Erode, Tamil Nadu: Shree Shivkumar, 50, found himself in a financial and emotional abyss as an entrepreneur in the late 2000s. His Erode-based family business, SKM, a cattle feed and poultry powerhouse in Tamil Nadu with a turnover of around ₹600 crore back then, was split up between Shivkumar and his younger brother. Shivkumar felt shortchanged when as part of the carve-up he got control of the group’s eggs division, a relative rump with revenues of only ₹80 crore.
“In traditional business families in smaller cities, the older siblings often carry the burden of having to be more benevolent. When the split happened, I accepted it, but felt broken,” Shivkumar said.
Shivkumar’s SKM Egg Products Export (India) Ltd is now not only a ₹300 crore company but also the first in the Erode region to go public and the largest Indian exporter of egg products, processing about 1.8 million eggs a day. “I owe the turnaround in my fortunes, in large measure, to Bouncing Board. It is my team of reliable consultants, personal confidantes, independent directors, and extended family rolled into one,” he said.
A Bouncing Board is a closed, informal club of a dozen entrepreneurs from diverse sectors and without competing business interests. So, for instance, a Bouncing Board can only have one industrialist who operates in the real estate sector. Besides monthly meetings, the members get together twice a year for a day-long retreat where they candidly share everything that concerns their business and personal lives—from family feuds to falling revenues. Empathy and complete confidentiality are the currency in which the membership fee is paid.
In its objective of learning through shared experiences, a Bouncing Board sounds a bit like Alcoholics Anonymous for those addicted to profit. For entrepreneurs in small industrial clusters such as Erode (about 400 kilometres (km) from Chennai) who often do not have the advantages of exposure to a wider spectrum of professionally run businesses in metropolitan cities, ready access to industry platforms or a sizable corps of professional managers, Bouncing boards have become a vital self-help group.
Erode’s first Bouncing Board of which Shivkumar is a member was formed in 2011. The combined turnover of the members of this group exceeds ₹3,000 crore. Now there are three Bouncing Boards in Erode alone and one each in Trichy and Coimbatore. At a time when the economic slowdown poses an existential threat for small and medium businesses in large textile and agro-processing clusters such as Erode, peer entrepreneur forums like Bouncing Boards act as a lifeline on both managerial and emotional fronts.
For instance, C. Devarajan, the managing director (MD) of the ₹800-crore URC Group with interests in construction, hospitality and software found himself in the midst of a receivables crisis after the double whammy of demonetization and the goods and services tax (GST). “It wasn’t that my clients wilfully held back payments. They had a cash crunch that was affecting my operating expenses. The suggestion from the members of the Bouncing Board was that I should personally focus on this issue for a few months rather than business development or strategy,” Devarajan said. It worked. “The sight of a 55-year-old making weekly visits to their office perhaps exerted adequate moral pressure on them,” he said, sitting in a red-oxide floored, modest two-storey house that is his corporate headquarters (HQ).
Rules of the game
Bouncing Boards are not a drinking and socializing club. Its membership comes with stringent and inviolable rules. To begin with, attendance and punctuality at the monthly meetings and retreats are mandatory. Skipping more than one monthly meet—hosted by each one of the 12-member group by turn—in a year means expulsion; every minute’s delay of turning up post the stipulated time attracts a fine of ₹1,000, as does every 100 gram of weight put on by its members since the previous meeting.
A foundational tenet of the Bouncing Board is that no one can dispense advice. Only experiences can be shared. And there can be no financial transaction between its members. So, if for instance, one member is facing a working capital crunch, another cannot offer a loan or dial up a financier friend to facilitate a line of credit. At the monthly meetings, where mobile phones are barred, the chairman circulates the agenda and each member makes a five-minute presentation on business and family issues and the progress of their firm’s corporate social responsibility (CSR) initiatives.
A member designated as the “processor” ensures the group’s focus and reins those in venturing into the territory of business advice. The “timekeeper” enforces the five-minute rule for presentations, and the “scribe” is tasked with noting minutes. What’s discussed in the Bouncing Boards remains in the room and not shared even with family members. The issues can range from falling profit margins to marital problems of children.
“For entrepreneurs, the rule of thumb once was, never discuss your problems with others because 20% wouldn’t care about it and 80% would be happy that you have a problem. The value proposition of Bouncing Boards is that when you share your woes, the burden becomes lighter,” said D. Venkateswaran, the chairman and MD of Venbro Polymers who championed the idea of Bouncing Boards in Erode.
Venkateswaran, 57, was the first US educated member of his extended family. His father, a first-generation entrepreneur with roots in agriculture (as is the case with most entrepreneurs in western Tamil Nadu region), built an edible oils empire large enough to virtually control India’s oilseed prices in the mid-1970s. For all the clout he has in the region’s business circles, Venkateswaran is unassuming. Dressed in his trademark, white shirt and veshti (dhoti), he walks barefoot once he enters his HQ that houses a polymer packaging factory.
“Our elders who were supposed to mentor us aren’t around. Today, in a globalized world where the business landscape is far more complex, where can family businesses in small cities turn to? We have to learn from each other’s experience in the ecosystem,” he said.
Signals in a sea of noise
The most influential evangelist for Bouncing Boards is C.K. Ranganathan, the chairman and managing director of Chennai-based consumer goods maker CavinKare Group that pioneered low-cost shampoo sachets. Ranganathan’s Bouncing Board in Chennai became the inspiration for entrepreneurs such as Venkateswaran in Erode.
