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Rediff.com  » Business » From Rs 22 to Rs 900 crore, Vasanthakumar's success story

From Rs 22 to Rs 900 crore, Vasanthakumar's success story

July 07, 2016 08:53 IST

Vasanthakumar, who started his career as a salesman, today owns a retail empire.

IMAGE: H Vasanthakumar, who is also a Congress MLA in Tamil Nadu, with actress and Congress leader Khushboo. Photograph: Kind courtesy Vasant & Co/Facebook

The rag-to-riches story of H Vasanthakumar reveals that one can become a successful businessman without fancy MBAs.

Vasanthakumar, who started his career as a salesman, turned every adversity into opportunity.

He started off by converting a small provision shop given by his friend 38 years ago on a rental basis into a shop selling household appliances and electronic items.

Today, he runs one of the largest durable goods retail chains in Tamil Nadu - Vasanth & Co with 64 branches in Tamil Nadu, Puducherry, Kerala.

His business model was to enter the rural market where consumers had lower incomes and urge them to buy a product that they liked.

He asked them to pay only half the price of the product in six months. He collected the rest of the amount after the product was sold.

This way he ensured that noone defaulted.

Vasanthakumar today dabbles in state politics and is a Congress MLA from Nanguneri. He also owns Vasanth TV, a Tamil entertainment satellite channel.

IMAGE: Vasanthakumar on the election campaign trail, May 2016. Photograph: Saisuresh Sivaswamy/Rediff.com

H Vasanthakumar tells A Ganesh Nadar/Rediff.com how a salesman became Tamil Nadu's richest businessman-politician.

What was your initial capital when you started the business in 1978?

I did my graduation and master's (by correspondence) in Tamil and joined VGP as a salesman. I left the job after working for 8 years. I did not have any money, but I had a lot of friends and VGP's customers also knew me well.

One customer had shut his shop. He gave it to me on the condition that I would pay him Rs 8,000 in six months.

I made a signboard for the shop with the wood from a packaging box to save money.

In VGP, we had this scheme where customers paid a fixed amount every month to us till half the money for any product was paid. Then we sold the product to the customer.

After that, they paid the remaining amount in the same way in installments.

I started this scheme in my shop. I went to all the customers whom I had befriended when I was in VGP.

Mr Bhaktavatchalam from Teynampet was kind enough to offer Rs 22, which became my capital.

IMAGE: "Politics has nothing to do with my business." Photograph: Kind courtesy Vasant & Co/Facebook

What is your turnover now? How many people do you employ?

Our company's turnover is more than Rs 900 crore (Rs 9 billion). We have 1,000 people working in 64 branches.

Does being an MLA help your business?

Politics has nothing to do with my business. I became a businessman decades ago. I became an MLA only ten years ago.

Is doing business in India easier now than 10 years ago?

Nothing is easy here. You have to plan everything to the smallest detail and go step by step.

When you face a hurdle, you should change direction and keep going.

As you go along, you will get a lot of experience, which will help you deal with obstacles easily.

IMAGE: "When you face a hurdle, you should change direction and keep going." Photograph: Kind courtesy: Vasant & Co/Facebook

What is the USP of Vasanth & Co?

Vasant & Co is known for selling consumer durables on an installment basis.

We also supply goods to large companies like Ashok Leyland, where we have sold items to all their workers.

Our after sales service is very good and prompt.

We have a tie-up with a finance company, which pays us and collects money from the customers in installments.

Do you think Goods and Services Tax Bill will improve business?

It will make things better. Now, we have shops in Tamil Nadu, Kerala and Pondicherry. Once GST is implemented, we will have branches all over India.

Why didn't you venture into manufacturing consumer durables?

I tried manufacturing mixies, fans and stabilisers for ten years. Customers know Vasanth & Co as a retailer. They were not ready to accept me as a manufacturer.

They all want well-known brands, which they are familiar with. After ten years, I realised manufacturing was a failure and closed it down.

IMAGE: "Indian products are at par with foreign brands". Photograph: Reuters

How do Indian products stand up to foreign products?

Videocon and Samsung manufacture products in India, while the rest manufacture in China. Indian products are at par with foreign brands.

Why don't you sell imported goods?

Importing goods is not easy, it requires a lot of legwork, clearances and separate accounting. It is not worth the trouble.

Manufacturers anyway import products from abroad. Buying and selling is simple and I have stuck to that.

What are the biggest problems you face in the retail business? How are sales in rural India compared to the cities?

Rural India is a bigger market for us, as we sell about 60 per cent of goods in rural markets. Cities account for 40 per cent sales.

The biggest challenge is offering good after sales service. We have a helpline number with 100 lines so everybody can call at the same time.

We coordinate with manufacturers and make sure customers are attended to at the earliest. I have a separate call centre just for that.

IMAGE: "Our graduates are unemployable as they lack basic skills." Photograph: Kind courtesy: Vasant & Co/Facebook.

How do you compare business under the Congress and BJP regimes?

There has been no problem doing business in the last two years. The only detriment is that the BJP government keeps increasing the tax rates.

They have increased service tax, which we are forced to pass on to customers. This will make goods more expensive, resulting in lesser sales.

I know that taxes are levied for the welfare of the people, but the government should utilise it properly than use it for foreign trips.

They should travel within the country and understand the problems of the common man and offer basic amenities.

Instead of looking for fuel for nuclear reactors, they should look at providing water to our citizens.

IMAGE: "Rural India is a bigger market for us." Photograph: Kind courtesy: Vasant & Co/Facebook

What qualities do you look for in a prospective employee? What is your advice to fresh graduates?

I look for honest people whom I can train properly.

Unfortunately, our graduates are unemployable as they lack basic skills.

For a person to be employable, his schooling should be perfect.

If you learn to cycle well then you can ride a bike properly.

Our education system has become substandard and they are not taking any effort to improve the system.

We have ridiculous rules that state that all students should be promoted till the 8th standard.

So most students remain illiterate till the 9th standard and after that it is too late to learn anything.

They can even say promote all students till the tenth standard and then till the 12th standard as a result of which we will have fools passing out of schools and colleges.

This will have disastrous impact. Our children must get proper education right from the primary school so that we have a good majority of intelligent and capable students passing out of colleges.

What are your future plans for Vasanth & Co?

We will expand our footprint once GST is implemented.

The Congress party unveiled plans to implement GST and the BJP opposed it then.

Now we are opposing because the GST rate is too high at 27 per cent. We want the government to bring it 20 per cent.

A Ganesh Nadar / Rediff.com in Chennai