What's cool and what's not? All through
May, a team of writers and editors from Business Today wrestled
with this question, meeting with companies, consultants, analysts,
venture capitalists, and the unusually well-informed busy bodies
that hang around corporate circles in India. Armed with nothing
but a few rules of thumb-the company has to be 'with it'; it needs
to be either doing something cool or going about an existing task
in a cool way; and the cool-factor needs to be scalable-the team
tossed up (and out) names. It came back with a dozen companies that
were as varied as they were cool. Here, in no particular order,
are the cool 12.
Go Ahead, Just Call Me Sindbad
MOCHA
COFFEE-AND-MORE BAR
FOUNDED: 2001
TURNOVER: Rs 9.6 CRORE
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Hungover on Casablanca? Well, founders Riyaaz
Amlani (left) and Kiran Salaskar won't mind that |
In 2001, Riyaaz Amlani and Kiran Salaskar
had a vision straight out of Arabian nights: a medieval Quaveh Khanneh
(coffee house) from Turkey, Morocco, or Arabia where people gathered
to partake Quaveh (coffee), Sheeshah (Hookah to Indians), and gossip.
And in a surreal twist they imagined such a place in downtown Mumbai.
The result was Mocha, and it did start out in downtown Mumbai (on
500 square feet of space), although it has since expanded to two
more outlets in Mumbai and one more in Delhi with talk of Bangalore
and Pune. With its assorted menu of authentic coffees, wines, smokes,
desserts, and world cuisine, Mocha isn't a coffee bar of the kind
that has mushroomed across the country. "We did not want a
cut-and-paste Starbucks model," says Amlani. "We went
into the genesis of the coffee shop and found that people are looking
for what we have come to call 'the twenty-minute vacation', "explains
Salaskar. Film, travel, and dog clubs are just some of the things
that are meant to give patrons that 20-min fix. As is an experimental
menu that even plans to feature combos such as chai and bhajjiyas
(tea and spiced fritters) during the Monsoon.
Behind the obvious passion of two foodies-that's what the Amlani-Salaskar
duo is-is a 'bootstrap' model that should find favour with hard-nosed
finance pros. Mocha has always been cash-flow positive, and all
its expansions are funded through internal accruals-one loan of
Rs 25 lakh from a nationalised bank has been all the external financial
assistance this start-up has availed. And even as they plan a research
and warehousing unit, a central kitchen, and a roasting unit, Amlani
and Salaskar have not lost sight of the numbers. Desserts contribute
the most revenues (coffee does only 8 per cent) and each outlet
enjoys gross margins of around 22 per cent. "It is not really
about coffee," confesses Amlani. Then, who said coffee was
what people wanted on a 20-minute vacation?
-Priya Srinivasan
Marketing 101, Operations 101, Finance 101,
And The Art Of Making A Summer Blockbuster
VARMA CORPTHE
FACTORY
FILM STUDIO
FOUNDED: 2003
TURNOVER: Rs 27 CRORE
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Would Toyota Approve? It should; the Varma
Production System rocks |
Here are some of the words you would
never associate with Bollywood (Mumbai's motion pic industry), right?
Cost control. Assembly-line production. Inventory. Brand building.
The 4 Ps of marketing. Wrong. Meet Varma Corp, a company that has
actually chosen to go back to business basics in a procedure-challenged
industry. The company derives its name from its founder, Bollywood
ace Ram Gopal Varma, a director who cranks out films faster than
people can watch them at a facility he calls 'The Factory'. "A
film is about selling," he says. "You have hoardings that
are basically commercials; promos that are TV ads; and the product
is the film itself; why should it be any different from selling
Coke?" Maybe it's the content, this writer offers tentatively.
"Yes, once in a while the content matters," responds Varma
in all seriousness. "That's what I am here for; at any given
point in time I see potential in several ideas that I do not have
time to execute; so, I simply look for suitable talent and hand
it over." In its eight months of existence, The Factory has
produced three films with eight more on the floor. It is an assembly
line, and a financially viable one at that. "Every film of
mine recovers its cost, so we always break even," says Varma.
"Some show moderate net profits and then, of course, there
are the straightforward hits." The model has its share of critics.
