Written By Writankar Mukherjee

KOLKATA | MUMBAI: Retailers have advanced their end-of-winter and year-end sales by one to two weeks this year after business in November turned out to be flat or lower than a year earlier, poor consumer sentiment and predictions of a warmer season.

Ecommerce marketplaces Amazon and Flipkart, too, have lined up promotions this month and next to clear inventory, three executives said. Discounts will be offered across a range of products, including electronics and smartphones, they said.

According to Yogeshwar Sharma, executive director of Select CityWalk mall in south Delhi, shopping has become offer-driven now and retailers are looking to give such options almost every month. “Winter stock is also risky since brands will have to hold the merchandise for a year if they remain unsold. So most retailers will offer full-priced products as well as discounted ones and early winter sales are becoming a norm now,” Sharma said.

“However, retailers and brands, too, are to be blamed for this vicious cycle by purchasing far more merchandise in advance based on predictions which turn out to be faulty. This then creates issues with cash flow, forcing them to offer discounts,” said Devangshu Dutta, chief executive officer at consultancy firm Third Eyesight.

The trend of bringing forward winter sales from the usual time of end-December or early January started two years ago, following poor business in the preceding months. This year, Woodland, Spencer’s Retail and 2Bme have already started their year-end sales.

Woodland India managing director Harkirat Singh said the sale has been advanced this year on expectations of better growth than last year’s sale, offering discounts even on winter wear. “May-June business was down, picked up little during Diwali, while November was flat,” he said.

Arvind Brands, which operates Arrow, US Polo Assn., Sephora, Calvin Klein and Tommy Hilfiger stores, will start its sale from the third week of December.

Electronics and smartphone retailers such as Reliance Digital and Vijay Sales are trying to establish year-end sales in these categories though their bigger promotion is near Republic Day. Vijay Sales director Nilesh Gupta said the year-end promotion will help in clearing inventory.

“The advancement started two years ago due to low sales, but retailers haven’t got back to the original end-of-season sale schedule since the base is already set now and growth will generally be compared over same period last year,” said Vasanth Kumar, managing director, Lifestyle International.

However, a senior industry executive said not all retailers and brands may unveil deals early. “While some brands are advancing end-of-season sale, it is not a secular trend. Leading retailers would rather sell full-priced merchandise in December and start their end-of-season sales only in the first week of January, which was the trend until two years ago,” said Rajendra Kalkar, president (west), High Street Phoenix Mall.

The India Meteorological Department has predicted a warmer December-February.

Source: economictimes

Anil Rai Gupta is scripting the growth story of the Havells Group with strategic acquisitions, technology adoption and rural expansion

Written By MANU BALACHANDRAN

We want to be something like the Apple of electrical products. We want to be a premium mass electrical company: Anil Rai Gupta, chairman and managing director, Havells India

Anil Rai Gupta is well into his fifth year at the helm of Havells.

With each passing day, the 50-year-old can’t help but realise the striking similarities he shares with his father, Qimat Rai Gupta, when it comes to matters of running the ₹10,000 crore Havells Group. Qimat Rai Gupta, a former school teacher, built the company from the ground up, after starting as a small-time shopkeeper selling electrical goods and cables in New Delhi in 1958.

“We are more same than different,” Gupta tells Forbes India. The second-generation businessman has been named Entrepreneur for the Year in the 2019 Forbes India Leadership Awards. Gupta took over the mantle of chairman and managing director at Havells India after Qimat Rai Gupta passed away in November 2014. As with many family-run companies, the economics graduate from the prestigious Shri Ram College of Commerce in Delhi had been groomed by his father for many years before he finally took over the reins.

“Sometimes, it would happen that when my father was taking some decisions or doing something, you felt that it could have been done differently,” Gupta says. “But now when I’m in this chair, I do the same things. But obviously, there will be differences and the differences come from the fact that he was a self-made entrepreneur starting with zero capital while I am a trained entrepreneur.”

