Keventer has now become a household name in West Bengal. The eastern India-based food company has carved out a separate brand identity of its own with its wide portfolio of food products — be it dairy items, frozen food or branded bananas. Starting its journey as a franchisee partner of Parle Agro for manufacturing Frooti and Appy, the company has gone on foraying into newer verticals under the able stewardship of Mayank Jalan, Chairman and Managing Director of Keventer Agro.
After completing engineering from University College of London, when he joined Keventer in 2004, the company was running into losses. But under his able leadership, Keventer not only made a turnaround but also gradually increased its topline to more than Rs 1,000 crore and now it aspires to become a billion-dollar company by the end of the next decade.
In a free-flowing conversation with The Soothsayer, Jalan touches upon a number of issues ranging from the company’s future plans to investment climate in the state. Excerpts:
Q: When you joined Keventer way back in 2004, it was a loss-making company. But under you, it not only made a turnaround but has also become a leading food company from the eastern region of the country with revenues of over Rs 1,000 crore. What is the secret of your success?
A: I think there are two, three broad mantras that I follow. First, anything is possible in a team, so to build a good team around you is critical and I have been very lucky that I managed to get a lot of dedicated and passionate professionals around me who run this company like their own and not just as employees. That’s definitely one of the key success factors, which has gone into making Keventer what it is today. Secondly, it is important to have the perseverance and strength to carry on even in difficult times. Every business will have ups and downs. There is no business which will not go through tough times and when you face them, you fight and try to do better, learn through your mistakes and stop blaming others. One aspect which I have seen in a lot of people, especially in Bengal, is that we love to criticise, love to blame everyone that because of the environment, because of this or because of that we have not been able to do it.
When you are making a business, there is no point in blaming anyone. You have to understand that situations will be tough. It’s about how tough you are and how much prepared you are to face the challenges. In Keventer, we had good and bad times, but we fought as a team. It has been hard work and self-belief that have made a difference.
Q: Do you believe in setting personal milestones? If yes where do you want to see Keventer in say five or 10 years down the line?
A: Without setting a goalpost you cannot play football. Unless there is a goalpost, you don’t know in which direction the ball has to go. It’s very difficult to say whether these targets and milestones are personal or professional. I think everything that we do is based on targets. So yes, there are targets, there are targets split into short-term, medium-term and long-term. In the next 10 years, we will be a billion-dollar revenue company. That’s the target that we have set and it means that we have to grow seven times from where we are right now by 2030.
Q: You are of late making a lot of investments in dairy business. What is your plan as regards the dairy vertical of the company?
A: Going forward, I think our dairy vertical, which operates under Metro Dairy brand, will be the largest portion of the business. We are transitioning Metro dairy from a pouch milk company to a full-fledge dairy products company, which means it will cover the entire range of items like pouch milk, UHT milk and value-added products. So in future, you will see introduction of products like paneer, set curd, loose curd and others. Alongside, we are also making a lot of investments in milk collection. Several bulk milk chilling facilities are being set up and eventually the company plans to do a lot of extension work with dairy farmers.
In pouch milk, Amul is now the largest player and we are at number two along with Mother Dairy and Red Cow. Barring Amul, we all have a market share in the same range of 18 to 20 per cent.
As regards UHT (ultra high temperature) milk, which we started around six-seven months back, we are the only company which has UHT milk processing plant in eastern India. Amul has to bring it all the way from Gujarat. Within a short span, we have been able to emerge as the number two player in this segment after Amul, displacing all our smaller rivals. UHT is growing very fast, and according to a report, it will grow faster than any other dairy segments. As regards the break-up of pouch and UHT, this year it is dominated by pouch, but going forward, UHT and pouch will become 50:50 and eventually UHT will take over.
Q: Branded banana — Where did the concept come from? How is your banana business doing now?
A: Branded banana is a very interesting development in the company. Now, why banana? Because it has a number of differentiating factors — it’s the only fruit which is not seasonal and is available throughout the year. It’s a fruit where a level of intervention is required — a banana needs to be ripened before it is sold. Besides, there was a clear pain point in the market, which needed to be addressed. Retailers were forced to go to a Mechua market or other markets early in the morning to pick up their material. So the company felt that its intervention could make a big difference in the entire process. Therefore, around 2013, we gave banana business a lot of importance, and touchwood, it has grown fantastically since then to a point where it’s now a major flag bearer for the company in terms of its branded business. We sold around 35,000 to 40,000 tons of banana last fiscal. In the next four-five years, we are expecting to figure among the top 10 companies in banana trade and sell around 200,000 tons of bananas.
Q: Frozen food is another vertical in which you are operating for quite some time. How is that segment growing and what are your future plans to enhance the market share in that segment?
