MTR Foods' CMD P. Sadananda Maiya (L) with CEO & Executive Director J. Suresh: Trying out a new recipe

TAKE A RESTAURANT

In the beginning was the restaurant. and what a restaurant it was (and still is). A chief minister once stood in a queue to have a go at its fabled masala-dosa (rice pancake with a stuffing of potatoes and onions); a Bollywood showman would spend at least half an hour in it every time he visited Bangalore, focusing exclusively on the coffee, five or six cups of it (pure filter coffee as people in the southern part of the country call it); and the best pace bowler to come out of India since Kapil Dev-he goes by the tag, The Mysore Express-is still a regular.

Mavalli Tiffin Rooms is its name, although people like to refer to it as mtr; and its only outlet-mtr shut its lone branch in the Infosys campus in Bangalore's Electronics City recently-is in a nondescript single-storey building opposite one entrance to the city's best-known park, Lalbagh.

Even today, a queue of 50-odd waits patiently for the restaurant to open for business. This article isn't about breakfast at mtr, but it does have something to do with the experience.

...ADD A DASH OF EMERGENCY STIMULATED INNOVATION

If Parampalli Sadananda Maiya's mtr is more than just a restaurant, he has the Emergency-22 months between June 25, 1975 and February 3, 1977-to thank for it. mtr's dosas come with a liberal daub of clarified butter. It may be bad for the heart, but sure is good for the tastebuds.

At the height of Emergency, the government fixed the price of a dosa at 50 paise. The cost of the butter that went into each mtr dosa was itself 50 paise (each was priced at Rs 1.50). ''We had to either compromise on quality or shut down,'' recalls Maiya. mtr decided to close shop, and remained closed between May and December 1976.

Retrenchment didn't figure in the vocabulary of the Maiyas who favoured a paternal management style.

So, with no small amount of reluctance, mtr branched out into processed ready-to-cook foods-these didn't come under the price control regime. The first product, ready-to-cook Rava Idly (steamed broken wheat dumplings), did famously well and soon the mtr gravy train was chugging along.

More ready-to-cook foods (termed instant food mixes in Indian English), pickles, and spice powders dotted the Mavalli Express' progress.

In 1996, Maiya hived off mtr Foods as a separate entity; the restaurant is wholly-owned by the family and managed by Hemamalini Maiya and Vikram Maiya, Maiya's niece and nephew. ''We just wanted to find work for our staff,'' chuckles Maiya. ''We never thought we'd become the leading processed foods brand in the country.''

...STEW IN THE PRESSURE-COOKER ENVIRONMENT OF A BOOMING MARKET

mtr Foods may be a Rs 87 crore company today, but it operates in the Rs 10,000 crore processed foods market-the unorganised sector accounts for close to 80 per cent of this.

The market, as one would expect in a country as vast and varied as India, is fragmented; there aren't many brands that can stake claim to a pan Indian audience; and the term processed foods spans everything from Everest chilli powder to Bambino Vermicelli to Kitchens of India Chicken Chettinad.

Processed foods are largely an urban phenomenon and companies such as mtr Foods, Tasty Bite Eatables, and itc (with its Kitchens of India offerings) are essentially targeting the urban double-income household with money to spare, but no time to cook.

That's a tremendous opportunity. ''With an increase in the number of nuclear families where both husband and wife work, the demand for ready-to-cook and ready-to-eat foods has increased dramatically,'' says Ravi Nigam, President, Tasty Bite Eatables.

"We are working on getting the taste for the North Indian recipes right. MTR's North Indian offerings will definitely taste authentic." Jiggs Kalra, Food Expert

Maiya knows this is true-''Per capita spend on food is still 40 per cent of total income; our aim is to capture a significant portion of this''-and that could explain his decision to divest some equity and hire a professional manager.

...COOL AND ADD A SPRINKLING OF FOREIGN INVESTMENT

Growth is good but it hurts and Maiya is no stranger to the pain.

He knows that for mtr Foods to become a Rs 1,000 crore company by 2007-that's his articulated objective-it needs to institute systems and processes.