Yet, the past five years have seen the emergence of Anil, a tactful and astute businessman with a vision for building the group into its next phase of growth. “We want to be something like the Apple of electrical products,” he says. “We don’t want to be considered as another ‘me too’ company. We want to be a premium mass electrical company.”

Since he started heading the company, Gupta has taken various significant decisions. This includes selling Sylvania, a Frankfurt-based electrical company that Havells bought in 2007, and acquiring Lloyd in 2017 to foray into the electrical appliances industry. Now, as India grapples with a slowdown, Havells has been focussing heavily on building up its manufacturing capacity, in addition to setting up a large rural network to piggyback on a revival in the Indian economy.

The group already has a significant play in the Indian fast-moving electrical goods and electrical equipment category. Havells manufactures everything from fans, water heaters and personal grooming products to cables, wires, air conditioners, washing machines and television sets. The company boasts of a pan-India dealer network of over 11,000 distributors and some 6,500 employees. In 2019 fiscal, the company had annual revenues of ₹10,057 crore, growing 21 percent over the previous year, while profits grew 11 percent to ₹791 crore. The company currently has a market capitalisation in excess of ₹43,300 crore, making it one of the largest in the segment. Its competitors include Polycab and Apar Industries in the electrical categories while it competes with the likes of Whirlpool, Voltas, Samsung and LG in the consumer appliance category.

“Anil is symbolic of a new generation of leaders that India currently needs,” says TV Mohandas Pai, chairperson of the board at Manipal Global Education Services and the former director of software giant Infosys, who also serves on the board of Havells. “Anil listens to everybody, is transparent, and respects opinions. He has also been able to carry on the legacy of his father and understands the importance of distribution. Yet, when it comes to hard decisions, he takes them.”

Taking Tough Calls

Selling a company that he led from the forefront to buy when he was the joint managing director of Havells is perhaps the toughest decision Gupta had to take upon becoming chairman.

In 2007, Havells had bought Sylvania in an attempt to tap into the global market. At the time of the purchase, Sylvania was nearly one-and-a-half times the size of Havells, and the idea was to leverage on Sylvania’s brand to sell in India, China and Europe, among other markets. While Havells had annual revenues of ₹2,000 crore, Sylvania clocked over ₹5,000 crore.

“There were two ideas behind the acquisition of Sylvania,” says Gupta. “We wanted to get global access to lighting technology and to the markets of Europe and Latin America. We are a distribution and brand-oriented company and we visualised that it would be a good idea to acquire.”

But, sluggish growth in Europe in recent times meant that the acquisition was becoming a burden on the Noida-headquartered company. In the 2014 fiscal, Sylvania’s losses stood at 4 million euros, rising to 10 million euros in 2015. “We had already taken the advantage of the technology and the technology transfer that had to happen,” Gupta says. “Anyway, technology was also going to change toward LEDs (light-emitting diodes).”

Such developments also meant that Havells was looking for better avenues of growth. Around the time, even as 40 percent of the company’s business was outside India, an impetus to the Indian lighting industry by the central government in 2014 provided an opportunity. Under a new initiative—called the National Programme for LED-based Home and Street Lighting—the government wanted to increase India’s usage of LED lamps across homes and cities and replace conventional lamps, which typically use more power.

“I think around 2014-15 we realised that we want to focus more on the India growth story for the next 15-20 years… while the global market will continue to have their struggles of growth, India is providing a huge growth opportunity for the next two or three decades,” Gupta says. “It is something similar to what happened in Japan between the 1970s and 1980s, and China from 1990 to 2015.”

To begin with, Havells sold an 80 percent stake in Sylvania to engineering services company Shanghai Feilo Acoustics for ₹1,340 crore in December 2015.

“Every big decision is a difficult decision. But I think, thankfully, the kind of management style that my father has taught me depends a lot on consensus-building and we are a great team of people who are open to discussing things rather than just being dependent on one man,” Gupta says. “The final buck stops with somebody, which is me. When the mind is very clear, the clutter goes away and it’s easier to make a decision.” Havells sold the rest of the 20 percent in December 2017.

