It is summer and consequently, ice cream parlours are filling up across the nation.

The
indigenous brands fighting for a piece of the action at the national level are Amul, Kwality
and Vadilal. Down South, of course, there is no question as to who rules the ice cream world.
Even as Mother Dairy and Amul try to garner some prominence, customers still swear by
home-grown brand Arun Ice Creams, the flagship brand of Hatsun Agro Product Limited
(HAP).
The most well-known brand from the company, Arun (Sun in Tamil) Ice Creams was begun
in 1970 as a small venture by RG Chandramohan, the son of a vegetable wholesaler from
Virudhunagar. The choice of business for the then 21-year-old was based on the capital he
could raise. Other businesses required heavy investment. It is said that he raised ₹13,000/- by
selling family land and invested it in the ice cream business, and named it RG Chandramohan
and Co. With just three employees, it initially operated out of a rented 250 sq. ft. area; ice
candies were prepared here and sold out of pushcarts.
It was a risky investment in those days as the southern market was dominated by brands such
as Dasaprakash, Kwality, Rita, and Joy. There were around 3,500-4,000 small-scale ice
cream businesses similar to Arun. What made this brand stand out even as others faded
away?
Targeting new sections
Chandramohan identified markets that prominent brands had ignored as too small or not
worth investing in. He started supplying ice cream to college students (who wouldn’t be
averse to trying new brands); and he kept the product quality high and the supply steadyThe
response was good. Similarly, he identified another market, ship chandlers, studied their
packaging and delivery requirements and captured that market as well. Reportedly, by 1974,
almost 95 per cent of the college canteen and ship-chandler markets used only Arun Ice
Creams.
Another shrewd marketing strategy employed by Chandramohan was introducing the brand
in rural areas. Positioning his brand as ‘Fresh ice cream from Madras’, he captured the
imagination of the rural public. Hitherto ignored or considered only as a marginal market, it
was quite refreshing for the people in rural areas to be wooed by a brand all the way from
‘Madras’. Arun breached the Madras (now Chennai) bastion only in the late 1980s.
The founder was soon supplying ice creams packed in dry ice containers to educational
institutions (canteens and hostels) at the district level. Wherever possible, he used Indian
Railways to transport his products. Chandramohan was not yet ready to enter Madras and
concentrated on Tier 2 and Tier 3 towns like Pondicherry (now Puducherry), Madurai,
Sivakasi, Kumbakonam and the like.
Marketing marvel
Around this time, Chandramohan felt the need to supplement his native shrewdness with new
skills and studied marketing and personnel management.
Apart from supplying ice cream to social events like marriages, , Chandramohan also
announced through hoardings that ice cream could be booked with Arun agents and picked up
on specific, fixed dates. The response to this was tremendous.
Arun is supposed to be the first ice cream brand in India to introduce the concept of an
exclusive ice cream parlour. It was a serendipitous discovery. Financial constraints made it
impossible for Chandramohan to supply deep freezer units to retail shops that were willing to
stock his brand. In 1981, one enterprising person who had noticed the public response to the
‘fixed-day’ campaign suggested that he would open an outlet dedicated to the brand and
invest in his own freezer unit in return for long-term distribution arrangements. And thus, the
concept of a ‘parlour’ where people could come in, sit down, and just eat ice creams was
born.
This franchise model soon expanded, first within Tamil Nadu and then to other southern
states. Loyalty among the franchisees was so high that some are said to have named their
children ‘Arun’. In 1985, Arun topped the ‘Ice cream sales by volume’ list in Tamil Nadu. By
1999, it is said to have opened about 700 outlets in TN, Karnataka, Kerala and Andhra
Pradesh.
By the 1990s, turnover had crossed ₹3 crore. The 1990s also saw Hindustan Unilever taking
over several regional ice cream brands; Arun Ice Creams refused to buckle under pressure
and held its ground. As the market expanded, in 1995, Chandramohan introduced refrigerated
vehicles to transport ice cream to its outlets, both within and outside Tamil Nadu. A new
depot came up near Madurai for storage and quick delivery.
Expanding the business
But before this, in 1986, Chandramohan had ventured into the dairy business. For ice cream
manufacture, the regular supply of quality milk is an essential prerequisite. By directly
procuring milk from dairy farmers, Chandramohan created a home-grown supply segment for
his ice cream business. The company was named Hatsun Foods Pvt. Ltd. (It later became
Hatsun Milk Food Ltd. and in 1998, Hatsun Agro Product Ltd.) The ownership of the brand
name ‘Arun’ was transferred to this company.
In the early 2000s, as Chandramohan’s focus shifted to the dairy business, ice cream sales
fell. It was only in 2007 that a revival was seen. That year, Hatsun introduced a new parlour
format called ‘Arun Ice Cream Unlimited’ offering scoops of ice cream. These parlours were
also used to sell its other products and became premium Ibaco parlours when the high-end
brand was introduced in 2012.

