beecham.
Not all promoters are as adventurous as Patel. Hipolin, a cross-country FMCG firm showed promise in the 1980s but restricted growth thereafter. “We don’t want to grow dramatically. We can sustain the current growth rate and still remain a bigger force in a niche market,” the director of the Rs 23.7-crore (2006-07) company recently told ET.
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Retail consultancy Technopak Advisors chairman Arvind Singhal says, “It’s not about the desire to expand but the capability to expand that matters. Entrepreneurs flounder by not building systems and processes to sustain growth.” This could mean anything from work spaces to IT systems to getting the right talent in place. Agrees B P Agarwal, chairman of the Rs 350-crore Surya Foods, which makes Priyagold biscuits, “It’s a constant challenge for us to fight at our level with the bigger companies. This means continuous investments in marketing and technology upgrades to minimise costs.”
When a small business grows out of a personal belief and passion, the transition to the next level isn’t an easy one. Take the case of Dubden Green, an organic food venture born out of Ganesh Eashwar and his wife Jayshree’s desire to “give back to nature”. Three-and-a-half years ago, Mr Eashwar relinquished his position as director at ad firm RK Swamy/BBDO while Jayshree left her own qualitative market research consultancy and travel portal to devote their energies full time to farming and selling organic products.
Today, while the business is limited to a single store in Shapur Jat in south Delhi, and a shelf presence in 20-odd retail outlets, the Eashwars have bigger plans — 100 exclusive stores and a presence in over 500 retail outlets in the next five years. With big retail chains like Wal-Mart interested in buying organic food on a regular basis for their stores in India, the Eashwars can afford to dream big. But in the opportunity also lies the catch.
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Organic food needs to be grown in soil free from fertilisers and chemicals with no cultivation for at least three years before organic farming can be started. This means a longer crop cycle. But retail chains are in a hurry and want a steady supply to begin in the next six months.The fallout: There will be enough firms supplying organic food which won’t truly be organic. “We’d like to grow big but without compromising on quality. What scares us is that if the organic movement tries to grow faster than the organic output, we’ll all end up compromising on standards,” says Mr Eashwar. Apart from concerns about quality, there is also apprehension among small businesses about losing the creative freedom in pursuit of bigger numbers. Take the case of Happily Unmarried, which is in the business of taking “boring products and making them interesting”, as founder Rahul Anand, a former JWT hand, says.
Mr Anand teamed up with Rajat Tuli (ex-Mudra) to start this unusual business five years ago. The duo add their touch of quirkiness to ordinary objects ranging from T-shirts to mugs and from door mats to bottle openers. Though it’s just a Rs 1-crore company now, Mr Anand and Mr Tuli are aiming for the Rs 10-crore mark soon.
ADVERTISEMENT
But there is the problem of escalating real estate prices. So instead of setting up standalone stores for their products — they currently have one in Goa — the duo is working on establishing a wider presence in big retail chains. Mr Anand says his biggest concern today is preserving the creative culture of the company as it expands in size. “Today, we have 60 products in our range and we have both been involved in every single product from idea to production. But when we scale up our range to over 1,000 products, we’ll have to make sure each new product has the ‘fun’ spirit we stand for,” he says. Prof Anil Gupta of IIM-Ahmedabad and a consultant at Milagrow, which advises small companies, says that the dilemma of growing too big is inherent in companies, which do not invest in R&D and innovations. “When they innovate, they know they are not making themselves redundant. They can only grow big and big.”
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