Memoirs.....Musings of a sales guy at heart.....
Episode 34...
We are a start up now!!
Sudeep was gung-ho....Krithi was quite but didnt say no....I was looking at something to exit Flemingo...so we decided to move forward....first 'how to name it'.....Sudeep had roped in someone, a freelancer, to work on the brands specific to TN and South and also presentation.
She provided few names for the company and we chose 'Geoscope'....Geo in Latino means global and scope-you know....Geoscope became Geoscope Exim pvt ltd...We registered the company with ROC and we got the approval from ROC on the 7th of Sep 2010....so Geoscope was born on the 7th of Sep 2010....
Darpan Kaur, who was our colleague during our Diageo time (she was handling SMV in India and later got a job in Diageo Singapore in brand management-worked there for few years and came back to India and was trying to figure out what next?
Myself and Sudeep knew her potential well and convinced her to be part of this start up and roped her in....We are a start up and the compensations cant be high which Darpan also knew well....And more than anything, she is a good soul and self and her respect each other and hence she decided to work on our brand strategy along with the one at Blr....Also Darpan started doing the hypno therapy course under Yuvraj Kapadia and was revving about it...Will come back to this later....
So, name done....work on brands in progress.....strategy and money?
Pramod Menon, who was with Diageo India and was with me in Dubai-a wizkid, came back to Bombay during this time and I met up with him and requested him to help us to work out the financials....and guys, hold your breath....the template he used 12 years ago is still being practiced by Geoscope...He did a fabulous job and challenged all of us enough on the numbers, employees, salaries et al.....I left India in 2005 and returned in 2010 and lost touch with the market dynamics (domestic esp south) and hence there was lots of dependence on Sudeep to provide these. Also Sudeep was still working for Kyndal and midst of his travel would contribute to the financials which was getting prepared by Pramod.
Krithi was a duty free guy and never. had any understanding on the domestic front but was very good in following up on initial setting ups et al. Also his job was to get us some export trading...we added the 'Exim' in Geoscope was to emphasise on the 'export-import'....
None of us had any idea on the upfront investment required for this project as we all had another job on hand and have to shuffle between these....
So when Pramod finally presented to us (including Darpan) we were in for a shock...because there was upfront investment required plus the investment on materials, brand registration fees, salaries et al....
Sudeep, on seeing these numbers, over a drink, with Krithi present, suggested that we mortgage our homes and raise the money....I was very clear from the very beginning that there will be no mortgage or any sort like that as none of us were rich enough to take that kind of risk....
So we decided to pitch our business model and the investment required to few known faces....Krithi brought a guy, known to all of us, and after hearing us out, he said when the money would be repaid and what would be the interest? He was under the impression that we were looking for short term loan....but that was not our pitch...
Sudeep and Krithi have to be behind the scene as they didnt want to rub their bosses on the wrong side and lose their regular income...but I have already done the rubbing and hence for me nothing to lose...It was almost a done thing with Flemingo for me...but since I kept the relationship going, I approached Viren but didnt sail through despite the fact that Viren initially agreed to this...these were all hit and runs...
I presented this to Jairaj and Neil in Blr....I had mentioned to you about these two lovely souls in my earlier blogs-during my IDV-Diageo times....Jairaj and Neil were school mates and Jairaj roped in Neil to partner with him in his business...they had few bottling units across India and their main focus was 3rd party manufacturing...I took our business proposal and met up with these two at their Blr office and we discussed in length but they didnt want to get in to branded alcohol business..so we need to start afresh...
One day self and Sudeep were in Bandra and over lunch we started wondering where the money going to come from to start our business. I told Sudeep that we will meet Sridhar Iyer-our ex colleague from Diageo and the CFO of Pfizer then...called him and he asked us to come to his office immediately. We went to his office and told him about our business proposal and our current plight. He asked us whether we approached Vishal Jaiswal....Vishal Jaiswal was our first bottling partner in Diageo, when we sold off the Nira plant along with our Green Label whiskey to Deepak Roy...Vishal set up a new plant as per the standards set by Diageo in Aurangabad in no time....We told Sridhar we didnt and he called Vishal immediately and set up a meeting. That was a major break through for us.
