When 38-year-old Baijayanti Routray started her bread and bakery business in 2011, little did she know that her products would one day delight the palettes of the Indian Navy personnel.
Her company, United Foods, which started in 2011, bagged order worth Rs one crore from the Indian Navy for INS Chilka (Navy's training centre). Baijayanti, who had till then been selling her products locally in around seven districts of eastern Odisha, considers this as a significant milestone in her journey.
"It was not easy. We could bag this order only in our second attempt. After our first attempt, we learned that we are competing against local giants like Mories, Modern, etc., which have huge production capacity. We therefore took a loan of Rs 20 lakh and doubled our production. The following year, we sold our products at a 10 percent lower rate than our competitors, enhanced production capacity. It worked."
She invested around Rs 25 lakh initially and today United Foods has an annual turnover of Rs 1.2 crore and provides employment to around 30 people.
She says, the initial years are critical for any business. There’s always a risk of crumbling down under pressure after huge investments. Therefore, she believes “Businesses should be started in rental premises first without investing much money in fixed capital.”
Over the years, as the company started bagging orders and showed signs of growth, it acquired a 2,000 sq.ft land in 2017 to expand its production.
Market share and strategy
The company at present has a market share of seven percent in Cuttack’s bread and bakery sector. Baijayanti says, organising local cultural events, inviting celebrities or other famous people in the field of culture, sports, academics and exhibiting stalls in popular festivals like Baliyatra in Cuttack helped her market the product better.
The company aims to acquire 20 percent market share in Odisha by the end of 2020. For this, the company plans to invest in advertisements, take orders online, reduce the production cost and pose a competitive bidding price for canteen tenders and make its own whole wheat bread and soya-formulated bread. The company has also identified around 15 areas like Chandikhole and Kendrapara as its potential markets in the near future.
Speaking about the challenges, Baijayanti says, “In order to capture local markets and popularise itself as a brand in its initial years, it had to supply its product on credit. That’s was a challenge. But once it crossed the sales target of Rs 5 crore in a year, the brand attained enough popularity and sustained without any credit.”
While calling her firm a new entrant, Baijayanti also made remarks on how the combination of increased raw material prices and the presence of local brands pose a challenge for her firm. She says, "We are facing a few hardships. There is low margin because the competition is huge and costs of white flour, sugar and oil have increased. Our competitors have big pockets. To be at par with them, we are forced to keep the margins low, rather extremely low."
Baijayanti says, "With the recent loan of Rs 20 lakh, our fixed cost has increased. Including rent, equated monthly instalments (EMI) and salaries, the expenditure comes to around Rs two lakh per month. A subsidy on the rate of interest from the government can be of great help."
(This story is published in partnership with the MSME Ministry to showcase success stories of SMEs)