Vivek Kataruka

Vivek Kataruka

PGDBEM 1999-2000

Chemshel Enterprises

The Spirit that Prevailed to Triumph

His office bears a conspicuous bright colour which complements the broad smile on every face that we came across within the first few metres of entering. By the time we reached Vivek’s office, we were convinced that we were going to meet a multifaceted entrepreneur who was just as concerned about keeping up his employee-motivation as making it big in business.

An exuberant face greets us with a handshake. Vivek unfolds his life, dreams and plans, “Ever since I started thinking about my career, entrepreneurship has beckoned me. Even during school days, my essays on career goals always said that I wanted to become a businessman. Like other children whose goals changed in every standard, mine remained unchanged.”

After earning a Bachelor’s in Commerce (honours) from the Hindu College, Delhi University, Vivek wanted to set out on his entrepreneurial journey. But, at this stage he was slightly unsure about his business idea and did not want to join his thriving family business. ‘His own,’ were the words that overpowered him. It was during those unsure times that he came across an advertisement on EDII’s Post Graduate Diploma in Management – Business Entrepreneurship. A slight probe informed him that it was a course for business aspirants. 

Vivek appeared for the selection test and was very soon on EDII Campus, talking and observing business with mentors, experts and entrepreneurs. Vivek says, “The classes established for me the significance of knowledge for an entrepreneur, ways of sourcing funds, ensuring networks, and I became determined to first equip myself appropriately. Knowledge brought in confidence and my resolve turned steely by the end of the course.”

Despite having identified a few business opportunities, including setting up of cold storage, manufacturing aloevera gel and papaya extract, Vivek was somehow not convinced. He reminisces, “Those were the days of all-time low for me. But, I am a self-motivated person. I would remind myself of my college days where I had founded the commerce society to promote sharing of new ideas and knowledge as well as networking among commerce undergraduates of Delhi colleges, and then devised ways to source funds and sponsors. These little reminders helped me sail through, by endorsing that I possessed the skills to succeed and lead. I strongly held onto my belief.”

Vivek comes from a family which owns a flourishing business and it was obvious that there was pressure from the members of his family to join the family business. With nothing concrete in hand, Vivek reluctantly joined his family business. His reluctance emerged from the longing to create something of his own and he knew that his family business would give him little scope to venture into unchartered areas. For a while, he managed the Bajaj automobile dealership, a family business arm at Bankura, West Bengal and with financial assistance from family, simultaneously, in a bid to find his ground, tied up with SSI Education to offer computer training programmes. Initially, the centre did well but later, it incurred a loss of ₹ 6 lakh, leaving him no option but to wind up.

A brief stint and it was already frustrating for him at the family business – ideas clashed, opinions didn’t match and his approaches backfired amidst a business setting which ran on conventional style and attitude. But, Vivek is quick to add, “May be I could not fit in because of my aspirations but there is certainly a great deal that I learnt about doing business. I worked under the able supervision of my father and knew how it is to run a businesses, the daily crises, the problems of employees, pressure from customers and so many issues which have to be dealt with utmost patience and understanding. My own failure during this period, brought me closer to reality and I understood that even with all my knowledge, I needed to know several aspects while selecting and conducting a business. I was still in touch with EDII mentors and they helped me at every stage of reaching an opportunity and fighting with my emotions after a failed venture. I was also fortunate that my family completely understood my aspirations and gave me a free hand to experiment.”

During this time, through one of his associates, Vivek came to know about shellac trading, a viable business opportunity in West Bengal. Its high-end products needed to be exported in bulk to Europe and USA. Vivek found the idea promising and undertook a preliminary market study which revealed a huge demand in the international market, both for shellac as well as products derived from it. He also gathered that shellac-trading desperately called for professional players who could cater to the needs of highly-professional foreign clients. The business was till now being managed in an unorganised manner and displayed huge scope for educated entrepreneurs who could understand international regulations like FDA (Food and Drug Administration) approvals, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) regulations, EPA (United States Environment Protection Agency) governance and similar regulatory compliance formalities for international trading. Vivek’s probe put him in touch with two prospective clients with whom he shared samples of alueritic acid.

While ambrettolide is used as a fixative in perfume manufacturing, alueritic acid (comprising 35-40% shellac, a resin), is a key raw material for the synthesis of Civetone, Exaltone, Ambrettolide and Isoambrettolide in the perfume industry. Vivek did have his rounds of crises, which he primarily encountered in large-scale production of alueritic acid and ambrettolide, but gradually his understanding of the business strengthened and he undertook a three-month pilot project to manufacture alueritic acid from seedlac. Vivek comments: “It seemed difficult but I was convinced. So, I collected steel utensils, hand weights, filter cloths and a gas stove, and decided to implement the project in my backyard under the guidance of a scientist and a retired worker of a chemical plant in Kolkata. Success was not easy; several bouts of failure started taking a toll on me. I had to try really hard to continue. Certain inputs and techniques proved wrong, like some metals generated adverse reactions and thus had to be removed in the subsequent trials. However, after several rounds of such trials and errors, we finally emerged successful.”

