How this Second-gen Entrepreneur is Cementing the Future of His Legacy Business
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If you are passing a construction site, sacks of cement packaged in the signature yellow of Sanghi Cement will definitely catch your attention. Having been in the industry for years now, Sanghi Industries has cemented its brand name in India.
The company was established by Ravi Sanghi in 1994, but his sons Alok and Aditya Sanghi have been involved in the business for over a decade now. Entrepreneur India had the opportunity to talk to Alok Sanghi about his contribution to the business and how they are expanding the company.
For Alok while growing up, dinner table conversations often revolved around his father’s business. However, the business management graduate from Indiana University, instead of joining his father’s business directly after college, went on to work for organizations like Merrill Lynch and Regency Securities. Ask him why and he is quick to say that this experience helped in establishing a work culture in him. “It was a unique challenging experience. You start from the bottom and get to know how things are done at the ground level. Although my father was not very keen on my working in these corporations, I was very eager about the same,” said Alok, adding that this period gave him a good blend of experience as well as freshness.
While Alok has worked in different companies, his biggest learning still comes from his dad – there is no substitute to hard work.
Bringing in a Cultural Shift
When he and his brother joined the family business, they introduced new methodologies or technology in place of the age-old processes. “We brought in the SAP system instead of the legacy ERP system. The idea was to get intelligence from the system to reduce human efforts, which can be used for something else,” he said.
With the introduction of these systems, their productivity has gone up and the operations too have become automated. But that’s not the only change brought about by them. “We brought in a cultural shift as well. The idea was to have teams comprising younger individuals. The cement industry on the whole has employees in the 45-50 years range. We tried to bring it down. The older generation resists changes, where as the younger crowd is more open to experimenting,” said Alok.
The Power of Social Media
One would think that for something like cement, the major spend of advertising is still done in traditional ways, but Alok said that too has changed for them as they have moved to digital. “The decision maker is the younger generation who is on social media and wants to research on social media before deciding on a brand,” he said.
Ask him about the competition in the business and how they handle the same, Alok said, “They are always the biggest teachers, a source of great learning. For us, our cost structure, market mix and product quality works as our USP.”
A Slowdown after Demonetization and GST, but a Promising Future
With demonetization, two of their biggest client sectors were hit badly – real estate and retail, which slowed down the market. “There was a significant drop in size, in Q4 last year, we had an all time low price. But in Q1 this year, the prices have bounced back by 30 per cent,” said Alok.
The implementation of GST proved to be a setback for a short period as their channel partners didn’t want to go through the transition with heavy inventory and thus, went ahead with destocking. “There was nothing much that we could do except for educating the clients about the impact of GST,” he said.
However, with things getting back on track, the future seems promising. The massive expansion plan they undertook two-three years ago, has already seen the conversion of their 2.9MT plant into a plant with 4.1 MT per annum capacity.
But with cement being a very regional business, their expansion plans are not geographical. “The tendency is to stay local. Ninety per cent of our sales come from Ahmedabad. Our major sales are from Rajasthan, Mumbai and Cochin, along with exporting to various countries,” said Alok.