Memoirs.....Musings of a sales guy at heart.....
Episode 19....
IDV----journey continues....
As mentioned in my earlier post, the narrative wont be in a chronological order as I want to capture things as it comes to my memory....need to capture the 14 years of journey and hence....
Managing the CBUs gave me lots of exposure in terms of understanding manufacturing better and also the issues involved in their every day life. Though India is one country but when it comes to alcohol, it's like managing 30 plus countries....with varying rules and regulations from state to state. Every state has their own taxes and duties...its called state excise duty (nothing to do with central manufacturing duty) and if you are manufacturing in one state and exporting to another state, there is added levy of export pass fee (varies from state to state...the lowest being states like Punjab, Goa, Pondy and Daman), there is also import fee when you import the finished goods from one state to another and CST....Its endless. Plus one has to register their labels in the states its being bottled/manufactured and the states you are selling. Suppose one has multiple sources of supplies in a particular state, the labels of all the sources have to be registered in that state. This cost additional money. In Maharashtra, they had introduced Form K, for those who want to import in to the state of Maharashtra from another state. Maharashtra is not an import friendly state and the idea of form K is to dissuade manufacturers to import in to Maharashtra. And this form K is quite expensive and to be renewed every year. To sell in Delhi one has to have their own bond...brand registration costs....based on categories. TN you cant import anything in, except BII scotches and wines and BIO. Kerala you have to pay TOT, even today, if you have a local unit. One has to familiarise this before taking the plunge. When volumes go up, it's important to have local units in all the big states to avoid multiple taxes and also to save time. In some states, getting the export permission itself would take few days even after paying the Export pass fee. Most of them are established and age old practices and mostly the officers(the excise commissioners) will not alter the policies fearing backlashes. But there are exceptions. There are some states, one can represent their predicaments/issues and if there is truth and logic in that, the governments would tweak the policies. Companies have one person dedicated to follow up with excise office in every state. It's a full time job. And raw materials like molasses are confined to few states and the others have to import this in to their states for distilleries to manufacture spirit. For example, Pondicherry do not have a local unit to produce ENA and everyone imports from other states which increases the cost of the final product. Goa, haven of many bottling units, is dependent on ENA from other states as they have just McD Ponda producing their own ENA. The respective governments have gone quiet and not issued licenses to make the job of the manufacturers easier and cost effective. Also getting a new bottling or distillery license is almost impossible in many states. And for example, if one is importing finished goods from Punjab to say, AP.....the process starts with applying for the permit paying the excise duty with the AP excise which would take max of 2 days to get. But the permit comes with a validity of say 15 days. This means, if the permit is dated 1st, the goods have to reach the destination by the 15h without fail. Once the AP permit is received at the unit in Punjab, the unit in Punjab would apply for the export pass, after paying all the applicable fees there and only upon receipt of the EP, they can load the truck and dispatch-provided the stocks are produced and kept. The goods have to reach before the expiry of the permit. Incase the exporting unit is unable to execute the order for whatever reasons, they have to send back the permit with a non execution certificate signed by the distillery excise inspector. This would be submitted to AP excise for revalidation and the whole process would start again. Suppose the goods were dispatched in the last minute and reach the destination in AP after the expiry of the permit, the goods cant be unloaded and the trucks would be stranded till the time the excise in AP revalidates the permit. ahhhh....one more...From Punjab you cross many states and some of them insist on obtaining a transit permit and some insist on escort also....one more day would go in that...if one is caught on a week end, 2 more days would be lost. And escorts are always on demand. Planning and execution hence is the key here....and if people involved are not well versed with the process, god help the units and the company. With forecasting failing us always, it was rush hour last 3 days of the month and the entire sales force and the manufacturing team would be on tenterhooks....nothing has changed till date....the same scene across all the companies...but when am talking about IDV-it was difficult times. While we could somehow manage the open markets like Bombay/Maharashtra/Goa and UTs....the state controlled markets were the toughest....especially Kerala....my BM of Kerala....Harikumar....made of iron stuff but could not do much on the last minute rush....Kerala we had to exit KAPL....this is one story I need to retell....KAPL was managed by Sakthivel Swamy the manufacturing head of both Shiva Distilleries and KAPL. The owner is Balasubramaniam a well respected businessman based at Coimbatore and in to sugar factory, distillery et al and from the illustrious family of Pollachi Mahalingam. A wonderful person. Sakthivel Swamy was crude and would always complain about our materials management-though partly we have to be blamed but due to the erratic volumes, the materials were getting stuck at his unit and also occupying space. It was becoming a bit of an issue for us too and once DR was coming back from Ooty and I wanted him to meet SVB as a courtesy and organised it. The meeting started off well in his office in the presence of Sakthivel Swamy and his finance person Shanmugam....but few minutes in to the meeting Sakthivel Swamy started complaining about our materials management and also erratic volumes and used a bad word in Tamil but from the way he uttered it, DR guessed what he said and in return he shot back at him saying 'what shit are you saying?'...this irked SVB and he looked at DR and his finance guy and said, 'lets terminate the contract'. Though we were not happy with KAPL and especially with Sakthivel Swamy's tantrums, a sudden exit would have resulted in huge write offs in terms of packing materials, change of unit and its approval process et al. This thought struck me like lightning and I immediately intervened and pacified SVB and brought down the tempers. DR was not happy and he told me on our way back we should have taught these guys a lesson but once I explained to him the quantum of write offs, he realised and smiled...We spoke to Jairaj and Neil who had their own bottling unit at Calicut-UDPL-and signed off with them. We served notice on KAPL after exhausting majority of our PM and at the start of the next fiscal we moved our bottling to UDPL.
