Mihir Rajani tried his hand at selling saris and snacks before he decided to become a franchisee for Bangalore’s best known supermarket chain Nilgiri’s. He walks me through the compact, 1,400 sq. ft store he has run for the past one year in Kasturi Nagar, a relatively new neighbourhood in east Bangalore, but one where greenery prevails over glass.
The shiny green and white store is bursting at the seams with some 7,000 types of groceries that span everything from old Nilgiri’s favourites such as 15 types of rice and the signature Rich Plum Cake to the just launched Ready-To-Eat Nilgiri’s Porridge and cold-pressed Gingelly Oil. Rajani’s already been told he needs to offer at least 1,000 more items at his store. An average Nilgiri’s store stocks nearly double the items you would find in a competing supermarket chain so shoppers often get a sense that the store is overcrowded. The South Indian brand, with annual store sales of Rs 600 crore, sells nearly 1,000 items through its private label; many are priced at par with national brands.
Rajani’s wife Molly doesn’t believe he reads enough so she’s instructed him to glue strips of quotations on to the spine of every shelf. As you walk from jams to snacks you learn that a day without laughter is a day wasted and that pain is inevitable but suffering is optional.
The 33-year-old businessman is usually at the store interacting with his customers; when he’s not around you’re likely to spot his father. It’s so mom-and-pop that it’s hard to believe one of Bangalore’s best known family-run businesses, The Nilgiri Dairy Farm Pvt. Ltd (Nilgiri’s for short), that began in 1905 and was handed down through four generations, is now 65% owned by the UK-based private equity investor Actis.
The story of Nilgiri’s, like every great Indian business story, is one of enterprise, change and one person’s desire to rise above his allotted life.
Muthuswami Mudaliar, born sometime in the late 19th century, near Erode in Tamil Nadu, should have been a weaver like everyone else in his family. But he wanted to explore the world. Eventually the school dropout became a runner in the postal department, trekking regularly between Wellington and Coonoor. When he spotted a business opportunity, he imported a couple of machines and began selling cream, and then butter, with his two brothers.
In Saga of the Nilgiris 1905, author R. Natarajan recounts that Muthuswami often carried a 30-pound (around 14kg) cream tin on his head and walked up the hill to Wellington. In 1905 the brothers set up Nilgiri’s, but soon a family dispute resulted in Muthuswami moving to Ooty and starting from scratch. He went back to doing what he knew best: making butter.
Word-of-mouth news of Muthuswami’s pasteurized Crown butter spread and soon Spencer’s, a British trading house, began stocking the brand at its stores. Bangalore seemed like a natural next step and Nilgiri’s entered the city in 1939 with its first, tiny store on Brigade Road. By the 1940s, Muthuswami’s family had moved to what was now the headquarters of the brand.
The kindly looking M.S. Mani, the third son of Muthuswami Mudaliar, remembers the 1940s when Bangalore’s retail artery Brigade Road was known more for its bars than its shops. Bascos was the haunt of famous boxer Gunboat Jack and The Old Bull and Bush bar stood shoulder to shoulder with the first Nilgiri’s store, which then sold only a few staples such as bread, butter, eggs, biscuits and imported jam. Nilgiri’s main business was to supply butter to the British military camps in the city; the surplus was sold at the store.
By the 1950s, their plum cake had become very popular (these days the company sells more than 100 tonnes every Christmas and sourcing for ingredients begins in October). A bakery unit was installed in the room behind the store where the family had stayed when they first moved to Bangalore from Ooty. Mani spent many nights at the store. Movie goers from the neighbouring Rex Theatre (“It screened English movies always,” he says) would often wake him up by knocking on the shutters near midnight, after the late show ended, to buy some bread or eggs.
Mani’s brother M. Chenniappan was the entrepreneurial star of his generation and is credited with launching supermarket format stores (the first one opened in 1971) and expanding the business. Popularizing sliced bread packed in wax-coated paper was an early achievement. In those days when a customer asked for bread in rice-eating south India, the salesman would inevitably enquire if anyone was unwell at home. Through his life, Chenniappan was a faithful follower of his father’s business policy: “No adulteration, no lying.”
His son C. Ramachandran was responsible for the popular annual Nilgiri’s Cake Show that began in 1970. Ramachandran, who first saw a sugar model when he was window-shopping in Brussels whilst on holiday, decided he would replicate the idea back home. His first attempt was a 14-inch model of the Eiffel Tower. The next year, he doubled its height. As the years progressed and the crowds who came to see the sugar models started disrupting customers at the store, the exhibit was moved to a well-known girls’ school in Bangalore. “When the size of the model became bigger than the size of the room allotted in the school, the annual show was moved to Palace Grounds,” says Ramachandran over the phone.
Nilgiri’s was sold in 2006, one year after it turned 100. Thirty-five per cent of the company is still owned by family members. Ramachandran’s son Prabhu, who runs a fleet of luxury buses among other things, is now the majority stakeholder within the family.
“We try to identify national champions and then invest in them,” says Shomik Mukherjee, partner at Actis who manages the investment in Nilgiri’s. Actis invests in local companies in Africa, Asia and Latin America.
One of the main challenges for Actis is to make sure the brand stays contemporary without killing the historic associations that Nilgiri’s shoppers swear by. So, for example, while the Nilgiri’s vanilla drops made by hand are increasingly difficult to produce as the company scales up, they haven’t been discontinued because shoppers have always associated this product with Nilgiri’s. Heritage comes with great perks too. Some 1,500 dairy farmers of the 2,500 who supply milk to Nilgiri’s have been doing so for at least 30 years, says Murali Krishnan, chief executive officer of Nilgiri’s.
What did Nilgiri’s stand for, I ask N. Palaniappan, who was CEO of the family-run company from 1971 to 2006, when it was sold. “Quality, cleanliness and right price for right quality,” he replies promptly. Some things never change.