Looking Beyond Tobacco

Himanshu Kakkar, Outlook Business
New Delhi, 28 November 2014

There is no denying that business histories are rarely documented, let alone in print, so a museum that chronicles a renowned company’s tumultuous history was till recently a far-fetched idea. This is where the experiential DS Museum started by the Dharampal Satyapal (DS) Group has scored a major first, recounting the grassroots-to-major-group transition of the entity, covering its diverse interests, from tobacco, mouth fresheners, confectionery, food and beverage and dairy ­— its core businesses — to latex, agroforestry, packaging, hospitality and infrastructure — its emerging businesses. Started by Dharampal in 1929 as a tobacco business, the group, which many of us now associate with the Catch spices label, counts Rajnigandha and Baba among the prime building blocks of its emerging empire.

Indian digestives have taken a beating in recent years, so the idea of using a museum to bring the brand’s story alive — from the colourful streets of Chandni Chowk in Delhi to the founder’s laboratory, painstakingly detailed with life-like marionettes and the original accouterments of Satyapal’s office — is heightened with dramatic possibilities. Satyapal was responsible for steering the fledgling company towards quality, research and its early experiments with branding. Audiences love rags-to-riches stories and there’s enough of that here to endear the company to the small groups that have permission to visit the museum, which is located on the group’s office premises. Similar museums at the Akshardham Temple, also in the capital, and the Khalsa Museum at Anantpur Sahib have used comparable tropes, but DS distinguishes itself by providing a more intimate experience to the audience.

For this purpose, visitors enter through a ‘fragrant forest’ where lights and aromas are triggered by the visitor’s footsteps, a kind of tactile experience unexplored in India so far. In the next section, a theatrical dramatisation of the group’s founders is used as an emotional hook to retain interest in the two remaining zones, which are built around the group’s aspirational vision and the range of products manufactured in its state-of-the-art factories. Though the museum is not yet open for the general public, it may not be long before it is: the Rs 4,800-crore group has a story to tell and it has done so with poignant vigour, something other companies may do well to emulate.

Changing Shape

It was during Satyapal’s era that the group firmly ensconced itself in a highly commoditised category like tobacco by pioneering the branded chewing and paan masala market in the country. Lala Satyapal had realised in the late ’50s that branding was critical for the company’s survival. The inception of the company’s first brand was just as fortuitous — Satyapal was walking around Connaught Place in 1958 when he came across a small laughing Buddha statue in a shop. Enamoured by the image, he got an artist to redraw the figure, albeit wearing a doshala and tilak. In 1969, graced with image, the first product from the company’s stables — Baba — was introduced, also holding the distinction of being the first-ever branded chewing tobacco product in India. Soon, new brands such as Tulsi in 1979 — to mark the 50th anniversary of the business — and Rajnigandha were created. Satyapal found the name apt because it was a sweet-smelling flower that had a popular film song dedicated to it, ensuring easy recall among the audience. The Catch brand name, inspired by a one-off cricket match, was also his brainchild.

After ruling the tobacco and paan masala market in the ’70s and the ’80s, the group diversified into the food business with Catch salt shakers in 1987, followed by Catch spices. Since then, the group has been entering new market segments quite regularly — packaging (with Canpac), spring water (Catch), mouth fresheners (Pass Pass), rubber (Uniflex), hospitality (Manu Maharani in Nainital), agroforestry (in the northeast) and dairy (Dairybest and Ksheer). The diversification has largely been driven by Satyapal’s two sons, group chairman Ravinder Kumar and Rajiv Kumar, who is the face of the group. The group’s turnover currently stands at Rs 4,894 crore and they hope to be a billion dollar company by the end of FY15. Putting the expansion in perspective, 52-year-old Rajiv, VC and MD, DS Group explains, “We are not top line- or bottom line-obsessed. We enter businesses where we see value and where we can add value. Though some of them are niche categories, in a country of a billion, that translates into numbers equaling the population of European countries such as Switzerland.”

The diversification is not without reason. Tobacco companies the world over try to break free from the negative image associated with tobacco consumption and dependence on tobacco products. The group, too, has spread its basket with this aim. The constant focus on reducing dependence on tobacco has meant that it today contributes just 25% to revenue. “At its peak, tobacco, along with paan masala, made up for the group’s entire revenue in late ’80s. But that’s no longer the case today,” points out Rajiv. Though the tobacco business brings in a sizeable Rs 1,262 crore in revenue and has been instrumental in making the group cash-rich over the past four decades, it is mouth fresheners — mainly the flagship Rajnigandha paan masala — that contribute 40%, or over Rs 2,334 crore, to the group’s top line. “Though tobacco is not likely to be banned in the foreseeable future, we chose to work on healthier alternatives as well,” he explains.

Making A Mark

Though the group’s journey seems starkly similar to the way tobacco major ITC remodeled its business to emerge as an FMCG-to-hospitality conglomerate, Rajiv disagrees with this observation. “It is the media that compares us with ITC. There are so many businesses where we are present and they are not, and vice versa. Our diversification is our natural progression,” he emphasises. In others words, the group consciously chooses to stay away from the personal care segment and food categories such as wheat flour. Instead, it is now betting on FMCG businesses through its DS Foods subsidiary, banking on its existing strong sales and distribution channels that have been hawking salt and spices for decades. The group has chosen to enter niche categories with a premium positioning attached to them. “Premiumisation is in our DNA. My father would travel all the way to Kashmiri farms to ensure that the right quality of saffron was being supplied to us,” points out Rajiv. The habit of getting the right ingredients has been crafted into a business strategy for the premium positioning of its mouth fresheners.

“It is a choice that each company makes. However, my opinion is that if you are committed to building a brand from the very beginning, then instead of competing on the price front with generic products, it is best to start with a premium brand. The additional margin available can be invested in strengthening the brand and its product attributes. The premium itself can serve as a vehicle to establish a difference from the competition,” says Devangshu Dutta, chief executive, Third Eyesight.

As early as 1987, much before the consumerism wave hit India, the group entered the foods space by going premium with table salt. Today, it has found its sweet spot in the dining condiment arena with its free-flowing table salt and pepper shakers under the Catch brand, which is today worth Rs 400 crore. Though Tata came out with its own brand of shakers, Catch continues to dominate the salt and spices shaker category. At Rs 15 for 100 gm, Catch is costlier than ordinary packaged salt. “In the table shaker category, we perhaps hold 99% market share,” points out OP Khanduja, associate business head, food business, DS Group. Similarly, In 1999, it launched bottled water by positioning Catch Natural Spring Water as having been bottled at source in the Himalayas. At Rs 53 crore per year, the brand today accounts for a lion’s share in the bottled spring water market.“The demand for Catch Natural Spring Water is more than the supply, given that the number of springs in the Himalayas is limited,” points out Bhavna Sood, senior vice-president, DS Group.