The audience will soon OD on the Varma brand, they chorus. "That
is a bit like saying the Coke brand is diluted every time it is
advertised," laughs Varma.
In the motion pic business, as in any other business, access to
finance is critical. A few years ago, a clutch of NRI (non resident
Indian) investors approached Varma with an offer to fund a corporatised,
studio-model of filmmaking. Today, the investors run K Sera Sera,
a company that finances The Factory's projects, and Varma is stretching
the corporate model for all it is worth. One of his tenets: films
can do without stars. "I positioned Vivek Oberoi (a then relatively
unknown quantity who is today one of Bollywood's biggest stars)
as big as any star in the commercials (hoardings in Varmaspeak)
for Company (a film about the Mumbai underworld) and when it was
released, he actually was as big as any star," gloats Varma.
Another tenet: the producer needs to control distribution so that
"the communication goes down to the last leg just as it does
in a multinational company". "I have to have control over
the publicity," he insists. All this is so simple that Varma
is surprised no one has thought of it before. "I am shocked
it hasn't been implemented before." Well, its time has come.
-Priya Srinivasan
There's No Success Like Mechanical Success
QUEST
ENGINEERING CONSULTANCY
FOUNDED: 1997
TURNOVER: Rs 95 CRORE
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Seen him before? Like Quest, CEO Ajit Prabhu
keeps a low profile |
Very few people outside the rarefied
realm of the engineering cognoscenti are likely to have heard of
Bangalore-based Quest. Still, you'd encounter Quest-if you were
to look for it, that is-in the most improbable places: inside gas
turbines made by GE and under the hoods of gm or Ford cars. Chances
are, one component or another in the gut of the machine has been
designed by Quest. The company is also one of the few remaining
in the country that recognise the merits of a degree in mechanical
engineering. Quest may design decidedly uncool things such as inlet
and exhaust systems for turbines, the innards of industrial oxidisers,
compressor-castings, aerospace gear-boxes, and printer components,
but there can be no arguing the fact that it has brought engineering
talent to the fore. "We are a successful product design firm,"
says CEO and co-founder Ajit Prabhu simply. "Our clients rely
on us for developing world class products in a cost-effective fashion,
which we do with India's engineering talent."
That's something some of India's software biggies-think Satyam,
Infosys, TCS, Wipro-can stake claim to but Prabhu points out that
"for them it is a peripheral activity". He has more to
say about quest's product-orientation as opposed to its Indian rivals'
services one and the company's standing as one of the few six-sigma
engineering solution providers in the world. Much of Quest's mechanical
engineering expertise can be attributed to its recruiting policy-forget
the large cities, the company mops up whatever relevant talent can
be found in towns such as Hubli, Shimoga (both in Karnataka), and
Pollachi (in Tamil Nadu). That could explain why, apart from GE,
GM, and Ford, United Technologies, Danaher, NAL, and HAL source
component designs from Quest. The result? Over the eight years of
its existence, Quest's revenues have grown to Rs 95 crore, and workforce
to 550. And eight months ago Venture Capital firm Carlyle Group
invested $6 million (Rs 27 crore) in it. That's telling.
-Venkatesha Babu
My PC Or Yours?
XENITIS
GROUPAMAR COMPUTERS
MAKER OF RS 15,000 PCs
FOUNDED: 2001
TURNOVER: Rs 23 CRORE
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Box, office success? Well, you can put it
that way, at least in West Bengal |
Even in a category where prices head
south in the blink of an eye, a pc that sells for Rs 15,000 (including
a 15" colour monitor, speakers, and a CD-ROM drive) is that
rare thing, a mix of adequate benefits offered at a price attractive
enough to make a difference. Popular estimates, including one put
forth by this magazine a few months ago, suggest that PCs will really
become popular when their price breaks the Rs 10,000-barrier. Amar
PC- Bengali for 'my PC'-is getting there. "We knew that demand
would go through the roof if computers could be made available at
the price of TVs," says Tathagata Dutta, one of the founders
of the Xenitis Group. Dutta and Shantanu Ghosh, the other founder,
were both channel managers, the first at Godrej Pacific, and the
second at IBM, in an earlier life. Realising that there was money
in computer components sourced from Taiwan and other South East
Asian countries, the duo founded Xenitis Group in 2001. Business
was good, but the Linux revolution set them thinking about the economic
viability of bundling the free operating system, and the hardware
components they sourced into one compellingly priced bundle. The
result? Amar PC, launched on January 21, 2004.
