Secret Diary Of A CEO 2017

"It's not enough to command respect, your teammates should accept you"

Secret Diary of RS Sodhi Part-2

Photograph by Soumik Kar

I was to join Jaipur as a senior sales officer. There was already a sales officer named Rajiv Verma, who had joined GCMMF after eight years with Bata; in contrast, I was just 23 years old, fresh from my MBA with zero work experience. I was told he would receive me at Jaipur station. But he didn’t show up and I made my way to an IRMA classmate’s relative’s house. As it happened, Verma was their neighbour and I met him later the same day. He was good, very dignified — presuming he was going to be in charge. 

I would go with Verma on his Bajaj scooter to meet distributors; he would always introduce me as his colleague. I was taken aback initially but after spending some time with him, I learnt my first lesson — workwise, he was better than me. From him, I learnt how to draft letters, how to speak over the telephone. I would have to prove myself. That opportunity came some eight or nine months later. Blue Star had introduced a concept calling walking cooler as an improvement over the traditional cooler. Our head office had recommended buying it. During my project work at IRMA, I had learnt a lot about coolers. I made a proper analysis — both technically and financially — and presented a PERT chart to Mr Padmanabhan, the distribution manager, demonstrating that the new technology was not necessary right then, given the costs involved. It was only after this that Verma really accepted me. Even today, I tell new recruits that you cannot command respect because of a degree. Only your work can give you credibility. 

There was a key difference between Verma and me. My strength was in sales analysis, whereas he was excellent in communication. We went on to become good friends and made a good working team. I learnt several field-related skills from him, also one big HR lesson — it’s not enough to command respect, your teammates also should accept you. You cannot create a team by authority. 

Life in Jaipur was comfortable. My salary was Rs.1,450 per month and I had an office in the DGP campus that also doubled up as my home and GCMMF’s warehouse. I got to travel by air for the first time when Bakshisaab came to Jaipur and I accompanied him to Jodhpur to sell ghee. A couple of years down the line, by which time I was married, I moved to Ahmedabad as assistant manager in sales. 

Salary levels in GCMMF were very low. Even though I got promoted as area sales manager, I was still getting only a third or even a quarter of what someone at my level in an FMCG company was making. We had just had our first child and had to be careful about our finances. As it was, we continued to depend on our parents for the big expenses. In Jaipur, I bought a second-hand scooter, for which my mother gave me the money. In Ahmedabad, my first car was a second-hand Fiat which cost Rs. 37,000. Here again, my parents and in-laws helped pay for it.

I had signed a bond when I joined GCMMF stating that I would work for three years and refund the stipend if I quit before that. In 1985, I completed three years and started looking out for a change. Hindustan Lever had advertised for the position of area sales manager for Lipton brand. I was selected in the interview but, when the appointment letter came, my designation was of a territory sales manager, a level lower. The salary was three times what I was making, though. I asked my wife what I should do. She had only one question for me: “Will you be happy if you accept this?” That was enough for me to say no. Some time later, there was a job offer in Nigeria, but I rejected that as well as I just did not feel comfortable. 

Now I understand that all these decisions were for the best. I am a believer in destiny. I didn’t get through the NDA entrance. If it hadn’t been for Sanjay Mehta, I wouldn’t have gone to Udaipur. If there had been no Udaipur, there would have been no IRMA. If IRMA had not been there, there would have been no Amul. If I had taken either of those jobs, I would not be here today.   

Promotions at GCMMF took time. When I became group product manager, it was a marketing-in-charge responsibility. Of the six sales managers, only two of us were promoted. When I became the chief general manager, there was no post like that. If you were a general manager, you then became the managing director. It was at a board meeting when chairman Kurien suddenly asked me how long I had been with GCMMF. The existing MD had six years for his retirement and the CGM designation was created for the first time. A larger role was in the works for me.    

When you have a career spanning 35 years, you deal with your share of challenges. You have to accept them and face them with strength. Two, in particular, were difficult and the second one really made me restless and worried.

The first challenge came up in 2010. I had been made MD-in-charge after the existing MD quit the position after a lengthy innings. Things had become difficult even before he had left. He was promoting those close to him; so he wanted to remove me and was acting against me. Luckily, the board was impressed with my performance and on January 1, 2011, I was appointed as managing director for five years. 

Personally, I was confident of managing this situation. I had the cooperation of so many people, from department heads and managers to field staff. What I discovered from this episode was that people are loyal to the organisation and not to individuals. Amul is a vast, spread-out organisation — the unifying factor is the organisation, not any single individual.

But the real challenge came in 2012 when a new chairman was appointed. The person who took over was of questionable integrity and he had the support of the old MD. For me, he was the elected chairman and I did not know how to fight such people. I was very restless and I spoke to my mother who quoted a verse from a Gurbani — Deh siva bar mohe eh-hey subh karman te kabhu na taro. Na daro arr seo jab jaye laro nischey kar apni jeet karo. (Bless me so that I don’t fear doing good deeds). I took great comfort and reassurance from that. A conversation with my wife also changed my outlook. She said the worst that could happen was that I would lose my job. “You will get a better job,” she said with confidence. 