I met Vishal in Bombay and presented to him our business plan and financials....he said YES immediately-the meeting was in Hyatt in Santacruz east and we used the Hyatt office to draft an MOU between us...self and Vishal signed it and next day he transferred the first crore of rupees to Geoscope.
I was still in the Chembur flat of Flemingo and we organised a meeting in our place with Vishal, Vaibhav (his brother) his team consisting of Vinod Puri, Nikhil (his finance guy) and Jeevan Patel. From our side it was me, Sudeep, Krithi and Darpan along with Pramod....we discussed the business plan and financials threadbare along with overheads, our salaries and head count. We decided we would set up an office in Chennai and also all of us would move to Chennai. I was asked to be the CMD of the company with Sudeep and Krithi the directors. The salary for all 3 of us fixed at the same level-though I was more experienced I felt all of us should draw the same....Darpan's payout was also firmed up...
Sudeep used to frequent Chennai often as Kyndal had their tie up with SNJ there and also doing well with their Bols Brandy. Sudeep was under the impression that Bols was 100% imported brandy with the concentrate coming from South Africa....but he realised after a thorough study and research that Kyndal was using a small portion of the South African brandy concentrate only for blending purpose and it was nothing but an ad-mix brandy.....meanwhile Morpheus was gaining traction in TN...On 'Morpheus'....Tamilians have to travel to neighbouring states to experience national and international brands as in TN only those 6 or 7 companies were catering to consumers needs with their own brands till 2010....DMK under Karunanidhi gave away 3 licenses and since none of them (except Kals who was in arrack business in UT of Pondy) they started welcoming tie ups with national players. Radico moved in fast and introduced Morpheus in TN...the presentation was something new to TN consumers and they grabbed it....The liquid is nothing but an ad mix brandy...they added a small portion of extracts of raisins to enhance the flavour of the product....and the consumers were ready to pay a premium for this brand....
We also wanted to pitch ourselves for Smirnoff Vodka for TN as Diageo didnt want to get in to that market directly. Sudeep used his charm with the concerned in Diageo India and we got a letter of consent from them authorising Geoscope to manage SMV for TN...this was a major break through for us....with that letter we approached few bottlers and through one of them showed huge interest, the project didnt take off as Roland got shunted out of India suddenly resulting in this one was put on to the back burner....
Our designer in Blr came out with some brilliant stuff but all in Brandy category as our strategy was to take a strong foot hold in TN and South and hence the entire focus was on brandy.
Meanwhile our dialog with Bardinet, France progressed well and I met up with Patric in Cannes at the annual DF congregation (I was with Flemingo then and it came handy)....we had some misunderstanding with Patric and the meeting in Cannes got this issue sorted. Patric and his boss Etione were very supportive and we signed an agreement with Bardinet for 10 years. We chose the name Hobsons, as for many it meant, 'leaves you with no choice' but actually the meaning is different.
The next question was whom would we partner with in TN to bottle our brands? What came to my mind immediately was MGM Maran whom I have a great friendship. MGM is the parent company and SAFL is their IMFL bottling unit. MGM Maran bought SAFL from Muthia of SPIC few years ago....During Muthia's time we pitched for SMV bottling with them but it didnt work out. SNJ would have been ideal but Sudeep was sceptical as it would jeopardise his Kyndal job....I also wanted to look at Shiva as they were the most professional those days next to Balaji and went to Coimbatore and met up with Mr. SVB...but he told me that they have stopped bottling for others after their bitter experience with USL....I shot out a mail to Maran about us and the start up and pitching for bottling tie up for 3 of our brands with a volume forecast of around 25k per month. He immediately responded with a YES and asked us to meet Theyagarajan who was the CEO of SAFL bottling unit and distillery. Everything happened in a jiffy. We were all still operating from Bombay and I was the face of the organisation as Sudeep and Krithi were still with Kyndal and David Lee...I told Viren and Atul my road map of starting our own in manufacturing. I requested them that my flat would be given back once I find something in Chennai for which they had agreed, graciously. As mentioned earlier I had approached Viren for investment but it didnt work out.
