Memoirs.....Musings of a sales guy at heart.....

Episode 37...

The MBDL saga......typical Hollywood potboiler......

Before we entered TN and our agreement to bottle with SAFL, Sipping Spirits owned by a very young and dashing Prasanna started bottling their Pink vodka there....this brand was unique for the TN consumers and the very first super premium Vodka in TN....and this brand was touching almost 10k per month....

Even after Samsudeen's return to SAFL somehow this brand was not touched by him as VSOP Gold was not in the horizon then. Also they just done away with the bottling partnership with SW/USL and hence needed some premiums in their portfolio....and the fact they were struggling to complete their licensed capacity of 4.15 lac cases per month. Things started changing only after the launch of VSOP Gold and Prasanna also started feeling the heat as he was not given production line and his volumes started dipping.....since both of us had similar problems we started discussing more with each other and also how we could do better with SAFL....but the issue was continuing....

Meanwhile, in 2011 when AIADMK came back to power, I thought MBDL (Mohan Breweries and Distilleries) would start doing better....My ex colleague J Krishnakumar was their Sales head and moved to Chennai from Blr....I used to visit their office regularly and meet up with their chairman Mr Nandagopal and even once told him that they should start investing more in to this business (they were doing bad in that time)....Natarajan, his son, was also involved in the business....but he was shuttling between US, HK and Chennai....developed a good relationship with Natarajan....but somehow they were not able to get it right and could not improve their business mainly due to their debts and cash crunch....it was going on for some time....Balu an ex SW person was heading their sales. Natarajan's younger brother Arvind was also getting inducted in to the business....

I wanted to meet Maran and impress upon him to provide us at least 5000 cases per month of both our Hobsons and Clovis put together....went to Singapore to meet up with him....which I did promptly...it was 14th of April and i think it was 2012 or 13....the meeting was just for an hour in his office in Singapore and he assured me that he would advice his people to provide our requirements without any interference from Samsudeen and Mathew would help me....i came back with lot more confidence and met up with Mathew and briefed him too, but nothing happened...again everything boiled down to Samsudeen.

Sipping Spirit also had similar issues and I came to know they severed their bottling arrangement with SAFL and tied up with MBDL for bottling....one has to note down here that Prasanna of Sipping Spirit's relationship with MBDL is different as his father was a partner in their Binny's business.....

On hearing this I approached MBDL and met up with Nandagopalji and requested him to consider bottling for us....he asked me to meet Natarajan....Natarajan agreed and asked me to discuss with his brother Arvind....earlier MBDL was only doing their own but as they were under severe cash crunch and dwindling volumes, they had to look at options and one of them is bottling for others....They also had units in AP and in Kerala but were still under pressure....Krishnamurthy was their CFO, a very good person but was always under pressure to generate money for running the business..Sikka who was Natarajan's go to man for any manufacturing related understanding...Ravindran head of manufacturing and Tyagi their blender and quality control...their bottling unit is in the City and prime place....the liquor bottling unit and the brewery were at the same premises.....they also had an ENA plant in Chenglepet. Sikka became a good friend. They wanted to launch a product in the same segment of Hobsons and I helped them to tie up with a supplier in France (this was before we launched Hobsons) but they ran in to problem as they didnt have money to clear the goods when it landed in Bombay port and ended up paying huge penalties and finally the product bombed during the launch phase itself.  You may remember from my earlier blog that Vijayakumar of MBDL who was their PR person, helped me to get an appointment with the JC and had fantastic relationship with the excise and in the commissioners office.