The premium plank has worked well within the group’s flagship business too. The total size of the paan masala industry is worth Rs 27,000 crore, with the premium segment accounting for Rs 2,800 crore. Of this, Rajnigandha holds close to 80% share. CK Sharma, business head, mouth freshener, who handles the Rajnigandha portfolio, says, “Over the past couple of years, the rural-urban divide has narrowed, with an increasing preference for branded products. This reflects in our sales.” As a result, the Rajnigandha business has seen an astronomical spurt in size last year (from Rs 1,300 crore to Rs 2,334 crore). Besides an aggressive TV commercial strategy, the company kept consumer interest alive by introducing several variants, with the latest — Rajnigandha Silver Pearls — being introduced in convenient plastic packs.

What is also working in favour of the mouth freshener category is the gutka ban in 26 states since 2012, which Rajnigandha paan masala seems to have benefited from. Sharma says the brand has tried to steer clear of gutka — a banned product that could tarnish its clean image. “Based on consumer demand, we did manufacture gutka in the past but were not that successful. However, after the ban, we have abided by the law and stopped manufacturing gutka.”

Though consumers have simply shifted to mixing paan masala with chewing tobacco (both of which are available as the company’s products) after gutka was banned, Sharma believes that this is not what is driving Rajnigandha paan masala’s sales. “People consume paan masala in a variety of ways but largely as a mouth freshener. There is no correlation between the rise in the sales of Rajnigandha and the gutka ban; the former is due to expansion and focus on rural penetration.”

Keeping in line with its expansion, the group entered the dairy business in 2011 with the acquisition of a plant in Rajasthan, including an institutional brand called Dairy Max. Two years later, it forayed into the premium dairy segment with ultra high temperature (UHT) processed milk and cow’s ghee under the newly launched Ksheer brand. With only a handful of players such as Nestle (GLYPH), Mother Dairy, Amul and Parag Milk present in the Rs 2,000-crore high quality and long shelf life UHT premium segment, the group chose its positioning carefully, with industry forecasts predicting the UHT milk market to grow at 20% annually. Rajiv claims that even with stiff competition, the initial results have been satisfying. “The dairy business has grown from Rs 30 crore in FY13 to Rs 111 crore in FY14 but it will be at least three-four years before cold chain infrastructure comes into place and we are able to realise its potential with new products,” he adds. The group is now looking at revenue of Rs 300 crore from the dairy business by 2016.

Network Connections

The group has managed to create a sizeable FMCG business as it has leveraged and ramped up its existing distribution network. Sharma says, “From 8 lakh retailers, we have reached 10 lakh in two years and have entered new towns and villages. Perhaps, we enjoy the highest retail reach after ITC,” mentions Sharma. The retail penetration is an outcome of its revamped distribution strategy that resulted in the number of depots increasing from 24 to 30 with 160 super distributors and close to 1,400 sub-distributors covering close to 9,500 villages.

The deeper penetration coupled with changing consumer preferences has worked in favour of the group. In case of mouth fresheners, DS was a strong player in northern and western markets, but not in south, which is what it is trying to change. “Pass Pass is our carrier brand in the south and we are leveraging our distribution and reach, to place Rajnigandha paan masala and other products in kiosks in the south,” says Sharma. The group is convincing retailers for better display of their brands. “If a retailer earns Rs 500 and Rs 250 comes from our products, we can influence space management in his shop,” adds Sharma.

“Consumption is rising rapidly in the higher income segments where availability and branding are greater drivers of product off-take than price-based competition. Most FMCG companies in India are under-penetrated with regard to distribution. Perhaps about 20% of the market is unserviced even for a market leader such as Hindustan Unilever; for other companies that figure is far higher. So increasing a brand’s availability across geography and penetration within the locations already serviced are avenues of future growth” says Dutta on DS group’s expansion plans.

In the case of Catch salt & spices business, which has grown over 30% over the past two years, the retail reach has gone up from 1.5 lakh outlets to 2 lakh outlets. “We revamped our reach in southern and eastern markets where we were weak, and outsourced part of our production,” points out Sharma. In case of the spices business, the group is focusing on all sales channels — general and modern trade, and restaurants and catering. Though there are several regional players and MDH and Everest dominate the general trade, Khanduja points out that they lack a national focus unlike the DS group.

The Way Ahead

Over the past five years, the group has trebled its turnover of Rs 600 crore with a diversified portfolio. By going that extra mile, it stands separate from other homegrown peers such as Kothari Products (Pan Parag) and Dhariwal Industries (RMD Gutka). Says Sood, “We are a privately held company but our accounting practises are at par with that of a public company. We aren’t required to present annual reports but we do. We are transparent and follow best practices.”

Today, the group garners more than a fourth of its revenue from food and beverage products and intends things to remain that way. Industry experts believe that given the competitive landscape, the DS Group has its task cut out. “The biggest challenge for them is how to get blockbuster brands. Catch is only one brand; they have to look at a much broader horizon and launch fresh brands in other categories such as processed food, chocolate or chips, the way ITC has progressed,” says Harminder Sahni of Wazir Advisors. But Rajiv has a different plan and doesn’t believe that the group needs to create fresh brands in multiple categories. “Catch will be like an umbrella brand — like Nestle — and sub-brands such as Catch Ksheer or Catch Piyoz (powdered beverages) will make space for themselves.”

However, getting market share is not that easy. In case of Catch spices, DS’ market share is hardly 7-8%, even after two decades in the business. The Rs 6,000-crore spice market has two major players — MDH and Everest — and numerous regional players. Catch is a premium but niche player. But Rajiv is willing to be patient. “MDH is 80 years old, Everest 50 years old, so our brand too needs time to come of age,” he feels. Nevertheless, the group is doing all it takes to create a buzz around its products, including celebrity advertising; actress Vidya Balan endorses its spices brand. While FMCG is a core part of the group’s strategy, its blueprint for the hospitality industry is taking shape. After acquiring a 67-room hotel — Manu Maharani — at Nainital in 2000, DS is ready for a second round of expansion.

