APRIL 27, 2003
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Q&A: Charles J. Fombrun
"There is a direct correlation between reputation and market capitalisation. Reputation has to be treated as an asset, measured as an asset." Thus spake Charles J. Fombrun, reputation guru, Professor at New York University's Stern School of Business, and Founding Director of the Reputation Institute. For more, log on.


Q&A: Keith Smith
Keith Smith—not to be confused with a Hot Springs Arkansas-based egg marketer by the same name—lives in Hong Kong, as the boss of an idea-hatchery. More specifically, as the Regional Chairman of the Asia pacific operations of TBWA. His most significant 'business coup'? Swinging the Wonderbra account.

More Net Specials
Business Today,  April 13, 2003
 
 
The QR Millionaires
Ever wondered who's responsible for bringing those imported foods, toys, cosmetics, et al to your friendly-neighbourhood store? BT tracks down nine such importers, who've been raking it in.

Remember those days when family, friends, and other irritants around you would get close to orgasmic at the sight of a Toblerone bar or other such ''imported'' stuff? The vividness of those images would of course vary depending on how young or old you were then, but these days it's difficult to catch similar expressions of ecstasy on the faces of those near ones when such goodies are chucked at them. Reason? Unlike when the wait for a pack of foreign chocolates was a bit like waiting for Halley's Comet to show up, today they're all over the marketplace.

If you're one of those who've found their reason for existing, thanks to the easy availability of these imported products, you've got to thank two sets of people. The first group is the wise men at the World Trade Organisation (WTO), who're responsible for pushing of lifting quantitative restrictions (QRs) on the import of 2,714 consumer products. You'd find it a bit easier to thank the second set of people responsible for bringing home the ''phoren'' goodies: The importers themselves, who in the process of providing you with the manna from the foreign heavens have become millionaires themselves. To know more about them, read on:

Laxman Rai: Moving with the times

Rai & Sons
Food

Owner: Laxman Rai, Director
Background: Diesel Engine Importer
Sales*: Rs 10 crore

Brands: Ferrero (chocolates & confectionery), The Laughing Cow (cheese), Hero (jams/fruit juice/jelly), Ricola (herbal lozenges) and Movenpick (ice cream)

Distribution: 1,20,000 retail outlets (for Ferrero tic tac confectionery); 3,000 for all other brands

They've been importers of Skoda diesel engines for the past 45 years, but clearly it's food that fuels the Rai family. The late Ranjit Rai, father of Laxman Rai, was a gourmet food cook and writer, with two Penguin titles, Curry Curry Curry and Tandoor, under his belt. Way back in 1963, the company even tried its hand at manufacturing Sun Sip, a canned-fruit juice brand, but it was an idea ahead of its time. By 1999, though, the time was ripe, and Rai plumped for Swiss food brand Ricola. The dismantling of QRs gave Rai just the shot in the arm he needed to leverage his relationships with European marketers.

Atul Khanna: Persistence pays

Optimum Marketing Metrics
FMCG

Owner: Atul Khanna, Director
Background: Service Apartment Owner
Sales*: Rs 8 crore

Brands: Clorox (household cleaner), Crayola (stationery), Hershey's, Mars and Ritter Sport (chocolate), Master Food (packaged processed food) and Kikkoman (sauce)

Distribution: 20,000 retail outlets

What do you do when you crave for brands like mars and Hershey's and Ritter Sport but there's not enough of them going around in the country? Simple, you start importing them. That's what Atul Khanna, a small-time service apartment owner, decided two years ago. Of course, there was the small matter of getting those manufacturers to agree or, to begin with, even condescend to speak to him. But Khanna persisted-and got the go-ahead-steadfastly resisting the temptation of shipping in stuff from free ports such as Singapore and Dubai. It's clearly paying off: Today the Mars and Hershey's managers come to India twice a year to meet Khanna!

Puneet Gupta: First-mover advantage

L-Comps & Impex
Foods & FMCG

Owner: Puneet Gupta, Managing Director
Background: A foreign-trade graduate
Sales*: Rs 7 crore

Brands: Berri (fruit juice), Pascual (yogurt), Betty Crocker (cake mix), Pasta Jarra (pasta), Edgell (tinned food), Freeman (cosmetics), Remia (salad dressing) and Arcor (biscuits)

Distribution: 25,000 retail shops for biscuits; 7,000 for other brands

After pocketing a foreign trade qualification from the Indian Institute of Foreign Trade (IIFT) in 1996, Puneet Gupta had two straightforward options: Either land a plum corporate job or slip into his father's cooking gas cylinder-making venture. Instead he chose to introduce Berri fruit juice in pet bottles for the first time in the country in 1997. By 2002, there were as many as 25 competing foreign juice brands on Indian shelves. But Gupta, wiser by five years, is riding on the headstart, and the experience: He's flagged off complementary brands, which give him an edge on the shipments front as well as when leveraging with the retail trade.

