Cut costs, Purohit tells budding entrepreneurs

Tamil Nadu Governor Banwarilal Purohit told budding entrepreneurs — mainly those operating in the micro, small and medium enterprises space — to cut costs and work hard, drawing from his experience of running a successful hydrogenated vanaspati unit.

“In my 30s, after graduation, I was told to join my father’s cotton ginning business. But I was not satisfied and wanted to do something more. After research, I decided to run a hydrogenated vanaspati unit,” he said speaking at the CII- Regional Conference on Affirmative Action.

‘Huge investment’

Mr. Purohit recalled his father telling him that such a unit would need a huge investment. “Finally, he agreed to give ₹10 lakh and I decided to start a 15 tonnes-per-day vanaspati unit and finance the remaining through banks”.

But his plans faced hurdles in the form of licensing requirements as well as the banks’ reluctance to lend. “It was in 1965 and during the period of License Raj. I was told that it will take a lot of time to get a licence. But there was a way out: if I employed fewer than 50 people, there was no need for a licence. So, I decided to take that route,” Mr. Purohit said.

He added that though he crossed the legal hurdle, the bank rejected his loan application. “When I asked why, the general manager of the bank said that in terms of business, I need to compete with bigger players who would be producing 100 tonnes per day, and therefore, my project won’t be cost-effective. But I told the bank that I would be cost-effective because big companies will have more employees including an MD, a factory manager, a purchase manager and a sales manager. In my case, I would be everything. The bank sanctioned me the loan,” he recalled.

The Governor said the unit was a success, and after paying the third instalment, he donated ₹21 lakh to Bhartiya Vidya Bhavan. Mr. Purohit launched the CII Affirmative Action Gateway. The portal has been developed to support underprivileged students, entrepreneurs and women through various schemes and opportunities.