admin
September 24, 2020
Written By MANU BALACHANDRAN
Mattress maker Duroflex is regaining lost ground by ramping up product development, and expanding into new geographies
(Clockwise from top) Mathew Chandy, Mathew Joseph and Mathew George of mattress-makers Duroflex Image: Nishant Ratnakar
Mathew Chandy knows well the importance of having professionals in a family business. After all, the 42-year-old had already seen the flipside, quite early in his family business. A graduate of the National Law School of India University, Chandy was witness to his 57-year-old family venture, mattress maker Duroflex, reach soaring highs and brutal lows largely as a result of a family feud. Now, in firm control of the company, the former lawyer is en route to reclaiming what Duroflex had lost during the turbulent times.
“We lost about 10 years between the mid-1990s and 2000s,” says Chandy. “The opportunity cost was huge, and that’s actually when many of our rivals grew quite well. Over time, we realised that if we had to improve productivity and win the bigger battles, we had to bring in professionals.”
But, bringing in more professionals into a traditional, family-owned business is only one part of winning the battle. Since taking charge as the managing director of the Bengaluru-headquartered company in 2012, Chandy has digitised much of its operations, expanded into new geographies, ramped up its online presence, and is developing personalised products to give Duroflex a much-needed push in the Rs 10,000-crore mattress market in India. Over the next five years, he aims to be a Rs 2,000-crore company, from about Rs 500 crore at present. India’s mattress industry is largely unorganised, with branded companies such as Duroflex, Kurl-on and Sleepwell controlling just about 30 percent of the market. “I am less focussed on the final turnover number,” Chandy says. “I have kept it flexible. But the focus is more on the vision and where we want to take Duroflex.”
As a result, unlike a decade ago, the mattress maker is visibly more aggressive in its approach, increasing its advertising spend and partnering with cricket teams Royal Challengers Bangalore and Chennai Super Kings in the Indian Premier League.
From Kerala’s hinterlands
Duroflex was set up in 1963 by Chandy’s grandfather PC Mathew, who hailed from a family of rubber planters. An engineer, Mathew had been working with the family’s tyre business, National Tyres, with an ambition to branch out and try his entrepreneurial skills.
Soon enough, he was selected for a government mission for entrepreneurs to Germany and Austria as the Indian government looked to kickstart the domestic manufacturing sector. Incidentally, he was joined by Ramesh Pai, a Mangaluru-based industrialist who would later go on to set up another mattress company, Kurl-on. On the trip, while on a factory visit to Mercedes Benz, Mathew saw the use of rubberised coir in car seats, particularly due to its high durability and cushioning. This made the young engineer try his luck in setting up a similar business back in Kerala. He soon started Duroflex, with a manufacturing facility in Alappuzha. “But the machines were stuck with the Customs department, and he had to reverse engineer the entire process to get going,” Chandy says.
The company’s clientele soon included Indian Railways and bus makers, among others. “But, the business was still not profitable,” says Chandy. By the 1970s, Mathew’s older son, Chandy Mathew, who had graduated from the Indian Institute of Technology, Madras and the Indian Institute of Management, Ahmedabad, joined him. In the 1980s, the group expanded its business, setting up two factories in Hyderabad and Bengaluru. “Back then, Kurl-on and Duroflex were of the same size, and until the mid-1990s business was brisk,” adds Chandy, son of Chandy Mathew. The company also set up an export-oriented business based out of Kerala for organic latex, which had also emerged profitable.
PC Mathew at his work desk in Alleppey, the first office where the Duroflex story began in 1963. The picture is from the early 1970s
Yet, they were finding it difficult to expand further north, particularly because the industry had largely remained unorganised. The group also found it difficult to professionalise the business, with Mathew’s five other children joining it. Around then, the company also tried its luck in manufacturing coir as a substitute for wood, which wasn’t successful, laying the seeds of discord among the brothers. “It’s very important to have family constitutions and succession planning,” Chandy says. “Unlike in a family business, professionals are always judged based on their merit.”
