Whilst investors like us can’t stop talking about the “formalisation” and the “networking” of the Indian economy – see for example https://marcellus.in/blogs/indias-moment-after-a-decade-of-structural-reforms/ – those who have studied India’s business history often give us case studies of 80 year old Indian companies who used technology and modern marketing techniques to create dominant pan-India franchises in the space of 20 years. One such example is the USHA sewing machine whose evolution has been evocatively described in this long read in The Print. If you care about investing in great franchises which grow at a frenetic rate for multiple decades (even in what was then a low growth country), you should read this story in The Print in full.

Nutan Manmohan tackles the subject chronologically. She starts at the beginning of USHA’s journey and it is a Steve Jobs-Apple type beginning: “The story of the USHA Sewing machine began in 1935 with Bishan Das Basil, who must be considered a pioneer in the history of the Indian engineering industry. Gangaram, Basil’s father, owned a confectionery shop in Ludhiana and all his children joined the business except Basil. He studied beyond matriculation, got a scholarship, and joined the Roorkee College of Engineering in 1901, where he got another scholarship for specialised training in the UK. On his return to India in 1906, Basil joined the Post and Telegraph Department in Calcutta.

Due to his ‘exceptional’ talent, he soon became superintendent of a workshop attached to the central telegraph office. Research and experimental cell so consumed him that he would sit devising various instruments and equipment to be used in telegraph and telephone systems. These endeavours made him realise how India was acutely dependent on foreign countries for the most elementary tools. And he wanted to correct this glaring disparity. Towards this end, he helped his friend B.K. Rohatgi acquire a patent for manufacturing electric fans, which were not made in India at the time. Thus, the foundation of India Electric Works was laid in 1923 and electric fans were manufactured in India for the first time.”

Then comes the founder Basil’s leap into sewing machines: “As his retirement came close, Basil decided to jump into entrepreneurship. Import statistics told him that 60,000 pieces of sewing machines were imported in 1934 and this figure would surely increase. He turned a room in his staff quarters at 25 Lansdowne Road, Calcutta into a workshop and began to study the German Pfaff sewing machine as a prototype to create an indigenous sewing machine. Such was the state of India’s manufacturing industry at the time that to even copy and recreate a prototype there were no tools for milling, drilling, lathe, press or capstan. There were no workshops where products like pumps, jacks, hinges, handles, knobs, fasteners, bolts, hook racks, saddles, weighing machines, etc could be bought or rented.

The growth of structural engineering in India started with the introduction and spread of railways, which led to the erection of bridges and steel structures. Hence tools and trained workers had just started to trickle into other spawning industries like jute, cotton, coal, and the manufacture of small machines.

For all these reasons, it took Basil one full year to recreate an Indian sewing machine mockup.  For the next two years, Basil continued to sink his time and savings into fine-tuning this prototype. It was crude, shabby and unattractive but this machine could stitch if handled carefully. After that, Basil spent a large sum of Rs 25,000 on 75 employees, who were fitters, assemblers, turners, millers and foundry workers, to make 25 cast parts such as screws, pins, washers and springs. Even then, high-precision parts like shuttles, bobbins, feed dogs, needles, etc were purchased from Pfaff shops. 25 sewing machines were completed by the end of 1936 and Basil named the brand after his youngest daughter, Usha.”

At this stage of the story, in the absence of a venture capitalist, the modern capitalist makes his entry and catalyses USHA’s growth into the dominant brand that it would eventually become: “At this point, one of Basil’s suppliers introduced him to Lala Shri Ram of DCM mills, who was forever drawn to engineers and innovators and was impressed by Basil’s courage and tenacity. A sewing machine is a precision item involving the manufacture of 220 components – some of them so small and intricate that it needed 30 operations or processes to make them. All in all, it took 1,800 operations to make a sewing machine for which various tools, jigs, fixtures and some special raw materials are required, which were not produced in India at the time. Basil’s company, Jay Engineering Works (JEW), was way ahead of its time. But precisely for this reason, the challenge and the dare were both daunting and thrilling to an entrepreneur like Lala Shri Ram.

On 2 March 1938, JEW’s board was dissolved and a fresh board of a new public limited company was formed, comprising Lala Shri Ram, his trusted managers Hans Raj Gupta and M.G Bhagat, along with three more eminent industrialists – Padampat Singhania, KL Poddar and Karamchand Thapar….
A 31-bigha land was purchased at Prince Anwar Shah Road in Kolkata. The company secured new loans and a fresh infusion of share capital. Messrs Karam Ali and RP Lahiri Engineers and Contractors were assigned to construct the factory building to house the machines and tools, which were ordered from Europe.

Lala Shri Ram began to make monthly visits to Calcutta to crack the production bottlenecks and to sort sales teams, commission agents, showrooms, demo units, marketing plans, customer complaints units, and advertising budgets and teams.”

If you want to read our other published material, please visit https://marcellus.in/blog/

Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.

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