the hidden leaders

8/12/2019 The Hidden Leaders

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One of them has actually succeeded in turning the tide of paper cheques that threatened tooverwhelm clearing houses. He operates in cyberspace. Another prefers the physical product— the company she set up makes 2.5 lakh buns a day. es! you read that right. A third has created aservice that will give you the contact details of the first two firms for free! if you were to call upa number.

"hey are #ndia #nc$s new middle%class—not consumers but those finding new and innovativeways to cater to consumer demands. "hey are entrepreneurs who combine the energy of a start%up with the confidence of a big businessman.

"hey are the hidden leaders. &ach one of them has either scale! or a unique business model! or aunique competitive advantage 'or all of these(. "hey are )en *e+t! ne+t not in the sense of thethird generation of a venerable business family! but that they do things differently! inventing anew sector 'iogi and online tech support for individual ,- users( or giving an e+isting one anew twist ',atu eswani$s /emon "ree hotels! which attract five%star clients with four%star prices(.

And! as ,rof 0. 1anikutty of the ##1 Ahmedabad observes! not only did they succeed in creatinga niche for themselves! but some actually succeeded in driving out the vintage families from their businesses.

Business Today went out to round up a sample! looking for two things the company should be bigger and with a lower risk profile than a start%up! and it should not be a mature business with astately growth rate.

3e looked for people who had made it on their own! without fear or favour. 4%0chool stamps didnot matter 'as the -remica story will show(. *or did we go looking for ust se+y products 'roads

are not se+y! but putting up a toll gate is! as #64 #nfrastructure realised(.

As "echnopak Advisors -hairman Arvind 0inghal points out! this new 7middle class8 ofentrepreneurs is in many ways! more 7genuine8 than their counterparts of yore since most ofthem are starting out in a field that is much more level than ever.

Out of the handful of 25 names gathered! BT chose to profile 9:. Obviously there are manymore this is ust a platter.

And this is not all that is about )en *e+t. #n future issues! BT also plans to profile the )en *e+tas most people understand the term—the successful inheritors of established groups. "hen may

be a )en *e+t listing of entrepreneurs who set foot in the global markets from the day one. 4utfor now! turn over to #ndia #nc$s emerging middle%class.



/O)#*) #*"O "H& /O)#0"#-0

6emember that battery powered toy train you had as a kid; And how it went round and round onits tracks; 4ut you ended up with a desk ob or as a road warrior. 3ell! Aay 0. 1ittal is onelucky man—he started off with the usual stuff! like an

14A from the <0 and a stint in the family business! before moving away to do his own thing! but now isthe proud owner of entire goods trains.

1ittal$s first foray was as a trader in chemicals and petrochemicals. 4ut when the flow of informationthrough the #nternet and e%mail left his margins intatters in ust five years! 1ittal figured he could getclients to pay a premium for on%the%dot delivery of promised goods. 7,remium on information becamehigher than trading !8 recalls the =5%year%old 1ittal!

who is -hairman and 1anaging >irector of Arshiya.

1ittal realised the importance of logistics in a boomingeconomy crippled by bad infrastructure. 4ut he had noe+perience in logistics! so he roped in 4>,#nternational! the <0%based global logistics maor! in2::: as a partner and put 6s 5: lakh on the table. 4>,#ndia! as the foray was called! began with plain vanillafreight business! even as 1ittal continued his trading business.

,retty soon! 1ittal could see the money in the glaringgaps in the logistics chain. )lobally! the logistics business was in parts rather than a complete chain.

1ittal now decided to concentrate fully on logisticsand sold the trading business. 0o! in 2::= he decided tomake 4>, #ndia an integrated logistics solution provider with services like supply chain! free tradewarehousing! railways! #" solutions and so on. Hisclient list grew—>u,ont! 4A0?! A1>! 6eebok! 1ahindra @ 1ahindra! ideoconB

#n 2::C! 1ittal acquired a listed firm! ##> ?orgings! and renamed it Arshiya #nternational afterhis daughter! and merged 4>, #ndia with it.

1ittal sees huge potential for logistics service providers and says #ndia can become a global hubfor trading if one can put in place better logistics infrastructure.

ARSHIYA INTERNATIONAL

4<0#*&00 /ogistics! #" solutions!distripark! free trade warehousing Done!railways

"<6*O&6 6s 5:: crore

"<6*#*) ,O#*" 3hen his earningsfrom tracking consignments for clientsovertook trading profits.

/&00%*O3* ?A-" ?amily businesses 1ittal 4uilders and "rade%3ings operating for over 5: years.

