How two brothers from Coimbatore created India’s biggest poultry company
B. Soundararajan, chairperson of Suguna Chicken, talks about building a billion-dollar company, and why the covid-19 market crash didn’t faze him
In February, as the covid-19 outbreak in India was just beginning, a rumour on WhatsApp led to fears that the virus could spread through chicken. Within weeks, India’s ₹1 trillion poultry industry crashed. Suguna Foods Pvt. Ltd, the largest company in commercial poultry farming in India, with an annual revenue of nearly a billion dollars, suffered a loss of ₹400 crore. A police investigation into the false rumour led nowhere. The end-to-end encryption on WhatsApp meant the perpetrators remained untraceable.
When I connected with Suguna Foods chairman B. Soundararajan a few months later, the worst had passed. By now, he says, chicken prices in most places have returned to pre-pandemic levels. “It would still take some time to recover what we lost but who do we blame? The person who created (the rumour) or the person(s) who forwarded it? They are all faceless.”
Is he always this calm in a crisis? I ask.
“I was tense till I was 30 years old,” he replies. “But as we got more and more beaten (i.e. faced setbacks in business), we got calm and cool.” In its 36 years of existence, this is the fifth time Suguna Poultry has suffered a financial blow—the previous four were due to major bird flu outbreaks. “It will take us six more months. But we will recover.”
Soundararajan is a friendly man with a generous smile. He speaks English with a Tamil accent, and has short, precise answers to all my questions. The austerity in expression matches that in his grooming. For our first Zoom interview in mid-June, he wore a white shirt with dull grey splotches. In an age of airpods, he was using a pair of tar-black earphones with a rag-tag mic. Every time the sound fluctuated, he would hold it up near his mouth.
As ice-breakers go these days, that first meeting saw us exchanging notes about the covid-19 situation in our cities. Coimbatore did not have too many covid-19 positive cases, said Soundararajan. “But there’s fear. People are not going to the markets to buy anything other than food items.” He had even stopped meeting his brother and business partner, G. B. Sundararajan, who lives right next door. “Housewives are fearing,” Soundararajan explained. “They don’t want to send any children or husbands outside. And without them nothing will move.”
Suguna Foods is a joint venture between the two brothers. Sundararajan, younger by two years, is its managing director and looks after the day-to-day operations. Soundararajan is the chairperson. “The (request for an) interview went to my brother first but he passed it on to me,” says Soundararajan. “I don’t look after it directly but I know everything about it.” And so we begin.
Soundararajan was born in Udumalpet village, about 70km from Coimbatore. It was a quiet place with dark black soil and lots of cotton plantations. Most of the village’s 2,000 residents worked on farms or in textile mills. Soundararajan parents’ owned farmland—they were among the few in the village who did—but worked as teachers at a government school.
When he finished high school, Soundararajan’s father sat him down to discuss his future. He wanted to study further, Soundararajan said. Why? the father asked. So he could get a job, of course, the son replied. That would get boring after a point, his father said. Why not do something on his own?
At 17, Soundararajan started looking after his family’s farms. “I wanted to do something different,” he says. “I tried doing vegetables in the area but my land wasn’t suitable for it. I got into a lot of debt and mentally got disturbed also.” Four years later, he handed over management of the farm to his brother. His uncle, who ran a small company selling agricultural water pumps, suggested he could join the business and set up a branch in Hyderabad. He grabbed the offer, packed his bags and set off. Somehow, this business too did not work. “At the time, a lot of labour strikes were happening in Coimbatore. It affected the supply of materials (for my uncle’s firm). I was unable to answer my customers.”
In the early 1980s, when Soundararajan was struggling in Hyderabad, commercial farming of chicken had started emerging as a lucrative source of revenue for Indian farmers. B.V. Rao, founder of the VH Group, the parent company of Venky’s chicken, had set up the first broiler farm in India in the 1970s. Farmyard chicken made way for broilers—chicken raised in sheds, fed a high-protein diet, vaccinated against infections and sold in 50 days.
Rao had also introduced contract farming—he would supply freshly hatched chicken, feeds and medicines to farmers, who would look after the chickens until they matured. Rao would then buy the birds, paying a fixed price per batch. Today, over 90% of India’s chicken production comes from contract farming.