Hatsun stores now play a dual role: they are distribution points early in the morning and retail
stores for the rest of the day, showcasing all the products from Arun in clear-top refrigerators.
Franchisees have reported a 50 per cent jump in sales of Arun Ice Creams due to this change.
Today, Hatsun is the largest private sector dairy company in India, with a network of about
10,500 Hatsun ‘Milk Banks’ across 12,000 villages: more than three lakh farmers supply
milk to these units. Its 14 plants are spread across four states in South India. It procures about
18-20 lakh litres of milk per day. Of this, 60,000 litres go for ice cream production and the
remaining for milk, milk products, ghee, curd, and other such products.
Ice cream sales reportedly account for only about 10 per cent of the ₹4,200 crore company;
but mention the name ‘Arun’ to anyone and the association with ice creams is immediate —
such is its brand recall!
Keeping up with the times
Chandramohan invested in the best technology to keep his ice cream brand ahead of the rest.
Apart from cone and chocolate manufacturing equipment, Arun has a well-equipped
packaging and production line, and a cold storage facility that can hold up to 10 days’ ice
cream inventory. Expert ice cream technologists and management personnel were appointed
to keep the quality consistent and innovation levels high.
Arun Ice Creams became famous for the variety of flavours it offers, which included flavours
based on traditional Indian sweets, and the new flavours introduced every season. Its
‘Cassatta slice’ ice cream is still a firm favourite among regulars. Bars, cups, ‘ibars’, ‘ibar
minis’, icons, specialities, tubs, kids’ bar (Yummy Bear, Spiral, Trio, Jolly Train) and the like
make up its portfolio. Because of control over milk procurement, Arun has been able to
consistently maintain its ‘creamier’ USP in ice creams, with 12 per cent fat content
(minimum fat content in ice creams is 10 per cent).
With over over 2,300 parlours across Tamil Nadu, Karnataka and Andhra Pradesh, Arun
recently entered Maharashtra and Orissa. It is also present in foreign markets such as
Seychelles (where it holds 70 per cent of the market ) and Brunei (where it is among the top 5
brands). Clearly, the sun, as in its brand name, keeps shining on Arun.
Facts of the company

Arun Ice cream was an Ice cream maker & distributor company established by the person
named R Chandramogan, son of vegetable wholesaler from the south Indian state Tamilnadu.
He was completely inexperienced person and did not complete his college studies as he
discontinued at very pre university stage, but he had a strong urge to run the business and to
succeed as a businessman.

Initially he did not know what the business to go for but after the suggestion given by his
uncle he went for the ice cream business.
Arun Ice Cream Case Report

He started with a small premise in busy locality of Madras with which he got succeeded and
moved to three fold expansion in just second year of its commencement which was turned out
and again resumes to previous old premise! He continuously improved the quality of his
product to meet the needs of customers thus he captured the market of the hotels.
Chandramogan was applying trial & error method in his business!

As Chandramogan was searching for niche market for his business he captured the rest 5 %
market of educational institution and shipyard chandlers about 95 % about 1975.

Talking about this 5 % market the rest 95 % market was occupied by other big banner
competitor! He also approached the district market of Tamilnadu completely ignored by
competitor and captured the market with the sound strategies! As his market for product grew
up his sales were also taking place in high proportion and became enough financially sound
to payback the debts and to earn enough.

