VM Enterprises - Stepping Stones of Surprises with Vijay Idagal - 1130/ADL

It was deep seeded in him that he should start a business as soon as his education gets over. His expertise in the field of capital goods design and manufacturing was tremendous. Yet, life has been stumping him time and again. Today, he has the experience of building, not one but, three businesses from scratch and growing them in to profitable and sustainable business units. Over 20 years of experience in the industry, he has been known for his excellence in executing and delivering orders on time, every time. His support and guidance to many young entrepreneurs to build their businesses is evident. As I sit in his office at Nasik’s Ambad Industrial area, he refuses to accept that the journey of his life has been extraordinary and continues to maintain a low profile.
An extraordinarily humble person, Vijay Idagal believes that life has been kind to him.
In 1990, after completing the industrial training and obtaining the diploma, Vijay joined Datar Switchgears at Nasik. He had also worked in a small company at Coimbatore before joining Datar. Vijay had been seeing a large number of his NTTF friends going abroad for work. He also bought the Australian immigration papers from the Australian embassy with a plan to apply for immigration. However, a huge passion to begin own business was lit in him from a long time and finally, the papers reached the dustbin. A very decisive person, Vijay always abstains from making half hearted decisions. After a couple of years of working with Datar, Vijay realized that there was tremendous potential for growth in the industry. He started thinking on lines of setting up a business entity to explore more possibilities of growth. Vijay decided to quit Datar. His plan was to either get started with a business or go abroad for a job. The groundwork began. He and his 2 other friends decided to get together to incorporate Sanjeet Moulds Pvt Ltd (SMPL). One of these partners was from SSBJ, Shivanand Kugotoli. Vijay resigned from the job and just then, the Harshad Mehta scam broke out. Having had no prior experience of business and also no assets to collateralize amid the tough economic situation that had arisen out of the stock market sham, banks were unwilling to lend any money. Every bank turned down their application for a loan and soon, the whole game plan had gone for a toss. Vijay did not even have very strong contacts who could give him at least some courtesy business.

A consultant advised SMPL that they must work on a product and prove the viability of the product to the financial institution. Merely setting up an engineering shop might not interest any funding as there were existing businesses with great financial standing looking for loans. After studying the market and interacting with experts, the trio worked to build a tone dialer. It was a small equipment to retrieve the messages recorded in the answering machine using codes. Thus, the necessity to stay near the answering machine was eliminated. In those days, there were hardly any mobile phones and answering machines were quite popular, especially abroad. On presenting the sample, SMPL won a confirmed order for 30,000 pieces a month at $1.2 a piece. It was a kick start for SMPL. Finally, after running from pillar to post, the Maharashtra State Finance Corporation (MSFC) offered them a loan at a whopping 21.5% interest rate against a margin condition of 36%. The moneys were arranged from every possible source and the margin requirement was fulfilled. MSFC financed the remaining 64% and SMPL was born in 1993.

The total outlay with SMPL was Rs 20lacs when the business began. To execute the tone dialer order, a working capital of Rs 40lacs would be required in order to import the required raw materials, electronic items, transistors, etc. in bulk. Thus, SMPL would also need to get an advance license, i.e., a license to import with a promise to export, in order to avoid paying the import duty. There was a visible increase in prices and suddenly, the project had become nonviable. SMPL made all possible efforts to arrange more funds but money did not come to their rescue. Their hearts were broken when they realized that this order was not in their hands anymore. A business seemed to have come to an end even before it could take off. The situation had turned worse as they had spent Rs 7-8lacs on the project. For a moment, they felt that that they had landed themselves in a trap. Having had no other go, they walked in to the MSFC and narrated their situation. They had given up. However, as the discussions went on, they realized that their core competency is tools and dies. In case they start working on this, in line with their basic plan before accepting the consultant’s suggestion, things might work better. There was a need for more capital to buy required machinery and set up the premises. MSFC agreed to lend Rs 5lacs against the Government subsidy sanction of Rs 8.5lacs that would come only after 8-10 years.