Arvind was very open and asked me to just match Sipping Spirit's offer on bottling fees and deposit. The deposit demanded by MBDL was a whooping INR 10 million (!)...Am sharing this with you just to emphasise the point that in TN it should be the other way ie the bottling company should pay deposit for the label owner as the investment on materials is done by the label owner and the payments received from TASMAC would be by the bottler....so the deposit demanded is, as claimed by Arvind, for investment in their bottling plant...Self and Prasanna discussed with MBDL chairman NandagopalJi and impressed upon him, before signing the agreement that we should request TASMAC to pay the invoices raised for our brands in a joint account to be operated jointly by us....It took sometime to convince NandagopalJi and a letter was given to TASMAC but the letter is still gathering dust as, probably, the local bottlers do not want that to happen as it would not only affect their cash flow but also make them less powerful....so till date this has not happened. Also we should not have progressed without this in place as it was part of our understanding. I have to really stick my neck out with Vishal as MBDL was not a well rated company that time and Vishal had his own reservations....but we were desperate for volumes and MBDL had that extra capacity as they didnt have any premium brands in their portfolio. Vishal reluctantly agreed and also taking our plight with SAFL...but we were told that Edelweiss has approved a loan based on some kind of understanding with MBDL and they were getting around 200 C which would give them the required infusion and business would become normal soon....this Prasanna also confirmed and this was one of the reason for me to go ahead....also the need for getting some volumes....our 3rd brand, Le Roi' in SNJ was not doing great and hence we were primarily dependent on around 2000 cases from SAFL....we didnt want to approach any other bottlers. I had mentioned in my earlier post about Shiva Disty....but they were not interested and in fact they were not even showing any interest in their own brands and were happy with whatever they were getting from TASMAC. Midas was an option but came to know that its difficult to do business with them...So, I felt, considering the above, MBDL had a possibility of turning around their business and we could encash on that and get around 5000 cases of volume for Clovis which would give us a breather....We also were stuck with lots of inventories in terms of both raw and packing materials. We imported huge quantity of French Grape Spirit (FGS) based on the initial forecasting and due to the delay in the launch and also the issue faced with SAFL, we were left with so much of FGS-a high investment area-

I still remember the day when I took a cheque of 50 lakhs to be handed over to MBDL. Krishnamurthy was coming to TASMAC office and I went there and handed over that cheque.....assuring him that the balance would be paid in a couple of days which got paid simultaneously....meanwhile, we informed SAFL that we are launching a different Clovis and in bottling tie up with MBDL...we named Clovis from MBDL as Geo's Clovis as Clovis of SAFL in the same name cant be bottled by another bottler...(this is also another flawed excise rule in TN).....so agreement signed and we were allotted a line in the plant...fresh investments from our side in terms of labelling machine, guala holder et al.....the bottling plant needed lots of  improvement and we realised it was going to be an uphill task....we recruited Damodaran to manage MBDL. Suresh who was managing SAFL and manufacturing, left to join SAFL and we recruited Kumaran to manage our mfg....

Price approval and GO happened fast and we started our production on 25th of December, 2012....myself, Krithi and Sudeep went on a turn basis to be at the bottling line as there were lots of issues we faced while bottling. We were made to invest more on the bottling line and we had to do to improve our productivity.....We started getting good distribution and the Clovis numbers started improving.....but getting the money from MBDL?

Meanwhile, another interesting episode happened with MBDL. Something I can never forget.....Sikka called me one day for an urgent meeting....when I reached his office, he took me to his cabin and told me in a hush hush tone that Natarajan had come to know that we had paid money to Krishnamurthy (CFO) to get our numbers and he wants to meet me to discuss this....I was completely taken a back as i didnt know how to react to this nonsense...on the contrary we had faced issues with Krishnamurthy as he was behaving funny with us, not taking my calls and also not helping us in getting additional orders for Clovis from TASMAC.....Krishnamurthy was the face of the organisation with TASMAC and any representation to TASMAC has to be in MBDL letter head and signed by him....went and met Natarajan and what he told me baffled me to no end....he said 'we know Krishnamurthy is on take.....and pl accept or else we will not produce your brands"....he had the Shirdi Channel running on his TV in his cabin and was a serious Sai Devotee....I looked at his eyes...and said, 'Natrajan, this is utter nonsense and baseless...how can you come out with such an outlandish claim?"But I kept my cool as I felt there was something more to it than just sheer nonsense...I felt they were (Sikka and Natarajan) trying to frame Krishnamurthy and were looking at us as a possible scapegoat as they had come to know K was acting funny with me especially...I kept probing and probing and finally he told me that this was conveyed to him by a person called Suresh of Red Spirits, a pondy based bulk grape spirit supplier that we are paying bribing Krishnamurthy....his point was that Geo's Clovis was able to get bigger orders and also the production and hence he believed that K was on take....he gave me an ultimatum that with in 48 hours I have to come back and accept or else no more production.....guys, this is a game he was playing to get probably Krishnamurthy out of his back....some internal politics....