“For a founder chief executive officer (CEO), it is fairly lonely at the top. You don’t know who to trust. If a well-networked entrepreneur like V.G. Siddhartha (the founder of Café Coffee Day who is suspected to have committed suicide in July) can feel helpless, think about those in smaller towns. The Bouncing Board is a safe space where you can open up about everything including the personal and professional and learn from shared experiences,” Ranganathan said. The two Bouncing Boards Ranganathan has helped create in Chennai now have other extensions in the form of Bouncing Boards of spouses of the entrepreneurs and the human resources heads of the companies they run.
“What entrepreneurs constantly hear and what they grapple with every day can be vastly different. In a startup for instance, employees might be complaining about the quality of food in the canteen, the entrepreneur might be wondering where the money might come from to pay salaries the next month. The stress can be never ending to the detriment of their personal and business health. Such networks can be a wonderful space to simply vent out,” says Suresh Bhagavatula, associate professor at Indian Institute of Management Bangalore, who specializes in entrepreneurship and social networks.
Coming back to Shivkumar, the MD and CEO of SKM Egg Products, the Bouncing Board also motivated him expand his business into unchartered territory. From being in the business-to-business space, hearing the success stories of some of his younger Bouncing Boards compatriots pointed Shivkumar to the possibilities in the consumer business. Now, SMK Egg Products sells directly to Indian consumers a clutch of ready-to-use products such as egg white cubes, and has ventured into branded over-the-counter Ayurveda and Tamil Nadu’s traditional Siddha medicine-based personal hygiene and health products under a new brand called Herbodaya. Shivkumar now is in-charge of mentoring his Bouncing Board on issues related to business succession and framing legally watertight and equitable charter for family businesses.
A matter of trust
Shivkumar’s inspiration to venture into the consumer market was T. Sathish Kumar, 44, the founder of the dairy brand Milky Mist Dairy Food Pvt. Ltd. Kumar entered his family’s almost-failing business of supplying chilled milk collected from Erode’s farmers to big dairies in Bengaluru, some 250km away, as a class X dropout. By the time Kumar was 17, he lost his father. On the many trips he undertook accompanying the milk cans on the back of a van to Bengaluru, he discovered that his clients were using the raw material he supplied to make value-added products such as paneer and cheese.
Soon he started making these at a small plant and sold them to institutional clients. Subsequently, his Milky Mist branded products became quite popular in south India. In 2017, in an all-or-nothing gamble, Kumar decided to set up the largest paneer- and cheese-making facility in India with an investment of ₹500 crore. Milky Mists’s turnover in 2017 was slightly over ₹200 crore; by the end of this fiscal year, turnover is estimated to be around ₹800 crore.
Kumar is a rare member of Erode’s Bouncing Boards who doesn’t wear a veshti to work, preferring the more mainstream corporate shirt-and-trouser attire (but no footwear is allowed in office space). A tall well-built man with receding hairline, Kumar’s table at the head office located in the middle of a coconut grove is cluttered with packaging designs for his new product lines. “In the branded milk products business, scale is essential to survive. The big decision I had to make was whether to fund my expansion through private equity investments—and there were many queuing up—or to take on debt,” he said.
Kumar recalls making several detailed presentations to members of the Bouncing Board and answering endless questions on the rationale for expansion. “I was initially hesitant to open up. But I soon realized that it was like having 11 experienced independent directors on my company’s board who were committed to well-being of me and my business,” he said. With their inputs he decided against diluting equity and funded the greenfield project through debt. With the new plant operating at full capacity, Milky Mist is planning an initial public offering in 2021.
Beyond the bottom line
The impact of Bouncing Boards is not restricted to the betterment of its members’ businesses. Erode is a buzzing city of 600,000 with a can-do entrepreneurial spirit and regional pride that’s palpable. According to the Tamil Nadu Human Development Report, Erode is a “high-income” district. It’s also one of the 100 “smart cities” identified by the Centre that will get infrastructure investments worth more than ₹1,000 crore. Then there’s the Coimbatore-Erode-Salem industrial corridor in the works, with an estimated investment of ₹43,000 crore.
But by any measure, Erode is a civic basket case: it can only provide less than half of the 70 million litres a day (MLD) of water its people need; it has no underground drainage system; it generates 27 MLD of sewage, not a drop undergoing treatment, that flows into ponds, lakes, the Cauvery and canals that join the river; its groundwater level has plummeted nearly 60% in the past decade; and numerous studies have found groundwater in most parts of the city unfit for both human consumption and agriculture.
In the Bouncing Boards, the recurring questions around “how to do better by the city we do business out of” led to the creation of the non-governmental organization Olirum Erodu Foundation (OEF), with an yearly individual commitment of ₹250,000 from each member (not counting the CSR spends their firms might make). In the past couple of years, OEF has built four new lakes and rejuvenated some 35 water bodies in the district. “We asked ourselves what would Azim Premji do if he lived in Erode,” said Devarajan of URC.
Despite the apparent success of the Bouncing Boards, it is hard to ignore the lack of diversity, especially when it comes to caste and gender. Western Tamil Nadu is dominated by the Gounders—classified as a backward caste—by some estimates accounting for about 40-50% of the region’s population. The Gounders have a reputation of being socially conservative. Being landowners has in large measure helped their upward economic mobility. The city’s entirely male Bouncing Boards are Gounder heavy. If that’s not addressed, the bounce will suffer.