Chandramogan identified Pondicherry, Madurai, Kumbakonam, and Sivakasi as the potential

market and began advertising in such market to create brand awareness and to establish Arun
as a strong brand, thus he also captured these market because these markets were also ignored
by the competitor. Initially he started selling Ice cream in such area on ad hoc basis but then
he gained the market and also the offer from franchisee agent who was keen to invest in the
Arun’s franchisee, this lead to birth of franchisee market of Arun Ice cream which was grown
very teadily that even other agents were also began to invest in Arun ice cream in their own
freezers. In 1991 Chandramogan also established another high capacity plant in Salem close
to Kerala and Karnataka and in the milk belt which facilitated procurement of milk. Through
regular advertisements and marketing his product Chandramogan established chain of
franchisee parlours of Arun ice cream. Arun emerged as the largest ice cream manufacturer in
Tamilnadu with turnover raised to 28 million from 150000 in 1970 and 425000 in 1981.

Chandramogan established ‘seat and eat’ themed parlour in Madras suburbs and outskirts, By
the year 1999 Arun emerged as owner of the 60 % market share of Tamilnadu and 36 % of
four south Indian states. Arun began to introduce 7 to 10 new flavours every year and thus
Arun’s product folio consist of 30 to 35 flavours at any given time! Arun also acquired a fully
automatic plant in Red Hill area with capacity of 15000 litres of ice cream mix every day.
 And began operated in 1995. Because of the investment restriction The Madras plant was
setup under a separate firm named Hatsun milk Products though it was fully established by R
Chandramogan.

Because of the continuous advertising and promotioning of the brand Arun began to earn
tremendous attention of the customers and also began to be supported by the large numbers
of the franchisee agents which played a crucial role in emerging as a big banner production
and distributor of ice-cream company!

Vision: To expand the company and make the company as owner of largest portion of
markets share through continuous expansion and by increasingly satisfying the new and
sustained customers!

Mission: To provide best quality of ice-cream to continuously expanding customers.

Company’s different ventures

 Established first ice-cream manufacturing plant in Madras under the firm name
Hutsan Milk Products
 Established another completely new plant in Salem nearby Kerala and Karnataka in
1991
 Established another new fully automatic manufacturing plant in five acre land on Red
Hill area on the outskirts of Madras city.
 Established a Depot in Madurai in 1995 for handling distribution over franchisees
located in Tamilnadu, with adequate cold storage facility.
 Established 700 franchisees outlets in Tamilnadu, Karnataka, Kerala and Andhra
Pradesh for continuous meeting the needs of increasing customers by the year 1991

Core Competencies 

1. Chandramogan had a strong urge to become successful as businessman

2. He continued business with strong advertising and promotioning activities to establish
and more grab more numbers of market share
3. 3 major ice-cream manufacturing plant in Madras, Kerala and Karnataka
4. Excellent management over distribution handling over depot
5. 700 franchised outlets Having 60 % ownership of market share of Tamilnadu and 36
% of four south Indian states
6. Continuous striving for new market and trying to satisfy as much as new customers
with best services and products
7. Good personal level of relationship with all franchisee owner agents
8. Established milk collection centres in major milk producing villages close to ice
cream plant
9. Warm relationship with all milk producers and dairy farmers
10. Maximum satisfaction to dairy farmers in pick season of milk
11. Rich product folio of 30 to 35 products available at any given point of time
12. Advanced sales promotion activities in which participant can take part and have the
product at very negligible price for making customers aware about different types of products
13. Excellent promotional campaigns for overall marketing plan
14. High margin proportion for franchisee handling agents at 20 to 25 %, comparing to
major competitor at 12 to 15 %.

Strategies & Planning

 He focuses the key selling point like addressed to outside the locality and focus on 5%
market which are general stores, hotel, restaurant, college canteen and social events like
wedding parties.
 He met to agents who procured and supplied to various ship line and understood
special requirement regarding packing and delivering to capture the market.
 Where fresh ice-cream was not got, he had plan to supplied ice cream on ad hoc basis
through agent within 4-5 days of the booking.
 Because of imbalance in seasonal demand, milk which is the key input was procured
from the farmer by collection center and he offered guaranteed procurement of certain
quantity of milk based on his lean season and peak season, pay higher price.
 He sourced other input and ingredients such as sugar, fruits, packing material, etc.
rom leading wholesaler/ manufacturer.
 He transported his supply by railway or by refrigerated vehicles and also planed to set
up new plant in 250-300km. radius area to provide effective service with average 7 to 10
flavors ice cream with the product port folio of 30 t0 35 products.

