KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

We help them to get right people to handle day-to-day operations, to administer quality in terms of people, materials
and machines and to have a certain kind of control on communication, in terms of the way the logo is used, the
strengthening of the brand, advertising, etc.
Broadly speaking, there are certain number of things that have to be done but how they are done varies from unit to
unit. The mechanics really depend on the extent of promoter involvement, the level of senior management, the level
of their assistance and the level of their comfort with our coming in.
The degree varies a lot, and dictates the amount of work we need to do and the speed at which we can handle the
transition.
Ideally the promoter should address the core group, the senior management team and then the general staff,
informing them that ‘Kamdhenu’ is coming in, about why we are coming in and what is our expectation of them. After
that we need to address people to allay their fears of the kinds of change that will come.
During this meeting, we openly admit that there will be some amount of change, but ensure that after three or six
months all of them will feel happy about the change. We talk about the new systems, new equipment, new orientations
and the new training we will bring in.
What we expect from a franchisee
Franchisees must appreciate what we stand for in terms of quality. We need them to be with us on investment
decisions and we definitely need them to be with us finalizing marketing strategy.
Franchisees need to understand the elements of our HR policy and to give us the freedom to administer HR in that
manner.
Service quality depends on the people in the organisation. It’s critical that the franchisee understands this, has the
ability to recruit the right people, can motivate them and invest in their training.
Franchisees also need to have a certain amount of commitment to quality in terms of materials purchasing. They
have to listen to us in terms of specifications.
People often worry about quality when talking about franchising, but in the end everything boils down to the franchisee.
If your franchisee is right, half the battle is won; and if they are not right, no amount of policing will help.
The ideal franchisee
Some franchisees just want the brand. They say they will manage everything let we be your partner.
The challenge is to make her change her mind. Capturing the value of the brand is not enough, the ‘Kamdhenu’
brand comes with a lot of quality initiatives.
Before we appoint a franchisee, we conduct a few checks. Obviously one is his ability to invest. The franchisee must
look at product quality and service quality the way we look at it.
In the Indian context, we ask them to explain what makes a good organisation, make them talk about benchmarks.
If our existing franchisee recommends someone, we do consider the person.
The ideal franchisee is someone whose concern for quality is similar to ours, someone who expects good returns
from the business but does not expect it tomorrow. These are the persons who can create markets.
People orientation, the ability to drive and create markets, understanding service quality and an utmost conviction
that business is profitable, if these four things are clear, we’re in business. The lack of even one factor means a ‘no’.
Facing competition
In any growth sector, competition is bound to increase. Our Brand would give us a competitive edge. Franchising
makes very good business sense. It allows us to use our expertise, extend the well-known ‘Kamdhenu’ brand, and
hasten the path of our growth in a capital intensive business with a long gestation period. The franchisee model
minimizes transportation cost. It results in avoidance of multiple taxes and above all it helps in converting the
unbranded products market into Branded products market.
It is a win-win scenario for both franchisees and us as we go forward with our plans.
Two type of arrangements have been worked out with Franchisee. Under first model the Company allows the
Franchisee unit to manufacture steel bars under the Brand name ‘Kamdhenu” under strict quality regime laid down
by the Company. The Franchisee markets the Products at its own using Marketing network of Kamdhenu and paying
the Company Royalty on per tonne basis.. For this purpose our Company has already entered into agreements with
following franchisees:-
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