Arun ice creams from the Hatsun group is a household name in Tamil Nadu. And increasing the group's mindshare in Tamil Nadu are their new products, Arogya and Komatha, the two most popular milk brands in the state, which are giving Aavin the state-run cooperative brand a run for its money.
In an exclusive interview to Sify.com, Chandramogan, Managing Director, Hatsun foods, revealed the group's strategy and growth plans.
Chandra Mogan is a first generation entrepreneur from Sivakasi in Tamil Nadu and leads the Rs 350 crores Hatsun group.
Excerpts from the interview:
Why is the group publicity-shy? Any particular reason?
Our idea of a successful company is about having a good brand. The personalities behind the brand do not matter much. If we were to talk about the personality, then it could become two competing brands. We don't want that to happen to our company. We want to be performance-oriented.
The Tamil Nadu and Karnataka markets are now flooded with the Rs 5 cone ice creams. Do you think Arun has missed the bus?
The cheaper cone ice cream makers are actually expanding the market. They bring in new consumers into the ice cream space. The world over, the trend has been that the consumers switch over from cone to other varieties soon and when that happens, Arun will gain.
Moreover, the cone market is dominated by the unorganised sector and we cannot compete with prices offered by low quality makers. However it is a good trend for the industry. It is sold at lower prices as they do not pay excise duty, and there are no trade margins.
We are paying huge excise and sales taxes at 22 per cent and there are trade margins and distributor costs too.
How is Arun doing and what are your plans for the product?
We have 56 per cent of the market share in Tamil Nadu; we are among the top three in Karnataka and we have a significant presence in Andhra Pradesh. We are also available in Kerala, and we plan to be the market leader in the south soon.
Arun was a pioneer in many areas. Did it benefit from such marketing initiatives?
You are right. We were the first to start franchising for ice-creams and we are also the pioneers in taking ice-creams to rural areas.
You have made a mark in Tamil Nadu with your Arogya milk. How did you begin this diversification?
We already had a base in procuring milk for our ice-creams and we took off on that. We also had a milk shake powder product in the market earlier. We did not do well, and it was withdrawn for some time. We understood the seasonal nature of the industry with this product and it was a learning curve for us.
We entered the milk market by sheer accident, but with our entry we have organised the industry and now Arogya is available even in hamlets with a population of 2,000. Earlier the availability was high only in urban areas. We changed the trend and availability has increased in rural areas too.
We understand that we are a logistics company too, what with our reach and our ability to reach every nook and corner of Tamil Nadu. We have two dairies but processing centres in many places.
What's your vision for Hatsun?
We hope to be a comprehensive food company in the next few years. There will be many value added products in milk from our stable and other related items. These could be in the form of flavoured milk and cheese and we hope to grow to a Rs 2500 crores company in five years.
We have been growing at a furious pace at a compounded annual growth rate of 52 per cent.
We hope to grow at the same pace.
How did you start your career? Your experience as a first generation entrepreneur?
I am from Thiruthangal in Sivakasi and I began my career as an entrepreneur at the age of 21. I am a first generation entrepreneur. And as for the name Arun, I just picked a common name. I started Hatsun Foods in 1986.
What are your other interests?
I am a badminton player and I have won the veterans' championship in Tamil Nadu for the last two years. I play to relax and I am also into reading—the latest book being Gurcharan Das's 'India Unbound.