Singh, the third generation in the family business, is conscious of the historical baggage even as he takes Woodland back to Russia. “I see this as an opportunity, as not too many people are thinking of entering the country at this time,” he says. “It is a big economy, and in the long term it has to become stable. If we can survive now, we will do well later.” The company has a centralised warehouse in Moscow that caters to multiple markets including Moscow, St. Petersburg, Novosibirsk, Yekaterinburg, Perm, Omsk, Vladivostok, Kazan, and Chelyabinsk. Sales happen through multi-brand outlets as well as e-commerce sites, and there are plans to start exclusive Woodland outlets by the middle of next year.

The ride won’t be easy. For starters, any company going back to Russia now has to shake off the comfortable, state-supported ways of the past. For over four decades, Indian exporters depended on the Soviet foreign trade organisations and Government of India departments and banks to secure contracts, writes Deshpande. “They executed the contracts without knowing the ground realities, like consumer preferences,” and Russian policymakers feel that Indian businesses have not been able to keep up with competition and the changing norms of doing business in the country.

However, assuming that the state hand has disappeared is naive. Recently, Russia opened up to dairy imports from India, thanks to the embargo on food imports from the West. But only two Indian companies, Parag Milk Foods and Schreiber Dynamix, received clearance from the Russian government, thanks to an archaic regulation that a dairy exporter must own at least a thousand milking animals. India’s parleys to relax this clause have been time consuming. On the Indian side too, progress has been impeded thanks to reported delays in finalising a disease control protocol by the Export Inspection Council. “For trade to flourish, the governments have to recede and let businesses have a free hand. But in the case of India and Russia, the governments are very much in control,” a former diplomat tells us on the condition of anonymity. “This is one of the key reasons for the stagnation in trade.”

Russia’s banking system is another weak link. With economic growth slowing to 4.1% and credit slowing due to steep key interest rates, Russian banks are under stress. Moody’s Investors Service forecast that bad loans in the banking system would jump to 15% by the end of 2015 from 9.5% at the start of this year. The country has over 800 licensed banks, simply too many say experts, forcing the central bank to shut mismanaged and under-capitalised banks. But despite the surfeit of banks and the reforms, Singh of Woodland says opening a corporate bank account in Russia can be an ordeal.

There are other challenges peculiar to the country, notably its daunting geography. Pharmaceutical major Dr. Reddy’s (No. 84 on the Fortune India 500), which entered Russia in 1992, says it takes about a month to ship its products to Russia, and another month for the products to reach the eastern corners of the vast country due to challenging logistics conditions. Temperatures in several parts of Russia tend to fall way below the freezing point, and it can be extremely frustrating for a patient who ventures out in the cold to not find a medicine in the store. “But it is very difficult to predict what will be needed three or four months from now in some far-flung corner of Russia,” says M.V. Ramana, the company’s executive vice president and head of branded markets, India and emerging countries. The long time taken for shipments to travel from India also adds to the futility of forecasting demand.

Just like in India, a company can sink a lot of money in Russia and not gain any substantial footing, Ramana adds. You need to be clear about the value you are providing, and then be flexible in your strategy to overcome the country’s unique constraints. Dr. Reddy’s, for instance, decided to shift from a forecasting-led model to a consumption-based model. The company collects information from retailers every day and has created buffers in its central warehouse from where new supplies are shipped as soon as stocks get consumed. Orders are placed at the Indian manufacturing facility based on inventory movement.

Woodland

Doing business in Russia

Scaling up