Since then, Xenitis has sold some 5,000 PCs, on the strength of
which it closed 2003-04 with revenues of Rs 23.17 crore. Projections
for 2004-05 are even more rosy: 25,000 PCs and a turnover of Rs
50-75 crore. To cope with demand, Xenitis is expanding the size
of its assembling facility at Chinsurah near Kolkata from 2,000
square feet to 12,000 square feet. The expansion will fuel the company's
march into West Bengal, Jharkhand, and Orissa. Then, after arriving
at a name resonant enough for the national market-Amar, feels Dutta,
is much too provincial-and riding a Rs 25-crore advertising budget,
Xenitis plans to go national with its offering. Will Dutta and Ghosh
break the Rs 10,000-barrier? Watch this space.
-Arnab Mitra
The Great Indian Animated Story
TOONZ
ANIMATION
ANIMATION
FOUNDED: 1999
TURNOVER: Rs 18 CRORE
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India's Shrek? Not quite, but Tenali's getting
there |
The story of Indian animation is replete
with companies serving as offshore production sweatshops for Western
studios. That is, if you leave out the tale of Thiruvananthapuram-based
Toonz Animation, which has gone ahead and produced local content
with a series on Tenali Raman, a part-historical, part-mythological
court jester and wise man rolled into one. What's more, the series
premiered on Cartoon Network Asia. "We believe that we have
set the right example for the industry to follow. Along with taking
on outsourced projects, Indian studios should also tap their inherent
strengths to become original animation film producers," says
P. Jayakumar, CEO, Toonz Animation. In effect, the company, convinced
that it could not become a globally known animation studio without
creating its own properties, allocated precious resources to developing
original projects, often at the cost of having to say no to high-revenue
yielding outsourced work.
The 'content' strategy has had an adventitious benefit: it has
attracted expat talent in droves. Among them is Atul Rao, a Los
Angeles-based writer and director and a second-generation Indian
American who was drawn to Toonz because of his own interest in exploring
the story of Hanuman, the monkey god who features in the Ramayana.
Convinced that crossover themes can work, Rao, now the Creative
Director of Toonz, is blending Indian characters with Western production
values. Well, if Crouching Tiger... worked its magic on Western
audiences there is no reason why an animated rendering of the story
of Hanuman cannot.
-Nitya Varadarajan
God Is Just A Print Away
BARTRONICS
IDENTIFICATION TECHNOLOGIES
FOUNDED: 1989
TURNOVER: Rs 12.5 CRORE
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Divine ID? God may know you, but this biometric
device could help you access him better |
One company saw an opportunity in
the serpentine queues, repeated security failures, and not infrequent
stampedes at India's plethora of holy spots. And it found a way
to apply biometrics to manage crowds and address issues related
to security. The technology itself may not be all that cool, but
Hyderabad-based Bartronics India's use of it definitely is. India's
#1 automatic identification and data collection (AIDC) company has
implemented biometric solutions at Tirupati, Vaishno Devi, and Amarnath.
Pilgrims pass through at least 12 fingerprint identification stations
before they reach the main shrine; at each the print is tallied
with the one taken at the base station (ergo, no pilgrim can join
a queue unless his identity has been established at the base station).
Emboldened by its success, Bartronics now wants to implement a biometric
solution in Mecca.
Bartronics has been around since 1989, but it is only with the
growing popularity of biometrics- essentially identifying a person
by getting a machine to match body parts such as the retina or iris,
or thumb prints-and RFID (Radio Frequency Identification and this
involves getting devices called 'readers' to, er, read radio signals
emitted by tags), that it is finding its place in the sun. The company
has provided solutions to Tata Steel, hp, ABB, Dr Reddy's Laboratories,
A.V. Birla Group, ITC, and ibm but it is temple thing that propels
it into the realm of the cool. Sudhir Rao, the company's Managing
Director, is already looking at the next big thing after biometrics
and RFID, revenues of Rs 75-100 crore, and a global presence. Will
things work out for Bartronics? Well, the company has the closest
thing to a hotline to God.