Havells plant in Alwar, Rajasthan, is the largest single location wire and cable plant in the country.

Buying Lloyd

Looking for better avenues of growth within India, Gupta wanted to build Havells for India for the next 15-20 years. “When I took over, we started looking at a different landscape and that meant a different perspective,” he says. This meant that the organisation—which had largely remained an electrical company manufacturing cables, wires, motors, fans, switchboards, kitchen equipment and geysers—began looking at the consumer durables industry as well. This included manufacturing appliances such as air conditioners, washing machines, and television sets.

The belief was that since Havells had already established itself as a premium brand, it could broaden its portfolio to offer newer products. “Over the past 20 to 30 years we’ve been investing heavily in three or four things,” Gupta explains. “On the brand side, we moved from [being] a B-grade brand to A grade, and we’ve moved from an industrial-oriented brand to a consumer-oriented brand. Distribution was a huge investment that the company made over the last few years. We also invested heavily in technology and manufacturing capabilities.”

That’s when a banker informed the group about a potential sale of Lloyd by its promoters. “Around 2015-2016, we started looking at opportunities in the other electrical and electronic products which are big industries that we were not present in,” Gupta says. “This is one consumer durable category, which is a large industry in India. But the segment is dominated by multinationals and there isn’t one dominant Indian company in this segment.”

India’s appliance and consumer electronics market was worth a staggering ₹2.05 trillion ($31.49 billion) in 2017 and is expected to increase at 9 per cent CAGR to reach ₹3.15 trillion ($48.37 billion) in 2022, according to the India Brand Equity Foundation, a trust established by the Ministry of Commerce and Industry. Of this, the washing machine, refrigerator and air conditioner markets in India were estimated to be around ₹7,000 crore ($1.09 billion), ₹19,500 crore ($3.03 billion) and ₹20,000 crore ($3.1 billion) respectively. Companies such as Samsung, LG, and Whirlpool dominate the industry currently.

“While we had an idea of getting into this industry ourselves, unlike the other additions that we have done in the past through organic expansion like in fans and lighting, here we wanted to get into acquisition because we wanted to acquire a distribution channel as well as a brand that is already in this business,” Gupta says. “So that’s when this Llyod opportunity came along, which could get us an entry into the consumer appliances

industry.”

Havells then spent a staggering ₹1,600 crore to buy out the consumer durable business (CDB) from Lloyd Electric and Engineering. The company, which was struggling with debt, was primarily engaged in the sourcing, assembling, marketing and distribution of products such as air conditioners, televisions, washing machines, and other household appliances. “It already had a distribution channel all across India and was well-suited into the ‘deeper into homes’ philosophy of Havells,” Gupta says. By the time Havells purchased Lloyd, the company already had a network of over 10,000 direct and indirect dealers across India, with a 14 percent market share in the home AC segment.

Becoming a household name

Today, a bulk of Havells’s focus is on research and development, particularly on new product categories and technologies. Alongside this, the company has also been investing in setting up manufacturing units for Lloyd. “A lot of times, even today customers ask me whether [our] electrical products come from China. Everything that we sell is manufactured in India,” says Gupta. “And we have been able to financially do it successfully, contrary to what people think.”

Another focus has been on turning more professional, bringing in management professionals to run various functions. Last year, Havells hired Mukul Saxena—credited with setting up a research and technology centre for German conglomerate Siemens in Bengaluru—as executive vice president and chief technology officer. “So for each business, and each function like R&D and manufacturing, we now have professionals who manage those; people who have done this in very large organisations… we’ve been able to attract that kind of talent to our organisation,” Gupta says.

Yet, the past few years have not been very easy. Much of that has been largely due to a slowdown in the Indian economy. For Gupta, however, since his business depends largely on real estate, the period also provided an opportunity to strengthen its foundation. “The growth continues, and we want to keep getting deeper into consumers’ homes,” Gupta says. “So we’ve realised that if we want to keep giving the best product to the consumer with better technology over a period of time, then we must get away from this ‘value for money’ tag and be a mass premium player.”

