India First: Growing The ‘Atmanirbhar’ Proposition

The significance of the manufacturing sector comes from the opportunities it creates. Parle Agro, counted among the key players in the Indian beverage sector, pays special attention to this part of its existence. It was in May 2020, when Prime Minister Narendra Modi articulated the self-reliant India call. For the beverage maker’s CEO, Schauna Chauhan, this call triggered a series of thoughts.  

“Parle Agro has perhaps followed both the Atmanirbhar Bharat and the Make in India agendas since 1985 in the beverage sector. We are an Indian company, manufacturing in India and investing back in India.  But for me, self-reliance entails much more,” says Chauhan, as she reflects on the company’s journey so far.  

Parle Agro enjoys a suite of brands that have been a favourite with different target groups, including kids and young adults. Citing the example of Frooti, the company’s mango-flavoured drink, Chauhan explains its theory of backward integration and how a new India’s call to action manifests in this. “When we began with Frooti, the largest mango drink that is made in India, we were buying mangoes from India,” Chauhan recalls.

The company started with one processor, buying about 500-1000 tonnes of fruit. Today Parle Agro has 14 processors and buys around 1.5 lakh tonnes of fruits indicating a large market opportunity. “We have seen farmers turn entrepreneurs and we encouraged them to upgrade their plants and infrastructure to process the fruits to meet the demand,” says Chauhan. This push has resulted in Parle Agro bringing all its business to farmers in India in the case of mangoes. Five of these processors have been with the company for over two decades.  

Parle Agro continues to develop more processors in markets like the south, where it buys fruit, processes the mangoes and procures the pulp. Chauhan explains that the salient point in all this is collaboration. She says, “When we say encourage, we see them as partners. Processors alone may not have the network to access newer technologies or embrace best practices. This is something where we can help with our scale and outreach. We collaborate with them to reach out to international equipment manufacturers and help upgrade their technology.”  

Replicating A Success Story 
Over the years, Parle Agro has worked with the processors to do exactly this and improve yields, while cooperating even in aspects such as good manufacturing process and layout. “We did a lot of development to reach where we are today. When the mango processing begins, our teams go to the markets to monitor quality and pricing and help with day-to-day challenges. This process is established. And now, we are seeing some early signs of success in replicating this for apples,” states Chauhan.

Parle Agro launched Appy in 1986. Apple may not be considered among the more popular juice choices at the time and the company worked with one processor, at a modest scale. Its requirement for apple juice concentrate hit a higher point with the launch of Appy Fizz, and it began importing due to the lack of supply in India. “There were just a couple of processors and they could manufacture about 6000 tonnes of apple juice concentrate, which was not enough. In the last couple of years, we diligently focussed on changing this,” informs Chauhan.

Chauhan had learnings from the Frooti side of the business, where the company’s processors were lauded at industry fairs for their international quality and standards. “We wanted this for our apple processors as well. We now have four processers and finally, this year, we are in a position to buy all our concentrates from India itself, which is a very big move for us.” Before this, Parle Agro was relying on international imports for almost 50 per cent of its requirement.

The Paradigm Shift 
The transition however was not easy. The lack of capacity pushed the company to work with new processors. However, the first battle was to tackle the mindset. More often than not, Chauhan found herself faced with the question of why change when it works.  

“Procuring good quality raw materials, consistently, is not easy. We had cases in the past when we had to return the raw material. Our preference is India but we were forced to import. We then began investing in explaining and convincing processors why their technology had to be upgraded,” explains Chauhan.

The suggestion for a change or introducing something for quality assurance and maintaining standards was met with resistance. Chauhan, who has been an active part of all these discussions, quotes this as an example of why being ‘atmanirbhar’ is a journey. “We realise we have to work with their mindset and urge them towards change. But we have to show them the difference and convince them. Eventually, it is something that will help us and them both,” Chauhan elaborates.

More often than not, Parle Agro has been called “too detailed” but this does not perturb Chauhan. She argues that this is a direct result of the company’s culture and strategy that is “rooted in collaboration”.

Investing in the Long Term 
“We are not working with someone who can convert fruit to concentrate for us but with a business partner. We are still in the process of building capacity. We hit a big milestone this year when we were able to meet our demands from our processors in India. However, ‘what next’ still stares us in the face because we just about met the demand and we will have to factor in our growth for the next year. So, we will sit with them again on how we grow together,” Chauhan says.  

Atmanirbharta, as per her, is not about one company developing but also encouraging other businesses including micro, small and medium enterprises to identify market opportunities and gaps and grow.  

Parle Agro has a similar story for its aseptic bag requirements, which were imported from Italy. Chauhan met someone interested in the space and worked with them to put a plant in Palghar. The company is now Parle Agro’s primary supplier. In a slightly different example, Chauhan met a Korean straw-making company to put up a plant in India to cater to this part of Parle Agro’s needs. The company did this also for its water business, where it created franchisees that had begun afresh, invested in the brand and created their own companies.

“We have created entrepreneurs. I advise everyone we invest in building a relationship so we would like it to be long-term. Atmanirbhar has to be about making more people ‘atmanirbhar’ and our ethos is in line with this,” Chauhan sums up.