Vasu Naren states that “Sona Machinery may have been involved in the manufacture of diverse range of machinery, but since it has been serving the agricultural sector over the years, it has to ultimately bow to the whims of the monsoon.”
Sona Machinery Private Limited is a manufacturer and supplier of a range of agro-processing machinery that specializes in the manufacture of rice milling machinery. In an exclusive conversation with Claus from Food Infotech, Vasu Naren, the CEO and Director of Sona Machinery Private Limited spoke in detail about his company and its manufacturing set up, the difficulties faced by Sona Machinery in running its operations and how the company has been managing to cope up ever since the lockdown had been announced by the Government of India due to the emergence of COVID-19 pandemic, the future plans that he has for expanding his business into other parts of India as well as into the overseas markets and much more.
Edited Excerpts Below:
i. Hello Mr. Vasu Naren! Thank you for agreeing to do this interview with us. First of all, can you narrate for us a bit about the year 2020 and what has been your biggest learning experience during that period?
In order to prevent the spread of COVID-19, the Government of India had imposed a nationwide lockdown in the beginning of year 2020. Since then, we have been continuously facing manpower constraints that have more or less been impacting our day to day operations adversely even today. Many MSMEs have been indicating that 30 to 70 per cent of their pre-COVID-19 workforce may have migrated back to their hometowns, due to uncertainties and loss of income during the lockdown period. It had been a challenge to convince our staff, whether to remain on the job or to hire new staff. Moreover, having observed the current rate at which our staff turnover has been over the past one year, we expect that it could negatively impact the productivity and quality of our business operations, thereby further adding to our financial concerns.
Subsequently, we had started to consider workforce-related solutions through ongoing communications with workers (including those who returned to their home state), setting up buddy systems (potentially with client technical staff), engagement with industrial training institutes and hiring temporary workers on walk-in basis. We had also considered introducing further protective measures such as the installation of sanitization tunnels, pre-start fumigation of factory premises, including rearrangement of work stations in order to maintain physical distancing. Some MSMEs also felt that they may be required to reduce or even halve the staff numbers and keep visitors out, including the need to make alternative arrangements for providing food and drink at work.
We had begun to upgrade our manufacturing facility and have slowly shifted towards automation instead of continuing with the manual tasks that had earlier been in existence in our operations. This idea had always been at the back of our mind earlier, however, we didn’t get the courage to invest and implement the same. The continuous issues of labour had actually forced us to take this step from our end which has now turned out to be for our betterment.
ii. Would you please elaborate for us about any major factors that had driven Sona Machinery’s earnings for the year 2020?
The future belongs to the manufacturers who recognize uncertainties and initiate their operational efforts and look for the ideas that will make them more competitive in today’s business world. Sona Machinery’s efforts in maintaining quality, efficiency in operation, production centric research and development and with reduced power and manufacturing cost prevailing over the last year has helped the company further to reduce the overall processing cost, while at the same time maintaining quality in its production operations. The year 2020 had rather been a bumpy ride for us. We decided to elevate our status from being a proprietorship firm that was known earlier by the name “Sona Foods (India)” and converted our business into a private limited company that is operating currently under the name “Sona Machinery Private Limited.” Since then, we have been working to boost and strengthen our manufacturing capabilities by undertaking investment in automation as well as research and development activities. We have also increased the spectrum of our services and have been working towards improving the quality of our existing range of machines, including enhancing the variants. The machines related to milling section had even managed to bring higher revenues for our company in the past one year.
iii. Could you brief us a bit about your current manufacturing set up? Any plans to open new manufacturing facility or facilities in the country?
Our manufacturing unit is located at Tronica City, Loni Industrial Area in Ghaziabad District of Uttar Pradesh. Our high quality special materials are supported by modern CNC machine tools. We are backed by a strong infrastructural base, which is well equipped with the latest technology, advanced machinery and equipment which provide the necessary support for us in helping maintain the quality and quantity of the rice. We have a strong focus on our manufacturing process. We also have a full-fledged quality testing laboratory and well qualified and experienced personnel for our operations. We have already opened our new sales and marketing office at Hyderabad and are planning to open new offices in Kolkata and Gujarat, in addition to expanding our geographical presence in the rice belt areas of India. We are currently focusing on enhancing and upgrading our existing facility in order to cater to the current increase in demand for our products.
iv. What are the changes that you have been observing in the agricultural sector over the past few years, since you’ve been serving this sector for quite some time now? How has it been impacting your business over these years?
Sona Machinery may have been involved in the manufacture of a diverse range of machinery, but since it has been serving the agricultural sector over the years, it has to ultimately bow to the whims of the monsoon, which has been a major cause of concern for our company. Good rains normally would mean bumper harvests, which are on schedule. This would in turn lead to mills humming with activity, thereby generating demand for our equipment and other services.
Subsequently, there is this issue of how much money rice millers would be able to spare in order to buy equipment. Sona Machinery caters to the low and mid-segment millers who often turn to banks for loans. But, most banks that have already been saddled with bad loans have been hesitant to hand over credit to these millers easily in the past few years. We have also been thinking about ways to make credit available to millers. The economics of these milling machines are highly compelling, as the returns could be generated within a period of just two years. For instance, any changes in government policy on rice procurement for food security could actually influence the millers’ decisions to buy our machinery. With plans to deepen its presence in India, Sona Machinery has its work cut out as of today. However, we would continue to stay focused towards ensuring the growth of our company. We want Sona Machinery to expand its operations beyond India soon and we feel that we have just sown the seeds for the same.
v. How many varieties of equipment in agro-processing have you been manufacturing as of today?