“We acquired our first hotel fifteen years ago and have learnt the basics of the hospitality business. It’s only now that four of our properties are coming up at Kolkata, Jaipur, Guwahati and Jim Corbett National Park,” Rajiv adds. With close to 1,000 rooms, the new properties will be a mix of budget and star hotels and will be largely funded through internal accruals. Though the group seems to be aping the ITC growth model, Kumar believes otherwise. “We entered agroforestry because we needed herbs for our spice and mouth freshener business, packaging because of company needs and hospitality because of my passion and our group’s emphasis on Indian culture,” he mentions. That being the case, the experiential DS Museum will probably have a lot more tales to tell about the group’s journey in the coming years.

(Published in Outlook Business) (By Himanshu Kakkar with inputs from Kishore Singh)

Burger King eyes a big slice of the Indian market

Samar Srivastava, Forbes India
Mumbai, 28 November 2014

When Forbes India first visited Burger King in July this year, its office in Mumbai’s Lower Parel business district was a beehive of activity. Employees were busy scouting for locations, negotiating with suppliers, conducting blind tastings and fine-tuning the international hamburger chain’s India menu. At the time, the $1.1 billion (2013 revenues) global fast food giant was still a quarter away from launching in India, but the countdown had begun.

A late entrant into the market, Burger King has seen many a competitor trip in its understanding of the Indian consumer.

Which is why, 45-year-old Rajeev Varman, chief executive officer of Burger King’s India operations, emphasises that menu will be the differentiator. “We will have burgers that no one in India has ever had before,” he tells Forbes India.

This would sound like a grand claim, one that is easier said than done: Development of the menu and, more importantly, adapting it to appeal to Indian tastes has taken established international players years to implement. Rivals such as McDonald’s and KFC met with success only after they indigenised their offerings as per local taste profiles. It took them a decade to arrive at a winning and money-making formula.

And therein lies Varman’s biggest challenge. Can he find a shortcut, and give a menu that Indians will love from day one? He is confident of his success.

At the time of writing this story, Burger King was set to open its first India outlet in Select Citywalk in Saket, Delhi, on November 9; this will be followed by a Mumbai launch the week after, at Phoenix Mills. By December, there will be a dozen Burger King outlets but only in Mumbai and Delhi—for now. Varman does not want to reveal the fast-food chain’s long-term India plans.

Burger King is entering the hyper-competitive Western quick service restaurant (QSR) space at a time when consumer spending has been under pressure. Competitors such as McDonald’s, which has over 350 outlets across India, KFC, with a chain of 361 stores, Domino’s Pizza (772 outlets) and Subway (472), have all seen consumer spending—hit by high inflation— slow down in the last year. Still, Crisil Research estimates the market to grow to Rs 7,000 crore by 2018 from the present Rs 3,400 crore; this is an annual growth of 27 percent with average spends of Rs 3,700 per household per year in metro cities.

It’s very early days, but 3G Capital, the multi-billion dollar Brazilian private equity parent which owns Burger King, has made all the correct moves. “The only reason we had not entered the Indian market till now was because we couldn’t find the right partner,” says Elias Diaz, president, Asia Pacific, at Burger King. The company was loath to enter the Indian market on its own realising that real estate, sourcing and taxation issues would divert its attention from the task of getting stores up and running.

In 2013, however, in what could well be a master stroke, Burger King tied up with the Sameer Sain-led Everstone Group (an Indian private equity firm with experience in the QSR space) to help it navigate the already-crowded Indian market.

A Fortuitous Partnership

Burger King has been keen on entering India since it was acquired by 3G Capital in 2010 in a $3.8 billion deal. “Any private equity player will be looking for rapid growth, and India would be an obvious market for a brand like Burger King,” says Devangshu Dutta, founder of Third Eyesight, a retail consultancy in Delhi. And the fast-food chain plans to be in India for the long haul. “Everyone has seen spends slow down in the last couple of years, but if you are entering a market with a 20-year time horizon, this slowdown is just a blip,” says Dutta.

At the time, Everstone Group had its hands full with the takeover of Blue Foods, now Pan India Food Solutions, which owns Copper Chimney, Noodle Bar and Bombay Blue, among other brands. Before it was acquired by Everstone, the restaurant chain had been burdened with heavy debt and high attrition. But it was in turning it around that Jaspal Singh Sabharwal, a partner at Everstone Group, saw an opening in the QSR arena. “We realised that there was room for a brand in the space, but what we needed was an iconic name,” he says.

Everstone was also aware that the Indian market had matured considerably since McDonald’s opened its first outlet in New Delhi’s Basant Lok market in 1996. At the time, most of its machines were imported, and even the fries and meats were flown in. It was only in 1997 that McDonald’s started taking its vendor development programme seriously. Today, all its products are locally sourced and manufactured.

In 2013, Everstone hired STEER Partners to introduce it to fast food players in Europe and the US, and talks with the parent company, Burger King Holdings Inc, began. That very year, the two firms agreed to enter into a joint venture to enable Burger King’s foray into India.

It was a win-win situation for both parties. Everstone, with its keen eye on real estate, helped the chain identify prime locations far more easily, and used its relationships with mall developers to get Burger King in. In Mumbai, for instance, the fast food chain will be opening an outlet in Phoenix Mills, a dozen metres from arch-rival McDonald’s. This would not have happened as easily without Everstone; after all, its Blue Foods had already leased the space.
Spicy, Crunchy and Juicy

Once the joint venture was inked, Rajeev Varman was deemed the best person to head the India operations. He had already made a name for himself as the man behind Burger King’s turnaround in the UK market, and had been with the company for 15 years. His last post was general manager in North-West Europe. However, though he had graduated from Bangalore University, India was an unfamiliar terrain.

“The first thing I did after I got to India was to get on a plane again,” says Varman. He’d been away from the country for the last 25 years and realised that he needed to tour the length and breadth of India to understand the palate. Along with Everstone boss Sameer Sain and Sabharwal, he visited local markets across the country and arrived at three key conclusions.

First, Indians like their food spicy. Second, it must be crunchy. But it was the last insight that surprised him the most: Customers, especially in the South, liked their food juicy. He also realised that the North has a higher proportion of vegetarians than the South. On some days, the percentage of vegetarian food sold in a restaurant can be as high as 70 percent.

Varman knew that he would have to adapt the menu a fair bit for India. He decided to keep his single-minded focus on that job, and is confident that Burger King has got the right formula, one that will appeal to Indians. The menu promises to be juicy, crunchy and spicy.