The samples of alueritic acid thus prepared were sent to two prospective foreign clients. Getting approval from them was Vivek’s first major victory. Vivek then visited Europe for a quick market survey of the demand. The visit was fruitful and he was convinced of setting out on the path of commercial production. He realised the happiness of prospective buyers on seeing somebody qualified, aware, educated and professional in approach in this business. The next step was to set up an enterprise for commercial production. Convinced about its feasibility, he established Chemshel in January 2004. But, the going was not easy. Corruption proved to be a major obstacle. Bureaucratic hassles were such that he wasn’t getting permission to begin production. Sourcing finance, acquiring land and persuading elders in the family for the initiative complicated the start-up phase for him. He realised that the new enterprise called for a fixed capital of ₹50 lakh and working capital of ₹35 lakh, amounting to a total investment of ₹85 lakh. Vivek says: “The amount was huge. The risk factor was also there but I persisted. I decided to seek bank loan. My business project was evaluated by State Bank of India, Kolkata and Union Bank of India, Kolkata. While SBI offered loan at 13.5 %, UBI offered the same at 12% and so, I opted for the latter and started commercial production after launching Chemshel.”

The major products offered by Chemshel comprise seedlac, shellac and aleuritic acid. The company’s demand for as much as 35-40% lac, a key raw material for these products is fulfilled through contract farming and the remaining 60-65% is sourced through suppliers. Chemshel’s lac plantation farm is based at Kantadih, a village in the Purulia district of West Bengal and the production plant is located on Wilcox Road in Purulia.

Challenges kept surfacing and at every stage, Vivek kept relying on his entrepreneurial skills to ward them off. The major hiccups emerged from operating in a small town with poor access to skilled technicians, spares and plant, winning over customers by communicating the value of the offering, regulatory compliances and labour issues. Purulia is a small town in West Bengal, with poor access to skilled technicians, spares and plant. Vivek hired an experienced worker who supervised and trained new workers. However, labour-related problems became his major worry which he addressed by forming a labour union and dealing directly with the leader of the union rather than dealing individually with each labour. He ensured that the workers received all legitimate benefits.

Vivek carefully crystallised strategies to deal with other problems, “I decided to win customers through elaborate presentations, showcasing my manufacturing, storage & packaging capacities and quality-control practices. I believe that the best way of attracting returns is accepting customer orders as far as the variable cost is recovered. Till this day, I follow this. For marketing, I resorted to distribution of free samples to prospective clients. This helped me win the trust of my customers and they were assured of my quality. I also evolved the policy of delivering even an order as small as one kilogram and wait for three to four days, before inquiring about the payment terms. Our customer response time is less than half an hour even if it is merely an acknowledgment to a mail received from our customer.”

Every operation at Chemshel was initially monitored by Vivek and this ensured compliance of all regulations for international trade, a factor which is very important in this business. Led by Vivek’s practical approach, strong will and persistence, Chemshel’s alueritic acid plant operations began generating profits and the bank loan was repaid.

Aleuritic acid is a key raw material for creating perfumery chemicals like ambrettolide and iso-ambrettolide. Chemshel has developed the competency to offer ambrettolide, a fixative which is used for perfumes and has an appealing market. As the next step, Vivek envisioned emerging as an exporter of ambrettolide and is today among the major global suppliers of ambrettolide, with exports to 20 countries. Bringing this product in his portfolio was a strategic growth move. Vivek knew that Chemshel’s integrated plant for ambrettolide will impart it an edge over its rivals. An internal source of raw material like aleuritic acid and seedlac ensured that the ‘quality’ was not compromised. Thus, the cost of ambrettolide was controlled considerably, leading to a price level that was five per cent lower vis-à-vis Chemshel’s competing products. Being used as a food flavour and additive in nations with Jewish population, ambrettolide offered by Chemshel had to be Kosher-certified. Kosher meaning kashrut, kashrus or kashruth, denotes food that conforms to the Jewish dietary laws. Kosher certification signifies that the certified product meets Kosher requirements. Vivek ensured this landmark as well.

Under Vivek’s astute leadership, Chemshel’s turnover expanded from Rs 2-3 crore in 2004-05 and Rs 8-9 crore in 2008-09 to Rs 38 crore in 2016-17.

Way to go Vivek! Keep up this spirit.