Tuesday, May 8, 2012

How B Soundararajan and GB Sundararajan created a Rs 4800 crore poultry empire

Two brothers, B Soundararajan and GB Sundararajan , created and honed to perfection a business model revolving around chickens. Their chicken-and-egg story model was simple - win the confidence of the farmers, provide a logistics platform for them and provide a link with retailers to sell the merchandise.

The model clicked and 'Suguna Poultry' evolved into a Rs 4,800 crore company, working with 20,000 farmers, 4,800 employees all across the country.

I belong to Udumalpet, about 70 km away from Coimbatore and have studied only till class 11. Instead of choosing higher education and turn a government employee, my parents - both teachers - wanted to see me doing something on my own. My brother, who studied till class 12, and I started a poultry farm in 1983 at Udumalpet.

We revamped our business model from a trading company to a contract farming firm. Suguna would supply day-old-chicks , feed and medicines to farmers, who would in turn grow the chicks for 37-40 days and return them to us to be sold in the market.

We started the business with just three farmers. It took us seven years to scale up, as gaining the trust of the farmers is difficult. We were able to work with 30 farmers, had 30 employees and did a business of Rs 7 crore. As we gained confidence , we thought of scaling up. We set up offices across Tamil Nadu and in three years, we achieved Rs 100-crore turnover.

When we began the business, the size of the poultry industry was just Rs 400 crore. Today, it is a Rs 45,000-crore industry and growing at 15% year on year. But it is not a simple business. Breeding is a completely technology-driven process; feed is capital-intensive. Managing 18,000 farmers across the country with different cultures and languages is a big challenge.

We have deployed an information technology system that has integrated internal and external management information across our 250 locations in the country - from finance and accounting to customer relationship management. This has saved us lot of time and brought efficiency. We also have a dedicated team that uses information technology to keep track of the supply chain and demand in real time.

Today we operate in 13 states of the country, work with about 20,000 farmers, and have 250 offices across the country with 4,800 employees . We produce 7.5 million chickens per week, equivalent to around 18% of the Indian market share. It reaches around 600 distributors, customers such as KFC, McDonalds and 22,000 retail shops across the country.

We also produce ready-to-eat products, such as chicken nuggets and sausages. We have started businesses such as poultry vaccines and have entered markets such as Sri Lanka and Bangladesh . 

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