• Insights

Recently, I was invited to the Leadership Summit at ISB, Hyderabad, as a panelist. The panel discussion was on the ‘Indian way of entrepreneurship.’ This is what I spoke of at that event:

In the next five years, I believe we will see trail-blazing entrepreneurs emerging from India’s towns. They won’t be your typical suited-booted, Valley-funded entrepreneurs, but people with a home-grown, high impact vision. I’d like to share the inspiring vision of a mentee of ours that illustrates my point.

Sivabalan Enterprises is one of the largest distributors of ITC products in Salem, Tamil Nadu. Sivabalan’s father started the company many years ago, and they have a team of 100 salesmen. Sivabalan believes that his company became successful because of the dedicated work of his sales team. He, therefore, felt he should do something to transform not only their lives but also those of their families and future generations. He called the project ‘Ennaiyum Kadanthu’ which, loosely translated, means ‘Beyond Me.’

His vision was simple: He was keen that the salesmen and their wives, too, would become entrepreneurs—not just for additional income, but for becoming role models in society. As a first step, I conducted a workshop for 85 of the salesmen’s wives and asked them why they have left the responsibility of earning entirely to their husbands. Some of them looked sheepish, others became aggressive and said they were busy raising their children. Most of them then concluded that they should earn, but didn’t know what to do. It was heart-warming to see how quickly they took to the idea.

Later that day, I met their husbands. I asked them if they would like to become entrepreneurs, to which they replied, “It is very risky. We are the only bread winners in our families.” Sivabalan then asked, “Suppose I protect your salaries and create entrepreneurial opportunities for you, will you become entrepreneurs?” They said they definitely would.

So, we created three kinds of opportunities. The first was in chikki manufacturing. Sivabalan has a unit that makes and sells groundnut chikki, and he wanted us to mentor him to scale up the business. Instead of Sivabalan investing in expanded capacity, we thought of getting 10 people from his sales team to set up captive units. The economics were very attractive—each unit requires Rs.3.5 lakh of investment for a turnover of Rs.50 lakh with about Rs.10 lakh net profit. The banks have no problem funding this, as each of them is a captive unit with 100 percent buy-back from someone as reputed as Sivabalan.

The second opportunity was almost identical, but in a different business area. Another mentee of ours, Bhavin, manufactures branded children’s apparel in Kolkata. We spoke to him along similar lines. He was excited about having 10 of Sivabalan’s salesmen setting up captive units of his company—one, because of Salem’s proximity to Tirupur, and two, because it could spawn so many entrepreneurs.

The third opportunity was for those with a smaller appetite for risk. Sivabalan wanted to set up a mushroom cultivation and export company, and wanted to invite people from his sales team to participate in equity, like the Whole Foods model, where 95 percent of the company is owned by 95 percent of his team! This is the Indian way of entrepreneurship—home-grown, high impact, no frills, pure vision.

NANDINI VAIDYANATHAN teaches entrepreneurship in biz schools around the world and has co-founded two companies, Startups (forstartups.blogspot.com) and CARMa (www.carmagroup.in), both of which mentor entrepreneurs.
©Entrepreneur January 2011

Tags:
captive unit, Ennaiyum Kadanthu, ITC, Nandini Vaidyanathan, Salem, Sivabalan, Sivabalan Enterprises