There was lots of work as we figured out (none of us had any clue on the time lines on TN/Tasmac registration process), SAFL sat on our papers and we came to know of it accidentally. There were lots of process involved. 1) The brand owner has to give a letter to the bottler their intent to bottle with them. 2) This letter, along with the letter from bottler addressed to TASMAC/excise to be submitted with the excise inspector based at the unit with his signature and stamp(find this illogical), 3) this would then go to the desk of 'tapal' at TASMAC 4) it can lye there for ages unless one follows up 5) Tasmac would make a note of it and call the bottler for a price negotiation and once the prices are agreed, Tasmac would send their recommendation to the board, and after the approval of the board, TASMAC would advice the bottler to submit the labels for registration and once the labels are registered and after the clearance from the chairman of TASMAC, the first order would be released....one has to be hands on here as the bottler wont move an inch as its not their own brand....we need to push this in every stage...I reached, on figuring out the letter has not reached TASMAC (we had a good soul in TASMAC-the then FM-Bala -who gave us right kind of advice on how the system works), SAFL office around 5 in the evening. Thyagarajan was there and he realised the letter was just lying with his secretary....it has to be signed by the excise inspector. Sudeep was waiting outside the office as he was still with Kyndal and should not be seen with me.....I made SAFL to prepare the letter, took it with me and drove down to their factory at Villupuram. Reached there around 8. There was a wonderful guy, Ramakrishnan, the factory manager-he was very supportive and cooperative-got the letter signed by the excise guy in the late hours-but the issue was that it has to be carried by the excise assistant to the excise office and not by an outsider....so the work was done only half.....next day the letter reached around 5.....one more day lost...finally after this letter things started moving ahead. We gave letter for 3 brands....Hobsons XR Pure French Grape Brandy, Clovis and Le Roi' all in brandy category with SAFL....Those days SAFL were bottling for USL (erstwhile SW brands) and Maran just started his own brands as being a bottler with a meagre bottling fees, they were not making any money....Also USL had bottling tie ups with Balaji and the new start up Kals....
The day we started talking about Geoscope and brands, one thing was clear in my mind that we should be the first one to launch 'bottled in India' brandy and thats how Hobsons was born. Clovis and Le Roi were to give volumes.
I have to keep travelling to Chennai from Bombay and since Sudeep was based at Chennai and had an office too, was able to track things, though surreptitiously, and keep us posted....
We got all our brands approved by TASMAC board and got the GO....major celebrations to see the name of Geoscope in TN....but we encountered an issue with the excise of TN.
We import the concentrate of matured French Grape spirit and it is bonded in the customs bonded warehouse Chennai. We imported 80 barrels and these have to be sent to SAFL. We could not import directly to SAFL as they never had an import export license. The process is that SAFL has to apply for a permit to take these to their bottling plant. There was a fee of Rs5 per lit to be paid to the excise department and along with that challan one has to apply to the commissioner seeking his permission to transport it to the plant. The file moves from AC to DC to JC and to Commissioner of Prohibition and excise..(irony, isnt it?)...unless you get the permit and transport, you cant bottle. We waited for 2 days but no news from excise and we were told by SAFL there was some objection from the JC....I used Vijaykumar of MBDL's influence to get an appointment with the JC. Met up with the lady and briefed her on our pedigree and the start up and also the bottled in India concept....she didnt want to understand and kept telling me that there is no provision in the book to allow such kind of product in TN....I quoted her the examples of Teacher's, Black & White, Vat 69 et al but she kept telling me that there was no precedence. Also their fear was the impending election results and hence wanted to play safe. This lady is a good officer but didnt want to chance. But without the signature of the JC the commissioner wont sign. And the file cant be sent to the DMK minister as the ministry was only care taker....complications....one of my partners came to me and said we can change the blend and go to the JC and tell her we would use this imported spirit only for ad mix and not completely....I said 'only on my dead body'....we went around in circles.....We were also running against time as we have to get the bulk spirit moved to SAFL before the elections results are announced....so I used a good soul to put in a word to the Commissioner of excise about me and he got an appointment. Its not that one will not get an appointment with the commissioner...anyone can go and meet him but if the appointment is thru a source, it lends some credibility....I explained to the commissioner step by step and like to a student....I spent almost an hour taking him thru this and also I carried a small portion of the Hobsons blend with me and made him to nose....he was maha impressed and felt that there would be no legal hassle and since it is an established practice in other parts of the country no one would object to it in TN. He picked up the phone and spoke to the JC who was in the other building and told her: "this person Rajah is a professor...he explained to me very well and made me to understand...I am sending him to you and pl listen to him and you would be convinced ( I didnt tell him my tryst with the JC, for obvious reasons)....I dont see any legal issues and I think we should approve this file as the government would get the revenue like other brands plus the Rs 5 per lit".....this was something fantastic. The commissioner also told me that he is waiting for the election results and once it is announced he would be removed from this position. So with his blessings, I rushed to the JC, repeated the same nth time and she asked me to come next day....so lived one more night with tension and next day she signed and forwarded the file to the commissioner. We got the permit and immediately transferred the stocks to SAFL after paying huge import duty-huge for us as it is blocking our precious cash-the next day election results were announced and AIADMK came to power and all the officers got transferred.....this is one major victory for us....had it been delayed, god knows how things would have turned around....