To start with, Havells has initiated a restructuring of Lloyd’s distribution network. “When we acquired Lloyd, it was a value for money brand and it was going into a certain channel that was not selling mass premium products,” Gupta says. “That means Lloyd was not available at stores such as Vijay Sales or Croma or Reliance Digital. While we want to continue to retain those existing channels, we also want to expand the distribution channel. So the right investments are being made.” The company also brought in new brand ambassadors, including actors Ranveer Singh and Deepika Padukone from March this year, in addition to Mohanlal and Mahesh Babu.

“Even in a slow market, Anil and his team have maintained their push on branding and marketing, which I think will stand them in very good stead,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “The Indian market is growing, though the pace may increase or decrease at different times; strongly establishing brands in the minds of the consumer and the distribution network is the best moat to build against competition, both domestic and international, now and as the market grows in the future.”

Gupta reckons that the results are beginning to show. “I think there is a huge transition in the minds of the trade and the consumer that Lloyd is a good quality product coming out the Havells portfolio,” says Gupta. “Havells does not call itself a luxury player. At the same time, you are not compromising on technology because you want to sell a cheap product, but you’re giving the right technology to the consumer at the right

price.”

Pai says that Gupta, like his father, spends a lot of time with the distributors. “He has a wonderful team and is very detail oriented. Yet, despite all the success, he remains simple and humble.”

What’s next?

Today, Lloyd is in the midst of a transition, says Gupta. “I think there’s a huge change in perception in the mind of the consumer, but more importantly, what happens in the first one or two years of any brand transitioning is that the trade changes their perception first and the consumer takes a bit longer to change his/her perception,” he explains.

He is confident the change will happen soon. He had already seen that with Havells when he was at the company with his father. The roots of the company can be traced back to 1958, when Qimat Rai Gupta set up an electricals trading business in Delhi’s Bhagirath Palace, a wholesale market for electrical goods. In 1971, when a fellow trader’s business ran into some difficulties, Qimat raised capital and bought out the firm, which was named Havells.

Over the next few decades, the company primarily focussed on switchgear, switchboards, and industrial electrical requirements. Then, around 2004, Havells entered consumer products like fans and lights, followed by the acquisition of Crabtree India in 2006 and Sylvania in 2007. “Just as the perception about Havells has changed over the last 15 years, the same will happen over the next four or five years in the case of Lloyd,” says Gupta.

Meanwhile, Gupta has also divided the businesses at Havells into four major categories, with separate business heads to look after these businesses. These include the building circuit protection business, cables, electrical consumer durables and a lighting business that also includes consumer lighting and professional lighting.

“We are a very entrepreneurial organisation,” Gupta says. “Even this personal grooming business [launched in 2017] was just like a start-up. Havells is a culmination of a huge number of startups over the last 20 years. We invest in the business for two or three years; once we have the results, we ramp it up.”

The company is currently number two in the fans segment, number two in the personal grooming category and number one in the geyser market and the premium lighting category. Much of that is largely due to the group’s philosophy of making it to the top three in the first five years of starting a category. “We have a plant in Rajasthan that manufactures 700,000 water heaters in a year. We have only 70 people in that factory. So it’s highly automated with huge investments. But many people [other industry players] still want to get it [the process] outsourced.”

Now, as the company looks for growth over the next two decades, it has also been busy ramping up its rural distribution network, to tap into the growing demand in the country. Over the past few years, India has laid much focus on rural electrification, with the government claiming near 100 percent electrification of villages.

“Within two-and-a-half years, we have set up a completely new rural distribution network. Electrification has already reached all the villages now, and those people will be buying more and more electrical products in the future. Already, in the last one-and-a-half years we’ve set up close to 1,500 distributors and 30,000 electrical products outlets in the rural areas. Within one year we will double this.”

