Nilgiris 1905

Nilgiris

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Type	Privately held
Genre	Supermarket chain
Founded	1905 as The Nilgiri Dairy Farm Ltd. (Coonoor, British India)
Founder	S. Arumuga Mudaliar
Headquarters	Whitefield, Bangalore - Corporate Office
Key people	Muthusamy Mudaliar and Son of Chenniappan
Website	http://www.nilgiris1905.com/

Nilgiris is a supermarket chain in South India. It is also one of the oldest supermarket chains in India with origins dating back to 1905 and hence its products are sold under the brand name of "Nilgiris 1905". Also, unlike almost all other supermarkets and grocery shops in India, Nilgiris sells its own products among other brands.

History

The origin of this supermarket chain can be traced back to Arumuga Mudaliar of Erode district in Tamil Nadu, who was a mail runner for the British in colonial India. Arumugam mudaliar carried letters and cheques for the British from Coimbatore to the hill stations of Ooty and Coonoor. As he was flooded with requests to carry dairy products and other items, he opened a small shop in 1905, after buying the butter business of an Englishman in Vannarpet and soon, "The Nilgiri Dairy Farm Ltd." was established. In 1936, he moved his shop to Brigade Road, Bangalore. The Nilgiri Dairy Farm Ltd. specialized in dairy, dairy products, bakery and chocolates. In 1962 the town of Erode sees the setting up of the specialized dairy unit that enhances the capacity of the company to manufacture its signature high-quality dairy products. Nilgiris bakery and dairy products manufacturing facility at Vendipalayam village in Erode town was the initial modern facility for the Nilgiris family. The produce was supplied to Bangalore on a daily basis from Erode. Nilgiris also operated a restaurant in Erode town and was famous all over the region. Muthusamy's son Chenniappan expanded the company by setting up a modest store in Bangalore to sell Nilgiris' own products. However, after Chenniappan's visit to the U.S. and Europe, this modest store was expanded into a supermarket. Though Chenniappan was influenced by the supermarket concept in the U.S. and Europe, he developed the Nilgiris supermarket to fit in with the local culture and set guidelines for its growth. Soon, the Nilgiris supermarket chain spread to Erode, Coimbatore and Chennai. In September-October 2008, Actis, a UK-based private equity investor, invested US$65 million in the Nilgiris Group in order to strengthen the group's manufacturing and franchising operations in South India. This investment has given Actis a controlling interest (more than 51% stake) in the Nilgiris group. Nilgiris is an iconic brand that enjoys wide household recall in the southern states of Karnataka, Tamil Nadu, Andhra Pradesh, Telangana and Kerala. The brand that was established in 1905 also has its own products portfolio comprising dairy products, baked goods, chocolates and staples. On November 21st 2014, Future Consumer Enterprises Ltd. acquired the 98% from Actis Capital and other promoters. With that now, Nilgiris is a fully owned subsidiary under Future Consumer Enterprises Ltd(FCEL), which is a Future Group Company.

NILGIRIS IS such an integral part of Chennai's panorama that it is difficult to imagine a time when this landmark was not there on Dr Radhakrishnan Salai. People drive down all the way from Neelankarai, Velacherry or AnnaNagar to shop at Nilgiris. For most of us, it has become an incurable habit. The increasing expatriate population is just as hopelessly sold on the idea. I spent an afternoon at the Departmental Store, talking with the management and the staff, trying to understand the complex management strategies they might be using. It took them little effort to explain the secret of their success. Everything goes back to the family and its values. ``We have been taught never to forget our background, our culture and our behaviour. Our conscience does not accept profit in business by short-changing people or by selling inferior products." It becomes necessary to trace the family back three generations to Muthusamy Mudaliar, who was a ``runner during the British times. He used to take letters and cheques from down Mettupalayam to the British living in Connoor and Ooty. Other than cool clime and exotic fauna, the hills offered little else.