/&A>&60H#, ,O"&*"#A/ #ndia$sonly integrated logistics service provider.

“With free trade warehousing zones,one European client will double itsimports to $6 billion”% Aay 0. 1ittal! ?ounder! Arshiya#nternational



Arshiya is now setting up free trade warehousing Dones '?"3Es(! where it will provide space tomanufacturers! warehouses! e+porting and importing of goods and all the documentationrequired by government and other agencies.

Arshiya has even bigger plans in railways 1ittal plans to own at least F: rakes 'they are running

four rakes currently( and operate them on #ndian 6ailways$ network.

However! some analysts are a bit concerned over these two businesses. 73e maintain ourconcern over the feasibility of ?"3E and profitability of the domestic rail business!8 says a4@ 0ecurities report.

6ealising the importance of technology in such services! 1ittal has set up a 0ingapore%based #"subsidiary! -yberlog "echnology.

0ome of the services that he started! including the ?"3E! were born out of his interactions withcustomers. 1ittal says one Arshiya customer imports GF billion '6s 9=!=:: crore( of goods from

#ndia into &urope! from where it e+ports to various parts of the world after value addition.

4ut #ndia$s famed logistics problems restrict the volume of the imports. Once the ?"3E beginsoperations ne+t year! imports will double to GC billion '6s 2!:: crore( a year—with all thevalue addition being done in #ndia at Arshiya$s ?"3E.

Arshiya has plans to invest 6s F!::: crore over the ne+t 9months in setting up five ?"3Es and buying F: railwaysrakes. "he recent slowdown in the global trade has not deterred1ittal he claims his volume growth was F: per cent in the lastfiscal.

His revenues come from movement of goods! #" solutions anddistriparksI railways will chip in this year and ?"3Es— for which it has government approval—from ne+t year.

KITCHEN BIZ TO BAKING GIANTS

?rom making ice cream in a hand churner with the helpof her maid to a factory turning out 2!5:!::: buns a day for 1c>onald$s not bad for a housewife without any fancydegrees or 14A stamp. "hat$s 6ani 4ector for you. "hreedecades ago! in 9JK! 1rs 4ector$s kitchenmade ice creamstarted becoming popular in /udhiana$s party circuit and fetes.3hen the volumes overwhelmed her kitchen! she and her husband invested 6s 2:!::: in a backyard facility.

ery soon! she began making bread on an industrial scale!5:!::: loaves a day. "hen! in 9JJ2! came biscuits! 2:: tonnes a

CREMICA GROUP

4<0#*&00 4iscuits! bread! buns! sauces and toppings.

"<6*O&6 6s F: crore

"<6*#*) ,O#*" "ie%up with1c>onald$s #ndia in 9JJC to bethe sole supplier of buns! saucesand toppings.

/&00%*O3* ?A-" 1akes2!5:!::: buns a day.

/&A>&60H#, ,O0#"#O* #n biscuits! it is LF in ,unab! L2 inHimachal and LF in M@.

“We will inest !s "# croreoer the net three years”% Akshay 4ector! 1>! 1rs4ector$s ?ood 0pecialties



day 'today she is a name to reckon with in the biscuits market in three states(. 3hile she wase+panding the business! her sons Aay! Akshay and Anoop gradually oined her! in early and mid9JJ:s! and 4ector$s -remica )roup is a widely%diversified food products and service companytoday! growing at F: per cent annually.

"he turning point came when 1c>onald$s #ndia chose -remica as its sole supplier of sesame buns! liquid condiments! batter and breading. #t was 9JJC! 1c>onald$s had ust set up itsoperations in #ndia and was looking for quality suppliers of raw materials.

7At that time! we were doing some breads and buns business! but largely focussing on the biscuits segment. 4ut when 1c>onald$s approached us! we thought it could be a big deal. Afterimparting rigorous training to our workers! and testing our capability and quality standards bymaking a series of visits to our factory! 1c>onald$s got convinced about us!8 recalls Akshay4ector! 1anaging >irector! 1rs 4ector$s ?ood 0pecialties! the group$s flagship. 6ani 4ector isnow the -hairperson of -remica )roup! and she indirectly looks after its growth and e+pansion plans.

#n order to meet 1c>onald$s requirement! the company sealed two 5:5: Ms with <%based&4# ?oods and <0%based Nuaker Oats. "he tie%up with &4# ?oods was essentially to acquire batter and breading technology! Nuaker Oats helped the company enter the liquid condiments business. 7"he sauces plant! which was designed and set up by the Nuaker Oats$ technical team!had an initial capacity of 9 lakh litres per month. However! three years later! Nuaker Oatswithdrew from the oint venture!8 says Akshay.