Yet, even as it chases high volumes, Gupta is clear that they won’t venture into offerings that compromise on quality. “Like in fans, for example, there is an economy segment. We don’t want to be a part of that because that is low quality and cheap quality. If you compromise on quality in electrical products, either you’re compromising on safety or on electricity consumption. We want to be an energy-saving producer of products. We want to be highly reliable for the consumer.”

So where does Havells go from here? “We are getting ready,” Gupta says. “We’re trying to tune out the noise around this whole slowdown so that we continue to invest. The markets will be tough and our growth may not be 20 percent as earlier. But even if we grow at 10 percent, we are happy with that.”

Source: forbesindia

Written By Sagar Malviya, ET Bureau

MUMBAI: The world’s biggest furniture retailer Ikea sold goods worth about Rs 2 crore every day on an average in its first year of operations, crossing Rs 400 crore in FY19 total revenue from its maiden store opened last August. This is a revenue record for any brand in the country from just one store -and in its debut year – in a market otherwise considered extremely value conscious.

Source: economictimes

Written By Varuni Khosla

NEW DELHI: Black Friday sale is catching up in India, with a spectrum of brands betting on the US ‘shopping day’ to lure discount-hungry consumers to make that impulsive purchase they’d been resisting.

Many brands and retailers both offline and online, including H&M, Myntra, Shoppers Stop, Canali and RealMe are offering up to 50% discount on select products across their range for three days.

At Palladium Mall in Mumbai, Reliance Brands-owned Canali, Salvatore Ferragamo, Emporio Armani, Brooks Brothers and Hugo Boss are offering up to 40% discount, while Aldo Shoes is giving flat 50% off. H&M is offering 20% off on everything on sale, industry insiders said.

Many firms including beauty brands The Body Shop, Kiko Milano and Forest Essentials, and clothing companies Gap, Ajio and Myntra have put together quick shopping offers, while some such as Shoppers Stop are running a countdown on their website. Being Human is offering flat 25% discount.

Black Friday, or the Friday after the Thanksgiving Day in the US, is regarded as the beginning of Christmas shopping season there. Many stores offer huge discounts and open very early, some even at midnight or the previous evening.

Indian marketers offering Black Friday deals is part of their efforts to reduce their dependence on the Dussehra and Diwali shopping peak that used to account for 50-70% of the year’s sales, said Devangshu Dutta, CEO at consulting firm Third Eyesight. “With modern retail distribution channels and high fixed costs, companies want to flatten out these peak seasons as much as possible,” he said. To do this, retailers create many events around which customer footfalls are induced to push slow moving .

“The Indian consumer has become smart and has by and large figured out what the discount pattern is and delays their purchases till then,” Dutta said. “While retailers and brands blame consumers for being price sensitive, they themselves create these events.”

Some marketers consider Black Friday a “business occasion” to acquire new customers while some others use the occasion to push fresh merchandise sales before winter sales kick in around December 20.

“As a retailer we look at this business occasion to acquire new customers since deals are irresistible,” said Tushar Ved, president of Major Brands that operated international brands such as Bath and Body Works, Aldo, La Senza and Promod in the country.

Pushpa Bector, executive director at DLF Shopping Malls, said some brands in the company’s malls in Delhi-NCR and Chandigarh have seen 15-20% upward swing in sales during Black Friday. “We have seen a good response for a couple of years and the concept is here to stay,” she said.

Poor Diwali performance and increasing competition from ecommerce platforms that are always offering some or the other discounts, too, are pushing offline retailers and brands to look for a reason to go on sale, experts said.

“Some companies want to liquidate their winter stock which is possibly 6-12 months old,” said Yogeshwar Sharma, CEO at the popular Select Citywalk Mall in Delhi. “Since India has no concept of outlet malls where brands can recover their money, they discount nearly 70% of their stock in this sale,” he said.

“It’s like a herd mentality and no brand wants to lose out, even though less than two weeks from now winter sales kick in,” Sharma said.