It is a difficult situation when the MD and chairman are fighting. The new chairman asked me to do certain things that I refused point blank. He offered me various inducements and later, when I refused those, it was all about threats. But I stood firm and also did not allow him to take the decision since it was not in line with the by-laws. Eventually, he took those decisions and I informed the board. They realised he was not good for the organisation and for the first time in the history of GCMMF, a no-confidence motion was passed. There was no provision for that in the by-laws but it happened! 

Every time there is a dilemma, I think of what Dr Kurien would have done in that situation and do exactly that. I have learnt the importance of value systems in my 35 years with GCMMF. I remember an occasion when one of our chairmen wanted to oblige a political party and decided to highlight the achievements of a prominent leader using our media properties. I was in a fix — he was my superior but this was against the organisation’s value system. I tried explaining why we should not be taking such a step. Our advertising budget is less than 1% of our sales but that itself was hundreds of crores. How can money that has come from the farmers be utilised for someone’s personal gain? I discussed the issue with my colleagues and then refused to follow that directive. Obviously, he was angry but I was firm. 

Professionals at GCMMF are given a lot of freedom. There are farmers on the board but they do not question the board; big investment decisions are taken in a matter of minutes. The only question asked is: will it benefit the farmers?

When I joined Amul in 1982, its turnover was only Rs.121 crore. Today, it’s up 231x. All this has been possible because of the freedom we were given. I believe that anybody can give good ideas. Dr Kurien always said you must ask a youngster first and you will get an independent view. If you ask the senior first, the junior’s view will be influenced. The Amul culture is to have an open door. 

In fact, the trigger to launch ice creams came from outside GCMMF. We conduct brand health studies every year through agencies like IMRB. In one survey in 1995, there was a remark from a customer — why doesn’t Amul, the largest dairy of the country, launch ice-cream, when soap manufacturers are doing the same? That really caught my attention. During that period, ice-cream was reserved for the small sector and this soap manufacturer entered the industry only after acquiring one of the established players. When we approached Dr Kurien with the idea, he just said, go ahead.

We started with a small factory at Baroda, which already had an SSI licence. We told the government that Amul was nothing but an organised representation of small producers. The government then relaxed the small sector condition. 

Our biggest advantage is price and nobody can beat us there. We have to buy milk at the highest price and sell the finished products at the lowest price. This has really helped us. When we entered the ice-cream business, we first studied the pricing strategy of existing players. A 100 ml vanilla cup that includes only milk, sugar and flavour ought not to cost more than Rs.3 to the customer, including all expenses and margins. But the selling price was Rs.10! Similarly, cones that were selling at Rs.18-20 ought not to cost more than Rs.10 as per our calculations. I was stunned by the margins. Our strategy for the product launch was to hire outdoor hoardings showing the brand and product but not the price. That was disclosed only on the launch date. Our price for a 100 ml vanilla cup was Rs.6. Within a week of the launch, we had to airlift an ice-cream line for commissioning at the Amul Fed Dairy in Gandhinagar! The rest is history.

The open-door culture is very important because I have found that ideas can come from anywhere and at any time. A small observation can become a big opportunity. Last February, I was in Dubai for the Gulf Food Fair. It’s common to come across many new products every year at this fair. This time, I saw packed rasmalai and was curious to know more. As it turned out, it was made by a Canadian company and sold in Dubai. If a Canadian can sell an Indian sweetmeat, Amul should also do it.

I returned to Anand and told my team about this. In three months, we launched the first packed rasmalai in India. It was very hygienic and there were no concerns about freshness — both of which are not guaranteed when you buy dairy-based sweetmeats from the neighbourhood mithaiwala. We now sell 50 tonnes of rasmalai every month.

It is also possible to convert a prevailing problem into an opportunity. In 2012, a general manager of Indian Railways came to my office at Anand. He first said our Kool flavoured milk was very popular, but there was a problem. I immediately thought he was about to raise some issue of quality. He went on to say that passengers drink the milk but throw the glass bottles on the tracks. “My men’s feet get hurt because of this,” he complained. 

Something had to be done. As it is, we were not able to meet the rising demand for the product due to bottle-related constraints. Both, the channel partners and consumers, were finding the glass bottles difficult to handle. We started looking at alternative packaging options. PET bottles seemed a possible solution. It was a risky proposition, though — our study showed that India was one of the few countries where milk had not been launched in PET, so we couldn’t be sure how it would be received in the market. Also, a PET bottle production line would cost Rs.100 crore; at that price, we could set up an entire new dairy! I was sure competitors would not be willing to invest that kind of money; it was too much of a risk for them. The objective of launching PET bottles was to be different and also cause a disruption in the market. I was convinced of the soundness of the idea but would the board agree to such a huge investment? As always, though, the board was supportive and gave the go-ahead immediately.

The plan was to manufacture Amul Kool in the peak season and use the same plant to bottle lassi in PET bottles in the off-season — we had launched lassi in a small way back in 2003. The production line was ready and offered us much flexibility. Kool in PET bottles was a super hit, but something more had to be done with lassi. 