Simultaneously the brands presentations were taking final shape....we started the work in Sep 2010 and by, if my memory serves right, we got the approvals by Feb 2011....
The presentation of Hobsons and Clovis were stunning.....We decided to go with green bottle for Hobsons and with bar top closure with sleeve to cover the cap...very expensive packaging as the bar top is not made in India and the sleeves, though made in India, was expensive as there were only a couple of manufacturers of this particular sleeve...only for the 75cl pack. We also decided not to go for 37.5cl considering the investment required. So we created a fabulous design and a great product and the task was to get a supplier to produce what we want. The obvious choice was HnG and AGI in India....HnG didnt even bother to talk to us and AGI, though was ready to do for us, but they had this colour bottles run twice a year only and hence the MGQ was huge....I approached Rajashekar of USL who was my neighbor and a good friend and requested him to get me connected to some bottle supplier and he connected me to Glassex Choudry...We also got a lead and met up with Anil Mehta of Jay glass. He was the agent for many glass manufacturers and one of them is Piramal glass SL....Damitha was their export manager and Sanjay the CEO...excellent guys and very supportive and cooperative....but the problem was the cost and also the advance they demanded...100% advance.....but we requested Anil Bhai to come for our rescue and he did....we got some credit of around 30 days but the minimum guaranteed quantity (MGQ) was a big issue, as huge amount gets blocked with inventories, but we could not do much about this....I flew down to Colombo to see first hand the first bottle of Hobsons coming out of the furnace and it was a sight I still behold....Green color and very cute bottle.....what a feel it was....we also decided to go for transparent label and self adhesive....I spoke to Manohar packaging-Nishikant Shirodkar-using my HL contacts and there I met this great guy, Aditya, Nishi's son in law....Aditya is full of energy and fire in the belly guy.....he was so helpful and was sharing everything about packaging industry with me....He created a great looking label for us and was also very considerate with the credit and also the MGQ.....then to bar tops for quarts bottle and guala closure for nips. There was no producer of bar tops caps in India and through our ex colleague Ashwin (we miss you friend), we got hold of Sidharth, and signed off for the bar tops...but we had huge issues with this person and at one stage, I was about to cancel the order and decided to go for a regular cap...but better sense prevailed as at that point of time, we were nobody and hence played it down....we got the consignment from France through him and also the sleeves. Went and met Romail of Guala closures-they were the first one to introduce tamper proof closures in India and during our IDV time, we introduced this closure for Green Lable whiskey...and hence knew them well. But our requirements were not huge and hence the MGQ here too....
Finally the liquid....for Hobsons it is not a rocket science...the liquid is imported in around 64% strength and all we have to do is to reduce it to 42.4% v/v by adding the demineralised water....
