There is a small Paan* Shop located outside a restaurant near my house. It’s run by a young man who hails from a backward village in UP. I often buy sweet paan from there for my family or when we have guests over for dinner or some party. In the course of last ten years, he has gradually increased the price of a sweet paan from Rs.5 to Rs.10. He has different prices for other types of paan depending on the type of betel leaf and ingredients, or if it is made with tobacco.
He recognizes me as an old customer, so one day I just happened to casually ask him why he was charging Rs.10, why not more or less, and whether he knew how much money he was making. I was stunned to hear the following from him.
- “Sir, I sell around 10,000 paan in a month. This restaurant owner takes Rs.10,000 per month for having allowed me to put up my small shop here. So one rupee per paan straight goes out towards rent.”
- “A betel leaf from Kolkata costs Rs.1 each but I also have to absorb wastage in transit or due to weather which varies from 20%-40%. So that costs about Rs.1.25 per paan.”
- “Your sweet paan has Gulkand (paste of rose petals mixed with sugar) that costs me Rs.130/Kg. I make around 100 sweet paans with one kilogram of Gulkand, so that’s another Rs.1.30 per paan.”
- “The other miscellaneous ingredients like areca nut, catechu (kattha), lime, cardamom, fragrances etc cost roughly Rs.1.50 per paan. On the whole it costs around Rs.5 per paan and I sell it at twice the cost.”
- “So, on 10,000 paan per month, I end up making a monthly net income of over Rs.50,000, plus additional Rs.15,000 on cigarettes, paan masala, candies etc, which is impossible to imagine in the village where I come from. I send money home that helps my family with their expenses and my daughters’ education.” He further added that he was putting Rs.5,000/- per month each in two mutual funds SIPs that would take care of his daughters’ weddings when they grew up, being aware of the burden of dowry that is still prevalent in the backward areas of our country.
Still trying to believe what I had just heard, I asked him about his own education. He said that he had to leave the school in his village after finishing grade-VII since his father died of cancer, leaving the big joint family bankrupt and under debt.
I froze for a few seconds—didn’t know what to say as I looked at him in awe of his clarity of thoughts, understanding of financials, self-esteem and humility. During my career as a CFO, I have struggled on several occasions when well-educated colleagues (including some from the finance domain) had a hard time understanding the basics of Unit Costing.
As if this were not enough, I also discovered that he had pulled out his younger brother and two of his nephews from his village who he feared would become nuisance back there, trained them in his shop, and helped them set up the same business in other parts of Bangalore. He expressed gratitude that because of his customers, his family was living happily in his village.
We teach in the corporate world that the job of a great leader is to develop other leaders, don’t we?
I thanked him, picked up the packet of paan and got back into the car. While driving home, his words kept playing back in my mind. Needless to mention, I returned home with several question marks on our formal education system. Some of them remain unanswered even today.
* For my readers from other countries, here is a link explaining Paan as the popular after-meal digestive and breath-freshener in India.