In 2017 a refugee with no educational degree who started out as a Tonga Wala became the highest paid CEO of an Indian FMCG company taking a salary of 21 crores I am talking about the late Mahashaya Dharampal Gulati JI the founder of mdh masalas in this blog I am going to tell you his inspirational story and how a common Indian man leveraged multiple marketing principles and built out a 2000 crore global company
Story of MDH
The story starts in 1919 when Chuni Lal Gulati Dharampal ji’s father set up a small spy shop in CL code a city which is a part of modern day Pakistan Dharampal wasn’t really fond of studies so he dropped out of school in fifth standard and tried to start multiple small-time businesses of his own like his old Mehendi mirror soap he even did a carpentry job but when none of those took off he joined his father in selling spices when the india-pakistan partition was announced dharampal ji and his family had to leave everything behind including their spice business and they arrived in Amritsar as refugees Dharampal eventually left for Delhi and became a tonga Wala there but fairing people around wasn’t bringing him much money and he wanted to go beyond the hand-to-mouth existence and make more money.
In 1948 he took a decision that would change his fate forever he decided to put together all the money and resources he had to start a business he understood best spices now you can imagine right this was right after the partition there was a serious crisis going on in India unemployment rampant inflation and scarcity of basic food but amidst all these cures Gulati ji had the guts to take this extremely risky call but I also feel that’s what entrepreneurship is all about right it’s a high risk High reward game you have to have the courage to go into completely Uncharted Territory and take a risk without a guarantee of success and that’s what he did he sold his Tonga and bought a small 14 feet by nine feet shop on ajmal Khan Road in Karol bagh in Delhi and started his family business of ground spices MAHASHIAN DI HATTI or MDH as we know it today
How MDH Grow
From this tiny Karol bark shop to reaching 50 million customers globally in a year Well I believe it’s a combination of three things he did.
When dharampal set up his pie shop in Delhi a lot of adulterated spices were being sold in the market they would make sand Chana and what not in spices basically scamming the consumers now dharampalji was also aware of this and he also had the option to go ahead and do this and make the same spices and sell it at a two to three percent lower cost and make money for himself but he did quite the opposite he literally made quality the ethos of his company did it even reduce profits margins of course it did so how did he make his business survive so I’ll give you this one example, when I was putting together my very first PC I found that this is one Road in Bangalore called SP Road where you can find multiple shops selling multiple computer parts super cheap and each shop will try to sell the products cheaper than the previous shop now every two years I’d go there and the previous shop would shut down on a new store would be in place of the previous one so there’s one thing I realized from this every time you run a business and you play this lower margins game your business will eventually die out because the next guy is going to come and probably select 20 rupees cheaper than you and your consumer will happily go there so in almost every consumer good products there’s a margin raised to the bottom ” “oh you’re gonna sell for 50 rupees I’m gonna sell for 40 rupees” but this is very short-term thinking now these shopkeepers are small time business owners and they don’t really think long term but dharampal Gi back in 1940s had the business Acumen to understand stand this feels like in a world of scammers I am going to go completely Ham on quality vendors adulterated the spices to increase their margins but he was not even thinking about these short-term margins he understood the concept of brand and that if you build this brand around trust that itself has value and the value in itself served the margin sure yeah your customers can purchase Masala package from a random vendor for one rupees lesser but the chances of them finding a cockroach in that Masala packet versus MDH masalas is also much higher so the human brain right it works on loss aversion so a consumer will rather spend that one rupees extra together a surety of not finding a cockroach and get a good quality product is the best raw materials did everything from grinding to packing to shipping himself making sure the product was Top Notch it was also very important to him that these customers kept coming back to him again and again for a repeat purchase because large businesses are built through retaining customers not constantly finding new customers so there’s actually this term that startups now use to measure this is called “customer lifetime value” so I keep getting ads for these energy bars so I finally clicked on this one ad and bought it the brand would have probably spent around 200 to 300 Rupees to make me click on that ad and buy that energy bar but the quality of that energy bar was so good I literally buy it every week so my lifetime value as a customer to that brand is now 10 000 rupees for the 300 rupees they spent on me so for any of you starting out always think of how you’re going to retain your customer and keep getting them back dharampal did it through quality and Trust
1950s these spice makers were selling their spices in those Blues packets again because it was cheaper and easier for them but you know what mdh did they decided to create these ready to use packets and cardboard packaging and printed the words hygiene full of flavor and tasty highlighting the brand message across out and clear and sold the spices in that, now think about it would you buy the 10 Rupees Masala in that loose packet or will you buy nice looking fancy packaging for 11 rupees knew that packaging is an essential part of creating brand equity and this also helped him gain the first mover advantage in the market in fact on one of dharampalgi’s visits to Bombay they saw very nicely done spices store so when you return to Delhi he also opened the very first spices shop in Delhi with very similar looking Interiors what I’m trying to explain is it was not just packaging of that product he was packaging a seamless customer experience across every touch point with the customer whether it was a product the packet his delivery or his spices store
MDH business was flourishing in Delhi he had found the product Market fit now he wanted to make sure that his masalas reach every house possible he realized that if he wanted to make his brand popular people had to know about it he leveraged all the accessible modes of communication to get consumers attention starting with newspapers he advertises masalas for the very first time in a vernacular newspaper called Pratap and it worked he started getting orders from all across the country and this also kick-started with Rich and spicy mdh masalas advertising Journey which was way ahead of its time you know mdh has one of the strongest brand recalls in this cluttered market and it’s because his space is forever etched in our minds and the moment someone says “Asli masale such such” you can’t help but sing the tune in your mind I’m pretty sure you sang it just now and I don’t really the funny thing about this it all happened by chance. once while shooting a TV commercial for mdh the actor who is playing the role of the father’s Bride for the commercial failed to show up and dharampalji was like I’ll do it so he took up the role and ever since then he has appeared in all mdh commercials.
As a part of Indian culture we’re always taught to respect our elders for their experience and wisdom so endorsing the elderly image of dharampalji also greatly shaped the consumer perception in favor of mdh, mdh also stood for hard work in genuinely and perseverance of gulatiji and because we felt like we could trust gulatiji we felt like we could trust mdh you know another company that has been a massive success because of the same strategy take a guess it’s patanjali the primary reason people started buying patanjali products was not for their quality or anything it was because they trusted ramdev Baba now as we have seen mdh has never shied away from experimentation as mdh masalas were slowly becoming known across various States the Rampaldi wanted mdh to get in every single Kitchen in India from Kashmir to kanyakumari he noticed when people cook they generally makes different different single ground spices like Mirchi garam masala to create the final dish so he was like What if I give them the Final Mix so they came up with the Blended spices formula pav bhaji masalas rajma masalas chicken masalas and it was a huge success the people of up started cooking pav bhaji a traditional food of Maharashtra more frequently and this also helped him tap into newer markets like they could Target Karnataka with their sambar masalas this newfound love for tasting Pan-India Cuisines prepared at home with a major push for mdh to gain Nationwide popularity as of 2020 the company brought in 2000 crores at operating income and 420 crores as net income mdh is now the second largest producer of spices for the market share of 12% and they export to over a hundred countries worldwide and have a number of overseas offices in shooting in Dubai and London.
Mahashay ji has truly helped India climb ladders of success in Fame at the global level in 2019 he also received the Padma bhushan from the president and the government of India he passed away on December 3rd 2020 but his legacy Still Remains there is so much we can all learn from this journey and not just as a businessman but as an individual he has done so much for the society from setting up schools hospitals you know he used to give 90 percent of his salary to charity he was an exemplary man.