The proof of the pudding, it would follow, was in the eating. But those were early days in July and Burger King was not ready to share its menu. Three months and many phone calls and follow-ups later, Varman offered to take Forbes India through an exclusive tasting session in October, barely a fortnight before the opening of its first outlet in Saket.

Even before it started designing the India menu, Burger King knew that its USP wouldn’t change. Flame grilling is what the chain is known for worldwide and in India there is no competitor that flame grills its patties. Sure, the Whopper (pronounced ‘Wau-per’) won’t have a beef patty but chicken and mutton patties will be flame grilled and offered to customers. As it stands, the Whopper will be the largest burger in the Indian market, bigger than the Maharaja Mac by McDonald’s.

At the tasting session, we experienced what Varman meant by juicy. (The mutton burger was the tastiest I have eaten in the Indian market.) And if Burger King can get the quality and consistency of the supply right, it has little reason to worry.

In its initial years, McDonald’s had launched a mutton burger, but discontinued it citing supply chain issues. In a March 2011 conversation with Forbes India, Vikram Bakshi, who had led McDonald’s in the North and East before exiting the joint venture, said that the fast-food chain dropped mutton from the menu because of customer preference. Undeterred, Burger King will be offering a mutton option on the menu.

There’s also no mistaking the fact that Burger King is not a me-too brand. Small, but subtle differences pepper its offerings. For instance, unlike the seven-mm French fries its competitors offer, the chain has a thicker nine-mm variety.

Burger King eyes a big slice of the Indian market

One place where it has left no stone unturned is the vegetarian menu. “In India, at times, people are vegetarian due to its lower price, and we wanted to make sure we give them enough reasons to come to the store,” says Sudhir Tamne, vice president, new product development, at Burger King India. The Crispy Veg and Paneer King Burgers seem to be a step up from the competition. And of course, they have the juiciness that Indians crave.

While Burger King has kept its pricing under wraps, it did indicate that there will be four burgers available for Rs 25 each. These are most likely from the crispy series—patties with a hint of spice that is unmistakably Indian.

Another key learning for Varman during his travels across India was the fact that customers want complete meals and that portion sizes must be large. He’s made sure that Burger King’s buns and patties are larger than those offered by competing brands. With its burgers hitting all the right spots, pricing and efficient service delivery levels are key areas that can make or break Burger King.

Scaling Up

India’s QSR market has tripped up many formidable competitors. Contrast Starbucks and Dunkin’ Donuts: Both entered India two years ago, but while Starbucks has had a successful run to date, Dunkin’ Donuts has been struggling to understand what Indian consumers want.

Starbucks, which had a clearly differentiated product and an efficient supply chain, has been able to expand across India with 58 outlets spread through Delhi, Mumbai, Bangalore, Pune, Hyderabad and Chennai. Dunkin’ Donuts, which has 35 outlets across India, has now added burgers to the menu. This, however, has led to considerable brand dissonance among consumers.

Burger King, on the other hand, has a differentiated offering and promises a slow and steady ramp-up. Case in point: The company plans to build the brand only through social media and word-of-mouth publicity; it will not be investing in expensive full-page print or TV advertisements. Varman has kept the corporate office as lean as possible with only 27 employees. The Everstone team guides him on real estate locations and other compliance matters. For now, his sole aim is to get a dozen outlets up and running by the end of the calendar year. Being owned by two private equity companies also means that the clock is ticking. “If we don’t have an outlet that is EBITDA (earnings before interest, taxes, depreciation and amortisation) positive in three to six months, then we know that something is wrong,” says Sabharwal of Everstone. He is unwilling to let this be a slow burn business.

Profitability Matters

In a conversation with Forbes India last year, Amit Jatia, who runs McDonald’s in West and South India, had mentioned that it took the fast-food chain nearly a decade to become profitable in India. Varman (and Burger King) does not have that luxury.

Varman, who eats thrice a week at a Burger King outlet, though his tall athletic frame belies this, will spend between Rs 2-2.5 crore in setting up a single outlet. It has to have the cash register do Rs 5 crore of business in a year. He’s unwilling to discuss profitability as the chain will be in investment mode for the first few years. But if an outlet does not make money in the first six months, it will be shut down. He believes there is enough cream in the large metros to skim in the first year. “I will only worry about the ability to grow rapidly once I am past, say, 200 outlets. Right now, there is a lot to play with,” he says. As for what the competition thinks of Burger King’s India plans, neither Yum! (which owns brands such as KFC) nor McDonald’s was willing to comment.

As we sign off on our tasting session, Varman, who is fanatical about service delivery, notices that the fries have less salt. He frowns and immediately checks the salt dispenser to see if the salt has coagulated. It hasn’t. And he smiles again.

(Published in Forbes India in the issue dated 28 November 2014)

Alibaba’s Jack Ma needs India as much as India needs him

Devjyot Ghoshal, Quartz India
27 November 2014

The founder of e-commerce giant Alibaba and China’s richest man, Jack Ma, is in India after apparently being swayed by the persuasive powers of prime minister Narendra Modi to come and do business in the subcontinent.

And expectedly, his visit to New Delhi has got India’s fledgling e-commerce industry rather excited. Alibaba, after all, is one of the world’s largest internet companies and raised an astounding $25 billion in its initial public offering (IPO) this September.

Yet, Ma and Alibaba need India just as much as India need the Chinese e-commerce behemoth.

For one, India has been a strong sourcing destination for Alibaba for some years now. The company established a customer service operation (PDF) in Mumbai in 2010, when it was adding over 30,000 new users to its Indian base of 1.45 million small businesses (as of June 2010).

In 2010, India was the largest supplier market outside of mainland China for and the second largest buyer market.

“Indian small businesses are savvy and they understand the advantages that the internet can bring to them both in domestic and foreign trade,” David Wei, the CEO of had said.

Four years on, Indian vendors on Alibaba still comprise the second largest group of sellers after the Chinese.

Size does matter

After its record IPO, “Alibaba is looking for growth opportunities across the globe,” said Arvind Singhal, chairman of retail advisory firm Technopak.

For Ma, India’s geographical proximity to China, a sprawling manufacturing sector and unorganized distribution make it an ideal market to expand Alibaba’s core business-to-business (B2B) model, said Singhal

India already permits 100% foreign direct investment in B2B e-commerce—but the fastest growing e-commerce market in Asia is being led by business-to-consumer (B2C) focused firms.

