The Entrepreneur's Choice

Cases on Family Business in India

C. Gopalkrishnan

• Publisher: Routledge India
• Year: 2016
• ISBN:
  9781134906666
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Micro, small and medium enterprises (MSMEs) are integral to the economic policy framework of India, and promote innovation, competition and equitable economic development. Comprehensively examining the management of family businesses among MSMEs, this book:

• discusses business strategy, corporate and personal values, vision, mission, stakeholder expectations, and strategic response to external factors along with their social and environmental orientation;

• includes 22 case studies drawn from varied sectors such as pharmaceuticals, food processing, engineering, and blood banking;

• documents rich experiences of Indian entrepreneurs and their unique entrepreneurial approaches towards management of social enterprises, loss-making firms in the public sector, corporate social responsibility, succession planning, and innovation.

The book will prove essential to students and scholars of business, entrepreneurship and management, and entrepreneurs and managers working in MSMEs, especially young entrepreneurs as well as the general reader.

SECTION IV

Strategic Options, Strategy Evaluation and Implementation

Kanhai Foods Private Limited*

This is the story of Kanhai Foods, manufacturer and retailer of egg-less bread and other bakery products. The case discusses idea generation, start-up phase, establishment of manufacturing facility, distribution network, logistics in Gujarat, and market domination. The difficulties and problems encountered by the entrepreneur Shashank Chokhani at each phase of business have been discussed. Kanhai Foods has now plans to reach the pan Indian market as the bakery sector has been growing very fast and foreign bakery chains are entering the Indian market.

Shashank Chokhani, the director of Kanhai Foods Private Limited, Ahmedabad looked at the computer screen as the latest figures of the company’s performance rolled before him. He was happy that his clients included some of the best restaurants, coffee houses, and hotels in Ahmedabad, besides some well-known institutional buyers. Kanhai Foods had become the largest bakery chain in Gujarat in a relatively short period of 15 years. It had built 21 own sales outlets called KabhiB in 12 cities of Gujarat,in addition to over 5,000 distributors. It also set up five KabhiB Bake Studios in five cities in Gujarat. It was the largest player in the organized bakery market (Figure 13.1) and Kalory was a well-known brand in Gujarat for eggless bakery products (see Table 13.1 for a list of products).

Shashank Chokhani was now considering various options to enter the fast growing pan-Indian market. He noted that bakery chains from abroad were now keen to enter the Indian market. He also examined the possibility of reaching the markets in the Gulf countries where there was a very large Indian expatriate population.

Source: Kanhai Foods Private Limited.

Figure 13.1
Kanhai Foods — Total Market Share (in percent)

Table 13.1
Kanhai Foods — Kabhi B Product Profile

Cake and Pastries Popular Pastries Premium Pastries Xotic Pastries Supreme Pastries Maestro Pastries Moussee Puddings/Tarts Brownie Muffins and Dry Cakes Pies Cookies Breads (Regular) Puffs Savories Samosa Cream Rolls Khari and Rusk Khakhra

Source: Kanhai Foods Private Limited.

As he reviewed the operations of Kanhai Foods, he felt nostalgic about the early days. He was the first to conceive the idea of marketing bread and other bakery products without using eggs. It was a ‘small’ innovation that catapulted the company as the market leader today. Born and brought up in Ahmedabad, the nuances of the predominant culture of Gujarat and his own community, the Marwaris, played a major role in his thinking and decision-making process. It led to a range of eggless bread and other bakery and patisserie products (Table 13.2) which vegetarians could consume without feeling guilty. This was not the case before he entered the market, since good quality pure vegetarian bakery products were not available earlier.

Table 13.2
Hot and Cold Section Products

Hot Section	Cold Section
Bread	Cakes
Puff	Pastries
Savories	Mousse
Samosa	Puddings/Tarts
Khari and Rusk	Chocolates
Khakhra	Brownies
	Muffins and Dry Cakes Pies Cookies

Source: Kanhai Foods Private Limited.

Entrepreneur Shashank Chokhani

Shashank Chokhani is the youngest son of Daudayal Chokhani whohad a well established business of spare parts and engineering tools in Ahmedabad. He took a bachelor’s degree in commerce and wished to go abroad for further studies. He, therefore, moved to Mumbai to prepare for examinations such as TOEFL (Test of English as a Foreign Language) and GMAT (Graduate Management Aptitude Test). Although he received an admission call for MBA from the University of Texas, his father did not let him go as he believed that Shashank would find it difficult to adjust to the Indian way of life. Therefter, Shashank started taking interest in his father’s business and learnt the basics.