Suresh Babu was our manufacturing guy, based at Villupuram to look after our bottling and quality at SAFL (MGM)....very good in his job....while we thought we were ready to go, he came out with a big investment requirement. SAFL in 2010-11 were not bottling any major premium brands and almost 90% of their production were cheap and regular brands....they were primarily bottling for USL (Shaw Wallace brands and major volumes were from John Ex Shaw brandy and Golconda brandy and almost 80% were nips-hence the bottling lines were made to produce only these kind of packs....where as for Hobsons we needed some extra care in a semi-auto machine. And these things were not off shelf....the self adhesive labels when put on bottles develops air bubbles inside as the bottles are wet (the bottles are washed pre bottling, the liquid is pumped inside, bottles with liquid arrives at the labelling area with wet outside.......as none of us were manufacturing guys all these were realised while doing trials....so we need to remove the wetness and hence have to install something called 'air knives'....also in the bottle washing area, the washers and the holders have to be changed to suit our bottles....labelling machines, guala feeders and bottle holders....all these to suit our bottles and we designed different ones for each brand....and guys none of these were even factored in our capex....and as mentioned these were not off shelf except the air knife....but we moved heaven and earth and got all these in record time but we had some issues with SAFL as they have never ever done any super ultra premium brands in their lives....and once all the above in place, we took a blend of 3300 cases (TASMACs first order is 3300 cases) and somehow managed to bottle these 3300 cases in around 10 days time with around 300 cases per day....this was not liked by SAFL as they do, in their lines, around 800 cases per day and its loss of production for them....so the issue of bottling fee....we learnt a lot by trial and errors only....Since the brand approval was there we thought we would bottle the entire quantity and go to TASMAC for the first order.....
Meanwhile, we also felt that we should launch Hobsons in other markets of south and hence approached my dear friend Jairaj of Gemini and Neil, whom I approached for investment earlier....they immediately agreed to bottle for us and we signed off....the problem with their unit at Goa that time was the IMFL bottling line was lying idle as they were focussing on Bacardi Breezer only.....so the lines were dusted off, the blending tanks and holding tanks were cleaned and kept ready for us....we also need a guy to manage our bottling and hence recruited Kotteeswar Rao.....young boy with lots of ideas....Suresh was overseeing Goa too.....We moved some concentrate to Goa and started at Gemini our bottling for supplies to UT of Pondy, AP and KTK.
Meanwhile In TN, we started our recruitments....hired Rajeev as our marketing guy, Subrat as our finance head and Vishwanath as our ASM for TN....Office was set up on Chamiers road...a 3 bedroom apartment....one bedroom was kept for Sudeep and Krithi, one for me and one for our office.....we also had a cook to prepare our lunch and dinner as we wanted to minimise the expenses.....Darpan used to visit us from Bombay once a while and things have started moving. We recruited Sridhar to look after UT of Pondy (Sridhar is ex SW and Kyndal)....The total team was in place....
Thyagarajan resigned from SAFL and Samsudeen aka AKMAS came back to SAFL...(he was there earlier after his premature exit from USL but fell off with Maran on something and resigned)....initially I thought Samsudeen was a great guy as I knew him from his SW days in Bombay.....He also ensured we sign the agreement with SAFL and we got it done in Dec 2010....
We bottled the entire 3300 cases of Hobsons in June 2011 and made SAFL to give the letter to TASMAC. AIADMK came to power in May and if my memory serves right, Jayalalitha took charge on the 16th of May 2011. With in a week the entire set of officers got transferred and we got a new commissioner of excise and new MD in Mr Vivekanandan. We thought TASMAC would release the orders immediately after we informed them on our stocks level, but nothing moved...we were desperate to get the first order as each day it is delayed was adding to our cost and interest....I went and met the home secretary, I think it was Santha Sheela Nair, a very nice IAS officer and briefed her the Hobsons brand...she was very impressed with our company profile and the product and she immediately picked up the phone and spoke to the MD of TASMAC....still nothing happened. I went around like a mad man knocking at all possible doors....my ex colleague from HL-Datta introduced me to one Kulothungan and he said he would put in a word to the MD...he was the PR of Maidas another bottling unit in TN....very nice person and sincerely wanted to help us....and he did put in a word to the MD....when I met the MD he said he is at it and we would get our order soon....time was just flying....meanwhile we shipped the first consignment from Gemini to Pondy...We appointed Happy wines, Anand, for our Pondy distribution...he was the numero uno there with almost all the brands except USL...highly focussed and very hard working, approachable, nice and friendly...had a good team and we launched our Hobsons in July 2011 in Pondy...the first in the country....finally we could see our efforts sitting pretty at the retail shelf....and the trade welcomed the brand as they saw the potential of it....Also our strategy that we should hit the market with our most premium and establish Geoscope as the premium brands company, paid off....we ensured the trade was well briefed on Hobsons...1) 100% French grape brandy 2) Made and matured for 3 years in France 3) the first bottled in India (BII) brandy in India....the presentation stood out and the liquid was a kind of 'never before' and people started calling it Cognac...I need to tell you guys here that in TN and in many markets, the consumers were just drinking brands not knowing what it is and how it is made....we ensure the consumers are well educated by conducting 'Brandy appreciation sessions'...mainly for the consumers...my marketing guy Rajeev created the content and yours truly conducted the sessions...I ensured it was interactive and the consumers loved it....and we always ended the session with sampling...this I learnt from Diageo and W&M....and designed it based on what I have learnt from there....we followed Pondy with Karaikal and Mahe...then in AP and in KTK....every where Hobsons received rare reviews....we have also launched it in Goa....The MRP in UT was around 900 per bottle and Goa also similar.