Machinery was installed and business was being scouted. Being a new company on the block with neither people having strong prior experience nor expertise, customers were very apprehensive of giving any orders to SMPL. Some small job works flowed in and work began. With some small and some big orders, the company just managed to earn enough to meet the operational expenses and pay the employees. The interest cost kept mounting a lot of pressure on the company’s financials. In 1994, the company won an order from VIP industries. VIP was happy with the samples produced by SMPL and they offered to provide raw material as well as design to SMPL. SMPL had to manufacture and supply the product in required quantities. It was a blessing in disguise and soon, SMPL built a strong relationship with VIP. Soon, SMPL was doing 7 moulds for VIP and the much anticipated breakthrough was in progress. The only constraint was the products had to be delivered within 45 days. With limited labor, Vijay and his partners themselves had to work on the machines day and night to fulfill the order. “We delivered the final slot of order at 11.30pm on the 45th day though we were permitted more time to do so”, recollected Vijay, “These were the first set of trolley bags being launched by VIP and we were happy to be a part of it”. In 1995, SMPL started getting orders from large companies like Crompton Greaves, Datar Switchgears and others. The company invested Rs 30lacs to grow business and bought a new CNC wire cutting machine. This put some pressure on the company as the decision was very premature. The machine was put to use only after a year. SMPL moved on a fast track of growth and by 1996, SMPL’s turnover had touched Rs 1Cr. The company kept growing at a rate of 20-25% over the next few years.

George Fischer Trenton (GFT), a JV between Switzerland’s George Fischer and India’s Trenton, had plans to supply LPG gas pipeline components in India. SMPL had worked with Trenton on supplying some parts for their irrigation products. They started working on this project. It was a high precision project in which SMPL was planning to design the connectors for these pipelines. There were numerous factors to be taken into consideration before designing the project. Vijay had taken keen interest in the project and it took him 6 months to completely understand the requirement with all the related factors. There were meeting almost every alternate day to design the product. At each meeting, a design would be finalized and sent to GFT. However, GFT kept rejecting these designs for various technical as well as patent related reasons. Finally, a design was built that complied with international standards and SMPL won a crucial order to its kitty. SMPL was asked to manufacture and supply 2 moulds at a gross pricing of Rs 12lacs. Impressed with the product, GFT placed the next order grossing over Rs 70lacs with SMPL. SMPL’s turnover for 1997 had doubled to around Rs 2Cr.

By 1999, SMPL was a preferred supplier to large companies like Videocon, Philips, Godrej, Daewoo and many others. The company had set fresh benchmarks in design and delivery and soon, it was not very difficult to get business from large companies. Interestingly, the face of the super selling Honda Activa inclusive of the front cover, headlight cover and the speedometer cover were designed by Vijay.

When SMPL started discussing about the mould with Honda, it was difficult for them to believe that it could be done in India. They always planned to import it from other nations. After a lot of pestering, the discussions began. The meetings would happen once or twice a month and it went on for 7-8 months. The design was given by SMPL much earlier but Honda was continuously trying to judge the genuineness. Each time, the executives would come up with their requirements and SMPL would give the drawings as well as quotations on the spot. Over many meetings of assessing SMPL, the managers and executives understood that SMPL knew what they were speaking and could execute the work. Considering it was Honda’s first big launch in India, they did not want to take any risks. Finally, Honda trusted SMPL with the order.

In 1984, the Common Entrance Test (CET) for entrance to Engineering colleges was introduced. The general trend after completing Class XII was to join engineering. Thus, Vijay and his friends had to take this exam to join engineering courses. In case the student could not afford an engineering seat, he would look at alternate courses like BSc. In line with the trend, Vijay took the exam looking forward to study engineering. The admissions to other degree colleges began and Vijay, not certain of his performance in the CET, applied for the BSc course as well. There was also an uncertainty over the date of results of exams considering that this was the first time the Government was experimenting with CET and thus, waiting could have made him lose the BSc opportunity as well. Along with another 2 friends, he joined the RLS College, Belgaum.

A few days after joining RLS, when Vijay was sitting with his classmate, Torgal, in his room, the postman delivered a cover to Torgal. The cover contained an application form for the NTTF course. Torgal had heard about the NTTF course at Dharwad and had requested for the application. It was 29 June, 1984. The last date to apply was 30 June, 1984. Torgal did not have his marks cards as he had not collected them. Just to ensure that the application does not go waste, he asked Vijay to fill it up and apply. Hesitatingly, he filled up the form and attached the required documents. The post would reach NTTF only after 4-5 days while the next day was the deadline. They rushed to the bus stand and request a driver going towards Dharwad to deliver the application at NTTF. He offered to drop it in a post box at Dharwad so that it could go as a local post and possibly reach on 30th. They had no other go but to agree.

Days went by and one day, Vijay learnt that he had been shortlisted for the exam and interview at NTTF. He read through the prospectus but did not understand anything. However, he went ahead to write the exam and he was selected. Vijay’s father inquired about the institution and found that it was a good choice. Vijay was not very keen but his father insisted that he should take up the course. The biggest block in his mind was the eligibility to join the course was Class X while Vijay had already completed Class XII and thus, he would notionally lose the 2 years. Today, when Vijay looks back, he says that it was indeed a good decision. NTTF is among one of the best institutes that have been producing brilliant talent in the field of tools and dies over a long period of time.