With the country’s e-commerce market projected to grow to $6 billion in 2015, a 70% increase over 2014 revenues, according to Gartner, the size of India’s marketplace makes it important for Alibaba. “The sheer numbers do create a momentum,” said Devangshu Dutta of Third Eyesight, a retail consulting firm.

India’s interest

Indian e-commerce firms could have an interest in Alibaba’s arrival for one of three possible reasons, according to Singhal.
First, as a potential joint venture partner to benefit from Alibaba’s size, expertise and financial clout. India’s largest e-commerce companies are still only a fraction of Alibaba’s size, and there is much to learn from a company that can sell goods worth $1.8 billion in 60 minutes.

Second, domestic firms may be seeking a strategic investment from Alibaba, along the lines of what Softbank has been doing in India lately. Masayoshi Son—Softbank chief, Japan’s richest man and an early investor in Alibaba—poured in over $600 million in Snapdeal late last month.

And finally, investors in Indian e-commerce companies might want to pull out as the marketplace heats up and look to sell their stakes to the likes of Alibaba. “The competitive intensity might get too much,” said Singhal.

(Published in Quartz India )

Golden Triangle

Golden Triangle


Send download link to:

Now over the hill, a Future for Nilgiris

Raghavendra Kamath, Business Standard

Mumbai, 24 November 2014

When quizzed on whether Nilgiris, the south India-based supermarket chain recently bought over by Future Consumer Enterprise, would be rebranded or not, Future Group chief executive and founder Kishore Biyani says, "Not at all, we bought it for the brand." There had been speculation, with the acquisition in the works from earlier this year, that the chain might be rebranded as KB’s FairPrice, which is a small grocery chain.

In a way, Biyani would relate to Nilgiris. If he was an apparel manufacturer who made it big in retail, the Nilgiris-founder, Muthuswami Mudaliar, was a milk supplier who went on to set up one of India’s earliest modern retail chains.

Today it has 140, mostly-franchisee stores in Karnataka, Tamil Nadu, Kerala and Andhra Pradesh. Though Mudaliyar used to supply milk and other dairy products since 1905, the first store of the chain was set up in Brigade Road in Bengaluru in 1936. Intially, the chain started by selling milk and bakery products that the women of the owner-family would pack and decorate themselves. But once Mudaliar’s son, Chenniappan Mudaliar, came back from the US after studying its supermarkets, the look and feel of the stores, from merchandise to supply chain, changed. Groceries and vegetables were added to the spread and Nilgiris became the first self-service supermarket in the country.

Susil Dungarwal, founder of the mall management consultancy, Beyond Squarefeet, and a customer of Nilgiris since childhood, says it was the first chain to import cook and bakeware and Indianise them: "It invested a lot of money in standardising the supply chain and cooking styles in its merchandise spread". Nilgiris is also credited for being the first supermarket chain to import point of sale machines for billing, when it was still unheard of.

Need for Actis

It is said that the fourth generation of the promoter family was unwilling to take up the supermarket business, when the earlier generation, comprising Chenniappan, would arrive at their flagship Bengaluru store in the wee hours of morning and leave only after the last customer stepped out. By the time Reliance Retail and Bharti stepped into the field, the family was sorely lacking in the management bandwidth required to match their scale, despite the headstart it had in India’s strongest region for modern trade. What was earlier a progressive chain, found itself without the professional touch and systems to attract the right talent.

The Nilgiris’ promoter family sold off 65 per cent of its stake in the holding company, Nilgiri Dairy Farm, to UK-based private equity (PE) firm, Actis, in 2006 for $65 million (Rs 300 crore). Nilgiris had 30 stores.

The PE firm brought in a professional management, expanded the stores with new plans for store and shelf lay-outs and inventory management systems. To contemporise and freshen up the chain, Actis brought in health foods such as flavoured yogurt and increased other product variety such as eight different kinds of bread from just white bread earlier.

Feuding partners

But within a year, the tie went sour. Actis started looking for offloading some of its stake through an IPO. When it did not happen, it started looking for buyers in other PE funds and retailers. It eventually held talks with international retailers such as 7-Eleven and Tesco in late-2012, but they were spooked by the lack of clarity in FDI norms, valuation and the reluctance of the founder family to sell any more shares. There were also disagreements over expansion plans, with the family opposing large-format stores measuring 2,000-3,000 sq-ft. The latter went to the Company Law Board when Actis floated a Rs 35-crore rights issue and withdrew it only after Actis acceded to reverting to the smaller stores of not more than 1,000 sq-ft and promised to bolster its private-label bakery and dairy business (the original product lines of the chain). So, the scalabilty was shot for a lucrative PE exit.

Advantage lost

Bijou Kurien, former chief executive of Reliance Retail, says the contemporisation was not enough, "When others were already selling masala milk and smoothies at supermarkets, Nilgiris stuck to plain assortments in a category it began with." Biyani says that he would launch new dairy products and explore how best to cross-sell products from other chains of the acquiring company, Future Consumer Enterprise (such as Green Apple, KB’s Fairprice ) in Nilgiris and vice-versa.

Before Biyani bought Nilgiris for Rs 300 crore, it was on the block for almost two years with a price-tag of Rs 600 crore. The obvious benefit of Nilgiris, which clocked Rs 765 crore in FY-14, would be to expand Future Group’s negligible southern presence. Though it runs around 230 Big Bazaar and Food Bazaars, south India houses only a fifth of the count.

Devangshu Dutta, CEO of retail consultancy, Third Eyesight, says, "India’s practices in modern retail evolution began in south India with Spencer’s in its first avatar and Nilgiris. The control of bakery and dairy by retail chains (in-house brands) was learnt from Nilgiris. It still has the trust of old-timers, but newcomers to southern cities have been won over by its competition."

Nilgiris still stocks nearly 6,000 products with low supply chain costs and a robust franchisee model. With its own manufacturing in dairy and bakery, around 26 to 27 per cent of its revenues come from private labels, that could prove profitable if Biyani can turn around the chain.

(Published in Business Standard )

Big is Beautiful

Manu Kaushik and Arpita Mukherjee, Business Today
New Delhi, 23 November 2014

Ahmedabad-based Anish Nagpal has been selling products online since December 2011. He sells clothing, footwear and home decor under his own brands, Cenizas and Macoro.

In October, as festival buying peaked, Nagpal’s company cashed in by selling over 80,000 items, much higher than the average of some 50,000 in other months. However, around 90 per cent of his sales, in terms of the number of items, were on Flipkart and Snapdeal, the two big e-commerce rivals which, fattened with funding, have unleashed high-decibel advertising campaigns.

