Name: C.K. Ranganathan
Profile: Chairman and managing director, CavinKare
His Early Lesson
Pay your taxes! When his fledgling company needed an overdraft limit from the bank, he had no collateral to offer. But the fact that the company paid tax was seen as a guarantee that the money would be returned.
CavinKare has its roots in Cuddalore in Tamil Nadu, near Puducherry. That’s where its founder C.K. Ranganathan’s father had started a small-scale unit to repackage generic drugs. He would always tell his children, do not be a job seeker, create jobs for others.
But Ranganathan (CK), fourth in a brood of six, struggled through school and college. He flunked mathematics and had to be taken off an English-medium school because he simply could not cope. He was more interested in breeding tropical fish in improvised tanks, had 500 pigeons, and spent time with urchins in the family’s 10-acre land where they jumped into deep wells to swim for hours on end and played gilli-dunda. In contrast, his three older siblings were all good at their studies; two became doctors and one a lawyer.
When CK was in the second year at college, his father passed away. The old man had been quite an innovator in his time. He had changed the game in the face of Unilever and P&G by selling shampoo in sachets for the first time. After his death, in the normal course of things, the business would have closed down. But the business had an unpaid loan of Rs. 2 lakh and the banker told the family that unless it was repaid, they could not wind up the business. The older siblings quit their professions and took over.
In time, CK became ready to work. He reported at the family’s small factory and the siblings were happy to have him. But it wasn’t a smooth ride. CK questioned things. He earned everyone’s displeasure by often dissenting in public.
When the family took it hard, and dinner table conversation stopped, in 1983, he walked out with 15,000 rupees in hand. He rented a 150 square feet place, 200 metres from where the family lived. This is where CavinKare was born.
Today, after 18 years, CavinKare has an estimated annual sale of Rs. 1,050 crore. I am here, sitting in the company’s R&D centre where CK wants to show me the future, but I am not yet done with his past. Because, I believe, people who do not have a sense of history do not create the future.
“When I came away from the family business, I did not want to clash with my own siblings. Why compete with them? So I thought of starting a poultry business or something like that. But the constraint was the 150 square feet of space that I had. So I asked myself, what can I do? The only thing I knew was making shampoo. I started Chik India [which was renamed CavinKare in 1998] after Chinni Krishna; that was my father’s name and I wanted him to live in my brand.
“When I started on my own, I became acutely aware of my shortcomings. I had been academically poor. Being in business required me to be knowledgeable. I stopped reading all Tamil newspapers and magazines. I switched to The Hindu. But I could not understand anything. I bought an English dictionary and every day, I started teaching myself five new words. I started reading management books and I listened to cassettes on things like human resource management and….”
I interrupt him to ask how old he was when that transformation began; because without self-awareness, people simply do not get it.
“I was 24.”
To me, an enterprise is like a creeper. It is the first six leaves that take the most time. I want him to tell my readers about lessons learnt when his enterprise was under six leaves.
“I was terrible in mathematics and barely managed my B.Sc. in chemistry but now that I was in business and my business required me to get on top of both the subjects, I went all out. Once I know what is important to my success, I simply change myself.
“Who would join my company in those days? It had to be the people who knew me in my early life; my friends. A time came when some of them hit the limits of their desire and ambition. I needed to let them go. You cannot keep ineffective people. But one thing I told myself, whenever I must part, it has to be without hurting people. I made sure they were taken care of.”
The year 1993 proved to be a watershed for the fledgling company when the government withdrew excise duty concessions for small-scale industries. The future became uncertain for most. Some gave up; some chose devious means like tax evasion to survive. CK took four fundamental decisions. One, he would pay taxes. Two, he raised salaries by 40 percent across the board so that his people felt confident about their future. Three, he went to management schools to hire. Four, he increased his ad-spend.
Counter-intuitive all, but I want to know about the very first decision — about paying taxes right. Where is the ROI for honesty in a country
“The man who was common to my father’s and my business was the auditor. His name is M.V. Ramaswamy. After a year in business, when I took my books to him, he told me, CK, pay your taxes. I told him, I would; I was happy to. And ever since, I have done just that. But an amazing thing happened because of it. At that time, we were just a start-up, we were hand-to-mouth. We needed an overdraft limit and we approached the Vijaya Bank. An overdraft limit required collaterals; having walked out on the family business, there was no collateral to give. But you know what? A branch manager named Mr. Subramaniam wrote something unusual in his recommendation for extending me credit. He wrote, ‘Here is an interesting company; they actually pay income tax!’ That was the guarantee, the man said, that they would return the money. After all, how many small-scale industries attached income tax returns to their loan applications?”
The early April evening in Chennai is still pleasant and I am now headed back to my hotel. In my mind’s eye, I see the image of a young boy jump into a deep well in the middle of nowhere. Startled by the splash, 500 pigeons take to flight.
Subroto Bagchi is co-founder & gardener, MindTree and a best-selling author. His brief: Every fortnight, exchange tales of the road with successful entrepreneurs