I would like to say a few things about Jairaj and Neil here. Jairaj inherited the liquor/distillery business from his father HR Basavaraj ( very well known in the industry then)-Karnataka based- and with his school/college mate Neil Peres, expanded the same...but he was content to be a bottling partner than manufacturing their own brands. Neil, his partner along with Betz Fernandes were managing the relationships and the units. We tied up with them in Kerala, Odisha, Goa and I think Punjab. Wonderful guys to work with. No air and totally committed and always there for friends. Sadly we could not do much in Odisha and Punjab and also struggled in Goa....but kept the Kerala unit going well. Jairaj and Neil helped me when we started our Geoscope....(this story at a later stage). We also tied up with an unit at Diwan cater our requirements of Vidarbha....So contract bottling across regions to cater the local markets which has reduced the pressure on Nira-our mother unit. SMV was still from Nira only. Meanwhile we recruited more executives to strengthen our manufacturing...John George joined as GM at our Nira plant and also Nitin Ghate. From the Polychem side we had Soni as the chief chemist and also hired Vijaykumar to manage the blending. John G a good natured guy with a very pleasing smile. Once I went to meet the excise commissioner in his office along with John and the EC mentioned that John has a very disarming smile...and John still wears that smile....Nitin is another great guy in our manufacturing team...well mannered and non controversial. Dr. Gore was our head of QA.... Another person with great pedigree.... Manufacturing is now fully staffed but our mother unit Nira was always a problem as all the international brands were bottled there and brands like Archer's, Malibu, Kelly's were small volumes but spread across so many states with state specific labels. Every state had their own requirements to be printed on the labels. Some states even specified the font sizes. In Bihar, those days, the brand name has to be printed on the cap....and Punjab followed that. The excise department implemented many things to stop illegal interstate flow of stocks but those who were indulged in that continued managing the channel partners well....but the problem was for the small volume brands....one has to print special labels to serve small quantities and that would increase the costs. And the stocks have to be segregated and kept separately state-wise. Sometimes the load man by oversight would load stocks meant for other states in the truck and if it is caught by the excise, you had it....it would mean lots of running around and penalty-for just 'oversight'. Whereas those who indulge in cross border by design go scot free. We had lots of issues with stocks getting mixed up and many a times we managed locally by just getting the labels removed and relabelling them. It was always nightmarish. When you complain, the reasons would be the same from manufacturing....And excise department across states working overtime to come out with more and more statutory requirements to make life more miserable for manufacturers....Whether the GOI brings Uniform Civil Code or not, they should bring uniform labels across the country for alcohol. If you are a non booze business guy reading this post, you would be wondering what kind of system is this....just imagine Unilever....Ponds talcum powder from their Chennai plant to Srinagar. All they would do is make an invoice, load the truck and 10th day it would reach Srinagar without any hassle....the invoice and the delivery challan is what is required to transport the goods but what is mentioned in the invoice should be in the truck not one extra or one short....any consumer durables or FMCG....hassle free compared to the hassles the liquor guys go thru....and we had this Octroi thing also...in Maharashtra, Gujarat and in some other states....thats another hassle one has to go thru. And the stranded trucks at the octroi toll centres....
I gained lots of knowledge about the intricacies involved in manufacturing and that helped me to make the sales team understand the importance of forecasts and also the timely placement of permits.
As mentioned earlier, IDV was on a launch spree.....we launched Gilbey's Heritage a premium whiskey in RC segment.....and later Solitaire.....and revamped Gilbey's Old Gold....Mens club brandy in Kerala....Christian Brothers Rum and Brandy.....All these in the next episode....till then, if you were in manufacturing/are still in-either in liquor or FMCG, pl mull this over and sure you would wonder why liquor is singled out.....yes, there is plenty of reasons for this differential treatment.....we will talk about this too.....
Till next episode.....
Cheers