I was furious and went to the office and hatched a plan....called Suresh, whom I had a great relationship and told him that i want to discuss something with him and coming down to Pondy next morning....briefed Sudeep n Krithi on what transpired....the plan was to meet Suresh and record our conversation....next day morning we met Suresh and switched on our recorder...Suresh confided in us that it was Sikka and Natarajan who told him that they would give their entire raw material business provided he goes and tells their chairman that he made payments to Krishnamurthy on our behalf....(!)....and when I asked Suresh whether he was considering doing it, he said 'nonsense, I would never do any such things and I will stop my dealing with MBDL after getting my payments'...I had goosebumps hearing this from Suresh and I told him a big thank you and left....and felt bad that I recorded the conversation without his knowledge.....

That evening after our visit, met Krishnamurthy in Chola for a coffee and briefed him the entire episode....He was dumbstruck.....and at the same time was so touched that I discussed with him and also took him in to confidence....as we didnt do anything to corrupt anyone in MBDL, told Krishnamurthy to keep our meeting to his chest and also told him our plans to meet the chairman and confide in him. Next day I met the Chairman and briefed him fully and also played the full tape. I told him after playing the tape that we would take our entire money including the deposit and leave MBDL as we dont want to deal with a company which stooped down to this level.....and also we dont want to create any stress between the father and son.....he listened to me very attentively, thought about it for few minutes and told me that he would ensure our business is not affected and I dont have to deal with Natarajan.....I have to take this assurance with a pinch of salt as we already had around 2 crores as outstanding from them. NandagopalJi is a soft spoken person and regarded by all in MBDL and outside. I felt mismanagement of this company led to their downfall and also the royalty they had to pay to Mohan Meakins....

Natarajan didnt discuss anything on this with me after that, Krishnamurthy became a great friend, Sikka disappeared and after a while, Arvind took over as MD......and Krishnamurthy was transferred to Binny's and they brought Bala as CFO....I came to know later that Arvind always listened to Krishnamurthy and was his go to man and hence he transferred him to Binny's...but the issue with payments continued and at one stage our dues reached  astronomical levels and we have to stop production at MBDL....I met the chairman and told him as money was not coming and we are under pressure from our partner Jaiswal in Nagpur and he was insisting that we send a legal notice with copy to Excise and TASMAC....he bought some time with us but nothing happened....their CFO Bala, a nice guy but didnt have a clue on where the money was going to come from....so we proceeded with the legal notice...that time MBDL was negotiating with the banks and didnt want any legal hassles....Sudeep went and met the chairman that our money to be paid immediately....finally he convinced chairman and got PDCs with an assurance that we wont proceed with the notice......to be deposited over almost one year....look at the audacity........and the very first cheque bounced....another legal notice....this went on for a while....every time I met up with the chairman, the dialogs used to be the same...intent is there to pay and we will not cheat you....the dues were coming in trickles only......Arvind also the same story....and the fun didnt end there....Samsudeen joined them as CEO....Samsudeen left SAFL sometime ago and was looking at all other local bottlers and finally joined MBDL...I went and met Chairman and Arvind immediately and they confirmed he was joining...I told them that we will not deal with him and we would deal with only the chairman and MD....but later I felt i should not antagonise this person and hence went and met him.....it was very formal and told him we are only interested in getting our dues and do not want to progress with them in terms of supplies....and he paid us 5 lakhs that day....(Joke).....and told me that but for him even the 5 lakhs would not have happened....to cut the long story short, it took a while for us to get all our money....but somehow we got it including the deposit of 1 crore and wrote off around 10 lakhs.....and Samsudeen didnt lost long.....MBDL gave him a Merck....but MBDL's cash issue continued and he was asked to leave.....2012 to around 2017....what worked for us was the PDC......otherwise, the money would have never come...we still did some volume with them as there was some material and spirit left with them....I think in 2018 or beginning of 19, MBDL was taken over by the founder (Udayar)'s grand son, Senguttuvan....our dear friend Meganathan was Senguttuvan's go to person and Kumar brokered the deal between us and MBDL once again but this time we tied up with them on Royalty basis....Prasanna of Sipping spirit also helped us to get our business going with MBDL..Senguttuvan is young, dashing and found to be committed to improve MBDL....as Geo's Clovis was still alive with TASMAC there was no issue.....we introduced Wassup Vodka and today we are doing both Wassup and Geo's Clovis with the new MBDL on Royalty basis....