With the ability to adapt and the flexibility to change, family businesses can stay afloat and navigate through the ebb and flow of economic cycles, says Vishal Kothary, Director, Ramniklal B Kothary & Company.
To be born with a silver spoon in your mouth is one thing, but jolting your family business out of its conventional rut and pioneering its transition into a vibrant, dynamic and professionally managed company is quite another. When Vishal Kothary came to join his family business in mid-1990s, after completing his studies in the UK and an internship with JL Morison in India, he very much wanted to work with his father, Madhookar Kothary. But much to his surprise, Vishal was taken to his uncle, Prabodh Kothary and was asked to work in his team. The reason was obvious: Vishal’s father did not want his one and only son to be inducted straightaway into the upper echelons of business, before he proved his mettle through blood, sweat and tears.
Now, roughly 20 years after he was initiated into the business and four years after Madhookar passed away, Vishal clearly understands his father’s farsightedness and the rationale behind his decision. He describes it as a very intelligent move which ensured a smooth succession leaving no room for any confusion. “In hindsight, I understand the entire logic behind my father’s decision to keep me away from his influence and groom me under my uncle,” ruminates Vishal. “Now my uncle and I are the two partners in the company, and we have a very strong working relationship, cemented by mutual trust and deep bonding evolved over the last 20 years.”
Madhookar’s decision helped Vishal stand on his own feet and develop his self-confidence. Vishal’s new founded experience and independence developed at a crucial time when the company was undergoing a major change. It was in the year 1997 when Ramniklal B Kothary & Co had put up the shutters of its supermarket chains in Oman, which were once its flagship business, and switched over to FMCG distribution and wholesale segments as a long-term, stable business model. As part of his training, Vishal spent one year as a salesman handling cash van sales in Sohar, Nizwa, Salalah and Muscat, before getting promoted as credit sales executive.
“I believe, every FMCG executive must have experience in ‘van-sales’ as that is what differentiates men from boys. Working in Van-sales teaches you patience and forces you to use an analytical approach in identifying the process to break down a problem into the smaller pieces necessary to solve it,” elucidates Vishal.
After two years of hard work, Vishal proved his mettle and was promoted to sales supervisor, receiving the opportunity to work directly with Wrigley’s. The multinational confectionary giant had just opened its office in Dubai and was looking to expand its presence in the Middle East region. Vishal seized the opportunity given to work with Wrigley’s in Oman. Wrigley’s provided a 15-day training programme in Germany which stood Vishal in good stead in understanding the strategy behind confectionary and impulse products like chewing gums. He reflects, “Four years with Wrigley’s has helped me hone my skills in planning, forecasting, negotiating with customers and preparing budgets.”
Later, Vishal was tasked with handling many of the leading agencies such as Reckitt Benckiser, Imperial Leather and various other brands which included products like soaps, shower gels, hand washes, glassware, cutlery, sports equipment etc. “Each agency had its own dynamics and each product came with a new set of challenges; but that was the most interesting part of my journey. I was provided with the opportunity to keep learning something new. My entire journey did not stagnate at any point of time,” explains Vishal.
“When I initially joined the business, I was able to find my space within the organization to work, learn and grow”, he says. As Oman’s economy grew, business practices started changing with new players entering into the country. The consequence of this was that business methods and practices were modernising and the market dynamics were changing. “Our partners were demanding more robust enterprise resources to handle product planning, service delivery and inventory management often needed in real-time. We needed to have a business intelligence system wherein the knowledge would flow downwards across the organisation. One of the main requirements was an automated forecasting system to help us meet the growing inventory cycle, manage our logistics and warehouse requirements.”
Initially, Vishal used to manually forecast the product requirements of various companies, three to six months in advance. He had to be meticulous in forecasting the orders for goods to come as the existing goods would deplete. Although it was strenuous and time-consuming, it helped him streamline the entire supply chain management of the company. Later, based on Vishal’s manual forecasting model, he along with a member from the IT team developed an automated sales forecasting system which provided the exact details about the inventory, sales and orders required. The system was capable of determining how long the products would last and also predict, based on the trends of the previous three months, how much the company required to order. Vishal says,” Within three to six months of implementing the system, our business almost doubled.”
However, challenges continued to arise and the company needed to facilitate further changes. “At the same time, Oman’s economy was going through a period of transition with more professional and multinational players coming in,” he adds. “Further, our principals started implementing new systems and were expecting us to follow suit. All these were key prodding to look for qualified professionals to run the business. It was very difficult to make people who were neither qualified nor technically skilled to adapt to the changing times. Therefore we started bringing more qualified and younger people,” he explains.
He also adds,” During this time, Oman’s retail business went through a major transition, with most of the retailers switching from the conventional front margin model to the back margin model, which also necessitated a change of perception.”
Against the grain
Vishal’s efforts towards modernising the company’s previously traditional system were not met without resistance. “It was very difficult. When the new system came, it shook the established order of things. The objections were not right away from my father, but it came from the rest of the sales team and employees, because the new system showed their inability and exposed their lack of skills. According to me, the only way to survive was to push back against the opposition, because if you don’t change when the business environment and the entire market conditions change, then you will lag far behind in the competition.”
Vishal believes that relationships and performance should go hand in hand in family-owned businesses to achieve a blend of stability and continuity. “The ability to adapt and the flexibility to change are what enable family-owned businesses to face challenging times ahead. If you were able to do these two things i.e. adapt and be flexible, I think family businesses will be able to go through any ups and downs. The business models need to be changed or reformed if and when required,” says Vishal.
Testifying to this broader outlook has seen the company foray into several new areas including food products in the recent past. “As retailers started focusing their attention, and dedicating more shop floor space, to food categories and products, we had to change our business focus. We were always known as a cosmetics company and never a food company.”
A case in point was the company’s tie-up with ‘India Gate Basmati Rice’. “It was only in 2008 we introduced India Gate basmati rice, but today it is one of the leading rice brands in Oman, and we are now considered as a major food player. As recent as last week we have been awarded the “Best Global Distributor 2015” award by India Gate. Additionally we have also diversified into a variety of categories from ice creams, confectionary, sparkling and still water, Parle biscuits, Vadilal Quick treat and Heinz frozen foods etc. which we represent and distribute in Oman,” explains Vishal.
Asked about the succession plans within the family, he said: “Family businesses should basically run in such a way that it provides for the family members, while in turn, the family should ensure that they support the business growth and its employees’ needs and aspirations”.
But how will the new generation of the family members contribute to the business? Vishal replies, “Ours is an 80-year old company and for it to thrive for, say, another 80 years, we have to ensure that the company is run professionally with proper governance in place. Today our company consists of a highly educated and motivated team with a professional organisational structure. Therefore, basically our job should be to provide a vision and mission for the professionals to take this business ahead. As the business grows, our aim should be to inculcate the next generation of the family members through a well-defined management trainee programme making them capable of running the business and taking it to the next level.”
Vishal believes that disputes in any family business are natural. “It’s OK to disagree, and to disagree as strongly and as vocally to get the issues out on the table. However, problems are to be solved within the family. It is important because families are a little like democratic countries; everyone should feel that their views are heard. It’s inevitable that family members will disagree, but a governance plan can help resolve disagreements. The underlying objective is to always make sure that for any dispute, a resolution is sought. The resolution must always be considered from an angle of how it can add value to the business, instead of looking at how it adds value to the individual,” says Vishal.
As director, partner and a board member of the company, Vishal is currently tasked with overlooking the business vision and mission of the company.