Three Theories of Management Adopted by Nagarajan to Make Ramraj a Success

In the capital of Tamil Nadu state, an up-market auditorium located in the middle of the city is usually visited by many all-round the year. But the current tenant of the auditorium is hosting a group of famous industrialists, sport stars and well-wishers of a great innovator and businessman. As he walked on the stage in pure white shirt and dhoti towards the podium, the entire crowd, like a military a baton stood for K. R. Nagaranjan as he unveiled the Salute Ramraj anthem. While the crowd was cheering Nagaranjan, his face was visibly beaming with pride. A business started in the 20s as an answer to an insult he faced when he visited an hotel for a business meeting, has transformed into a million-dollar enterprise in 40 years. Born to a family with modest means, Nagaranjan had to quit his studies after matriculation to become the breadwinner for his family. Being a quick learner, he was able to grasp the tricks of the cloth trade within two years of joining a cloth factory in the neighbourhood.

He went on to start Ramraj Khadi Textiles in 1983 in Avanashi, which in his words was an office with a table and chair. His vision was very clear “To deliver quality ethnic wear for the people in and around South India”. Nagaranjan felt that clothes are an integral part of India and it should be woven not just with a thread and pin but with pride culture, prosperity and quality. He sold the Khadi wear in Tirupur on cycle, a 14-km round trip journey everyday as he saved 20 Rupees on bus fare, got an idea on how to transform the business completely in the unsold inventory worth Rs.85000/-. He realized that the main reason why the inventory was left unsold was the fact that people were habituated to similar kind of clothing and needed a differentiation which offered better quality and durability. This is what Nagaranjan capitalized on. He re-branded the company is Ramraj Cotton Textiles in 1987, developed a manufacturing model which sourced products manufactured from the local weavers in the region of Rayalaseema in undivided Andhra Pradesh.

The concept of outsourcing, quite a popular term used to services provided by an enterprise not in their core-competency, was unheard then. Through Labour Innovation as it is known, Nagaranjan transformed the lives of many in the region of Rayalaseema. In the year 1986, Andhra Pradesh was hit by a severe drought. Farmers were burdened by loans and Co-operative Banks were not interested in offering new loans. He went on to spread the idea of sourcing cotton and manufacturing the dhotis and shirts on a contract basis directly from the people. He offered a lucrative deal for the services, thereby the offer spread like forest fire in the entire region of Rayalaseema. Today, over 1000+ families have direct contract with Ramraj, with over 2.5 lakh meter of cotton yarn transformed into dhotis, shirts and innerwear daily, without major significant investment by the enterprise. Ramraj which currently has over 30+ stores in India located in malls and airports, got the idea of developing a retail outlet from an old warehouse. Yes, you heard it right. In the late 1990s, Ramraj faced issues with its old warehouse and subsequently relocated themselves to a bigger warehouse. Instead of giving up the place, Nagaranjan tried the model of a premium touch-and-feel outlet at the location of the old warehouse. It was a run-away hit and currently Ramraj is looking to open its outlets in North Indian markets too. A man with humble beginnings, today stands tall with pride for his contribution is revival of Indian culture. If you wish to spin magical success, it should be a combination of innovation, determination, hard work and of course raw ambition. Three theories of Management were adopted by Nagaranjan to make Ramraj a success

Labour Innovation: - While outsourcing is the norm in the current day, it wasn’t in the era of pre-liberalised India. Nagaranjan, in 1986 worked out a sourcing model in which he did not own any factories or employ any labour rather used the existing infrastructure of textile in the region for the growth of Ramraj. This improved the company’s margins in sales and secured employment for the people in the region. In an era of competition and lose of jobs, this innovation of sourcing existing labour kept Ramraj away from the hassles of the government regulations and unnecessary protests against a big establishment.

Large scale sourcing: - Cotton prices keep fluctuating in India depending on the monsoon and demand for different grades of cotton. Keeping in mind that constant fluctuations would have a negative impact on the costs, Ramraj decided to source over 2000 variants of cotton and blended them to use it, in order to keep the price in control. This method of sourcing keeps the company insulated on the margins it earns out of the sales it makes in the industry.

Advertising Strategy: - People would purchase a product not only on the basis of the quality of the product, but rather on the basis of the how the product is perceived by the others. Ramraj realized this soon, roped in very popular film stars and R Ashwin (South Indian heart rob Bowler) to improve the leverage of the brand. This way, it has been able to promote its retail outlets located in prominent malls and airports as a luxury store, worked in favour of the company. Dhoti as perceived isn’t a luxury product and a strong advertising strategy worked well for the company.