A: In frozen food segment, we are number two in the market behind Yummiez. However, the growth of the industry has not been as per expectations. But we see a lot of potential in this business. It stems from the fact that families are going nuclear, convenience is gaining importance daily and modern trade is also making major inroads in terms of channels of sales. So we do feel this category will see higher-than-expected growth in the days to come.
Keventer has certain advantages in this business. We have by far the best infrastructure. While most companies in this segment rely on third-party operators for the last-mile deliveries, Keventer has created it own network of cold-rooms and supply chain. As a result, the product, which reaches the consumer, is the freshest and the best in terms of temperature and quality and we think that should be enough to make a difference in the minds of consumers. We also have by far the widest portfolio of products — we are present in vegetables; valued-added snacks, both vegetarian and non-vegetarian, while there is a sausage line and there is a shrimp line coming up too. Hence, overall, it’s a great showcase for the company and I think the segment should do well.
Q: You have also diversified into realty and hospitality. What percentage of your revenue comes from that segment and how do you see growth in that?
A: It’s not diversification exactly. The group always had a large presence in realty because we always had a lot of land parcels available for us. Now, we are trying to monetise those land parcels by entering into joint ventures with companies like Tatas and other very reputed builders. In prime Kolkata, we have around 12 acres of land. We also have land parcels in Joka and other areas in greater Kolkata. The realty business is looked after by a separate arm of the group — Keventer Projects.
Coming to the hospitality business, we operate two food services chains — Coffee World and Cream & Fudge. We have around nine Coffee World and 20 Cream & Fudge outlets. Cream & Fudge is an ice cream parlour where specialty ice creams are served. We are regional master franchisee of a Thailand-based company GFA, which owns these two brands. We are franchisee partner for eastern and northern India.
We plan to expand the number of outlets of both the food services chains in major mall areas across all the cities in eastern India.
As regards revenue, realty and hospitality business put together, it is still very small. It’s about four to five per cent of the overall topline of the company.
Q: What was the company’s revenue last fiscal and what’s your target for this year?
A: The company’s revenue in the financial year 2018-19 stood at Rs 1,100 crore. Out of this, dairy business accounted for Rs 500 crore, Frooti Rs 350 crore, banana Rs 75 crore, exports Rs 150 crore and frozen food and realty combined accounted for around Rs 50 crore. The company is targeting revenue of Rs 1,400 crore during this financial year (2019-20).
Q: Can you share the company’s capex plan for the next five years and how much of that is expected to pour into West Bengal?
A: A major portion of the company’s investment during the next three-four years will be in dairy business in which we will be pumping in around Rs 150 crore. Also for our banana business, we have drafted Rs 100-crore investment plan and for Frooti, another Rs 150 crore. Our total capital expenditure is expected to be somewhere around Rs 400 crore to Rs 500 crore in the next three to four years and almost the entire amount will pour into West Bengal.
Q: You are now the president of a reputed business lobby Indian Chamber of Commerce and must be working very closely with the state government on issues concerning business and industry. How do you find the investment climate in the state? What, according to you, are the issues the government should focus on to attract more investors here?
A: I think West Bengal has one of the most investment-friendly environments in the country. In ease of doing business also, the state is number one. The kind of red carpet which is laid out for investors, the dedication and speed which is shown by the bureaucracy in the state is unbelievable. Yes, on behalf of Indian Chamber, we do keep on discussing how things can be made better. The state government is very much aware of its duties and responsibilities and they are working on that direction.
I can say that we are probably suffering from perception problem — a perception which has historically been negative rather than the reality. The kind of growth, which is happening in the state in terms of consumption, is unmatched to any other parts of the country. How is it happening? It’s not because the base is low rather we are one of the top five economies in the country in terms of size. Development has happened all around us. The state government has invested a huge sum of money in infrastructure, rural roads, electricity, water, sanitation, hospitals and social schemes.
We have to shun the negativity and as citizens of Bengal, have to accept that something good is happening. If we don’t change that mindset, we will not get that growth. We are the worst people to market our own state. I think we are living in a time when West Bengal is going to lead the country and nothing can stop that.
The part of the country, which has lagged, is North-East. However, now a lot of developments are taking place in the region. And when the North-East flourishes, West Bengal will go into a different kind of orbit. That’s my opinion and I am very bullish on Bengal.
Q: Your message to budding entrepreneurs of the state.
A: We are living in a very exciting time. We are living in a state where the environment is very conducive for entrepreneurship. Grab this opportunity, give your whole life and passion into it and execute. Just get down to work rather than thinking, criticising and debating.
Q: Apart from Keventer, what else keeps you occupied? Do you have any hobby?
A: It’s work, work and work. I am a very boring guy. So for me, it’s work and family, which keep me occupied.