#n 9JJC! before the 1c>onald$s link! -remica had reported revenues of around 6s 2: crore. #t isaiming for 6s 5:: crore in 2::J%9:! and 6s 5: crore by 2:99%92. 7#n terms of market share! weare amongst the top five players in the biscuit industry in #ndia and amongst the top three in the

tomato ketchup industry!8 says Akshay.

3hile biscuits continue to be the biggest contributor to the top line with a C5 per cent share!-remica is also e+panding its presence in readyto%eat foods! snacks and liquid condiments.-remica$s liquid condiment plant is producing almost K.5 million litres of sauces! and caters to both retail and institutional markets! with capability of packing the products in a wide range offormats.

7B3e will invest 6s 5: crore over the ne+t three years!8 says Akshay. 4esides! the company isalso setting up a food%processing facility in Haryana at an estimated cost of 6s F: crore to caterto domestic and e+port markets. -remica plans to go public in the ne+t financial year to raise

funds. #n 2::C! )oldman 0achs picked up 9: per cent stake in the company at a valuation of 6s5:: crore.

Apart from being an important link in the supply chains of -af -offee >ay! 4arista! ,iDDa Hut!>omino$s ,iDDa! some hotel groups! H</! 0pencer$s! 4ig 4aDaar and airlines! -remica is alsoe+porting to 5: countries! including -anada! the <0! <! Australia! and some in Africa and 3estAsia. 7&+ports generate 95%2: per cent of the total revenues. ,roducts such as ready%to%eat ethniccurries and gravies are doing well in markets such as Australia and the <0!8 says Akshay.



*orth #ndia being its forte! -remica is also spreading its wings in other parts of the country. #tsrange of liquid condiments! including mayonnaise! ketchups and dessert toppings! are beingrolled out in metros and tier%# towns in different parts of the country. 7"rial runs are under way inmetros such as 1umbai and *ew >elhi. 3e are hoping our products will pick up in the ne+t 2%Fyears!8 says Akshay.

He Lights Up Your Life

"he year was 9J5. Nimat 6ai )upta! a young schoolteacher from 1alerkotla in ,unab! had reached >elhito pursue his dream of starting his own business. Heinvested his entire savings of 6s 9:!:::—a substantialamount then—to launch a small trading business incables and wires at the 4hagirath ,lace wholesaleelectrical goods market.

Over the ne+t decade! the school teacher$s businessacumen and perseverance yielded rich dividends and hetook the ne+t step backward! into manufacturing. 4uthe needed a brand. 3hat better than Havells! with itsvaguely foreign twang; Acquiring Havells for the princely sum of 6s 9: lakh in 9JK9! he moved up from being a trader in electrical equipment to a manufacturer of switchgear.

#ndeed! that laid the foundation for the success story

that is Havells #ndia today. 6eminisces )upta$s sonAnil! who is now the Moint 1anaging >irector of Havells #ndia 73hat sets my father apart is hiscalculated risk taking abilities. He is never satisfied andis always looking to do something new. "hat is why hemoved on to manufacturing! even though the trading business had taken root.8

Over the ne+t couple of decades! Nimat 6ai )uptaaggressively e+panded his manufacturing base in>elhi. #n the $K:s and $:s! Havells started making changeover switches! H4- fuses! and

miniature circuit breakers 'in a M with )eyer! )ermany(. 4y 9JJ:! revenues had hit 6s F: crore.

4ut the turning point for Havells came in 9JJ2! when Anil oined the family business armed withan economics degree from >elhi$s 0hri 6am -ollege and an 14A from 3ake ?orest! *orth-arolina.

HAVELLS INDIA

4<0#*&00 0witchgear! electricalfittings and lighting

"<6*O&6 6s 5!=:: crore

"<6*#*) ,O#*" #n 9JJ! whenintense competition from 1*-s madeit invest heavily in manufacturing.

/&00%*O3* ?A-" 4rand spendingis more than that of top five brands insector put together.

/&A>&60H#, ,O0#"#O* Among thetop three in every product category.