At present, we are offering milling equipment for rice processing, cleaning pulses-dal, wheat, sesame, millet, gram, lentils, maize, corn, etc. Sona Machinery has been working for the development of Rice Milling Technology for India type rice varieties, including the Basmati Aromatic Rice and non-basmati medium and short grains. We have engineered and modernized more than 300 Rice mills in India, Nepal, Sri Lanka and other neighbouring countries.
At Sona Machinery, we provide assistance for the purpose of re-engineering any existing rice mill, including taking care of designing and installation for any new project, as envisaged by our clients. We also assist our clients by offering financial solutions that can help them modernize their mills.
vi. How do Sona Machinery’s various categories of equipment stand out from its competitors?
At Sona Machinery, we have been involved in the creation of custom-made plants and processes that can fit according to a client’s resources as well as the ones that are based on the market trends. We would also be able to offer support for the entire lifecycle of the mills of our clients. Our Rice Mills machinery varies from a capacity that starts from 3 TPH that can go up to 8 TPH. We manufacture equipment that can handle bulk material of a capacity up to 100 TPH, apart from also manufacturing machinery that is used in the preparation of all types of value added products in Soya that includes hi-pro, normal and edible. Our solutions also include products pertaining to pre-milling activities of cleaning as well as material handling.
vii. If you were asked to tell about your company’s performance during the COVID-19 pandemic, what would your responses be?
As Sona Machinery had been a labor intensive agro machinery manufacturing unit, the impact of Covid-19 on our business had been massive. We were caught off guard initially, but later it served as a wonderful opportunity for us to upgrade our manufacturing set up, since we began to explore new areas that included making investments in our R&D apart from shifting towards automation. Our diverse range of agro processing machinery has also undergone a lot of up gradation over the last couple of years.
viii. Can you tell us more about your role as an exporter of various categories of milling equipment? What are the major expectations that you often hear from your customers?
We plan to consolidate our company’s presence across various parts of India, apart from expanding our presence in the overseas market. Our clientele are currently spread in a few Indian states as well as in a few parts of the world.
We have also held discussions with a European manufacturer recently, by which we plan to offer integrated solutions for our clients. Keeping in mind the requirements put forth by some of our customers, our Company is planning to expand to other premium range of its existing machines that focuses on a more evolved quality, in which we would be introducing various categories such as pre-processing cleaning, packing and silo manufacturing.
ix. Do you have any plans in the future to raise additional funds for expanding or diversifying your business operations?
Our entire business has been bootstrapped starting from a small workshop in Delhi till the time we had entered the manufacturing hub at Tronica City, Ghaziabad District in Uttar Pradesh, which comprises of an area that is more than 5600 sq. yards. I had made the initial investment out of my own savings and have managed to grow this business that included both manufacturing and marketing of these machines through my own efforts over the years. We are also in the process of expansion of our business operations and we have major investment goals that include working towards improving the quality of our diverse range of equipment as well as enhancement of our offerings. We will continue to stick to our own resources for mobilizing the funds that would be required by our company to fuel our business expansion plans.
x. Do you have any suggestions to make for the Indian government, which you also feel could help boost the growth prospects of the sector in which you’ve been operating as of today?
Globally, there are a relatively small number of large commercial rice mills producing more than 100 tonnes of rice per day, nevertheless fewer than 50,000 tonnes as a whole. These mills have been performing well and have also been using lesser power for each ton that is being milled (around 40kWh) as compared to small and medium-sized enterprise (SME) mills, which use around 80kWh per ton milled. However, larger mills require huge capital to build, operate and maintain, apart from requiring substantial quantities of rice in order to operate at a cost-effective level. There are about 1.5 million SME mills worldwide that actually mill less than 100 tonnes of rice per day. Many of these smaller mills do not benefit from modern milling solutions, due to their existing infrastructure, limited capacity and lack of finance to re-invest. Thus, SME mills are locked in a perpetual cycle of operating destructive, antiquated machinery or are forced to replace like-for-like, thereby hardly having any choice but to opt f or cheap and poor-performing machinery. India has primarily been an economy dominated by agriculture, wherein, most of the population is still dependent on agriculture and its related products. Hence, the Government could provide support by strengthening the loan structuring mechanism for millers which could help them focus on modernization of their existing as well as ongoing mill setups.
xi. Finally, would you tell us a bit about your plans for 2021 or in the near future?
Sona Machinery’s technology has enabled efficient manufacturing and distribution of its equipment that has finally resulted in lesser scrap, in addition to helping contain the cost of goods that are being manufactured by our company. We have addressed three key problems in milling and they include lowering power consumption, quantitative improvement (more milled rice from the same input) and qualitative improvement (the milled rice is of a higher quality). As such, Sona Machinery produces more food from existing harvests with lesser power, reduced losses as well as lesser damages. By integrating simpler distributed storage and milling solutions, we are working to minimize these post-harvest losses, thereby maximizing the return on food and high-value by-products from bran and husk. This is vital, since modern rice mills cannot be efficiently scaled down to meet the needs of SME mills. Indeed, there has now been a push for larger mills to reduce the cost of production, which requires the trucking in and redistribution of massive quantities of rice.
We wish to reiterate that our primary objective has been simple, which is to create and build the momentum that can help us move towards delivering on our vision. In this way, we not only expect to improve the profitability of our business, but also create a positive impact economically, socially and environmentally.