Beauty Concepts
Cosmetics & Toiletries

Owner: Rajiv Bahety
Background: Diversified manufacturing group
Sales*: Rs 4 crore

Brands: YSL, Davidoff, Intimate, Adidas, Jovan, Esprit, and Diesel

Distribution: 100 top-of-the-line lifestyle stores across the country

As in the case of most of the importers profiled here, the removal of quantitative restrictions was just the opportunity that Bahety was looking for to find his place in the sun. Bahety flagged off his importing operations in 1998 by bringing in cosmetics and toiletries brands from Europe, a market he was not totally unfamiliar with since he would export software to that continent. Bahety's focus has always been top-of-the-line products, and select outlets only, and he's refused to spread himself too thin by getting into other products. Consumers who just can't wait to lap up his exotic product range wouldn't be complaining too much about that strategy.

Ajay Agarwal: Wooing customers

Indo Cosmesi
Cosmetics & Toiletries

Owner: Ajay Agarwal, President
Background: A former duty-free manager
Sales*: Rs 11 crore

Brands: Julien d'Irvy (deodorant), Vidal (skin cream and shampoo), Tromphy (baby care), Arrixaca (room fresheners), Tabac, and Pupa (toiletries)

Distribution: 25,000 retail outlets

For 20 years he helped build resorts, duty-free shops, in-flight kitchens, even luxury airport lounges for his Singapore-based employer, the $500-million NG Chye Mong. Then in 1998, Ajay Agarwal decided to head home and start up on his own. Trade barriers were slowly but surely coming down, but Agarwal didn't chase the big brands right away as he felt the Indian consumer wouldn't be ready for them. Instead, he seeded the market with middle-of-the-road brands, and offered huge retail margins in a bid to wean consumers away from domestic toiletries. That's one good explanation for the Rs 11-crore sales.

R. Parthasarathy: Like father like son

Dhanya Associate
Cosmetics

Owner: R. Parthasarathy
Background: Second-generation importer
Sales*: Rs 4 crore

Brands: Bilgimogle, Berio and Musa (cosmetic olive oil)

Distribution: Pharma and retail stores across Tamil Nadu, Kerala and Karnataka

In a way, he is following in his father's footsteps, whose company (Ravi & Company) was once the country's biggest importer of branded milk powder, 9 to 3, from Holland. And this during the infamous Quota Raj, when most quota holders were largely into rent-seeking on their quotas, rather than any serious trading activity per se. Few took Parthasarathy seriously when he decided to import a little-known cosmetic aid in olive oil, and that too from Turkey, when whatever little was coming in was from either France or Italy. When Unilever and Nestlé caught on with their own European olive oil brands, Parthasarathy just added on an Italian (Berio) and Spanish (Musa) brand to his portfolio. He's taken seriously for now, for sure.

Premsons Trading
Toys, Crockery, Stationery

Owner: Bharat Gala, MD
Background: Third generation retail store owner
Sales*: Rs 13 crore

Brands: Silverline (crockery), Flying Dragon and TCV (toys)

Distribution: All over metros and smaller cities such as Chandigarh, Pune, Cochin and Ludhiana

Starting just two-and-half years ago as a "backward-integration" (in his own words) to his retail store operation in up-market Breach Candy in Mumbai, Gala has reaped a quick windfall. He began with crockery, mainly from Thailand, and quickly moved to toys and stationery, with fruit juices being the latest addition. That's helped him maintain a break-neck 30 per cent plus growth rate, on the back of a nationwide 55 distributor-strong network. What has helped tremendously is the fall in import duties from around 50 per cent when he started to around 20-25 per cent now. Trust Gala to think different: He is now planning to launch his own brand, Gulp, a long-life (two years) fruit juice.

Ashim Saraf: All pay no work

Hi Life Exports
Toys

Owner: Ashim Saraf , Managing Director
Background: Scion of a manufacturing group
Sales*: Rs 4 crore

Brands: Intex (inflatable toys), Creative, Diamont and Egmont (activity games)

Distribution: Bulk sales to five wholesale distributors

He's an importer all right, so don't get taken in by his company's name. It's just that Ashim Saraf was in too much of a hurry to change the company name (from exports to imports) when he acquired it. He kicked off by importing Walt Disney toys in 1998, and then went on to buy 20,000 different toys from 20 different manufacturers spread across China, Turkey, Israel, and Italy. When smuggled imports from Dubai started eating into his big brand legal imports, he changed his modus operandi to concentrate on just a few product lines-inflatable and activity toys for three-year-olds plus-and moved his entire business to selling in bulk. Business has since trebled.

R.R. Oomerbhoy
Foods

Owner: Riyad R. Oomerbhoy
Background: Edible Oil Business, Fifth Generation Parsee businessman
Sales*: Rs 30 crore (from just imports)

Brands: Bertolli (olive oil), Barilla (pasta), Lee Kum Kee (chinese sauces)

Distribution: 100,000 stores, 1100 distributors

In 1991, Riyad R. Oomerbhoy set up a JV to import and distribute soaps and toiletries. By 1997, he exited it. That was the end of Cussons India, but the beginning of Oomerbhoy's import sortie. Unilever's Bartolli was his first choice. He hasn't looked back since, claiming that his company will hit sales of Rs 100 crore by 2004. Not all of that will come from imports. Oomerbhoy has expanded into production of edible oil with brands like Postiano, RRO, Mastman and Tildil, with an installed capacity of 300 tonnes a day. He's got 60 brands in his quiver, 40 of which are imported. And he's still got miles to go.

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