When Shantanu Ghosh decided to roll out his fledgling Xenitis brand of low-cost PCs nationally in 2005, few gave him a chance. The top- and mid-segments of the computer hardware market were, after all, dominated by multinationals such as IBM, HP, and Compaq and large Indian companies like HCL and Wipro, while companies such as PCL and Zenith Computers and the unorganised sector had a stranglehold over the lower end.
Besides, West Bengal wasn’t quite the ideal base from which a small start-up—Xenitis then had a turnover of Rs 12 crore—could hope to spread its wings nationally. But Ghosh, and his now estranged partner Tathagata Dutta, proved sceptics wrong. Not only did Xenitis succeed in selling its PCs across the country, it has also seen its turnover rise phenomenally over the last two years to Rs 620 crore—and more tellingly, 70 per cent of its sales now come from outside eastern India.
Like Xenitis, the others featured in this report are still relatively small, and their main markets are still West Bengal and the rest of eastern India. But they’re all dreaming big—and rolling out their brands nationally—even if it means slugging it out with bigger, deeper-pocketed rivals; and their efforts are paying off. Their strategies have a common thread running through them—find or create a niche, and then go all out to fill it up.
If Xenitis’s Aamar PC in the east, Amchi PC in the west, Namma PC in the south and Apna PC in the north stormed the market with sub-10K PCs, Linc Pen & Plastics has made it to the industry’s top bracket (its rivals are Cello, Montex, Reynolds, Flair and Today’s) by creating new price points (Rs 5, sub-Rs 5 and Rs 10-20), introducing new products at regular intervals and continuous brand building exercises. “Bringing in professionals from outside the family has also paid off for us,” says Deepak Jalan, Managing Director, Linc Pen & Plastics, adding that Linc is the market leader in the Rs 5 segment.
In 2002-03, its entire topline of Rs 62 crore came from the east; it ended 2006-07 with sales of Rs 145 crore, of which 30 per cent came from rest of India. “There is still lots of room to grow in the west, north and south, and we are working on that,” says Jalan. Linc has 50 types of pens in its portfolio, and a 10 per cent share of the Rs 1,500-crore national market for pens. “We are targeting a market share of at least 20 per cent over the next three years,” he says.
The company is rolling-out two retail chains, Just Linc and Office Linc, nationally in order to do that—and already has 16 outlets across Kolkata, Durgapur, the National Capital Region, Gujarat and Mumbai. It plans to open 10 more outlets this year itself and also proposes to merge the two chains. Says Jalan: “The future is even brighter. We hope to increase our market share in the domestic market, tap overseas markets and increase our supplies to Wal-Mart and some leading UK-based chains.”
Xenitis, which is targeting a 60 per cent rise in turnover to Rs 1,000 crore this year, has also been beefing up its capacity. Its stateof-the-art components manufacturing unit in the Hooghly district in West Bengal makes keyboards, power supply units, mice, speakers, monitors, motherboards, floppy drives, CD drives and cabinets that were earlier imported from China, Taiwan and Singapore; this has resulted in substantial cost savings. The company has also begun making its own laptops, servers and media centres.
Ghosh’s latest initiative to ramp up his top and bottom lines: manufacture PCs and components for companies such as LCC, Novtech, Supertron and few other leading brands. Export orders are pouring in from Africa, Dubai and Bangladesh, he says. Much the same story is repeated at SAJ Industries, that owns the BiskFarm brand, is challenging the likes of Britannia, Parle and more recently ITC’s Sunfeast. BiskFarm, for instance, has grown from a Rs 35-crore company in 2004-05 to a Rs 120-crore one in 2006-07. It’s now targeting the #1 position in the branded biscuit market in the east; it also hopes to increase its national market share from 8-10 per cent now to 25 per cent by 2010. Says Vijay Singh, Managing Director, SAJ Industries: “We will leverage the BiskFarm brand and foray into other sub-segments like cakes, cookies, bakery products and the readyto-eat segment and also put up our own retail chain across the country.”
In the footwear sector, Khadim India has emerged as the country’s third-largest retailer after Bata and Liberty, says Siddhartha Roy Burman, MD of the company, which has 263 stores across 22 states. Bata has 1,400 stores and Liberty 334. The brand is also available in over 1,000 multi-brand dealer outlets. “Our aim is to reach every Indian home,” says Roy Burman. About 25 per cent of Khadim’s 2006-07 turnover of Rs 150 crore came from outside eastern India. It plans to increase this share, and to do this, has recently launched a retail chain, Egaro, which will have shop-inshop Khadim stores and sell grocery, apparel, gold jewellery and cosmetics. He has also set aside an initial budget of Rs 10 crore for a national brand-building exercise.
Says Roy Burman: “We aren’t afraid of incurring losses while we’re building our brand.” Another Kolkata-based brand that now has a pan-Indian presence is the Rs 321-crore Rupa & Co., which enjoys a 40 per cent share of the national market for undergarments. The company shot to fame a few years ago when it roped in Bollywood stars Sanjay Dutt and Govinda (and more recently, Hrithik Roshan) to endorse its Frontline brand of undergarments and followed this up with ads featuring Saif Ali Khan (Bruno), Aishwarya Rai (Softline) and Lisa Ray (Bruno for Her).
Says K.B. Agarwala, Managing Director, Rupa & Co.: “Celebrity endorsements work wonders in our area of business, provided you maintain an affordable price. We have steadily increased our ad budget every year and this is helping us achieve growth rates of 20-25 per cent over the last 8-10 years.” Now, it is planning a foray into formal shirts to drive its expansion. Can it take on deep-pocketed players like Madura Garments, Raymond, Arvind Mills and others who dominate this market? “Branded shirts are a different ball game altogether from hosiery,” says an industry analyst. “My 700-strong network of distributors and retailers will push my shirts as well as they do my hosiery brands,” says Agarwala.
Like Rupa, all the others, too, face significant risks—building national brands is an expensive proposition and building national distribution channels can be a Herculean task. Then, managing the logistics of distributing their products nationally will stretch them financially and test their management bandwidth. “We’re teaming up with strong local players in different regions to push our brand,” says Singh of SAJ Industries. Linc’s Jalan, on the other hand, is banking on his retail foray to penetrate newer markets across the country. It is also targeting the under-serviced semi-urban and rural markets where competition is less fierce, mentions Jalan.
Can these companies follow in the footsteps of the Emamis, and the Haldiram Bhujiawalas, and much before them, groups like the Birlas, Goenkas and Bangurs who started small in Bengal and went on to build national—and in some cases, interntional—business empires? It’s too early to take a call, but their individual journeys will be worth tracking.