MONEY INDICES - Poultry + Contract Farming Happy Farmers

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Poultry + contract farming = happy farmers
Vishnu RageevR 21-05-2014

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In the poultry business, its all about timely delivery, quality, and ensuring
good returns for all stakeholders on a consistent basis. And fame comes only
to the rarest of rare. Two brothers from Tamil Nadu Bangaruswami
Soundararajan and Bangaruswami Sundararajan have perfected a unique
all-inclusive poultry business that runs on a contract farming model involving
small and marginal farmers. Kick-started in 1978, their brainchild, Suguna
Foods Ltd (formerly Suguna Poultry Farm Ltd), has been instrumental in
changing the lives of thousands of small-time poultry farmers by giving them
sufficient returns. The brothers, who are XIth and XIIth grade pass-outs,
have turned Suguna Foods into a `5,000 crore business with presence across
India. They say it is their father who mentored them
By Vishnu Rageev R
Which came first, chicken or egg? For Bangaruswami Soundararajan and
Bangaruswami Sundararajan, chicken came first. Suguna Foods, named after their
sisters daughter, started out in 1978 as a small poultry venture dealing in chicken.
Born into an agricultural family, Soundararajan, CMD, Suguna Foods, initially thought
of this venture as a simple extension of the familys agricultural activities until his
father persuaded him to go full steam ahead with this business. The start was made
with an assistance of `5000 from his mother. Today, Suguna is a leading poultry
company, poultry vaccine manufacturer, poultry nutritionist, and poultry educator,
credited with the popularisation of the concept of contract farming in the Indian
poultry ecosystem. It works with 18,000 farmers in 14 states across India and has
operations in Bangladesh and Sri Lanka. When we started out, it was purely for the
sake of survival, says Soundararajan. In the beginning, it was only an extension of
our farming activities. Our entry into the poultry business was accidental, but once we
entered, we were bullish about its prospects.
When Suguna Foods was born, Ganapathypalayam in Udumalpet, about 70 km from
Coimbatore, Tamil Nadu, had many poultry farms, but no input suppliers. Identifying
that opportunity, Soundararajan initially tried to become an input supplier. There was
growth in the sector, but the farmers were not making money. The farmers were
dependent on 14 intermediaries, including retail distributors, brokers, chicken feed
suppliers, medicine suppliers, and veterinary service providers. By simply bringing
down the intermediaries to three, we were able to save 30-40 per cent costs. In
1990, we started off with three farmers at Udumalpet by providing them with
necessary inputs, says Soundararajan.
Contract farming model
Soundararajan and Sundararajan introduced a unique contract farming model that
was unheard of in Indian poultry trade. Through this model, they promised the
farmers that they wont lose money anymore. The brothers not only promised better
returns to the farmers, but also provided them with a logistics platform and a link
with retailers to sell their livestock. Suguna supplied day-old chicks to the farmers
along with feed and medicines. The farmers raised the chicks for 45 days and
returned them to Suguna.
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MONEY INDICES :- Poultry + contract farming = happy farmers | Latest,Business, Financial, Economic, Political,Stock Market, news, India, UAE, World 11/1/2014
http://www.moneyindices.com/detail_news.php?id=4822 1 / 5
We analysed the farmers strengths and weaknesses before tweaking our business
model, says Soundararajan. The forward-backward integration strategy helped us.
Farmers were good at production, so we made them focus on it without investment
or working capital, while we ourselves took up the responsibility of supply, sales, and
marketing. Suguna even helped farmers with procurement of bank loans for erection
of shelters and maintenance of poultry. Our hatcheries and breeding farms supply the
chicks. We provide the feed (made from soya and maize), medicines, and vaccines.
This business model gave farmers a regular, assured income, and this kind of
consistency had never been seen in any Indian agricultural enterprise.
The proprietary firm, which was then known as Suguna Agencies, grew from three to
300 farmers between 1990 and 1997 and achieved a turnover of `7 crore. Average
farmers used to deal with 5,000 birds and earned around `3 lakh. Suguna Agencies
then scaled up the business to 1,500 farmers, clocking a revenue of `100 crore. By
1990, the company had operations across Tamil Nadu. The idea to scale up occurred
to us in 1997, says Soundararajan. Initially, there were doubts about the scalability
of the model. But we won over the farmers. They trusted us and we have grown
together. Since 1997, we have been growing continuously. We have seen
breakthroughs in multiple areas of our business.
As far as production is concerned, Suguna is concentrating mainly in Tamil Nadu,
Karnataka, and Andhra Pradesh. Indirectly, the company is dealing with 1-1.20 lakh
farmers. Any farmer can join our family. Our criterion is simple: the livelihood of a
farmer has to be farming and farming alone, explains Soundararajan. We wont
entertain someone just because he has `1 lakh for investment in this line of business.
We attach importance to his association with the farming activity. We are in the
business of livestock. Rearing and maintaining livestock is not about investment
alone, it is about affection. We are working in 8,000 villages and we dont find any
difficulty in terms of recruiting the right kind of farmers.
Poultry turns a money-spinner
Suguna Foods has achieved a turnover of over `5000 crore by doing a variety of
business related to poultry - retail, animal healthcare, R&D, and education. The
company directly employs around 5,000 people. The company adds up to `1,000
crore on an average to its turnover every year.
As and when the business kept scaling up, we started applying good management
principles, and they really worked well, informs Soundararajan. Upon the successful
operation of management principles, we started recruiting more people in the
organisation. During 2000-10, our business grew to `3,000 crore (by 30 times in 10
years). This year, we would cross `5,200 crore. Next year, we expect 10-15 per cent
growth. We are now quite strong in Tamil Nadu, Karnataka, Andhra Pradesh,
Maharashtra, and West Bengal. Eighty per cent of our income arrives from these
states. Livestock accounts for 75 per cent of the group turnover. Our state-of-the-
art hatcheries, quality feed, and best farm management practices ensure the highest
quality broiler and layer birds, which are then given to farmers under the contract
farming model.
To support his growing business, Soundararajan has deployed an information
technology system which has integrated internal and external information
management from finance and accounting to customer relationship management
across 250 locations in the country. This has saved lot of time and brought efficiency.
The company also has a dedicated team that uses information technology to keep
track of the supply chain and demand in real time.
Interestingly, when Soundararajan began this venture, the size of the poultry
industry was just `400 crore. Today, the industry is worth `47,000 crore and
growing at a rate of 15 per cent year on year. We produce over 7.5 million chickens
per week, equivalent to around 18 per cent of the Indian market share. It reaches
around 600 distributors, customers such as KFC, McDonalds, and 22,000 retail shops
across the country, says Soundararajan.
Expanding the wings of success
Soundararajans Suguna Holdings also runs the `50-crore Globion India Private
Limited in Hyderabad that manufactures poultry and animal vaccines. Suguna Institute
of Poultry in Udumalpet offers diploma courses in poultry. Suguna Foods now plans to
extend its services to cattle, fish, and pet food. It is also mulling over to enter the
dairy segment.
We are into direct retail. We successfully run around 400 shops under the brand
Suguna Daily Fresh, says Soundararajan. Suguna Daily Fresh outlets promote a
hygienic model of processed meat consumption. Our animal healthcare company is
witnessing 25-30 per cent growth. All our businesses are equally contributing to the
groups turnover. Although we are presently operational only in poultry trade, we are
looking to further diversify into new business arenas.
The companys main clients are top QSR chains, big restaurants and hotels, modern
retail outlets, and direct retail shops. In 2010, Suguna entered Bangladesh and Sri
Lanka. Today, it is eyeing the Southeast Asian and African markets. On the domestic
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front, Suguna Foods, which commands 18 per cent of the market share, expects
future growth from newer markets such as Bihar, Madhya Pradesh, and Jharkhand.
We are not producing in Kerala, but selling very well in Kerala, says Soundararajan.
In the west, we are in Maharashtra and Gujarat. As far as sales are concerned, we
will get into Madhya Pradesh soon. In the north, we have presence in Punjab,
Haryana, Rajasthan, and Uttar Pradesh. In the east, we are operating in Orissa, West
Bengal, Jharkhand, Bihar, and Assam. India is an emerging market. We have around
30-35 per cent market share. Consumption is growing, and we are expecting 15 per
cent growth this fiscal.
Suguna Foods has an aggregated market share of over 80 per cent in 14 states.
Compared to Tamil Nadu, Kerala is a better market as the sales at individual shops are
quite high. About `6-8 lakh investment is required for setting up a franchise of
Suguna Daily Fresh. The shop requires an area of 250-300 sq ft. The company runs
around 400 franchisees across the country, with a majority of them located in Kerala
(200) and Tamil Nadu.
The retail division, which generates around `400 crore in revenue, is run by experts
through establishment of a proper supply chain and logistics. The company is
investing `100 crore in a pellet technology feed mill plant at Khadakjamb near Nashik
in Maharashtra. The project is being funded by IDBI Bank. The feed mill plant will be a
catalyst for the development of poultry activities in the region. The feed mill will be
supplying high quality feeds for broiler, layer, and parent bird farms and other
livestock farms.
Greening mission
Suguna has been replanting lakhs of trees across the country to increase the green
cover and widen soil restoration activities. Suguna has donated over 50 lakh tree
saplings to governmental, non-governmental, and voluntary organisations, schools,
colleges, and general public. Even farmers have helped the company plant trees in
villages. The company is also into environmental education.
Our business itself is a corporate social responsibility initiative, says Soundararajan.
My biggest achievement in life has been the financial empowerment of the families of
18,000 farmers. That means the most to me. I was thrilled when an institute like IIM
Ahmedabad did a case study on Suguna Foods.
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(4 days ago) nikhil Bhoyar said:
I am interested to do poultry in my farm with your organisation which is
wardha district in maharastra so please contact me as possible as
Nikhil Bhoyar
09823172676