“We had to ma%e world&class productsand scale up distribution”% Anil )upta! ?ounder$s son and Moint1>! Havells #ndia



Anil had global ambitions for the group 7# felt that the group had to adopt a two%prongedstrategy. One! our products should be world class in terms of quality and technology. "wo! weshould rapidly scale up our distribution network! both in #ndia and abroad! to gain market share.8

"o achieve this! he gradually shut down the old manufacturing plants. All the ten plants that

Havells today has are new and have the latest technologies. At the same time! he e+panded the product portfolio. "oday! Havells makes industrial cables and wires! switches '-rabtree(! fans!compact fluorescent lamps and lighting fi+tures. #t$s among the top three in most of its productsand is increasing market share with some aggressive brand building.

*ow! Anil and his core team are planning to take the Havells brand global. "he acquisition of0ylvania! the world$s fourth%largest lighting and fi+ture brand! has given it a distribution network spanning 5: countries! mainly in /atin America and &urope! and a diverse product portfolio.

"oday! the school teacher lords over a 6s 5!=::%crore business employing over K!::: people. #tsstrong brands! large distribution network and diverse product portfolio will be its key strengths

driving its growth internationally.

EXPRESS PROFITS

"here are people who know what they are going to doin life right in college. irendra >. 1haiskar is one of them. 1haiskar decided to oin the family business of constructing and operating toll roads even as he wasstudying civil engineering. 4y coincidence! his career

began ust when #ndia had unveiled the reforms of 9JJ9! opening the gates to public%private partnershipsin infrastructure. 1haiskar was first off the block! bagging a buildoperate%transfer road '4O"( proectnear 1umbai in 9JJ5.

He saw 4O" roads as the future and floated #64#nfrastructure >evelopers in 9JJ. 7At that time #thought this was an e+tremely good model to grow!8says the F%year%old 1haiskar. 4ut! for the ne+t fewyears! the government offered precious little by way of

4O" proects. &ven so! 1haiskar could figure out that!to build and operate roads! you need to have fullcontrol on the construction.

7>elay in proects increases the cost and affects theinternal rate of return of the proect and the profitability!8 he says. "o keep costs down! #64decided to own its construction equipment. 7#n road

IRB INFRASTRUCTURE

4<0#*&00 4uilding and operating tollroads.

"<6*O&6 6s 9!:29 crore

"<6*#*) ,O#*" )etting to operateand maintain 1umbai%,une&+pressway in 2::=.

/&00%*O3* ?A-" ?amily business is a leading toll%collectionagency.

/&A>&60H#, ,O0#"#O* /eader inoperations of toll roads in #ndia.

“There is huge potential for B'T pro(ects in the net )"&*# years”

% irendra >. 1haiskar! -1>! #64#nfrastructure >evelopers



construction! where the profit margin is %9: per cent! having our own equipment helps us to bein a slightly better position!8 he says.

?or #64 and 1haiskar! the biggest break came in 2::= when the company paid 6s J9 croreupfront to the 1aharashtra 0tate 6oad >evelopment -orporation for operating the 1umbai%,une

&+pressway and a parallel national highway connecting both cities. #t was #64 which made the&+pressway a success by ensuring that both roads would have a toll.

"oday! the 1umbai%,une roads contribute 6s :%J: lakh every day and are #64$s cash cows.Another toll road with a similar toll collection is the 1umbai%0urat highway! which #64 baggedthis year.

1haiskar has decided to continue building highways on a 4O" model. 7"here is huge potentialfor such proects in the ne+t 95%2: years considering the road infrastructure!8 says 1haiskar.-urrently! #64 has over :: km of toll roads under its operations and has orders for over 6s9:!::: crore.

#n highways! the focus will be on *ational Highway%= '1umbai%-hennai( and *ationalHighway% '1umbai%>elhi(. 1haiskar also plans to set up an airport on the 4O" model in1aharashtra$s 0indhudurg district to tap into the tourist flood into nearby )oa. 7#f we are able toattract even 2: per cent of )oa$s tourists it will be big for us!8 he says. "he investment in theairport will be 6s 95: crore! but it has not yet decided when the proect will start.

Another area #64 plans to get into is real estate! but it will not infuse cash in this business andwill prefer to go for oint development where #64 will have land and another partner will be thedeveloper. #t already has around 9!25: acres along the 1umbai%,une e+pressway.

DIALING SUCCESS

3est 4engal$s -hief 1inister 4uddhadeb 4hattacharee had once upon a time hoped to bring in the big bucks by e+horting a lethargic bureaucracy to 7Must >o #t8. He failed.

1aybe he should have tried the phrase 7Must >ial8. .0.0 1ani did! and today his dial%for%information service has revenues of 6s J9 crore. 4est of all! he began the service in 9JJC! when

the government%owned companies were the only players in telephony and it could take you yearsto get a telephone connection.