The others – Naaptol, ShopClues, HomeShop18, Limeroad and Indiatimes – where, too, Nagpal peddles his wares, brought in little more than chickenfeed.

"Large e-commerce sites generate more traffic and therefore we tend to focus more on them," says Nagpal. On October 6 alone, Flipkart’s Big Billion Day, a discount carnival intended as a tribute to the flat number 610 in which Sachin and Binny Bansal set up the company in 2007, Nagpal sold 11,000 items on the site.

Nagpal, who has nearly 15,000 product varieties and an online stock of 1.5 lakh products, says that even in terms of listings and catalogue he is biased towards large players. "At the end of the day, I have limited inventory and bandwidth. I will put my efforts behind the big names."

He is not the only one to think like that. In January this year, electrical equipment maker Havells India started selling its 700 products online through tie-ups with Amazon, Naaptol, Pepperfry and Indiatimes. The company quickly realised that the large ones, with their scale, gave more for less. In October, Havells sold 3,000 pieces to these websites out of which 2,500 went to Amazon India. "We have just started selling online and we are still testing this channel. A bigger e-commerce company can help us in understanding the market better," says a Havells spokesperson.

Likewise, consumers, too, are moving towards the biggies. In Pune, 28-year-old Mohua Mandal was shocked out of her wits when her father’s customary Diwali gift this year, a saree, was delivered to her by Flipkart. Kolkata-based Santosh, Mohua’s father, found it the most convenient way. The choice was vast and the discount deep. And there would be no need for him to find a courier to carry the saree from Kolkata to Pune.

Santosh, a retired railways professional, is hardly the kind that listens to punk rock on headphones and makes online purchases in coffee shops. But the sustained advertising blitzkrieg by the big e-commerce players first made him curious and then a convert.

"There was a tangible decline in footfall and transaction [in malls and offline stores], which was attributed by retailers to the whole e-commerce shebang," says Devangshu Dutta, CEO of consulting firm Third Eyesight.

According to industry body Gartner, the e-commerce market stands at $3.5 billion, which is expected to reach $6 billion in 2015, a 71 per cent growth.

Experts attribute the growth this year to the publicity around the growing e-commerce market, deep discounts and the ease of purchase. This, along with a one-upmanship battle raging between the big guys – Flipkart, Snapdeal and Amazon – a lot more willing customers are joining the online consumer base.

However, this growth is hardly even. The likes of Flipkart, Snapdeal, Amazon and eBay are taking away the lion’s share of it. Small and niche e-commerce firms such as Infibeam, Naaptol, Tradus, and a plethora of others, seem to have lost ground due to inadequate money power.

eTailing India estimates suggest that the pie this festive season was gobbled up mostly by Flipkart, Amazon, Snapdeal and eBay. While there are no official estimates, the Big Four have together cornered 70 per cent of the e-tailing market, averaging out the sales during the festive and non-festive seasons.

Starting with the Big Billion Sale on October 6, when it sold products worth $100 million in 10 hours and saw a billion hits on the website, Flipkart had a dream run in the month. If traffic is a good proxy to measure sales, Flipkart was far ahead of the others on that day. However, according to Internet agency SimilarWeb, there were 16.4 million visits on Flipkart on October 6. For smaller ones like Homeshop18 and Lenskart, the numbers were merely 543,056 and 120,852.

Throughout October, Flipkart had an average daily traffic of 10 million, compared with six million in the month before. Its October revenue stood at around $400 million, while Snapdeal clocked some $120 million, according to Spire Research and Consulting. Smaller players registered far lower revenues.

Sandeep Sharma, Co-founder and Chief Operating Officer of niche e-commerce portal, accepts that the large players are hogging the limelight. "I think smaller e-commerce players have been overshadowed by the bigger players. Companies such as FashionAndYou, Lenskart, Fashionara and ShopClues don’t have the kind of money that big e-commerce sites have raised or have committed for expansion. Big players have deep pockets which smaller companies can’t match."

Yepme sells its products on its own website ( as well as other large e-commerce portals such as Flipkart-Myntra and Snapdeal. The buzz created by large players resulted in Yepme clocking higher sales growth on other portals as compared to its own website in October. "The sales growth on other websites was 100 per cent in October, whereas the growth on our own website was just 50 per cent," says Sharma.

Other small outfits disagree with him. Naaptol, Homeshop18, Mydala and Infibeam say they, too, have grown well. Mydala claims its sales rose 60 per cent during the festive season. "We are not spending anything close to what they are spending," says its Co-founder and Chief Technology Officer, Ashish Bhatnagar. "We cannot make that big marketing push. Not just because they have deep pockets but also because we do not believe this will give us return on investment."

Homeshop18 says it wouldn’t be squeezed by the march of the e-commerce biggies because most of its revenues come from television. "The web audience is evolved and can do its own online research. Television audience is different; you need to hold their hand," says Vikrant Khanna, Chief Operating Officer, TV Business, Homeshop18.

The smaller firms also say that profitability is supreme for them. Infibeam Founder and CEO Vishal Mehta says size is important, but so is profitability. "Those who have the largest market shares will not necessarily be the last men standing." Infibeam, he says, broke even last year and expects profits this year.

The small outfits say they benefit from the rub-off of the advertising campaigns of the big players. "We see huge traffic whenever big players advertise," says Sanjay Sethi, Co-founder and CEO,, an online marketplace.

Advertising spends by e-commerce players this festive season in the week leading up to Diwali were 40 to 60 per cent higher, says ad retargeting company Vizury. Take the case of Snapdeal. A 10-second spot on Sony’s game show KBC costs around Rs 6 lakh, and Snapdeal has gone in for an in-show integration, with a Snapdeal-branded question, for which it would be paying a premium of 25 to 30 per cent.

ShopClues, with much less money to play with, decided to stay away from the print and TV advertising frenzy. As compared to around nine to 12 per cent of the top line for large players, ShopClues spent around 6.5 per cent on marketing in the festive season. It confined itself to a small awareness campaign.

Gaurav Gupta, Senior Director, Deloitte India, says the smaller players will continue to get squeezed. "It requires a large amount of capabilities to become a large player: building brand, product catalogue, offering competitive prices, and customer experience. In all these areas, large players clearly have an advantage."

Experts believe in specific categories such as fashion, those other than Jabong and Myntra clearly lost out on the discounts battle.