Birth of Kalory Bread

Shashank belongs to a Marwari family where it is strictly forbidden to consume eggs and other non-vegetarian food articles. Gujarat had a significant number of Marwaris, Jains, and other communities who are pure vegetarians and generally avoid consuming bakery-made bread, cakes, and pastries since these are made with eggs.

Shashank got the idea of setting up bakery business from his cousin who was in the bakery plant manufacturing business in Surat (Gujarat). Since Shashank had no experience in the bakery industry, he did a lot of research and experimentation on producing breads, more specifically, eggless bread. For this purpose he also visited China and Germany in order to understand the technology of making bread. He procured machinery for making bread and other bakery products from New Delhi and carried out a lot of experimentation toproduce eggless bread. The distribution of the products was handled by his father. He chose Kalory, a play on the word ‘calorie’ as the brand name for the bread.

Shashank made several visits to retail outlets, bakery shops, grocery stores, dairy outlets, and FMCG stores in Ahmedabad to promote his bread. Grocery stores and bakery shops were the major retailers of bakery products in Gujarat. However, he found that they were mostly owned by members of a certain community, which had a strong and wide social networking system. This community was also known to have very fierce loyalty and therefore, no retailer was willing to keep Shashank’s products in spite of the fact that Kalory bread had such a unique selling proposition.

The problems however did not end here. When the market started showing signs of acceptance, slowly welcoming the product, distributors of other bakeries began destroying Kalory bread at retail outlets. The shop owners were highly indifferent and did not show any interest in selling Kalory bread. Shashank, therefore, decided to pay extra commission and kept a watch on the outlets where his products were displayed.

On August 15, 1996, he formally registered Kanhai Foods Private Limited at Changodar, on the outskirts of Ahmedabad, to manufacture eggless bread. Ajay Kariwala, a family friend became his partner in the business and entrusted with the operations of the factory.

In the beginning Shashank had only two autorickshaws (three-wheeler pick-up vans) for delivering his products to the outlets. Presently Kanhai has over 60 commercial vehicles and their products are sold through more than 10,000 outlets in Gujarat. The company has 25 branches all over the state and the number is constantly growing.

The company is the only bakery in Gujarat to obtain the ISO 22000 certification. Kanhai follows the norms of food safety management system (FSMS) and have also obtained ISO 9001 certification.

Birth of KabhiB

Initially, the company used to depend on other bakeries and retailers for selling its products. However, since the retailers asked a far higher commission, Kanhai Foods set up its own retail outlets.

Initially, the company set up a sales outlet of Kalory bread by the name of Kalory. However the outlet did not do well as it only sold bread and Kalory was not a well-known brand. Thereafter, it closed down. Shashank built upon the concept of KabhiB outlets which stocked cakes, chocolates, cookies, etc., as the main merchandise and bread as a point-of-purchase item. The first KabhiB outlet came up in Maninagar on rented premises, which also had a small production facility. The response was very positive, which gave Shashank confidence to further work on the idea. However, the outlet was closed down owing to confl ict among the premise owners. The Maninagar outlet was re-opened in 2010 at another site which again had a good response.

The production of cold section items takes place in the factory only following the just-in-time approach (Tables 13.1 and 13.2). Products such as bread, cakes, and pastries have a very short shelf-life. Also the demand for different products keeps fl uctuating.

The locations for the KabhiB retail outlets were chosen on the basis of potential of sales. As of now, there are 13 outlets in Ahmedabad, majority of which are on franchisee basis, three in Anand, two each in Gandhidham and Vadodara, and one each in Bhuj, Rajkot, Bhavnagar, and Nadiad. There are plans to open more than 100 KabhiB outlets all over India.

The franchisees are chosen on the basis of suitability of the premise for this line of business, interest of the businessman, etc. It is expected that that at least one member of the family is involved full time in the business. The franchisee will also have to undergo practical training in one of the outlets of the company.

Kanhai Foods undertakes p...

Table of contents

• Cover
• Haft Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Plates
• List of Tables
• List of Figures
• Foreword
• Preface
• Acknowledgements
• Section I: Values, Mission, Vision and Strategy
• Section II: Environmental Analysis and Resources Analysis
• Section III: Stakeholder Expectations
• Section IV: Strategic Options, Strategy Evaluation and Implementation
• Section V: Management of Organizations with Social Objectives
• About the Editor
• Index