Soundararajan hadn’t heard of Rao, Venky’s or contract farming at the time. It was his brother, Sundararajan, who visited a cousin’s broiler farm and decided to set up one of his own. Country chicken still ruled the meat market but broilers were beginning to find buyers among the restaurants in Coimbatore. “There was something called ‘Chicken 65’ launched in the market. For that, hotels would buy broiler chicken.” In 1984, Soundararajan quit his job in Hyderabad and joined his brother in the new venture.
Initially, the brothers had modest expectations. “Only one butcher shop in Coimbatore bought the chicken (in the region),” Soundararajan recalls. The monopoly allowed its owner to rule the roost: There were times when he would take a week to pick up the chicken, driving the farmers to desperation and forcing them to settle for low prices. “Then one day,” says Soundararajan, “that guy went inside for some murder case.” His shop shut. Chicken sales came to a halt.
The brothers seized the opportunity, buying chicken from local farmers and selling chicken feed and medicines to them. In 1986, the family set up its first shop in Udumalpet. They called it “Suguna Chicken”.
Broiler sales increased over the next few years as these chickens gained more currency among households. Soon, they adopted the contract farming model. The VH Group had been doing it for years but their idea, Soundararajan insists, was their own.
By 1997, Suguna Chicken had become the largest player in Tamil Nadu. It had 70-80 farmers on its rolls and a turnover of ₹7 crore. “We understood we had to grow big but didn’t know how,” says Soundararajan. So he signed up for short, week-long courses in B-schools in Coimbatore and Hyderabad. “There was learning on one side, another side implementation.” The two brothers overhauled their working processes, set up separate departments for sales, HR, IT and manufacturing, slowly building the blueprint for the company as it runs today.
In the 2000s, the brothers expanded across India, often working closely with the state governments. In 2008, Soundararajan started Suguna Holdings, expanding to sectors like poultry in Bangladesh and Kenya, mining in Madagascar, and animal healthcare in Sri Lanka.
By 2010, the Suguna group’s annual revenue had touched ₹3,000 crore. But consolidating processes through contract farming upset the middlemen. “Some of our offices in Maharashtra, Punjab and Andhra Pradesh were attacked,” says Soundararajan, without going into the details. “It would mostly happen in the first year of setting up business in a new place. They would come and destroy everything in the office. But we knew their frustrations. So the next day we would come back and restart.”
The big challenges, however, weren’t economic or political—they were the many outbreaks of bird flu. “There have been 30-40 of them,” says Soundararajan; five in the past two decades hit the hardest. The first few times, Suguna was actively addressing consumer concerns on whether humans could get the disease by eating chicken (Answer: not if you cook it). Over the last few years, however, it has stopped. “Bird flu is a negative subject. If you talk about it, people will be more fearful. If you don’t, the media will also not write about it.”
It might not be a sound strategy but it’s the one they adopted during the covid-19 pandemic too, waiting for the crisis to tide over, relying on the Indian Council of Medical Research and the Union and state governments to do the troubleshooting, even as they lost crores of rupees every day. “We have seen such losses many times,” says Soundararajan. “We also got immunized!”
Today, chicken is the most consumed meat in India. Its consumption between 2018-23 is estimated to increase by 12% every year, according to a study on ResearchAndMarkets.com. But for all the success of commercial farming, the industry has often been criticized for raising birds in crowded sheds, fattening them on feeds ridden with highly potent antibiotics, and transporting and slaughtering them in filthy conditions.
Soundararajan isn’t willing to admit the allegations of cramped conditions at the chicken farms (“Adequate space is given”) or of feeds ridden with antibiotics. “It’s about balancing protein and energy ratio,” he says. “We have understood what the bird needs. Human beings we haven’t understood, but we know about birds. There are no malnutritioned birds, just human beings.”
Of course, the conditions of transport and storage can be improved, he admits. “But there are hundreds of thousands of markets. How to change?” The only way out, he reckons, is frozen and processed chicken. “But (Indians) think live chicken is fresh chicken. Anything they buy they would use the same day.”
This will, however, change, he adds. “My wish is in five year’s time, if live chicken goes away, I will be quite happy with it.”
What do you do to relax?
I trek. There are many spots around Coimbatore, where I live.
Anything with chicken or fish.
Have you experienced ease in doing business in recent years?
No. There are positive changes at the Centre but it doesn’t trickle down to the states.
LAST UPDATED24.10.2020 | 11:55 AM IST