The runner was flooded with requests to deliver butter, dairy products, and many other items. And there were more requests. In time, Muthusamy Mudaliar opened a small bunk shop in Ooty. That was in 1905 and the beginning of a long story in procurement and customer satisfaction. In 1936, the shop moved to Bangalore with its registered office on Brigade Road, a small shop exactly where the huge mother store is now located. The first expansion happened when Muthusamy Mudaliar's son Chenniappan, also the chairman, established Nilgiris as a modest store carrying Nilgiris' own products, mostly dairy and bakery. Eventually, it evolved into a supermarket when Mr Chenniappan visited the U.S. and Europe and was influenced by the old supermarket concept in the west. ``Quality products at competitive rates all under one roof. Only, he refined it in the local context and set guidelines. He also reinforced what already existed - a very clear code of conduct, which guides the entire family that comes together to run Nilgiris, India's first supermarket with self-service facilities. It is around this time in the 1960s that the Chennai chapter opened. P.M. Natarajan started the small Madras Farm Agencies in the Everest Building (it still stands strong near Rippon Buildings) in Periamedu, with encouragement from Chenniappan. They were the first big private suppliers of milk in the city. Before the crack of dawn the train from Erode (their main dairy division even now) would chug in with five 40-litre cans of milk. Nilgiris also set up their first pasteurising plant at Erode, which Aavin used till they set up their own. Yielding to pressure from the Madras shoppers at Bangalore, the chairman further encouraged Natarajan to set up a full-fledged branch in Madras. They bought the vacant three and a half grounds plot on Radhakrishnan Salai and then the adjacent plot of one and a half grounds. (The owner now lives in an apartment in the Nlgiris building.)

The Chennai Nilgiris officially opened in 1981 as just a cake shop. A year later, the department shop opened with Natrajan as the branch manager. The rest of the building, other sections, the restaurant and The Nest (the hotel) grew at a slow pace of construction. Not all of us know that this is the only Nilgiris in Chennai. All the others are franchises controlled by the head-office based Franchisee Division. The store itself is the additional responsibility shared by every member of the management. They are a recognisable feature in the system, always walking around, quietly checking on the running of the store at every stage. What comes through more than the fact that Nilgiris is a privately owned concern, is that it is about a set of values that the family grew up with and stayed by. The management, however, whole-heartedly credits their chairman with the success that Nilgiris is today. ``The chairman taught us all that we had to learn. From the production level to the retail point to packing covers, he checks out every detail. He is particular about avoiding waste at any level. Even today at 85, he is at the store the whole day, at the billing counter, training people or improving efficiency. He travels to the branches and spends time with the franchises... They have also evolved a very effective procurement policy. They get their own dairy, confectionary and bakery products. Their instant food comes from Bangalore, spices from their Erode base. Branded products come to them directly while the grocery is procured locally, checked, cleaned, and repacked at the store. ``Many mills are available locally. We hand pick the suppliers and the best grade even though the prices may be marginally higher. They know our customers and the type of counter we maintain and they get immediate cash payment. The proposition makes it very difficult for them to compromise on quality. Customers demand and the movement of the products determine their inventory. Nilgiris stands out for the ability to sign on their workers to a level of commitment, quality and involvement, almost as good as theirs. The way they manage their human resource definitely has something to it.

During recruitment they don't look for previous experience or paper qualification. ``We look for family background and character. We look for people who will fit in with the staff already at work. Training is always on the job. They learn the ropes under guidance from the senior staff and are assessed on how well they take to correction. The management, on their part, are constantly on the move, closely watching them and working with them. The guiding principle at work is discipline at every level. Strict adherence to timing. No socialising at work. No extra long breaks. The flip side is, Nilgiris pays them more than the average wages and conveyance and other allowances. They are given appointment and confirmation orders, provident fund, ESI benefits and annual increments. Workers on their part say they are happy to be working there. They are looked after and cared for. Nilgiris has a billing point they can be proud of.

One bright morning the store became computerised. Packing girls to billing hands, everyone took their turn at the computer right there in the store, and now they have a fleet of extremely efficient computer operators. No wonder they have succeeded in creating a work force that has made a big difference. A work force that has learned to think and act like the management. A work force that is quality conscious and gracious like the family they work with.

The management is trying to understand how things work and how to make them work better. And Nilgiris continues to evolve. New thoughts and new ideas are beginning to stir. Environment has become an issue. They are currently working on ways to avoid use of plastic (Chennai public is certainly pleased to note that the store does not stock profitable but basically harmful substances like cigarettes, tobacco or alcohol). A new generation of management is growing up and going out for advanced and specialised training anywhere in the world. Some to come back and join the old departments. Others to consider diversification

References

1. Kishore Biyani eyes future scale in snapping up Nilgiris for Rs 300 cr
2. http://www.hinduonnet.com/thehindu/mp/2001/12/13/stories/2001121300030100.htm Storehouse of values
3. http://www.sathguru.com/Note_on_Retail_Industry.pdf
4. http://www.thehindubusinessline.com/2006/09/02/stories/2006090203850100.htm Actis set to buy controlling stake
5. http://www.hinduonnet.com/fline/fl2305/stories/20060324002610000.htm Aiding in good living