I knew packaging could change everything — it gives you room to be innovative and is also a big entry barrier for competition. It had worked well for Kool and lassi. But lassi needed its own identity. The category had not yet been exploited as a business opportunity by anyone. We decided to use Tetra Pak, with a difference. We chose to launch lassi in Tetra Pak edge (boxes with a lid on the top), offering convenience and a unique look. Now, PET bottles for lassi have been phased out, while Kool is sold in PET, glass and cans. Together, both sell two million units a day now, up from 300,000 units seven years back.

Milk is a sensitive issue. Increasing the price of milk is always difficult, but it has to be done. A multinational can justify a price increase but we cannot. The reason is our objective — our price discovery is not aimed at a better bottom line but to ease the burden that our farmers face in producing milk.

In 2012-13, we were planning to increase milk prices in a state where elections were due. The chief minister called me and said he would lose the election if the price was hiked and requested me to postpone it. I promised to speak to the party president. I then explained that a price reduction is not possible since 85% of the price goes back to the farmer. He listened patiently while I explained the cooperative structure. I made one promise — when prices are increased, I will release ads in the paper with a proper explanation. He agreed. 

We cannot say no to farmers when they come to us with milk. In winter, this is a challenge since there is a 40% growth in milk procurement but consumption remains consistent. Usually, we convert excess milk into commodities such as milk powder and white butter that are sold to big dairy plants such as Mother Dairy. As milk procurement increased, we started depending more on these dairies. They realised they could now bargain for a better price since we were under some pressure. We had to cooperate since Dr Kurien was the chairman of both Amul and NDDB, and Mother Dairy is a part of NDDB.

In 2004, Britannia launched liquid milk in large metros. We were worried since our position was to be challenged. NDDB, by now, had a new chairperson. We realised Mother Dairy would also find it difficult to fight Britannia. To reduce our dependence on commodities, we launched liquid milk as well. We had a long-term understanding with Mother Dairy and this was a difficult decision. We sold our milk only in places where they were weak. We started with the outskirts of Delhi — and some congested areas. Milk was delivered by rickshaws and cycles here. 

I was then General Manager and stationed myself in Delhi for three months during the pre-launch period. A day before the launch, my father-in-law passed away and I had to rush to Chandigarh for the last rites. I returned in a day, missing the launch conference but not the first despatch of milk from the plant. We hired Kwality’s dairy plant and there were some labour issues initially. I remember loading the trucks with crates with my team. It was very satisfying. This was a big hit and volumes kept increasing. In two months, we achieved a sales volume of 300,000 litres per day and by 2009, we were the market leader. Within six months of our launch, Britannia withdrew from the market! Most importantly, Mother Dairy did not lose volumes. Both, Amul and Mother Dairy, benefited. After the success in Delhi, we launched in Kanpur, Lucknow, Mumbai, Kolkata and Pune. We used our learnings from Delhi and that helped us greatly.

Consistency is important at all levels. This is my first job. So is it for COO KM Jhala, marketing head Jayen Mehta, and Manoranjan Pani, the head of sales. All of us have spent at least 25 years in the organisation. There is an Amul DNA and we have stuck to it. In today’s world, people come from different companies and imbibing that DNA becomes very difficult. It takes decades to align people’s DNA with that of the organisation’s DNA. At the same time, it does not mean we don’t change with the times. 

We will also need people to remain in the villages and look after the land and cattle. That’s a bigger problem. Tomorrow’s generation will need to stay in villages and will have to wake up early. They need to work 365 days. How do we make this cool and sexy? For that, it also has to be commercially lucrative and glamorous. We are training youth, but it is not easy...

Cooperatives have succeeded because of selfless and dedicated political and professional leadership. Amul worked because of people such as Tribhuvandas Patel and Dr Kurien. Where do we have people like that today? For the future, we need committed professionals and that is the biggest challenge for public institutions. Because whatever we do, farmers’ interests have to be protected.

In all these years, whenever I am on a flight or a train or at any gathering, someone will start a conversation by asking what I do. I first say, Main to doodhwala hoon and then add that I work for Amul. I never mention my designation. Usually, when I say Amul, people respond by saying they love the Amul girl advertisements. 

Show me any other brand that is known for a character? You say Maruti, you think of cars. If you say Sony, the association is with TVs; and with Apple, it is the iPhone. But Amul is always about the girl. You need a unique creative and unique media selection; it doesn’t take big investments to make an impact. Our ad expenditure is 1% of sales, of which only 4-5% is spent on the Amul girl. 

The ‘utterly butterly’ line has been in use for 50 years. Our ad agency follows the principle of GCMMF, that is, freedom for professionals. Amul butter is always a topical ad and we see it at the same time when you see it. There is no approval from us before the hoardings and print ads appear.

There have been some memorable taglines of other brands — such as “Hamara Bajaj” and “I love you Rasna” — but they have vanished. In the case of Amul, the campaigns “Taste of India” and “Amul doodh peeta hai India” have been around since the ’90s. The reason is that in the case of corporates, individuals want to leave behind a legacy, while in the case of Amul, it’s a utopian legacy that will continue to thrive.

This is the second of a two-part series. You can read part one here.