The small players, many of which thrive in niche segments, will face more heat because the big ones have followed them there. Flipkart acquired Myntra this year to widen its apparel offerings. Snapdeal sells furniture, an area that was so far the domain of mainly FabFurnish and Pepperfry.

However, FabFurnish Co-founder Vikram Chopra is unfazed. "The experience that players like us can offer is unmatched. You need specialised experience in running a furniture business online. Walmart sells furniture in its store, but people still go to Ikea."

That they do, but the moneybags have veered largely towards the big e-commerce players in India. With the recent round of investment of $627 million from Japan-based SoftBank, which it announced on October 28, Snapdeal has now raised about $1 billion from investors such as Temasek, Myriad, Tybourne, and Blackrock.

Flipkart has also raised substantial sums from investors such as Tiger Global, Accel Partners and Morgan Stanley. Then there are the Indian arms of the global biggies Amazon and eBay.

Experts say that e-commerce in India is in a habit forming stage and money will have to flow – in advertising and discounts – to lure more consumers, and bring them online more frequently. That is why investors do not mind punting on the promising ones like Flipkart, which many have taken to calling India’s Amazon, and Snapdeal, its close rival.

The question is, for how long will they continue to pump in money without worrying about profits? For the smaller ones, it is the opposite: how long will they make do with claims of profitability, without worrying about funding?

Additional reporting by Arunima Mishra and Taslima Khan.

(Published in Business Today)

A degree of style

Pradipti Jayaram, Hindu Businessline
Bangalore, 21 November 2014

If you’re someone who has for long harboured the dream of studying at prestigious universities abroad, such as the University of Oxford, Harvard or UCLA, or even someone who just wants to make that impression, merely by owning merchandise from those institutions, there is good news for you.

The University of California and Los Angeles’ merchandise is already available at Lifestyle stores across India. Harvard University has been selling its merchandise online in partnership with Myntra. Likewise, the University of Oxford recently tied up with Franchise India and US-based Bradford Licensing to produce and sell Oxford LLP merchandise India, 2015 onwards. This includes apparel, back-to-school products, mementos and other memorabilia.

Why do these institutions, which don’t have campuses in India, sell their wares here? According to Srinivasa Rao, Head-Marketing, Lifestyle International Pvt Ltd, UCLA-branded goods are popular and are doing very well in terms of sales. “Based on our experience, over the last two years, we feel that this category has good potential and will continue to grow,” he adds.

“University gear began as a means to inculcate a feeling of belonging, fellowship, and college pride among those associated with the university,” says Devangshu Dutta, Chief Executive at consulting firm Third Eyesight. He believes this feeling extends not only to current students, but their families, as well as alumni and their families. “For the more ‘desirable’ campuses the pull even extends to customers who have no direct connection with the university,” he adds.

For Ankit Kapoor, a New Delhi- based high school student, if he could get his hands on some university merchandise in India he would surely buy it. “Harvard and Oxford have an awe-inspiring reputation in India. Many prominent Indians have studied there. I hope to study at either of them, too, one day,” he adds.

“The University of Oxford enjoys a worldwide reputation and could be considered to be as famous as luxury brands such as Louis Vuitton and Ralph Lauren in terms of brand awareness,” says Chris Evans, managing director of Oxford Ltd, the university’s commercial arm, to a news agency.

“We launched UCLA’s gear in India when we realised that collegiate wear, growing in popularity, was an under-serviced category. There is a substantial section of the upwardly mobile urban population that patronises such collegiate wear, as it offers a relaxed wear option with a premium appeal and helps them connect with the institution’s brand,” says Lifystyle’s Rao.

Slice of the pie

In India, the number of current and past students of these foreign universities and their families is too small to form a target group, says Third Eyesight’s Dutta. “The addressable market, therefore, must include consumers without a direct connect, a group that any other international brand is also targeting. Many fashion brands already use faux university logos on their graphic t-shirts, sweatshirts and jackets, as a design feature. So it is reasonable for genuine university merchandise to aim to get some of that business,” he elaborates.

However, he believes that it is the pricing, availability and visibility that will determine the success of such college gear, as it does for any other brand.

According to a recent article in BusinessLine, the apparel range of Oxford University will be placed in the “mid-to-premium range” and categorised in the affordable luxury segment.

“The job of a brand is to create an additional pull, perhaps, provide a price premium or extra margin to the brand. At this time, it’s an open question whether the college logo will pull consumers in the same way or more than an established premium fashion brand, if the college merchandise is priced at par or higher than competing fashion brands,” he adds.

Better visibility

What about alumni of these institutes who wear their foreign education as a badge of pride and revel in the exclusivity it confers? Are they indignant that a mere piece of apparel can smooth over the difference, even though it’s only in appearance?

Rahul Advani, a Singapore-based musician and University of Oxford alumni, says it’s a positive trend and that more people, irrespective of their association with the University, should have greater access to such merchandise. He believes it will contribute to further enhancing the reputation and prestige associated with the universities, and can possibly help attract and increase funding and donors “which universities in the UK need, given the recent cuts in government funding”.

“The more that people know about Oxford, the better,” he adds.

Having said that, don’t these universities’ brands, like all brands, run the risk of over-exposure? For the answer to that one, stay tuned…

(Published in Hindu Businessline)

Booming e-tail sounds death knell for electronic retailers across the country

Rahul Wadke/Rajesh Kurup, The Hindu Businessline
Mumbai, 20 November 2014

Till a couple of months ago, Peshwa Acharya used to call up Shailesh Bhai, owner of a nondescript electronics shop Maruti Infosystem at Lamington Road here to buy mobile phones or laptops.

He would get discounts as high as 12 per cent and home delivery.

But of late, he makes nearly half of his purchases through e-commerce sites; the reason: transparency in pricing, array of choices, convenience of buying and even higher discounts.

“People like me will move over completely to online buying as India is now leapfrogging to e-tailing much faster than expected,” said Acharya, the founder of focused marketing firm ‘Think As Consumer.’

This has already sounded the death knell for traditional electronic retailers in areas such as Lamington Road in Mumbai, Nehru Place in Delhi, Canning Street in Kolkata and Ritchie Street in Chennai.

Plummeting sales

Vendors lamented that their sales have dropped by more than 35-40 per cent during the past three months as online market firms went on a marketing blitz.

“Our bottomline is being hit badly, and sales are dipping by the day. How these companies (online firms) manage to sell below dealer prices is not clear. If this continues, we (retailers) will have to close shop in the next five years,” Chintan Zangda, owner of Computer Section in Mumbai, said.