On 25 Jan 1988, when Vijay’s final year exams were in progress, his father called him. He told Vijay about a problem in the village. At a marriage of a close friend’s daughter, the groom did not turn up due to certain family issues and the bride had already started with the ceremonial activities. The situation had become worse as bride’s future was at stake. Being closely knit communities with strong beliefs, it was difficult for the bride to return unmarried once the ceremonies begin. Vijay father asked him if he could do something. Vijay was clueless.

His father asked him, “Will you marry her?” Vijay had not even known the name of the girl and his answer was complete silence. There was silence at both the ends.
A sound was heard. “Yes”.
Vijay finished his exam on that day and left to his native. The next day, 26 Jan 1988, was a holiday on account of Republic Day. For their lifetime, Vijay and his wife celebrate this day as their marriage anniversary. “It has been 25 years since then and I feel that I took the best decision then. We have been living an absolutely happy and contended life”, says Vijay. As soon as the marital ceremonies completed, Vijay returned to Dharwad to write the next exam which was scheduled on the next day, 27th. On a lighter note, if there was no Republic Day in between, either he would miss a year for not attending the exam or miss marrying the one who he calls a wonderful lady now.

In 2001, a small dispute rose between the partners and ended with a big toll on all. Vijay called it a day with SMPL and left the partnership. Not only did he leave the company, in which he had played a significant role, as it was to the other partners, he did not even take any compensation. Rather, he continued to carry the personal guarantees that he had offered to some lenders. It cost him Rs 12lacs to extinguish these liabilities over a period of time. Partnerships are great when each partner has a different skill set to offer. When 3 techies get together to run a business, the presence or absence of all the 3 doesn't matter much.

In the process, Vijay had landed himself into a quagmire. He neither had any money to start a new business nor was he interesting to get back to a job. Moreover, the salary that he would earn from a job would be lesser than the interest that he was required to pay on the liabilities he carried. Everything he had earned over a period of 8 years and much more was gone in moments. Vijay held a little stake in a company named Master Moulds that was run by Mudduraj Kulkarni, also from SSBJ. In fact, Vijay had mentored Mudduraj in the initial days of Master Moulds. Vijay sold back the stake to Mudduraj to accommodate for the payments towards the liabilities as well as to manage the adversities that life had thrown upon him.

In a quirky situation, Vijay dared to be different. While a large number of companies were sprouting around seeing a strong potential in the auto industry building up, most of them being begun by first generation entrepreneurs, there was a dire need for some guidance and support to help these industries set up long standing businesses. Vijay started consultancy and mentoring services for businesses. Over the next 2-3 years, Vijay worked along with some entrepreneurs, businessmen, vendors, suppliers and other clients and helped them scale their businesses. It was a tough period and clients were not easy to come by. On the other hand, Vijay’s liabilities kept building up.

In 2004, one of Vijay’s clients, impressed with the technical knowledge and immense understanding Vijay honed, offered him to start a business. The proposal was that he will contribute all the money that is required and Vijay has to run the business. After many rounds of discussions, Vijay relented to the offer. A new company, Om Sai Moulds and Plastics, was incorporated and Vijay built it from scratch. In 3 years, the company was running with a sustainable business model with decent profits. During this period, Vijay cleared all his liabilities and also purchased a piece of land in Nasik. The Indian economy was seeing a rising during this period and ancillary part making units posted decent growth rates.

In 2007, a client head at George Fischer Trenton had resigned. In the process of finding a suitable replacement, GFT hunted down Vijay and asked him to join them. Vijay was very interested in working over this product which he had designed while working at SMPL. It was surprising for him that GFT had continued to use those moulds even after 10 years. He was also keen to learn more about the adjoining areas like testing, quality management, product maturity, etc. Vijay offered his consent to join and resigned from the partnership firm. All the legal formalities with respect to the dissolution of partnership were completed and Vijay was set to join GFT. And suddenly, the client head who had resigned, withdrew his resignation. GFT was in a fix and it was a major disappointment for Vijay. For no reason, he had landed himself into another tricky situation. It was his mere passion for his interest in the LPG devices that he decided to take this job. GFT offered Vijay to join them for 3-6 months till he finds another job. Vijay made it clear that it is not about the job or money, the sole decision was because of the product. GFT compensated Vijay with 3 months pay for breach of contract but Vijay had bigger challenges facing him. They say, “Whatever happens happens for the good”.

