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Reddy Poultry Farms

A Chicken Story Gone Wrong?Narsimha Reddy, the managing director of Reddy Poultry Farms (RPFL) was in his office, lost in thought, sifting through stacks of paper on his desk.

Reddy and his two brothers started RPFL in 1992 and in 2010-2011, achieved a turnover of ̀ 2,500 crore. Though the com-pany had done well over the years, the last year had been appalling.

RPFL ranks among the top 10 poultry companies worldwide. With opera-tions in 11 states, it offers a varied range of poultry products and services.

RPFL had overestimated the poul-try market and to add to its worries, competition was catching up. Prices of chicken and eggs had plummeted and as it had excess supply, RPFL had to sell live birds at various lev-els of their life cycle at lower-than-cost price to minimise losses.

It had also tried to venture into packaged meat as this attracted more margins, but because of the Indian mindset of having fresh

chicken, this venture was not gain-ing momentum.

From being in an unorganised sector, RPFL had successfully done a vertical integration. It had pioneered the model of contract farming and had integrated the value chain.

The key to increasing the value of the value chain lay in feed, which formed 70% of the cost. But of late, the contract manu-facturers loyal to RPFL had also started compet-ing and demanding more charges.

The threat of bird flu and re-lated diseases were adding to RPFL’s worries.

Reddy was now wondering whether vertical integration with so many stakeholders was the correct choice to operate in this industry. Should it integrate further or should it diversify to augment its revenues and rein in costs?

SANDEEP CHATTERJEE, Associate Director, KPMG, IIM Kozhikode (Batch of 2003)

Viva Automation

A Survival TestViva Automation, which is active in the robotics and automation businesses, was among scores of companies at the cross-roads due to the eco-nomic slowdown.

It had not grown substan-tially from 2003 to 2011 and its turnover was hov-ering around ̀ 4 crore for the past eight years. With only 25 employees (as of 2011-2012) with diverse skill sets, the management was not sure of how to deal with the stagnation.

The low growth rate was eating into employee morale, and customers were not consider-ing repeating their orders. Current business areas were diverse and incoherent, and market conditions did not favour big investments.

There was an exigent need to take a fresh look at the company’s stra-

tegic intent.In January 2011, Madan

Mohan was appointed to take Viva Automation out of the woods. Several challenges stared at him: How would the company face recessionary trends? How would it win against competition? Was it time to change its business model? What would it take for him to align external pressures with internal processes? Would he prove to be the David or

Goliath for Viva Automation?

VIJAY DHARMADHIKARI, DGM-Projects, Nicolás Correa SA

PC BASAK, Professor, Indira Gandhi National Open University

SandeepChatterjee

VijayDharmadhikari

PC Basak

12�THE ECONOMIC TIMES | BENGALURU | TUESDAY | 14 APRIL 2015Career & You