Registered with the Registrar of Newspapers for India under R.N.I 53640/91

Vol. XXXIII No. 5, June 16-30, 2023

When a collaboration went wrong

Business Houses of the South by Sushila Ravindranath

The Chennai based Kothari Group, has had a chequered history. Once seen as one of the strongest groups in Tamil Nadu, it started going down after a split in the family, between brothers DC and HC Kothari. The rise and fall of the group is a story for another time.

In 1985, when the DC Kothari group’s Kothari Industrial Corporation Ltd (KICL) was still doing well, it had a dream tie up with the American giant General Foods Corporation. The collaboration was started with high hopes.

A new world was supposed to be opening up. The plant was set up to manufacture soluble coffee, powdered food beverages and vegetable based protein products in Mysore. At the end of the year, the project ran out of money. The company needed Rs 5 crore to keep it going. It needed a knight in shining armour to come to its rescue. Various names of the then take over tycoons such as R.P. Goenka and K.K. Modi were being bandied about.

The joint venture was thought of in 1981, when the Kotharis were one of the leading groups in Chennai. The cost of the project was around Rs 35 crores. KICL at that time was making record profits. It was into sugar, textiles and plantations. It diversified into caustic soda for which demand was very high at that point of time.

However, true to that period, clearances took forever and the project went on stream in 1987. By that time, everything that could go wrong had gone wrong. The brothers DC and HC had fallen out and split. DC was stuck with the Rs. 25 crore he had put in for the caustic soda project, which turned out to be a disaster. KGF was expected to revive DC’s fortunes. That was not to be.

D.C. Kothari with former Chief Minister of Tamil Nadu M. Karunanidhi. Picture courtesy: Kothari Industrial Corporation Ltd., via it’s LinkedIn page.

KGF entered the mass market with Ju-C, a powdered soft drink based on the internationally successful Kool Aid. The local manufacturers could not deliver appropriate inputs. It was difficult to take on the local success story of Rasna and others. Ju-C was withdrawn from the market. Another international product Tang turned out to be too expensive. In the instant coffee market too there was overwhelming local competition.

KGF got into a total financial mess. Suppliers were lining up to be paid.The company needed a new product, one that had no competition in India. GFC was willing to put in more money and wanted to remain committed to the Indian venture. It wanted its Indian partner to do the same. KICL was in no position to do so.

There were many willing to step in and buy the Kotharis out. Food Processing was an industry which was very in then. GFC with its widest range of products was the biggest nane in the field. R P Goenka was one of the contenders.

In 1992, the KGF story was finally over with Brook Bond taking over the company.

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