SWOT Analysis

Strength

 He was risk taker and very enthusiastic person with strong thinking of “doing
something “
 Provide vast variety of product with 30 to 35 different favor ice cream
 There was a strong symbiotic relationship between the company and its franchises. He
recruited well skilled and experienced manager in head of division.
 There were 700 outlets and 120 franchises and market share around 36% in south
India.
Weakness

1. He uses single tier distribution strategy, directly supplying to the retail customer sales.
2. He did not have the excellent capabilities of anticipating the future demand
3. He gave his franchises to relatives and uneducated people
4. Vast advertisement without proper assessment of financial position
5. He sold his product to such area where transportation services took more expensive.
Don’t match demand when there is a pick season because of shortage of milk and other
material.
Opportunity

 There is a huge network of franchises and it will expand

 There is good chance to stand in competitive environment after emerging in Hatsun
Milk Food Ltd.
 There were lot of variety in product for demand and growth of business
 It has cover 60% market so good sign to future growth through set up new plants.
 Advertising & promotioning of brand made his company strong in terms of market
share & brand recognition
Thteats

There are various competitors which are giving their best in grabbing the market share

 Chandramogan was not having specialized knowledge in managing the business

 Distribution channel was not so wide to cover all the marker share

Problem Identifying Facts

He did not believe in delegation of authority, he used to take the decision on his own! He was
applying ‘trial & error’ method in business. Initially he stepped in market with vastly
improved service and deliveries they were unaccustomed to He had restricted big banner
,elderly, & highly potential franchisees agents to join him as franchisee agent. Initially the
problem arose because of the seasonal demand-supply imbalance in respect of the product
and its extremely short shelf life. Even despite the financial crisis, he continued to increase
the numbers of franchisees on one hand and in the variety of ice-cream flavours on the other
hand.

Establishing Problem

Because of the centralization of the authority & no delegation of responsibility over the wide
franchised network, nobody is able to take key decision in meantime Chandramogan was
applying ‘trial & error’ method in business which sometimes became worst nightmare for
him. Chandramogan was very enthusiastic about the expansion and approaching the different
beneficiary projects, this led the company to financial imbalancement of the company during
the expansion and establishing the plants. He was making more expenditure on advertising
 and promotioning the brand and products of the company which also played significant role
in financial imbalancement.

Generate Alternative

Minimizing expenses over advertising and promotioning the brand can lead to effective
utilization of the resources towards a better management of company.

 He should improve his decision making skill and he should learn some of the
strategies about the business marketing-promotioning & expansion of the business
 He should invite the suggestions from the all its franchisee agents because there are
the franchisee agents who are directly dealing with the customers so they can better
understand the customers He should appoint high educational people who help him to lead
business in good position.
 The remote area where no transportation facilities available in that case they have to
supplies in fixed period so that cost can be minimized
 He should have the capabilities of forecasting the future and to act according to the
customers trends
 He should establish such a small various numbers of the distribution channels area
wise which can distribute its products effectively to the customers in meantime.

Evaluate The Alternatives

Chandramogan improving his skills and appointing some experts person ould lead his
business at good position:

 Inviting the suggestions from the all over its franchisee agents can lead the company
towards a better understanding the needs of the demand of the customers.
 Suggestion from agents, franchisees members and customers will help to fill defects
in production, marketing and distribution areas.
 Learning from past events and anticipating the future events can lead the company
towards excellent grabbing the market share and establishing the increasing numbers of
customers in very lean time Establishing excellent system of distribution channels can lead
the company to reach every customers and satisfy them, thus maintaining the good
relationship between the supplier and consumer.

Best Alternative

Recruitment of highly trained and technically experienced people lead the company in better
way in context of reaching the customers and taking the decisions related to minimizing the
cost expenditure taking place on advertising and promotioning the brand and steps related to
expansion and diversification of the business.

Contigency Plan
The company should most importantly recruit best personnel for the technical and
distribution task of the company for better management of the company. The company should
establish such a distribution channel which can efficiently reach every franchisee agents thus
reaching every customer. The Company should control their expenditure on advertising &
promotioning the brands so that available resources can be used for different development
purpose.