(Oct 24, 2014) Ismail Pathan said:
I am very much interested in your poultry contract .I would like to request
you please help me to start poultry farm for ur assistance there in my
village at Latur. Maharastra..Or I have 2 acre land , so Assiste me to grow corn
in my farm. which is the food for poultry farm.
Looking for reply. 9030988036
Thanks,
Ismail.

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Thanks,
Ismail.

Thanks,
Ismail.

(Oct 12, 2014) Neeraj Amga said:
I m very much interested in Poultry + contract farming. I have 12 acer of
Farming land in Maheshwar-451224. Dist. - Khargone. Madhya
Pradesh. U can contact on my mobile 8223808031 also. Waiting for your
reply...

(Oct 12, 2014) Sreenath R Nair said:
I am interested in poultry farming & decided a place in my village
(Kottayam) at Kerala,Will you please contact me, my mobile
no:09745089392,08589808565.

(Oct 6, 2014) Jagdish Singh said:
I want to start contract poltry farming in punjab with suguna contract
farming.thnx

(Oct 5, 2014) sanjay malik said:
@Pavel,
@nepal chandra ghosh,
@nepal chandra ghosh,

(Oct 3, 2014) nepal chandra ghosh said:
want to start a poultry farm in my village. need a business partner.

(Aug 16, 2014) Pavel said:
Truly impressed. I'm interested. Any assistance available in West Bengal
to start as farmer?

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