The Dhawan family of India is taking their company SSF Plastics to the next level in family business evolution through initiatives in professionalisation, diversification, sustainability and engaging the next generation.
Saurabh Dhawan (pictured), the second generation family member leading business development, says the Mumbai-headquartered, self-described one-stop solution provider for all rigid plastic packaging needs has also been venturing into multiple startups, with next-gens at the helm.
SSF Plastics was established in 1985 by entrepreneurial brothers Kapil Dhawan, now the chairman, and Sunil Dhawan, now the managing director. The family business is driven by their sons, Saurabh Dhawan, the son of Kapil Dhawan, and Daksh Dhawan, as operations director north; Pulkit Dhawan, as operations director south, and Dhruv Dhawan, the sons of Sunil Dhawan.
The family started off with one factory in Mumbai but SSF Plastics has expanded its capabilities into the moulding of consumer plastics, engineering plastics, inhouse mould-making, in house engineering concept and designing, and manufacturing recycling resin. Based in Andheri West, Mumbai, SSF Plastics operates seven factories in Daman, five factories in Tamilnadu, five factories in Baddi and two factories in Dehradun, employing more than 2,000 staff members.
Saurabh Dhawan, who completed his management studies at SP Jain Institute, tells CampdenFB his strategies for growth, sustainability and managing economic disruption.
SSF has been organically growing 10% to 15% every year in volumes and value ranges from 15% to 25%. We are among the top rigid plastic packaging companies in India. The category of rigid packaging has seen consistent growth in the past few years and we feel our growth numbers will be maintained.
We have also been closely eyeing acquisitions in similar industries to scale up our size as an organisation. A lot of effort has been made on moving from a family-run to a professionally-run organisation where family members put more focus on strategic issues and operations to be controlled by professionals from the industry. Hence a mix of minds have already come to the board to take bolder decisions on acquisitions in the coming years.
As a family we have also ventured into multiple startups which will start showing results in coming years. All these startups are outside SSF and are run by next-generation members. This has helped in de-risking from entirely being dependent on one business.
Is the Dhawan family considering establishing a family office as its business grows?
At the moment we are working on a family governance board post and a family office may follow.
What do you look for when considering co-investments and co-investing partners for SSF Plastics?
SSF has been investing together with partners on the new startups which have been launched by the next-gen. Partners’ experience, contribution, ethics, values and principles are all evaluated before joining hands. In discussions, the board has shown interest in businesses which are sustainable and B2C.
We recently started a post-consumer recyclable [PCR] business which means manufacturing plastic resin from waste. This plant came up last year during Covid disruptions but is now taking shape into a running manufacturing facility. We are undergoing trials with various brand owners on their products. In the next year we plan to be scaling up to 400 tonnes of PCR material monthly and supplying to market. We will be among the very few in our industry who have taken this initiative.
How has SSF Plastics responded to Covid-19 disruption and changing consumer demands?
Like many other companies the biggest challenge for us has been on operational cost while the operations were shut. Many actions were taken to look at reducing our idle costs which ranged from the decentralisation of support equipment, planning efficiently to run when it is required, downsizing on frills, improving IT infrastructure to work remotely and, most importantly, sessions with the leadership teams at plants to cope up with Covid stress.
Consumers have been ever demanding and this has increased after the Covid outbreak. We are servicing our global clients on product demands which have become very inconsistent. Volatility is very high, which was never the case in our consumer product industry. Customers are not able to predict their sudden spikes or falls in demand in the market hence the pressure is on manufacturing to cater to those demands.
To tackle this problem, the most important action we’ve taken is to change mindsets. It’s been a difficult journey for a manufacturing plant which can predict demand for months to adapt to weekly planning schedules. We have decentralised our operation to a level where we can work on partially running plants due to disruptions and have control on increased costs.
My family got into the packaging business when this industry was just evolving and this business was created as an enterprise to make money. My next generation has to be pulled into this industry by making this organisation more focused on innovations and sustainability.
What informal or formal steps have your family implemented to separate family life and family business?
A well-drafted family charter is important to cover subjects such disagreements and misunderstandings.A lot of time is being spent on this subject to make a complete governance law for the family.
What is the family’s succession plan—is it your ambition to succeed your father as managing director and, if so, what would your aspirations be for the family business?
Yes, at the moment there are four of us in the next generation and we’re inclined to work with each to grow this family business. The current core business is where I will take a lead and make sure shareholders (family) wealth creation is based on sustainable growth while following ethical standards towards the environment and society.
Apart from the year of lockdowns, other years have been reasonably good for business. I see the world recovering with more vigour and a larger appetite on demand in the next few years. This will help our business take bigger steps towards more capacities and growth avenues. We have already started making plans for our next initiatives based on positivity in the market. Keeping our fingers crossed and hoping there are no more Covid disruptions, we are moving ahead in forecasting demand and planning accordingly.
How will you manage the risks some business families anticipate this year and next, namely rising inflation, interest rates and costs?
India faces the increase in inflation, interest rates and costs every year, only interest rates have been an exception in the last year. Hence as businesses we are well trained to tackle it, but the biggest problem is demand going flattish, which may lead to the collapse of manufacturing set ups because then there will be no avenue to absorb these ever increasing costs through volume increase. Hopefully the bad days are over.