Over the next few years, as the coir business failed to take off, the brothers too had a fallout, with three of them on one side and three on the other. “Over the next 10 years, Duroflex lost a lot of time as the board room battles intensified, and business decisions were stuck,” Chandy says. The dispute then went on to the National Company Law Tribunal, with three brothers leaving the company eventually. “That was the time when Kurl-on grew well,” Chandy says. “But, through it all, Duroflex focussed on setting global standards, but not many investments were made on growth.”
It wasn’t until 2008, when the family finally came together and worked on a settlement. But by then, unfortunately, Chandy’s father had passed away.
Picking up the pieces
Around the same time, Chandy’s uncle, George Mathew took over as the managing director. “He had been single-handedly running the business and had realised he needed to slow down,” says Chandy, who had been working as a lawyer with UBS in London. He was offered the role of running the business back home.
“Around 2012, my uncle had realised it was time for him to retire,” Chandy says. “We debated whether to sell or grow the business. I realised I wanted to be part of the India growth story.” It also helped that the global economy was in the midst of a slowdown, and India was largely immune to the crisis. That year, Duroflex had a revenue of Rs 110 crore.
Over the next year, after he shifted base to Bengaluru, Chandy spent much of his time trying to understand the family business, before revamping it. This included ramping up the marketing budget, focusing on new designs, upping the overall quality of products, and focusing on paying better salaries to employees in an attempt to professionalise the organisation and attract talent.
“Many family businesses believe the capital must be kept with them or in the business,” Chandy says. The company also brought on an advisor, Equitor Value Advisory, a firm specialising in unlocking the brand value of a company. “As opposed to a startup, we had to get an understanding of the brand and how we should get more out of it,” Chandy says. “We had to correct weaknesses and unlock the real value.”
Meanwhile, the company also started hiring more professionals. New recruits included Pradeep Mishra from United Breweries as CFO, Mohanraj Jagannivasan from Wipro to head sales, Mathew Thomas to head the polyurethane foam division, and Smita Murarka from Amante as head of marketing. Today, the company operates 500 exclusive outlets, with over 3,000 dealers and 10 company-owned stores around the country. It employs 1,500 people, including contractual and permanent ones, across five factories.
Over the next few months, the company is aiming to complete a manufacturing plant in Indore, which will help expand business in the western and northern parts of India. This will also need boosting its distribution network, and the affiliation with IPL has helped build brand identity. “We are no longer a regional brand,” says Chandy.
The big leap
When he had taken over the reins of the company, Duroflex sold its products only in the six states of southern India. Rival Kurl-on has over 10,000 dealers, and nine manufacturing facilities across Karnataka, Odisha, Madhya Pradesh, Uttaranchal and Gujarat. “Today, we have a network across 29 states, and over 30 percent of our business comes from non-southern markets. And that is only going to increase,” Chandy says. Much of that, Chandy reckons is also thanks to its foray into the ecommerce sector in 2017, with the launch of Sleepyhead, a product aimed at millennials. It embodies the concept of a mattress in a box, which is logistics-friendly and can be compressed and rolled back, making it easy to ship. “Today, about 30 percent of our revenues come from ecommerce,” Chandy says. “We are trying not to be traditional anymore, and be as agile as possible.”
He was also helped by his cousins, who have since joined the business: Mathew Joseph leads the Sleepyhead business, while Mathew George heads new product development. “He is in charge of new materials, the new range of mattresses and design, including plans to create a work-from-home line of furniture,” Chandy says. Another cousin, Jacob George, working from Mumbai, is in charge of expanding Duroflex’s business in the western market. “Between us, we have a pact to stick together and not fight,” Chandy says. “We will live with our differences and capitalise on them.” By 2018, consumer-focussed private equity (PE) fund Lighthouse invested $22 million (Rs 160 crore) in Duroflex. Lighthouse’s deal was the largest PE investment in a mattress maker after Motilal Oswal PE invested Rs 90 crore in Kurl-on, India’s largest mattress maker, in 2015.
“Unlike other FMCG products, this is a product that has a long lifespan,” says Devangshu Dutta, CEO of retail consultancy Third Eyesight. “But the industry has always remained unorganised.
Now, over the past decade, customers have become more conscious about their purchases and has moved towards branded products. The lockdown has only meant that people have also begun to focus more on their homes.” That’s something Chandy knows well. Over the next few months, he wants to improve the conversation around the mattress category and has roped in celebrities including Milind
Soman and Anil Kumble to campaign for improved sleep and wellness. “What people don’t realise is how important sleep is to general wellness,” Chandy says. Besides, the company is also making inroads into the furniture category with products suitable for working from home, particularly for the millennial audience.