1ani$s story began in 9JK! when! as a fresh 4-om graduatewith aspirations of becoming a chartered accountant! he had toearn a living and began selling listings for <nited >atabase#ndia for its yellow pages. 3hy a directory; he asked himself.3hy not a phone number that anybody could call for free and

ask for information;

1oney. He needed money to fund his dream. 0o he worked ondifferent ideas from 9JJ to 9JJ=! finally landing in 1umbaiwith 6s 5:!::: in his pocket in 9JJ5. &ven then! he had to doother things—like a matrimonial magaDine—to survive. 4ynow! he was dreaming numbers. 7# used to dream of numberssuch as CCCC! ! FFFF and how millions of people are usingmy services!8 he recalls.

3hen he finally could focus on his dream! he had a stroke of

luck "he general manager of 1ahanagar "elephone *igam/td$s andivili e+change liked 1ani$s idea so much that he promised to give him the number . '"hose were thedays when 1"*/ was the only player and you had to waityears for a phone.(

7# do not know how it happened. # ust went and met thegeneral managerB and he assured me that the number wasmine. # guess when you dream of something and you want itdesperately things automatically fall in place!8 says 1ani.

1ani applied for three phone lines by paying 6s F!::: for each'he could not afford the 6s 95!::: required for the own%your%telephone scheme( but put the waiting time to use by sendingout a team of data collectors to get names and telephonenumbers of small and medium siDe establishments. He finallylaunched Must >ial in 9JJC from a rented garage with borrowedfurniture and rented ,-s! and working capital of 6s 5:!:::.

"oday! Must >ial is valued at an estimated 6s 5:: crore andclaims to have J5 per cent of the market. #t has grown out of the garage the headquarters sits in a 2:!::: sq. ft office in1alad! and it has a presence across 2=: cities and towns.Around =!25!::: people use Must >ial every day! calling up or hitting its website. Must >ial replies with numbers of threemillion establishments across #ndia.

1ani attributes his success to passion and hard work 7# faced a lot of challengesB #t$s not that if you do not have capital you cannot do a business... 1y philosophy was simple it was to see aday%to%day improvement in my business and overcome the challenges.8

JUST DIAL

4<0#*&00 ,roviding listingsover the phone

"urnover 6s J9 crore

"<6*#*) ,O#*" #n 9JJC!when .0.0. 1ani impressed asarkari babu enough to get a

special number.

/&00%*O3* ?A-" #n histweens! when there was nocable "! he organised a paidvideo show.

/&A>&60H#, ,O0#"#O*/eader in #ndia$s local searchspace! covering 2=: cities.

4#) O,,O6"<*#"0,O""&> 3ho wants a paper

directory; 0et up a phoneserviceP

"6&*> -A,"<6#*) 0#//,hones are not all — was quickto launch ustdial.com.

#*&0"1&*"0 ?O6"O1O66O3 Has raised 6s=: crore with which it will goabroad.

“+ guess when you dream of

something and you want itdesperately, thingsautomatically fall in place”% .0.0 1ani! ?ounder! Must >ial



Must >ial was helped by the telecom sector$s liberalisation and the mobile telephony boom. #tssuccess drew a series of investors after the first ten years Hong ong$s 0A#? ,artners! <0%based"iger )lobal and most recently 0equoia.

1ani! never one to miss an emerging trend! launched ustdial.com two years ago. "he 3ebsite

gets 9!5!::: visitors a day. *e+t A long%code 010 0ervice at the price of normal 010.

3hile callers 'the new number is CJJJ JJJJ( don$t pay anything! Must >ial began earninginitially from a flat fee structure and then moved to an advertising%led model in which it chargedits clients a huge premium for featured positions. "oday! it has a pay%per%lead model inspired by)oogle. Out of the three million establishments registered with Must >ial! 9!::!::: are sponsored —much of the company$s revenues come from this and through advertisements.

According to 1ani! Must >ial$s &4#>"A margins are now 25 per cent. 1ani e+pects revenues togrow to 6s 9F: crore by the end of the current fiscal.

"he company has also invested a great deal in technology to aid customer queries. 7All oursoftware is indigenously built from the start. "oday! the entire operation is completely automated."he technology enables the query to be answered by a te+t message even before the caller canfinish the call!8 says 1ani.

3ith the arrival of F) technology! 1ani is confident of providing information in a rich contentformat such as video and pictures.

the hidden leaders

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