“Our only recourse is to approach the Competition Commission of India, for violation of the Competition Act,” he added.

There are an estimated one lakh small retailers in the consumer durables, information technology and telecom retail space in India, which is worth Rs. 50,000 crore.

The plight of retailers elsewhere is similar. “I am thinking of quitting this and getting into something else,” Basavraj, a computer trader from Bangalore said, adding his turnover has plummeted to about Rs. 1 crore today from Rs. 5 crore earlier.

Grim scenario

E-commerce firms are flush with cash from multiple rounds of investor funding and are battling for market share. Here, discounted price is the prime differentiator, said Devangshu Dutta, Chief Executive of consulting firm Third Eyesight.

“In our marketplace, products are sold in compliance with the laws of the land. We clearly tell our sellers to sell products in accordance with applicable laws,” a spokesperson for India’s largest online retailer Flipkart said.

“All authorised dealers and middlemen can sell their products on online platforms,” is what Flipkart has to say on the conflict between retailers and online marketers.

For online firms, however, business is not as easy as it seems.

“All the major e-tailers are not just acquiring customers at high costs, there is also a huge customer churn and little loyalty or stickiness,” Dutta added.

All said, e-commerce is a reality that cannot be wished away, at least by retailers.

(Published in The Hindu Businessline)

Wal-Mart denies violating FDI norms, says all rules followed

Hindustan Times

New Delhi, 20 November 2014

Multinational retailer Wal-Mart on Thursday refuted the allegations made by of foreign direct investment violation in India and insisted that it regularly conducts membership audit internally to keep a tight vigil and continuously improve strict compliance norms.

Cobrapost, which recorded the entire operation on video, had shared its findings exclusively with HT. Based on that, HT reported on Thursday that Wal-Mart, Metro Cash & Carry and Carrefour, which are allowed to sell goods and merchandise only to wholesale customers in India, are blatantly violating rules and selling to individuals.

Wal-Mart claimed it has deactivated membership of more than 1,50,000 members over the years due to failure to furnish renewed business licenses. “I would like to highlight membership is rejected… terminated… in case it is found that the business license provided by the member is not valid or the member is unable to produce a valid license,” Rajneesh Kumar, vice-president, corporate affairs, Walmart India, in an email response to HT.

On Thursday, editor Aniruddha Bahal said: “If a proper investigation is done by the commerce ministry on the membership base, specially focusing on the add-on cards, I am confident there will be a big chunk of people, who would not qualify to be either resellers or institutional investors…”

“Does commerce ministry have a process to monitor what these stores are doing,” Bahal questioned.

Minister of state for commerce and industry Nirmala Sitharaman, when contacted by Hindustan Times, for her response on the issue declined to comment.

“It is not possible for such global firms to violate legal agreements with a sovereign entity…They would have followed all the norms,” said Devangshu Dutta, chairman, Third Eyesight, a retail consulting firm.

However, Wal-Mart refused to respond on how individuals were purchasing from these cash-and-carry stores as shown in the video.

“At Wal-Mart, we adhere to very strict compliance processes and have a robust membership process. We are not only fully compliant with the foreign direct investment (FDI) regulations in the country but also remain fully committed to follow the laws of the land,” said Kumar.

Carrefour and Metro had not responded to a detailed questionnaire on the FDI violations at the time of going to print.

(Published in Hindustan Times )

Wipro Consumer Care & Lighting sees a billion-dollar revenue this fiscal year

Varun Sood, The Economic Times

Bengaluru, 11 November 2014

Wipro’s consumer care and lighting business could end this fiscal year with $1 billion (Rs 6,000 crore) in revenue, as the privately-held company expects the Narendra Modi-led government’s promised reforms to start reflecting on the ground, leading to a better second-half of the year for the company.

Wipro Consumer Care & Lighting, which reported a little more than Rs 5,000 crore in revenue in the year ended March 2014, saw a 25% growth in revenue in the quarter ended September, according to a senior company executive. "We did 11% volume growth (in the second quarter)," said Vineet Agrawal, president, Wipro Consumer Care & Lighting, adding that revenue grew 25% in that period on account of the 10-11% price hikes the company undertook.

This growth will be the envy of some of the goliaths, including Hindustan Unilever that saw a 5% growth in volume and homegrown Dabur that saw volume growing at less than 9% in the July-September period.

Significantly, four states—Karnataka, Andhra Pradesh, Maharashtra and Gujarat—account for over 70% of the company’s topline, while the company generates 53% of business from overseas, including China, Indonesia and Malaysia. Since a large chunk of revenues are accounted from international markets, Agrawal shies away from putting a number because a currency depreciation could prove to be the biggest spanner in the company’s e growth. Nonetheless, he remains optimistic that the Modi government will walk the talk and release money for the pending projects, thereby giving a boost to discretionary spending."The bigger struggle for now is liquidity. The money (is stuck) with our traders and distributors. Earlier, if they paid me in 60 days, now they pay me in 90 days," said Agrawal.

The fast-moving consumer sector growth has halved to 9% in 2013 from 18% in 2012 with some experts pencilling-in a lower growth for this year on account of "uneven demand", hurt by below normal monsoon, higher competition among companies and lower economic growth leading to less increments.

"Multiple reasons (including) Intensification of competition among firms, food inflation, lower monsoon and low increments suggest that growth for the sector as a whole will be lower this year," said Devangshu Dutta founder of Third Eyesight, a Delhi-based consultancy.

"So, against that backdrop, Wipro Consumer story is heartening. A lot of this success is also on account of overseas acquisitions made by the company. Also, in the last few years, the company has tried to reposition itself."

Wipro’s lighting and furniture business accounts for 18-19% of the company’s domestic sales of about Rs. 2,400 crore. It recorded a 14% growth during the second quarter. Although Wipro consumer’s two brands account for a large share of revenues, with Santoor alone bringing in 25% business and Yardley accounting for another 15%, Agrawal dismissed any talks of skating on thin ice.

"It is our strength. I would not like to have seven brands which each have a 5% share. For the simple reason, if you are not big, you cannot be profitable, you cannot defend or be aggressive," he said.

The management also believes that India could soon see a lot of more white goods being sold through ecommerce sites as the smartphone penetration increases. In China, which accounts for about 15% of its Rs. 2,600 crore business from overseas Rs markets, Wipro Consumer generates 9% business from internet users.

In India, like in Indonesia and Malaysia, Wipro Consumer currently generates less than 1% of overall business from e-commerce sites.

(Published in The Economic Times)