India’s mattress market is expected to grow into a $2.5 billion (Rs 18,300 crore) industry by 2022, according to a 2018 report from RedSeer Management Consulting. The branded mattress market is expected to constitute 37.5 percent of the market by 2022. “Unlike earlier, as a family, we are focussed on new channels and new geographies, and a focus on the future,” Chandy says. “In fact, August was among our best months.” Certainly, Chandy and his cousins are only getting started.
Source: forbesindia
admin
September 1, 2020
Written By Smita Balram, ET Bureau
Leading consumer product companies such as Hindustan Unilever, Dabur and Godrej Consumer Products have started replacing raw materials from China with local indigenous ones, as part of their strategy to either reduce or completely eliminate sourcing from the neighbouring country.
Sunil Kataria, CEO – India & SAARC at Godrej Consumer Products Ltd, said, “We are developing local sources for these imports. Since the world supplies are dominated by China, it will take some time for alte .
Source: economictimes.indiatimes
admin
August 31, 2020
Written By Sharleen Dsouza
India’s largest dairy brands, Amul and Mother Dairy, turned to baking during the pandemic.
When you have surplus milk, make butter—and then bake butter cookies. At least, India’s largest dairy brand is doing so.The world’s strictest lockdown to contain the Covid-19 virus forced 1.3 billion Indians
Source: bqprime
admin
August 30, 2020
Reliance Retail will get the benefit of economies of scale. The products can be bought in large quantities and sold at competitive prices, and would see further improvement in margins due to improving scale.
The numbers were already mind-boggling.
Reliance Retail is India’s largest, most profitable retail business and is the fastest-growing retailer in the world thus far.
Its revenues are higher than the rest of the organised retailers combined.
Reliance Retail’s business footprint spans across 11,806 retail stores in over 7,000 towns with 28.7 million sq ft of retail space.
It sells more fruits and vegetables than any of its peers. It sells more flour and oil, it sells more television, more washing machines, and more clothes.
Despite these fantastic sounding numbers that it has achieved in the 14 years since its launch, there are still some missing pieces to the retail ambitions of Chairman Mukesh Ambani.
Much of its revenue comes from consumer electronics segment. It makes up for almost 75 percent of the outlets, and about 25 percent of the revenue.
But its presence in other big segments, including groceries and fashion and lifestyle, is less intimidating.
With a total count of 800 stores, the grocery segment constitutes less than 10 percent of the stores, and 20 percent of sales.
Of all its retail stores, fashion and lifestyle retail contribute only 20 percent, but in terms of total sales it contributes 8 percent which is around Rs 13,500 crore.
Even in fruits and vegetables, the unorganized segment takes over 25 percent of the total pie.
That is where the deal with Future will help Ambani get closer to his vision for the retail business.
The mega transaction with a combined value of Rs 24,713 crore cements the position of Reliance Retail as the undisputed leader in the organised retail segment and adds muscle to the ongoing battle with Amazon for the Indian e-commerce market.
“Food and grocery retail is a fragmented market, so the acquisition is more of a consolidation of market share rather than establishing leadership. Reliance Retail is by far the largest retailer already, and the takeover of Future Group’s retail assets is more of a consolidation of its leadership position,” said Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight.
In the last 4-5 months of lockdown, neighbourhood stores have done well, while large-format stores have lost ground. In the coming months, it will be important to see how Reliance bridges the gap with neighbourhood stores and expands its market reach using its digital footprint,” he added.
According to Euromonitor, India’s retail market size is about $635 billion (Rs 42 lakh crore) that is split 59:41 between grocery and other categories such as apparel, footwear and electronics.
What falls under Reliance Retail?
Reliance Retail, which was started in 2006, is the retail initiative of the group and is central to the consumer facing businesses.
Reliance Retail has adopted a multi-pronged strategy and operates chain of neighbourhood stores, supermarkets, wholesale cash and carry stores, specialty stores and online stores and has democratized access to a variety of products and services across diverse segments for Indian consumers.