Vijay sold the land that he had bought a couple of years ago. Over the years, the only factor that was lacking him from starting on his own was capital. Finally, the capital factor had a solution. With the Rs 20lacs that was realized from this sale, VM Enterprises, a proprietorship concern, was incorporated. From then on, there has been no stopping. VM Enterprises, today, does a turnover of Rs 2.5Crores. Being a sole proprietorship concern, Vijay has been willingly growing at a pace slower than the potential at which he can grow. About 20 employees work at firm and recently, Vijay has made an additional capital expenditure of about Rs 1.5Cr to scale up his business. However, over the years, his focus has shifted from executing large orders to working on niche products. Innovating newer designs, ensuring 100% compatibility between customer’s need and the company’s delivery and taking up work that involves intellectual and technological expertise have been on the radar of VM Enterprises. The capital goods industry is in continuous hunt for products and designs and each of these is made to order. There is no generic formula that works for all. It takes a long time not just to design these requirements but also to become a preferred supplier to the clients. Establishing credibility and excellence in the markets is the key to make progress in the business world.

We have been rewarded tremendously by repeat business. Keeping the customer happy as well as saving money and time for him improves our own business. Mould making is a high precision business and even a minor mistake will result in scraping the entire unit and starting afresh. There are no patches. The margin for error is zero.”, says Vijay.

Way back in January 1977, Vijay’s father was speaking to a stranger while travelling in a bus. The matter of discussion led to children and he disclosed that he was planning to send Vijay to SSBJ. The stranger told him that if he is serious, he should send Vijay to coaching classes. The very next day, Vijay’s father travelled to Bailhongal along with Vijay to inquire about the classes. The teacher clearly stated that the exam was due in February and students were studying at the coaching classes from more than a year. Against the master’s willingness to accept Vijay in the class, Vijay’s father insisted that he must accept his son, “Please take him into your class. I won’t demand anything more. Whatever is in his fate will happen”. Vijay’s fate was strong, so strong that his name appeared only next to the exam topper’s name in the merit list.

A large number of Vijay’s batch mates made it to the National Defense Academy. In fact, the batch even won the President’s Medal for maximum NDA entries during the year. The SSB stood between Vijay and NDA. When a student spends 7 years preparing himself for the Armed Forces and gets to know one day that his dream will remain a dream, he undergoes a painful experience. It takes a lot of time to overcome the thoughts that haunt after failure to accomplish a long set goal. “The school days were the most chivalrous days of my life. The kind of confidence and courage I developed those days is the reason why I was able to stand on my own at all times. Honesty is tough to practice in business but it pays tremendously in the long run in non monetary terms. These are happiness factors that money can’t buy. I have always taken business which I am certain of doing justice to and in turn, this has also built a strong track record for me.”, says Vijay.

NTTF was a turning point in Vijay’s life. It was tough for many students to adapt to the stringent regulations laid down at the institute. More than 80% of the time was spent at practical assignments where the students had to be standing. The performances were assessed on a weekly basis. These assessments had a weight of 60% in the final assessment, thus ensuring that the students give their 100% every day and do not even dream about studying at last moment. Considering Vijay had sufficient exposure to activities other than academics at SSBJ, he was able to quickly adapt to NTTF. He developed a lot of interest in the course as it involved creating something that did not exist. Vijay’s performance all through the 4 years had been outstanding.

I have been fortunate to not have spent any significant money on my education. SSBJ was a merit seat where parents had to bear only the pocket expenses. At NTTF too, I received scholarship and was required to bear the food cost only. But then, the kind of time our parents dedicated for us is something unbelievable. For whatever reasons, they could make time for us and for whatever reasons we are unable to make time for our kids. That’s perhaps the reason for the imbalances in today’s society. We have everything but time”, says Vijay, “We have become too possessive of too many things these days, specially our dreams. Life doesn’t run to our specifications as we are not its only stakeholders. I always believe in giving my best and leaving the rest to happen on its own. Long ago, when I was in Class VIII at SSBJ, I gave a speech with the conclusion being that it is better to build castles in the air than on the ground. Today, I feel that the truth is otherwise. 3 crucial decisions happened in life without much intervention by me. I am glad that they happened. SSBJ, NTTF, Marriage”.

Update of as Dec 2019
In 2014, Vijay purchased a MIDC plot (~1,000 sq.mt.) to set up his own premises. After facing several issues with the transfer of land and delays in construction, Vijay finally completed building a heavy duty RCC structure (~6,000 sq.ft.) by 2018. He invested about Rs 3.25 crores on this project and an additional Rs 1 crore for the machinery. The policy changes and reforms such as demonetization and GST have had an impact on the market conditions, especially those of MSMEs. Vijay's son and daughter in law have also involved themselves into the business, while his second son is studying for masters in RWTH University, Aachen.