Trade, import and export for MSMEs: “Risk-taking is important for you to go where others hesitate to go. The difference between those who succeed and those who don’t is that the former takes the opportunity that others only think about but don’t act on it,” said Kiron Chopra, CMD, Chopra Retec Rubber Products at Financial Express Online’s The ScaleUp Summit.
Trade, import and export for MSMEs: Back in the 1970s, Kiron Chopra took over his father’s loss-making automotive component manufacturing unit in Lucknow for its turnaround. However, lack of industrial infrastructure in and around the city, lack of capital, and difficulty in servicing auto companies based in far-flung cities such as Pune and Chennai had already crippled the business. Chopra knew he would have to look for an alternative growth path before it is too late.
Export came up to be an option for Chopra since he had prior experience of working in automotive manufacturing facilities overseas. “I tried to relate their quality standards with what we were doing and realised that if I choose a particular category of products, I could look at the export market,” said Chopra, Chairman and Managing Director, Chopra Retec Rubber Products, in his virtual address at the Financial Express Online’s The ScaleUp Summit on Thursday.
However, looking at the export market was the moment of truth for Chopra as India was known for the manufacturing ecosystem that was notorious, negligible, and nowhere at par with global standards. Chopra, determined and persistent to revive his business, went to Germany, which is considered the gold standard for the auto market, to participate in an exhibition for auto components.
Chopra looked for opportunities in manufacturing products made out of rubber that would have volumes and recurring demand. He stumbled upon the exhaust suspension that included a lot of rubber components such as rubber hangers, gaskets, etc. However, since Make-in-India wasn’t a brand then, nobody at the exhibition entertained Chopra to provide him with some samples of products that he could make back in India. “They didn’t want to have any conversation over getting anything manufactured in India,” said Chopra.
Since Chopra knew Indian products would not be accepted outside India, he brought back some samples of fast-moving parts made of rubber for conventional German cars like Volkswagen, BMW, Audi, etc. In India, he made similar products with matching quality and went back to the same exhibition in Germany next year. This time, he was accepted as the product manufacturer at the exhibition level even as he still couldn’t find any taker for his made in India products except one German company that reluctantly agreed to place an order.
“I asked the representative of that company to pay us only after he could accept the quality of the product. That was the turning point for our business where we saw a complete transition from looking at local markets earlier to global markets,” added Chopra. The acceptability in the German market gave Chopra the confidence to explore markets beyond Europe.
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By this time, Chopra already had a few learnings in business – risk-taking and being persistent in what you want to do.
“Risk-taking is important for you to go where others hesitate to go. The difference between those who succeed and those who don’t is that the former takes the opportunity that others only think about but don’t act on it. We didn’t deter in our conviction of what we were doing since the global market was huge in volume,” said Chopra.
While Chopra enjoyed the highs of the growth opportunity, there were lows as well, to the extent that he was forced to think of shutting the business, thanks to currency fluctuations that time.
Gupta explained: In the mid-1980s, the exchange rate was Rs 13 per US dollar. Since the rupee was a strong currency back then, Chopra’s products were very expensive to export. While the company was flooded with orders, it was not making money because prices at which it had accepted orders were not making it viable for Chopra to make a profit as the rupee was very strong against the dollar. And Chopra, of course, couldn’t do anything about the problem.
“For two years, we supplied products on a no-profit, no-loss basis. We requested our customers for a price increase but they didn’t agree. We were hoping that the rupee would get devalued but it didn’t. We were almost at the stage of looking at discontinuing the business. There were also working capital issues and we had to borrow from banks to stay afloat,” said Chopra.
Luckily, the rupee’s devaluation began later and all the clients, who had moved to vendors of other countries, came back to Chopra. “This was a big learning for us that selling good product was also about selling overall good experience. We have built our business on relationships,” added Chopra.
Now with the shift in the automotive sector towards electric vehicles or alternative fuel vehicles, Chopra believed the impact would not be cascading on his business. While exhaust suspension will cease to exist with electric motor in EVs replacing the internal combustion engine, the suspension and steering systems would continue to keep Chopra’s business growing. “We realised that future will not affect this part of our business. Today we have the capability for product design and development that has given us the edge over others,” said Chopra.
Pre-empting any negative impact by foreseeing and adapting to the future was another big learning for Chopra in recent years. Chopra Retec Rubber Products is currently a $20 million company with over 2,000 products exported to over 30 countries including the US, Europe, Canada and China.