Krishna Gopalan, deputy editor, Outlook Business: Mr Majithia, the Urmin group has a diversified presence across sectors with food being one of them. How has that segment grown over the years and do you intend to make it larger than what it is today?
Rajendra Majithia, director, Urmin Group: What started out as a restaurant by my grandfather in Karachi translated into a small shop selling tea and Indian snacks when my father migrated to Gujarat in the 1940s. After struggling for several years to make ends meet, he was back on the streets selling tea and sweets outside a post office in the 1960s. From there on, he began making his own masalas, chutneys and gradually entered the tobacco business, which was doing well. It was at this time that my father taught me the importance of three crucial stakeholders for any business, who must be respected – the supplier, the manufacturer and the distributor.
From tobacco, he moved on to the food business. In 2005, we acquired the Babul brand and changed it to Baghban under the Urmin group, which is when we launched Tingles jaljeera powder. In 2007, we acquired a Delhi-based company, which produced roasted nuts for PepsiCo India. We supplied to airlines, mini bars and pubs and exported it as well. My father always said, that in the food business we must manufacture things that the customer wants and make it in a manner that would remind them of the way it was prepared at home.
So, every few years, we added more traditional Indian snacks to the portfolio. In April 2015, we started with the business. Post that, we launched extruded snacks and traditional Indian sweets such as rasgulla, gulab jamun, son papdi, etc. Quality was an area we focused on a lot. For instance, all the milk that we source for our units is 100% cow’s milk, we purchase Amul’s ghee as we trust the brand. From the beginning, our factory resembled that of a pharma company, with the highest standards of quality management in place. All our seasonings are done in-house.
We faced several difficulties developing the brand as we had no knowledge about the food business – when is the right time to procure raw material from the market, what is the right price. But the learning and distribution network built during the tobacco business helped us hugely. Now, my elder son has joined the business. But the philosophy we follow at the Urmin Group remains the same – right product at an optimum quality at the right price.
Gopalan: Piruz, what is that you have done to ensure that the quality quotient of your brand remains high?
Piruz Khambatta, CMD, Rasna International: Every company has to ensure that we are in line with the customer’s requirements. And a customer today, is looking for both a tasty and healthy product. As food manufacturers, it is our responsibility to ensure that we feed our customers what we would give our own children. For example, we introduced a chocolate-based snack called Vitos recently and we’ve ensured that the fat content is restricted to 19%. We have launched several sweetner-based products for the export markets.
Also, a surprising trend that I’ve noticed is that Indian customers are choosing traditional Indian versions of beverages over foreign flavours. So we have launched variants such as shikanjee, jal jeera, aam panna and we plan to relaunch the kala khatta flavour, which was doing very well earlier.
Gopalan: Chandubhai, today Balaji Wafers boasts of a portfolio beyond just chips. What drove you to add more product categories?
Chandubhai Virani, founder and MD, Balaji Group: We started off with chips and fried lentil snacks but soon the dealers demanded more of us. So we began adding namkeen items such as bhujia. We introduced automated process lines in our factories and we brought in several innovative techniques. For instance, if you spread any of our namkeen items on a piece of paper, there will be no oil stains visible as we manufacture our snacks with an oil-spray technique. This way we gradually gained expertise in the field today. While other companies have gained expertise in only either chips or namkeen, we can proudly say we are leaders in both.
Gopalan: Parag, you spoke briefly about the heterogeneity of the Indian market in the case of preferences changing in every state. How does a company deal with that situation?
Parag Desai, executive director, Wagh Bakri Tea Group: Yes, that’s the reality of India. We had to make a lot of changes in our blends when we launched in Maharashtra. I cannot ask a customer to use a particular type of milk or use only milk powder, but I can definitely alter my blend. That’s my area of expertise. We spent an entire year on research and development and conducted several product trials. Today, that has become fundamental to the process of a new product launch. So, recently, when we launched in Bengaluru, we changed our blends again to suit the needs and preferences of the people in that city.
Gopalan: While quality is important so is growth, how do you strike that balance?
Majithia: Our strategy revolves around the agri product procurement. Now, we have developed a system where we plan out our procurements well in advance. We have worked on creating an innovative packaging technique, which reduces costs but increases the shelf life of the products. We don’t blindly follow conventional methods or replicate some other unit’s practices, we do our own research and development.
Gopalan: Chandubhai, what are some of the challenges you faced in either distribution or manufacturing?
Virani: Challenges are always present but that is what pushes us to try new things. For example, as consumers became more health-conscious and demanded healthy products, we launched the sev-murmura pack, which has no oil and the latest item, Poprings, which is a roasted snack. If you don’t keep pace with the changing needs of the customer, you will be wiped out of the market. Everyone is afraid of change but that is bound to happen, so there is no point to resist it but adapt to that change.
Gopalan: What was the biggest blunder you have committed and what was your key takeaway?
Virani: Mistakes are part and parcel of the journey. We noticed that all the companies were big on automation back then. That made us anxious so we visited exhibitions and inquired with few companies for machinery but that was not within our budget. Finally, we sourced equipment from a company in Pune but that stopped working after the sixth month itself and left us broke as we had invested everything we had in setting it up. We couldn’t afford to hire an engineer so we tinkered with it on our own, did our own research and in another six months, we gained the technical know-how to fix it albeit without an engineering degree. So, success and failures are part of this game.
Gopalan: So, what would be the key ingredients to create a successful food brand?
Virani: Now that we’ve spent 44 years in this sector, I believe that passion is the most important element behind running any business. This is afterall the food business, so put some thought behind it and listen to your heart. And from time to time, keep bringing in improvements and adapt to change. Only when you gain experience will you survive and that will ensure that you have the knowledge to go further.
Majithia: It’s all about hard work, dedication and passion. I have always considered my business like my baby. Just like you would provide your child with clothing, nourishment and care, you provide your business with good quality raw materials, good packaging and the right kind of marketing and publicity. It’s important to keep pace with changes in the market. Despite being a commerce graduate, I design my processing equipment. And then branding and marketing your product the right way is also important. That’s what distinguishes the market leaders from the rest of the brands.
This is the second of a two-part series. You can read part one here.