There is usually some mystery around Black Friday offers in the US as many brands don’t reveal them till the last minute.

“In India, too, we have witnessed much enthusiasm for Black Friday,” said Abhishek Bhattacharya, country director at Kiko Milano India. “We give an open hand to the customer to choose any product and we expect the sales to grow 4x along with acquiring new customers base.”

One retailer said even those brands that had no plans to offer any special deal are forced into it because every other brand is offering some or the other scheme.

Source: economictimes

Himself vegetarian, Jaipuria’s RJ Corp is banking on the KFC franchise game to bring in big business over the next decade

Written By MANU BALACHANDRAN

Ravi Jaipuria, Chairman, RJ Corp
Image: Amit Verma

Ravi Kant Jaipuria has always been a vegetarian. It’s been the family tradition, and Jaipuria didn’t want to deviate from that. At his palatial home in tony Lutyens’ Delhi, where he hosts legendary Holi parties, Jaipuria never serves non-vegetarian food.

But business and personal sentiments are poles apart, and nobody knows it better than the 64-year-old. That’s why, two decades ago, he set out to serve non-vegetarian food to millions of Indians, much to the disdain of his father. Today, his company Devyani International owns nearly 400, or 70 percent of, KFC outlets in India.

“Sometimes I wonder if I did the right thing,” says Jaipuria. “I don’t know. My father was very proud of me except for this. I was very close to my father, so I don’t feel great about it.”

Despite the remorse, Jaipuria is also well aware that the next phase of growth for his business empire will come from selling fried chicken to Indians. So, apart from planning an IPO for Devyani International next year, Jaipuria is busy plotting strategies to increase the number of stores across the country, from highways to malls. “The growth is going to be unprecedented. We are already talking about opening between 50 and 100 restaurants a year in India. So, to open another three to four hundred KFC outlets over the next few years isn’t something out of the blue,” Jaipuria says.

Already, in June, Jaipuria bought out 61 stores from Yum! Brands, KFC’s parent company. “KFC is going to be our lead brand,” he reiterates. Besides, his Devyani International also owns franchise rights for the pizza chain Pizza Hut, and coffeehouse Costa Coffee. Jaipuria claims to own over 420 Pizza Hut outlets, nearly 80 percent of the number in the country. Besides him, Sapphire Foods remains the only other franchisee for KFC and Pizza Hut in India. The group also has proprietorship of other food outlets, including popular south Indian fast food chain Vaango and Foodie’s Bar, the lounge.

The billionaire’s big bet on KFC also comes at a time when he has already scaled up his beverage business, which forms the foundation of his business empire. Varun Beverages, owned by RJ Corp, is PepsiCo’s largest bottler in India, controlling 94 percent of all the bottling for the cola major. Varun is also PepsiCo’s second biggest bottler globally, and, this year, Jaipuria has bought out the bottling franchise rights for the southern and western Indian markets from PepsiCo, in a deal worth nearly `2,000 crore. With that, Jaipuria controls over 90 percent of PepsiCo’s bottling business in India.

“As far as the Indian market for Pepsi goes, it is well set right now,” says Jaipuria, who presides over the $1.7 billion RJ Corp and is ranked 53 on the 2019 Forbes India Rich List, rising 22 spots from last year. His business empire which he runs through RJ Corp includes carbonated beverages, ice-cream, fast food, schools, real estate, retail, and health care.

“God has been kind,” Jaipuria says about being on the Rich List. Yet, had it not been for a personal tragedy three decades ago, fate would perhaps have charted a different path.

The Jaipuria family is among the pioneers in the cola bottling business. Ravi’s father, Chunni Lal Jaipuria, and his uncle Mahavir Prasad Jaipuria were textile traders and, in the 1960s, Chunni Lal became a franchisee for bottling Coca-Cola in the country. However, with Coke exiting in 1977, the family shifted to Thums Up. Jaipuria, meanwhile, went to study in New York, and eventually settled down in Montreal.