Serving the food and grocery category, Reliance Retail operates Reliance Fresh, Reliance Smart and Reliance Market stores.
In the consumer electronics category, Reliance Retail operates Reliance Digital, Reliance Digital Express Mini stores and Jio stores, and in fashion & lifestyle category, it operates Reliance Trends, Trends Women, Trends Man, Trends junior, Project Eve, Reliance Footprint, Reliance Jewels and AJIO.com, in addition to a large number of partner brand stores across the country.
What falls under merged Future Enterprises?
FRL is engaged mainly in the home and electronics retailing, value retailing and operates Big Bazaar, Easyday, and Foodhall, among other format retail stores. The deal will also involve Future Consumer, which operates the food business, and has significant links with FRL, which is its largest customer, accounting for almost 80 percent of its annual sales.
Future Lifestyle Fashions (FLF) was the flagship fashion business of Future Group. It so far operated in more than 400 stores in 90+ cities, occupying 5.7 mn sq ft of retail space. It ran in-house retail chains Central and Brand Factory, exclusive brand outlets (EBOs) and other multi-brand outlets (MBOs).
Similarly, Future Supply Chain Solutions provides supply-chain solutions [for non-agro products] to Future Group companies as well as to outside companies. The supply-chain company gets 65 percent of its business from FRL.
Large becomes larger
Reliance Retail, which was already the largest retailer in India by a long shot, gets even larger and bigger.
Its network gets a big push in the cities, where 40 percent of Future stores are present. In comparison, more than two-thirds of Reliance Retail’s nearly 12,000 stores are operating in Tier II, III and IV towns.
The company can now pick and choose which of Future’s stores to retain and rationalize the network.
Much of the businesses will be integrated, and that will include the grocery business under Reliance Fresh, and the fashion vertical under the banner of Reliance Trends.
Reliance Retail will get the benefit of economies of scale. The products can be bought in large quantities and sold at competitive prices, and would see further improvement in margins due to improving scale.
The deal will help strengthen the vision created through the launch of JioMart, the online grocery delivery service that propels the company’s omni-channel plans. JioMart, which is currently available only at selective cities, will now be able expand its reach.
To meet customer’s requirements for essentials, the beta version of the JioMart grocery consumer platform (jiomart.com) was launched across 200 cities, followed by an app later on.
Within a few weeks of launch, JioMart was delivering over 4 lakh orders daily, which according to Reliance Industries (RIL) is significantly higher than any other grocery home delivery company.
JioMart, which went live in May, that saw an order flow four times that of the pre-lockdown period for partner kiranas, pointing to the potential an online-offline network has for stakeholders
Reliance Retail will ensure last-mile connectivity through tie-ups with Kirana stores in the remote region of the country. This ensures formalization of the retail sector as a whole.
Growth in retail will complement Jio’s growth because both are consumer-centric.
The deal will help RIL’s retail business to expand its offline retail presence and get it ready to tap O2O and B2B opportunities. With Reliance Retail having only begun its digital commerce business (JioMart’s online grocery delivery business and the Kirana B2B distribution business), brokerage houses believe value creation from this business will happen only over the medium term.
What now?
After attracting a series of marquee investors to back Jio Platforms, Reliance Industries’ telecom arm, Chairman Mukesh Ambani, addressing the company’s 43rd Annual General Meeting on July 15, indicated that the group’s retail venture, too, has received strong interest from strategic and financial investors and plans are underway to induct some in the next few quarters.
admin
August 28, 2020
Written By Seetharaman G
The joint venture’s supermarket chain Star has been struggling to make a mark with only 57 stores across the country, compared to Reliance Retail’s 797 and DMart’s 214. Pushed into a corner, Star now has little choice but to think big
India’s supermarket war seems to be in its endgame. With the dust finally settling, the field is littered with the corpses of those who have tried and failed to make it their own. Some of India’s biggest conglomerates, like Aditya Birla Group and the Godrej Group, gave up the ghost and sold out.
India’s top two retailers—Reliance Industries-owned Reliance Retail and Avenue Supermarts-run DMart—are now squaring off against each other in a final fight for dominance. The third claimant to India’s retail throne, Future Group-owned Future Retail, which runs the Big Bazaar chain
Source: the-ken.com
