Robert Kiyosaki, of Rich Dad Poor Dad fame, says that to be successful ou have to have a clear societal goal, where you end up doing either of two things: Improve the quality of life or Right some wrong. Pradeep Lokhande grew up in a village near Wai, where his father worked as a peon. One of four brothers, he clearly was not in a position to get very well educated. His mission in life has been to right the wrongs that rural India is facing. He himself managed to do his commerce graduation through correspondence, before enrolling at IMDR for his MBA. His first break in life came post IMDR, where he got selected by Johnson and Johnson. Eighteen months into J & J, he thought that he had learnt whatever there was to – and quit.

His first entrepreneurial venture was in distribution, where he happened to have partners like Satish Magar (of now Magarpatta fame) and Girme. He tells us the story of how he convinced the Khorakiwalas of Mongini’s to let them do the distribution in Pune. Patiently parking himself in front of the 2000 sq ft personal office of the MD, he waited for 6 hours for an appointment. Utilising his J and J learnings to the full, he blew away the MD by detailing out each of the 163 shops that he felt Monginis needed to be present in, in Pune. Needless to say, they got the assignment!

Distribution was a good business from an ego point of view. Coming from a humble background, it pleased Pradeep no end that all the shop keepers called him ‘Seth’, and so did the company people. He says in jest that he realized very soon why he was the seth. The distributor was primarily a financer for both the company – where he bought goods in cash, and for the retailers – who he gave never-ending credit to. A good businessman is one who realizes when he needs to move on.

In the early 1990’s started a company called ICRC – Indian Corporate Research Center – the aim being to impress future customers that any company with an abbreviation for a name must be a serious company. Initially the company organized promotions – primarily in urban areas. One of his first projects was to launch Surf Ultra in Pune, where he got the product sampled to 3 lakh people. 

In 1993, Pradeep attended a seminar conducted by Gursharan Das, the then MD of Procter and Gamble. He paid a then princely sum of Rs. 500 to attend and noted that for 75 % of the time, Gursharan was talking about the opportunity in rural India. Pradeep decided that if he was to make his 500 bucks paisa wasool, then he should listen to such gurus. He came back with a clear divine directive – quit distribution and get into rural relations. So ICRC morphed in to Rural Relations – which started with primary data, which tells you that there are 600,000 + villages in the country. A formidable number. But the 80-20 rule applies to rural India too. So he set about slicing the villages using a very simple criterion: How many have a population more than 2000, and also have a weekly village bazaar? (The bazaar criteria was added because these villages serve as feeder markets for the surrounding smaller villages) Now the numbers dropped to about 80,000. Getting data of these villages to sell to marketing guys became his mission.

He made a start with Maharashtra. He decided to write to each of the 6700 villages in Maharashtra which fit his 2000 / Bazaar criteria. He used post cards to get across to them. He identified 3 key decision makers: the sarpanch, the school principal and the post master. He enlisted his wife and father to write 20,000 post cards to these people with one simple question: ‘Please mail me back the name of your sarpanch’. The reason why manual labor was used was primarily financial. The post office’s charge for printed post cards is Rs. 2.5, whereas the charge for hand written ones was Rs. 0.45. Of course, to his wife and dad – Pradeep motivated them by saying that this is for a personal touch..

To get back to the post card story – in order to encourage replies, he had also attached a reply paid post card along with the letter. He got a total of 18 replies, most of which asked ‘ ‘Tu kaun?’. Not one to give up easily, he sent the next set of 20,000 letters with a new question – ‘On which day is the weekly bazaar in your village?’ The response to this was better – about 48 people replying with almost the same tone as earlier. Pradeep was about to accept defeat, when he convinced his wife that they must try one last time. This time the postcard went with no reply paid – but being the month of October, the message was a simple one – ‘Diwali chi shubhekcha’

This time 800 replies came – all of them with the message – ‘Tumhala pan Diwali chi shubhekcha’. This was the insight that Pradeep needed – and which later on his company name came to symbolise – what matters is relationships. To cut a long story short, in a year’s time, Pradeep had visited about 500 villages – and had his database of 6700 villages of Maharashtra ready with a virtual goldmine of information for marketers.

He set about visiting FMCG giants with this database – and found very little interest. Of the 40 companies he visited – most of them were polite but did not respond. The one call that came was from Tata Tea – who said – come over for a presentation. They saw what they liked – and said give us a quote. He thought that all his effort was at least 500,000, but in his wisdom, decided to ask the marketing manager, who was also a marathi manoos, how much would the company pay. 25,000 – came the reply. With a wife and daughter to take care of – and cash flows from 1993 to 1995 all being negative, Pradeep swallowed his hubris – and took up the offer. A week later, Parle Agro bought the database – this time for 20,000.

The interesting part though was Tata Tea – who called him back three weeks later, and asked him what they should do with the database. The savvy marketer that he was – he reverted with a proposal of a rural campaign for wet sampling of tea – and a 3.75 lakh order from Tata Tea. 3 months later, he got a big one from a MNC – Procter and Gamble – sampling of Ariel and Camay in Rural areas – which was worth 1 cr. And from then on he has concentrated on selling solutions, not databases.

Some of Pradeep’s defining philosophies:

·         Success is about consistency – and a little bit of innovation.

·         We make mistakes most of the time

·         Humility is important, we need to respect time of every villager

·         We are all hypocrites

·         Never get into a business which deals with subsidies / governments.

·         Most of us are stuck in negativities. He believes these are things which are making Bharat Shining: Mid day meals, Panchayat Raj, Schooling within 3 km, Move away from caste based politics (aka UP in Loksabha elections)

Nuggets from Pradeep:

o   RBI defines a rural area as one where more than 50% of income is from agriculture.

o   Cities are the inspiration for rural India

o   In Bharat, opinion makers for hygiene products are secondary school students; for product categories like motorcycles and mobiles, it is college students.

o   Bharat’s opportunities today are in: Education, Mobile and DTH (entertainment)

o   The average spend by Bharat on Value Added Services in telecom is 30 to 150 per month, which is more than urban India spends.

o   Indian will see a spend of 50 lakh crore on Infra in the next 10 years.

o   The biggest issue in Bharat is Power

o   One of the participants asked him as to how they can penetrate the market for their drip irrigation systems. The market leader – Jain Irrigation – makes 70% of its money selling to government / subsidy. The company in question had no subsidy plans in place. Pradeep’s idea was to identify progressive farmers, work with them to make their farms model farms, and then invite prospective customers to visit them. (In Ackoff’s Diffusion of Innovation, I read something similar about how hybrid seeds were diffused into the population) – Brilliant Pradeep!

o   Inferior products don’t work in rural India. FMCG sales in rural India are 55,000 cr. Duplicate brands all put together sell only 15,000 cr.

o   Satchets work brilliantly in Bharat.

o   Ghadi detergent became the market leader because it customized, Before launching in Odisha, it worked with water samples there, so that they could customize the detergent formulation to suit the water.

o   You can’t sell toothpastes in the brand of Electrical appliances. Which is why Anchor flopped.