“I lived there for about 12 years,” Jaipuria says. “As a kid, I enjoyed the western part of the world. I got married and settled down. I was quite happy, and things were going well until the Kanishka bombing in 1985.” Jaipuria’s wife was on board Air India flight 182 that exploded mid-air due to bombs planted by Canadian Sikh militants, killing over 300 passengers.

With a young daughter and son to look after, Jaipuria shifted base to India in 1987. His father, meanwhile, split the bottling business between his three brothers, with Jaipuria getting the Agra plant. He continued to bottle for Thums Up, while also dabbling in an apparel export business.

In 1991, as India embarked upon a new economic policy, and Pepsi decided to foray into India, Jaipuria knew he had to move on from Thums Up. “I think the trigger was that Thums Up had about 40 or 50 bottlers. Our territory and the growth opportunity was limited,” he says. Pepsi, with its international presence and financial muscle, made sense for Jaipuria in his quest to expand the business.

The rest is history. After winning franchise rights for the central Uttar Pradesh (UP) territory, Varun Beverages, named after Jaipuria’s son, expanded to Rajasthan and western UP. “We had a good team and were always able to do well wherever we went,” he says. Since then, Jaipuria believes that Varun Beverages has acquired a new territory every year or every alternate year, and in the process ramped up its plant count to 36. “We practically own between 93 percent and 94 percent of Pepsi’s India bottling business,” Jaipuria says.

Today, he has expanded Varun Beverages to five other countries including Morocco, Zimbabwe, and Nepal. “It’s a great business,” Jaipuria says. “We are doing extremely well and to get additional territories is not easy. You have to pay a huge price. But Pepsi has been very supportive. We have grown the market for them. It’s a two-way partnership.”

This year, Jaipuria intends to consolidate the business, especially since he bought out newer territories, and in the process added 11 more plants. Jaipuria paid the entire cost through a mix of internal accruals and a qualified institutional placement. “As you grow old, you also become a little averse to taking on debt,” he says.

While Jaipuria kept expanding his beverage venture, an opportunity had turned up in the fast food business. In 1997, he took on the franchise rights for Yum! Brands, then part of PepsiCo restaurants, that included KFC and Pizza Hut. Through Devyani International, named after his daughter, Jaipuria began to scale up the restaurant business and today has over 900 restaurants under its umbrella. However, that foray came at a cost: Disapproval from his vegetarian father. “I could never convince him. He was never happy with it. I made him meet the chairman of Yum! and the only thing he said was I wish he could sell it and give the money to charity,” Jaipuria says.

But, even the strain at home couldn’t stop him. “For me, it was a business. I said as long as I am continuing with my tradition and not doing it myself, how does it matter,” Jaipuria says. Today, however, he would have taken a different route, had the opportunity come along. “I mean if I had crossed 64 years of my life without doing this business, then maybe I would have crossed the remaining without doing it,” he says.

Jaipuria is clear about the direction Devyani will take over the next years. Apart from the proposed IPO, it is busy renting entire food courts at malls, instead of just focussing on a few shops, to accommodate all its brands. “And if the mall says they want a different brand too, we will take the franchise for that,” Jaipuria says. That apart, he sees a massive potential in the highways space, where there is a severe shortage of food and refreshment options.

But even as he goes about expanding other brands, KFC remains Jaipuria’s trump card. “If you look at KFC, it is the only brand with no competition. You look at burgers, McDonald’s has Burger King or Carl’s Jr, Pizza Hut has Dominos’ or Pizza Express. But KFC has no competition.” He cites the example of China, where until 15 years ago, there were about 400 outlets, whereas today it is opening 600 to 700 outlets a year. Jaipuria also sees huge potential in emerging markets like Nigeria, where he holds the franchise rights for KFC.

“There is definitely an underlying growth trend that is driven by a change in lifestyles, and an increasing orientation to brands and standardisation of experience,” says Devangshu Dutta, the chief executive of consultancy firm, Third Eyesight. “A QSR [quick service restaurant] meal could be a regular feature for younger consumers who don’t cook regularly at home, or consumers who are travelling for work or leisure, and that means there is a steady growth of QSRs.”

