Dhirendra Singh, Chairman, Manpasand Beverages, has always taken immense pride in calling himself a beverage maker of the masses. Singh is usually found in his tiny office housed in a wooden cottage in a sprawling farm house adjacent to the Manpasand headquarters (on the outskirts of Vadodara), where he talks passionately for hours about his trips to the heartland of India just to understand consumer psyche. From demonetisation to the post-GST woes of trade in smaller markets which has always been dealing with cash, Singh is an encyclopedia of rural markets.
His mango drink, Mango Sip, despite being a late entrant started giving stiff competition to stalwarts such as Maaza and Frooti in most Tier 2-3 and rural markets. The company always claimed that it won the hearts of masses by offering its beverage at a lower price than competition. It has won over retailers and wholesalers by offering higher margins. Unlike other beverage companies which have a franchise business model, Manpasand found it cost-effective to set up its own manufacturing facilities.
While other beverage companies hire expensive celebrities to endorse brands, Singh settled for a modest Sunny Doel, who he believed had a tremendous fan-following in smaller markets where he sold his beverages. His favourite brand-building anecdote is when he launched the fruit-based aerated beverage, Fruits Up, in Godhra, Gujarat in 2015. The challenge was to get retailers to sell his product. Instead of investing in an expensive advertising campaign, Singh got two school girls to cycle across the town with boxes of sweets to invite retailers for a Satyanarayan Puja. That he claimed changed the tide in his favour. The next day, he found almost every retailer in Godhra selling Fruits-Up.
Manpasand's growth story was picture perfect until May this year when the company's MD, Abhishek Singh (Singh's son) and CFO, Paresh Thakkar were arrested on charges of GST fraud. They were allegedly involved in creating fraudulent business units to avail input credit. The company was accused of evading taxes worth Rs 40 crore. More recently, Singh has been in the news alleging a hostile takeover bid by Mumbai-based Finquest Financial Solution's Bharat Patel and his partners. Singh is known to have reached out to the latter for a Rs 100 crore loan to pay off his GST dues and thereafter released his son and CFO. These incidents led the company's share price to plunge from a high Rs 110 to just Rs 7 earlier this week and also led to a massive erosion of trust.
However, even during the company's heydays, the analyst community raised questions about its exponential growth story. Investment firm, 2Point2 Capital in a blog way back in 2016, had said that it had done a telephonic survey of over 100 retailers across Gujarat, Punjab, UP, Uttarakhand and Bihar, which revealed that less than 10 per cent of retailers carried Manpasand products. The blog also raised questions about the company's claims of generating a substantial part of its sales from Indian Railways (IRCTC) vendors. Its flagship beverage, Mango Sip, in 2016, was classified as a Category A supplier by IRCTC, while Maaza, Slice and Frooti were classified category A special suppliers, which meant that Manpasand was not allowed to sell its products on premium trains. The blog had said that its research didn't match with the market share numbers that the company had projected.
The blog had also raised questions about the market share of Fruits-Up, which the company had claimed had a higher market share than Parle Agro's Appy Fizz, when the former was only present in Gujarat and Maharashtra. So, is the Manpasand success story an eyewash? The recent turn of events surely indicate the same.