He knows that the company needs to invest in marketing (and in marketing pros).

Anil Ahuja, the ceo of JP Morgan Partners, had been following mtr's dream run-his personal favourite is the company's instant rasam powder-and when, in August 2001, a friend mentioned that the company was actively wooing investment, he got on the phone with Maiya. ''mtr is the only player that straddled the entire processed foods market,'' gushes Ahuja, whose initial call to Maiya recently translated into a 29.91 per cent stake for Rs 19.2 crore in the company.

Money isn't the only thing JP Morgan has invested in mtr Foods. ''We bring a degree of professionalism, expertise in accounting and legal practices, and provide access to funds,'' says Ahuja.

Maiya plans to use the money to retire some high-cost debt and fund a marketing onslaught. And that's where a certain Jayaraman Suresh comes in.

...SEASON WITH A SINGLE CEO AND SERVE

Morgan also helped Maiya poach J. Suresh, formerly head of Hindustan Lever Limited's Rs 1,800-crore beverages business.

The new ceo, a 17-year-veteran of hll, may be a few hours old in his job when he meets with this writer, but he pushes all the right buttons. ''I grew up with hll, but this was a once-in-a-lifetime opportunity to build a pan Indian food brand.''

Maiya understands the value his new ceo will bring to the company. ''His understanding of the market and his ability to work out the logistics is a tremendous advantage.''

A owner-manager clash is unlikely (although, who knows?): Maiya will look after the production and r&d functions; Suresh, sales and marketing.

There's enough to do on both fronts. Suresh plans to increase mtr's reach to 12 states from the five where its products are currently available.

And Maiya's fascination with the micro aspect of recipes makes him an ideal production and r&d man.

An electrical engineer by training, he is equally at home rattling of the names and proportions of the nine spices that go into sambhar powder, sharing trivia about how chillies ground in December have a high oil content and are dark red in colour, while those ground in August have lower oil content and are not so dark.

Tarry a trifle longer, and he is apt to tell you when this oil will evaporate-at 17 degrees for the December chillies and 12, for the August ones.

What's r&d doing in a foods company? Well, last year mtr spent close to 2 per cent of its turnover on research, and way back in 1998 it developed, in association with Defence Food Research Laboratories, the foil-pouch packaging that's now become the industry standard for ready-to-eat foods.

...BUT THERE ARE OTHER RECIPES THAT COULD TASTE AS WELL

It's easy being a Rs 87-crore company in a market dominated by the unorganized sector; it's a totally different ball game being a Rs 1,000-crore company-even if Maiya gives the process five years.

More importantly, mtr does face competition in every area in which it operates. In vermicelli, it is Bambino; in spices it is heavyweights Everest, mdh, Asoka; in ready-to-cook foods and it is Gits, Orkay, Vasu; and in ready-to-eat foods it is Tasty Bite and itc.

And oh, yes, there is a host of smaller companies in each business. Tasty Bite's Ravi Nigam believes there is space for all existing players and more but adds that the recipes for mtr's North Indian offerings could do with a little tweaking. ''mtr has tremendous brand equity but the market is sufficiently big for everyone.''

mtr is conscious of its shortcomings; it has hired foodie Jiggs Kalra to rejig the recipes for its North Indian offerings. ''We are working on getting the taste for the North Indian recipes right," says Kalra, who is a recognised authority on North Indian cuisine. ''Given my understanding of the North Indian dishes, mtr's North Indian offerings will definitely taste authentic.''

...BURP

JP Morgan believes Maiya's Rs 1,000-crore target is achievable (of course it does, silly; why else would it take a stake in the company?). "Even if they continue to grow at the same pace as they have grown at over the past three years, this should be possible," says Ahuja who is tipped to join the board of mtr Foods. Ahuja also hints at acquisitions-if the fit is right.

Growth could also come from exports-a mere 7.8 crore or 9 per cent of turnover last year, but slated to go up to Rs 250 crore by 2007, purely on the strength of targeting the Indian diaspora.

''We'll be putting out best food forward,'' puns the rotund Maiya, on a high after the Morgan investment and the hiring of Suresh. Will the customer bite?