the beginnings — 2
Financial statements were always fascinating to read, at least for me. The lifestyle of a manufacturer (factory owner) was exciting for us, back then. Driving down to the factory, watching the large piece of land, and some highly engineered machines churning out amazing products every day sounded exciting to us. We both dreamt of doing that all our life.
Our business ideas started back in 2014–15 when I moved to Pantomath, while he joined his family business in full swing. Before that, I had a brief stint in starting a small venture — retail of digital signature certificates with Digisign (my first venture). That was in partnership with two other friends of mine. It did not work out for, and we dissolved the business in a year.
Rushit and I were two — young, raw & aspiring kids inspired by the manufacturing world more than the startups, back then.
We started churning out ideas of what we could do. Few of them didn’t turn out well (we were too slow to understand, act and capitalize). Some of which are as follows
Biomass briquettes.
Manufacturing of biomass briquettes was first of the lot. They are also known as bio coal/white coal and used by many manufacturing industries across Gujarat. The supply of traditional bituminous coal involves high transportation costs (right from east Chhattisgarh to the west coast of Gujarat). Biomass briquettes made more sense commercially for industries as the cost of slightly lower than the traditional bituminous coal. There was an ample supply of primary raw material used for the biomass coal — groundnut shells and other agricultural waste and thus made commercial sense for us to start it. Rushit (an excited kid) went down to inspect a factory in an adjacent town that was available on a long lease for about Rs. 25k a month. The project would have cost about Rs. 20 lakhs in addition to the lease rent. It seemed a capital intensive business back then, thus, after rounds of discussion with our parents, we skipped it.
Coal tar
The idea shifted to coal tar for a brief period. I hardly remember our thesis behind thinking about this product. It was more of a trading product than manufacturing. I still remember some parts of it — reading about it in some newspaper regarding the lack of supply of this product. That probably got us thinking.
CRGO
Rushit was more excited about CRGO than me. I happen to have a client in the manufacturing of transformers and rectifiers. During one of my visits to the factory, I distinctly remember talking to the purchase manager about the raw materials involved in manufacturing these heavy electrical machines. He mentioned about many products, but emphasized more on quality of CRGO. CRGO is an imported product — no Indian company is a manufacturer of it. That struck me, and as always, we had a conversation about CRGO. We did our groundwork (we are not engineers — it was rocket science for both of us) and found out about the raw materials used in CRGO, its manufacturing process, suppliers and pricing. A single roll of CRGO costs around Rs. 60 lakhs to Rs. 1 crore depending on the quality. Surprisingly, we did not bog down (yes, not bogged down) listening to his large amount. We tried to have a word with our parents as they laughed it off. Gradually we understood that it required a large capital and had nostalgia about us denying the biomass briquette project (fun fact: biomass briquette project cost 1/4th of CGRO project while it was rejected as it was capital intensive).
The ideas were more opportunistic than intrinsic & realistic. We settled with the fact that large manufacturing wasn’t our calling.
Read up the next post to understand how our thoughts were shaped.
