How MN Jaganath and A Balaraju turned Dairy Day into Karnataka's top ice cream brand

MN Jaganath (left), co-founder, MD & CEO and A Balaraju, co-founder, director at Dairy Day Image: Selvaprakash Lakshmanan for Forbes India

January 2002, Chennai. It was a ‘bizarre’ dilemma for the master salesman. For the first time in 12 years, ‘Ice Cream Jagan’ was asked to do something contrary to what he had been doing for years: Don’t sell ice cream. “I didn’t know how to react,” recalls MN Jaganath, who was bestowed with the moniker ‘Ice Cream Jagan’ in 1991. “I mean, my job was to sell. And now I was asked to wind up operations,” says Jagan, who dumped his job with Vysya Bank and joined Vadilal in 1991. Reason? “I figured that the best thing for me was to work for a company where I could eat ice cream for free,” he smiles, adding that he would relish ice creams at wedding parties. “I was in love with ice cream,” he gushes.

So much so that he quit his job as a bank clerk which offered ₹1,850 a month, and settled for a new role where he pocketed ₹1,350. Jaganath joined Vadilal in 1991, his obsession with selling ice creams made him popular in the trade circles, and he was billed as ‘Ice Cream Jagan’ in his home market of Bengaluru. The love affair continued for two years, Jagan’s performance broke all records, and then came what some intense love affairs invariably encounter: A nasty break-up. The star performer was denied promotion, he wanted an upgrade from the role of a junior sales executive to a sales executive. But all that he used to get at every “promotion talk” with his boss were two words: Agle saal [next year].

Jagan, though, knew there was no ‘agle saal’. He quit Vadilal in 1993, and joined rival brand Kwality. “All I knew was ice creams, and my familiarity was confined to Karnataka,” he says, alluding to his move to join the Mumbai-based brand, which was planning to launch in Karnataka. “I sensed an opportunity, applied, got selected, and was offered the role of area sales manager,” he recounts. Apart from a meatier role, there was a jump in salary as well: ₹5,400 per month. He launched Kwality in Bengaluru, made the brand breach the sales mark of ₹50 lakh in a short time, and Ice Cream Jagan was enjoying his chilled-out stint.



After a year, the story had a bewitching twist. Hindustan Lever brand Brooke Bond bought Kwality in 1994, Jagan became part of Brooke Bond, which was on an acquisition spree and had brought multiple ice cream brands under its fold, including Cadbury’s Dollops, and from being a superstar in Kwality, Jagan was now one of the thousand stars in the HLL universe. His dream to work for a multinational brand made Ice Cream Jagan settle for a lower designation but a bigger responsibility.

Unfortunately, the jinxed love story at Vadilal returned to haunt him. Despite being an outstanding employee, Jagan was denied promotion on two counts. First, he didn’t have an MBA tag on his CV. Second, Jagan didn’t possess any business experience outside ice creams. He was asked to work in the tea division for a few years, but he stayed adamant. He reasoned that his love for ice creams had not melted, and he had a lot to learn in the segment.

In 2000, he was posted to Kochi to grow the non-metro markets of Kerala and Tamil Nadu. Jagan’s love for ice cream kept stoking his passion, and the ice cream soldier continued to dream big in small towns.

Two years later, in January 2002, came a big, rude jolt. Jagan was in Chennai to attend HLL’s annual conference ‘The HLL Way’. Contrary to everybody’s expectations, the multinational decided to exit the ice cream business across smaller towns and non-metros. Reason? A rickety cold chain infrastructure and patchy electricity were taking a toll on the business.

The salesman felt like a hitman. “For the first time, I was given a different kind of target: Shut operations in a year,” he recalls, recounting his bizarre predicament. With a tight deadline in mind, as Jagan started to exit, he was seized with a strange feeling. A voice inside his head kept murmuring ‘now or never’. The more he interacted with retail partners across small towns and consumers, the more he realised that there was a big, unexplored opportunity for an ice cream brand.

The internal voice, interestingly, was matched by an external voice. On one of the hot evenings, Jagan was sitting with a distributor in Tiruvannamalai—some 190 km from Chennai—and bumped into an astrologer who claimed a “sweet and cold” future for Jagan. “You will soon start a business that will deal with cold and colourful food,” he predicted. Jagan was quick to join the dots—he decided to quit HLL and start an ice cream brand. But there was a small problem: He needed a technology partner who could match his sales prowess.

