Why India Inc. should consider running its business like a “Paan Ki Dukaan”

Biswadeep Gupta
Jul 11 · 6 min read

Businesses should take a cue from the enterprising “Paanwalla”; remember what happened to elitist politicians who poked fun at the humble chaiwallah!

The recent public outburst from one of the aggrieved promoters of Indigo Airlines about the company being run as a “Paan Ki Dukaan” made me think of it as another elitist bias. In my opinion, it is disregardful to the Indian tradition and the practitioner who has run his business for decades, without access to public money, bank loans, public debt, government concessionaries, and tax breaks, and yet serves his customers with a happy smile — often sporting a trademark moustache.

Let’s not make fun of the Paanwalla, for today, many ‘traditional’ Indian businesses face extinction or need to reinvent themselves to survive, much like the Indian polity that poked fun at the hardworking chaiwallah!

One thing that has been hitting news headlines since the 2014 elections is the dire health of Indian businesses. If you look around, bad management practices are the main cause of most companies falling by the side or facing crises. In quite a few cases, the issue lies in serious misfeasance by the management. Be it the financial services, realty or aviation sectors, or the latest addition to the list — the auto industry, most businesses have been hit by such challenges. And, not to mention, these businesses are run by the best management teams consisting of entrepreneurs and professionals! So, are there lessons to be learnt for these businesses? The ‘Paan Ki Dukaan’ may have a few answers!

Traditional Indian Paan
Traditional Indian Paan

1. The Paanwalla has a lesson on credit appraisal, KYC and outstanding monitoring systems: Many who are regular visitors to the neighborhood paan shop are used to getting credit for their purchases. Be it their daily quota of cigarettes or paan or various mouth freshener pouches, the Paanwalla has a unique way of appraising customers’ credit limits. For students and young customers, the quota is limited to a few loose cigarettes, while for working-class customers, the credit extends to multiple packs. Similarly, for a daily wage earner, the dues have to be settled by the next day, while for the gentleman who resides in the locality, credit can be cleared off at the end of the month.

So, how does the Paanwalla ensure a credit check, that too in an informal manner? A key challenge facing the financial services sector, from banks and NBFCs to new-age fintech players is the quality of credit and worry of defaults. This is where the ‘unsaid’ factors that go behind such the successful and meticulous KYC at the “Paan Ki Dukaan” come into play. The Paanwalla employs subtle techniques in determining the creditworthiness of customers providing them a credit in line with their purchasing capacity.

2. The ‘uneducated’ Paanwalla runs a highly granular, profitable, cash flow positive business: If you open any newspaper, research report or TV channel, you will have businesses and their executives uttering sophisticated platitudes — cash flow constraints, asset-liability mismatch, forex hedging losses, and what not — for all their troubles. Also, remember that these companies have the best professionals, and still fail to measure up to basic business concepts.

The Paanwalla usually offers his regular customers monthly credit, pays off the FMCG vendors (for cigarettes, toffees, etc.) as per their strict credit terms and sources the balance raw materials of betel leaves, slaked lime (chuna), areca nuts (supari) and red katha paste (made from the Khair tree bark) through a well-oiled, traditional ‘unorganized’ supply chain. You will never find him complaining of credit woes or cash constraints. It may be a good idea for India Inc. to actually start running its businesses like a ‘Paan Ka Dukaan’, for many of its current woes may then get sorted out in a simple and straightforward manner.

3. A ‘Paan Ki Dukan’ never goes out of business: Have you ever seen a ‘Paan Ki Dukaan’ closing down, be it in your neighbourhood, or near your office premises or outside your favourite marketplace? It is the same family of owners — the father, his brothers and their children who continue running the shop. Today, we have many examples of successful businesses going downhill in a short span and then closing down, leaving employees, vendors and many others in the lurch.

How come the best leaders and their teams are unable to foresee business uncertainties even after running it for decades? Is it complacency or are they unable to live up to the newfound culture of accountability and governance? The Paanwalla can give management lessons in business continuity to India Inc., where financial prudence, risk management and running your business with limited resources help find long ‘runways’ for your business to take-off and survive sustainably.

4. The Paanwalla is agile and nimble to changing consumer habits: From time to time, the ‘Paan Ki Dukaan’ has undergone a metamorphosis, based on changing consumer demand. From being a simple paan shop, it moved into stocking cigarettes, then FMCG products and now doubles as a mobile prepaid shop or a Banking Correspondent (BC). The exteriors have also undergone a change from simple billboards to sophisticated electronic advertisements. How has the uneducated Paanwalla been able to change with the times in an agile and nimble manner, while many industries and companies are on the verge of going out of business? Why does the ‘Paan ki Dukaan’ not face an industry crisis?

Today, from NBFCs to automotive companies to banks to exporters to hospitality partners, everybody is rallying with the government for a bailout or concession. This bailout comes from the public exchequer and taxpayers’ money. Poor business decisions or over-ambitious style of management conduct has led to sectors being laden up with bad loans, obsolete product pipelines or uncompetitive costs. None of these players look inward to blame themselves for being in their comfort zones while the world has moved ahead. History shows that this one-time bailout has become a regular cyclical feature — private mistakes being cleaned up through public money. Then, isn’t being agile, alert and nimble the key to avoiding a ‘crisis’?

5. The Paanwalla runs his business on the simple tenets of honesty, integrity and ethics: In most cases of modern corporate wrongdoing, those involved — promoters, directors, senior professionals, auditors and rating agencies — have continually displayed a complete lack of professional and individual probity, honesty, integrity and ethics. When it comes to fraud, it is being proven of the lenders, promoters, auditors and consultants are complicit in the misinformation of the actual health of a company, often suppressing the ills in return for personal aggrandizement.

India Inc. can definitely take lessons from the Paanwalla on how to run a business without damaging the entire (financial) ecosystem. At most, we may blame the Paanwalla for a certain amount of adulteration. But on a broader scale, he runs his business in a simple, honest and happy manner. Businesses should imbibe a sense of personal integrity in their conduct. Till industry associations or business communities start condemning such acts, errant promoters will continue to act recklessly and give a bad name to everybody.

Today, if businesses face low trust across the stakeholder ecosystem, they need to call out the black sheep much before the law catches up. Or maybe, give them the example of the neighbourhood Paanwalla, whose reputation and goodwill (moustache) are so crucial that he never conducts himself in a lesser manner. So, customers generation after generation, trust him and go to him for their daily dose of paan!

Coming back to the Indigo Airlines crisis, while Mr. Gangwal and Mr. Bhatia enjoyed their wealth creation journey, it is sad that now this battle will be fought in the public domain. Maybe, instead of hiring expensive law firms, public relations consultancies and arbitrators, both of them should visit the Paanwalla who sits across the street from their Gurgaon head office, for he may have a simple and surer solution to solve this ego battle.

Lastly, let Indian businesses not forget that in recent times, Indian politics has proven that a humble chaiwallah can dream and deliver as a globally acclaimed political leader that even the opposition parties are trying to copy his team’s success mantra.

If India Inc. does attempt to run its ‘professionally’ managed businesses using the above principles of the “Paan Ki Dukaan”, I am sure they will come out much more robust and thrive better than before!

Ending this note, I can only hum the famous Kishore Kumar song, “Khaike Paan Banaraswala, KHUL JAYE BANDH AKAL KA TALA” (A proper dose of paan can unlock your brain!).


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