TN was very still elusive. We kept meeting people and were told it would get released. Meanwhile self, Sudeep and Krithi went on a trip to Pondy and decided we would visit Srirangam to take the blessings of the Lord....we left early hours and on our way we got a call from our Datta that TASMAC has released the new brand order on SAFL....we got so excited and called up our ASM to rush to Tasmac....it was some time first week of August 2011....Vishwanathan also confirmed that order was released....we called up the GM of TASMAC and asked him but were heartbroken when we heard that 'yes order was released but SAFL took it for their brand VSOP Gold'....this was a huge shock for us....we stopped the car midway as we didnt know how to react to this....I called up Bala of TASMAC and asked him why the order was not for Hobsons for which he said Samsudeen said they are ready with VSOP Gold and converted the order....he also said not to worry and in Sep we would get our order. We came to know that TASMAC would release one new brand only per month per unit. We didnt want to abort the trip and hence prayed and returned to Chennai the same night. I went to TASMAC straight next day and met the MD...he was helpless as he also didnt anticipate this googly from SAFL. The fact was SAFL created a brand called VSOP Gold some couple of years ago when Samsudeen was there but it went in to hybernation....when Samsudeen realised TASMAC is releasing new brand order he grabbed it without even a single case of finished goods in his warehouse....a sample of TN for you....So we have to wait for another 3 weeks....in TN there are many twists and turns....on 15th of August I was on an outing with my friends and I get a call around 7 in the evening informing me that the MD of TASMAC got transferred....our dear friend who was very supportive and also assured us 1st Sep.....another set back...I think the Home Secretary also got transferred....those days the HS was the Chairman of Tasmac too....my contact told me not to worry and we would get our orders....Mr Soundayya was appointed as MD of TASMAC....we have to start all over again....briefing him and getting him on the same page...which I did...he was giving us hopes but nothing happened in Sep, Oct and Nov....
Meanwhile, Krithi shifted his base to Chennai and resigned from his earlier job...Sudeep also resigned but kept one room in our office for himself.....our expenses were mounting....we started thinking outside the box....I met one Kausalya Devi the honorary CG of France based at Chennai and thru her got an appointment with the CG of France at Pondy....requested Patric of Bardinet to accompany me....we went and met him briefed him and requested him whether he could put in a word....
I personally sent mails to the CM of TN....knocked at every possible doors...kept meeting our contact....it used to be funny....he would meet me only after 2200 hrs but in some kind of remote places...mostly outside the park at GN Chetty Road....I would go early and wait for him....
Meanwhile, Darpan decided to drop out and told us that she is shifting to Goa to pursue something else....
Our brand developed from Blr also, after completing her job left....
We developed Clovis....the packaging came our very well but we were struggling with the blend...through our Suresh we approached Natarajan who was the blender with SAFL and he developed the current blend....our brief was that he should use our Hobsons spirit in the blend and it was a challenge for him....he is a good person but very quixotic....but after testing many blends we finally zeroed in on the current one....second product was ready....
Hobsons still remained elusive and we decided to pursue Clovis for UT....and from Goa dispatched the first consignment from Gemini Goa to Pondy on the 23rd of Dec 2011 to Happy wines....the consignment reached Pondy on 31st of Dec 2011.....
This day turned out to be a memorable day for us in Geoscope.....