A Balaraju was the answer. He came into the HLL fold when the MNC bought Dollops from Cadbury’s, and soon emerged as the best production officer in the company. Interestingly, Balaraju and Jagan had two things in common. First, they had the same designation. Second, both were from the Tumakuru district of Karnataka. Gradually, they realised the third common trait: Both dared to dream. Jagan exited HLL in August 2002, a month later Balaraju resigned, and both friends rolled out Dairy Day the same year. Within a year, seven more joined from HLL. “The nine navratnas of HLL were now nine navratnas of Dairy Day,” says Jagan.

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The friends started their entrepreneurial journey by identifying their strengths and limitations. “We were star performers in sales and production,” says Jagan. While Balaraju could produce best ice creams at the lowest cost, Jagan was known to sell ice cream like hot cakes. Their biggest limitation, the duo realised, was money. The navratnas pooled ₹34 lakh, and raised ₹50 lakh in unsecured loans from friends and family on an interesting pitch: Payable when able.




The money, however, was insufficient. Balaraju was quick to spot an opportunity in crisis. A bunch of struggling and smaller ice cream players were exiting the segment. The co-founders bought used equipment, started production on a modest scale, and demarcated roles. “We decided that Bala would be the decision maker inside the factory, and I would take care of sales and finance,” says Jagan.

The formative years were challenging. An inconspicuous brand, poor cold chain infrastructure, and limited marketing and advertising budget tested the ingenuity quotient of the co-founders. The friends devised a H2H (home-to-home) strategy across Karnataka. ‘Buy 1 tub, get 1 tub free’ was the bait, and quality became the talking point. “Word of mouth works if your product is of great quality,” reckons Jagan. Small retailers, who had been grumbling about the arrogant way of the big brands, joined the army of well-wishers.

Over the next few years, came two turning points. First, Dairy Day managed to find a space at Reliance Retail and Metro Cash and Carry. “The moment you are in modern trade, the perception changes. Suddenly, you become a big boy and a big brand,” says Jagan. The second tipping point came in 2016 when Motilal Oswal Private Equity-managed India Business Excellence Fund reportedly invested ₹110 crore in Dairy Day.

Fast forward to 2024. Dairy Day has emerged as the biggest ice cream player in Karnataka, is among the top three brands in Tamil Nadu, and has closed FY24 with an operating revenue of ₹680 crore and a profit after tax(PAT) of ₹28 crore. The brand gets 68 percent of its revenue from Karnataka and Tamil Nadu, has expanded its footprint across Andhra Pradesh, Telangana, Kerala, Odisha, and Maharashtra, and in March this year, got an investment from private equity biggie Kedaara Capital. “We want to be among the top four brands in India,” says Jagan. Kedaara, he underlines, is a valued partner for the next stage of growth for the brand. “Their wealth of expertise and in-depth retail and consumer experience will be invaluable as we press the growth pedal,” he adds.



Industry observers are not surprised by Dairy Day’s pace of growth. “The reason for its success is its relentless focus on execution,” reckons KS Narayanan, a food and beverage expert. In the ice cream business, a sharp geographical focus pays off. Sticking to the core geography of Karnataka and Tamil Nadu, and ensuring deep penetration into these states have helped it take pole position. “This has also ensured profitability and superior service,” he says, adding that Dairy Day’s move to invest in the latest technology has ensured that the products get the benefits of scale, which becomes critical when the brand goes deeper into the existing markets. The challenge for Dairy Day, points out Narayanan, would be to build on the brand, find ways to participate in the blooming premium ice cream market, and ensure that it doesn’t rush to spread itself too wide and thin.

Jagan, for his part, prefers to look at the big opportunity. “Every soft drink outlet is a selling opportunity for me,” he says, adding that there is room for multiple players, so one must not harbour ambitions to be the biggest in all markets. “I have always believed in B2B logic, which is ‘back to basics’,” he says. Ice cream business, Jagan underlines, is not rocket science but needs a lot of common sense. “We are not reinventing the wheel. But we need to be smart enough to use the wheel in the best possible way,” he signs off.