Besides Devyani and Varun, Jaipuria is also looking to expand his fledgling medical business: Diagno Labs, a medical diagnostics venture, and Cryoviva, a stem cell storage business largely set up due to his proximity to Naresh Trehan, the founder of Medanta. Jaipuria claims Cryoviva has been quite successful in Thailand and Singapore. “We are number one in Thailand and number two in Singapore,” he says.

While he had also dabbled in the retail store category, by setting up J Mart, he shut that down. “We didn’t have the expertise,” Jaipuria admits. However, he continues to bet on the ice cream and dairy category, where he operates the Cream Bell brand, both in India and abroad. “It’s done extremely well for us,” Jaipuria says.

But, has the economic slowdown affected him? “Of course not,” says Jaipuria. He reasons out that the past year has been a fabulous one for the group. “We have seen one of the fastest growth phases after a long time,” says Jaipuria. Much of that, he believes, is due to an improving electrification across India. “The power situation is improving in many rural parts of the country,” says Jaipuria. “For example, in UP there used to be no power supply for 16 to 18 hours. You can’t sell a warm soft drink. Now that there is power, it is helping us penetrate deeper.”

He also sees a potential in the vast untapped market that comes with low consumption of soft drinks in the country. India’s soft drinks consumption stood at 44 bottles per capita in 2016, significantly lower than US, where the per-capita consumption is 1,496 bottles, according to a report by Varun Beverages. In Mexico, the consumption was 1,489 bottles per capita while in developing markets such as Brazil, it stood at 537 bottles.

“There’s only one way to go, and that is up,” Jaipuria says. Along the way, having become Pepsi’s largest bottler, Jaipuria has also managed to rewrite their agreements, allowing Varun Beverages a better say in the running of the cola company. “Now we are running the country, so they have to listen to us. If I’m not happy about something. I won’t launch it,” Jaipuria says. As for Varun Beverages, he sees a tripling of revenue over the next five years. “If you look at Varun Beverages’ history, we have tripled the top line and the bottom line every five years. I’m going to try and do that again.”

In FY2019, Varun Beverages had revenue of ₹3,862 crore, while net profits rose to ₹332 crore compared to ₹235 crore the previous year. Since the company went public in 2016, Varun Beverages has also more than doubled its market capitalisation that stood at ₹18,375 crore in October 2019.

As for Devyani, the targets are pretty clear. “When you look at soft drinks, the growth is organic. In the food business, particularly KFC, if I’m able to open another hundred outlets every year, the old and the new stores will grow at the same time,” Jaipuria says.

Experts agree that Jaipuria is on the right track. “The market is overall significantly under-penetrated by QSR chains,” says Dutta of Third Eyesight. “Growth is an outcome of a combination of factors: Growing demand aggregation in more centres, improved connectivity that makes logistics and management significantly easier, and improved electrification that helps maintain temperature control, vital for product quality, consistency and avoiding waste. The growth of highways and rest-stops will help increase QSR outlets, and the share of QSR chains in the market. Given India’s diversity of tastes and cuisines, a mix of formats, brands and menus will be a favourable factor for the Jaipuria group.”

So, where does Jaipuria want to take RJ Corp from here? “We are not going to get into any new business for the time,” he says. “We are going to grow our existing business. We’ll look at a few other countries to expand for Pepsi. As for the food business, we’re not looking at too many countries as such, because there is still huge growth potential in India.”

All that means is Jaipuria has no plans to hang up his boots anytime soon. But he will not move at a breakneck speed either. Every year, he takes a week or two off for a spa to relax. “I think I want to take it easy,” he says. “I’m travelling for 20 days a month. I’m going to slow down and I am also grooming my son. In the next few years he should be able to take care of the business.”

As for setting targets, though, Jaipuria has one more. “My birthday is coming up next month. I want to lose a few kilos before that.”

Source: forbesindia