-Supriya Shrinate
Let Your Fingers Do The Gaming
INDIA GAMES
GAMES
FOUNDED: 2000
TURNOVER: Rs 10-15 CRORE
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Thumb happy? Well, Vishal Gondal would sure
like more of the world to be so |
It seems somewhat apt that a boy who
won the National Computer Programme Solving Contest when he was
13 has grown into a young man whose company has bagged the mobile
gaming rights to the newest disaster blockbuster The Day After Tomorrow.
Now 27, Vishal Gondal-he says he has "gone through all eras
of computing from dos 2.0 onwards"-runs Indiagames, a company
that boasts some 60 international telcos, including familiar names
such as AT&T, SingTel, and Vodafone, as its customers. Gondal's
first company, an interactive games creator that spawned Indiagames,
dates back to 1998. Among the first people to visit its office was
a team from a multinational i-bank that offered to find him some
funding. "I told them I did not need a loan," remembers
Gondal. "Then, they told me how I needed to structure my business
and promised not to charge an engagement fee." Bankers from
a multinat arriving on the doorstep of a 22-year-old's company with
the promise of funding-it doesn't get any cooler than this!
Today, Indiagames has pretty much emerged the first port of call
for anyone seeking to source games from India and is one of the
world's best-known mobile games creators (it is yet to get there
in terms of games for consoles or PCs). And it got there by displaying
some characteristic initiative and chutzpah. "When Nokia was
planning to launch its first camera phone, we got a prototype and
developed 11 games for it," says Gondal. "When the phone
was launched, we were the only company with ready games for operators.
We signed up 20 global operators straightaway." Last year,
Indiagames bagged the worldwide mobile content rights (for games,
ringtones, wallpapers, and images) for Spiderman from Marvel Comics
and Activision and has reportedly sold over 500,000 copies of the
game. It has since acquired rights to The Predator and Buffy The
Vampire Slayer. Big deal? In the world of mobile gaming, yes.
-Priya Srinivasan
The ABC of Healthcare
CARE HOSPITAL
HEALTHCARE
FOUNDED: 1997
TURNOVER: Rs 85 CRORE
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Looks hi-tech, doesn't it? That Care Hospital
is, but it is, but it is also fairly low cost |
Corporate hospitals, the perception
in India goes, are expensive. To date, this has largely proved an
accurate assessment. However, much like organised retail that presents
a low-cost alternative (and one that comes with better service)
to that of the unorganised variety, corporate hospitals hold the
promise of high quality and low cost healthcare. Hyderabad-based
Care Hospital, founded by Dr B. Soma Raju and a few other doctors,
is delivering just that. It isn't charity but indigenisation and
cost control that are helping it do so.
For instance, the hospital uses the locally developed and manufactured
Kalam-Raju stent (the Kalam in the name is the country's First Citizen,
who encouraged Raju, then an employee of a state-run hospital to
develop the stent, putting the resources of a lab of the Defence
Research Development Organisation that he then headed at the good
doctor's disposal) instead of imported ones. Care is also working
on indigenising everything from oxygenators to catheters to components
that go into dialysis equipment and has founded a company Relisys
Medical Devices that will soon start manufacturing these. In most
hospitals, the level of indigenisation is 5-10 per cent; Care hopes
to take it to 35-40 per cent with its Relisys initiative. "Indigenisation
is crucial not just to reduce costs but also make products that
meet local needs instead of just being a replication of a western
model," says Dr Raju.
It isn't every hospital that adopts cutting-edge management techniques
such as activity-based costing and bar-coding of inventory. Care
does, which could explain how it has been able to keep its inventory
at the same level despite growing revenues by an average annual
rate of 30 per cent over the past three years. It may never achieve
the volume-play of a Wal-Mart, but this five-facility (three in
Hyderabad and one each in Vizag and Vijayawada) is a game trier.
-E. Kumar Sharma
The Oil-Method Company
AYUSH THERAPY
CENTRE
AYURVEDIC PRODUCTS & SERVICES
FOUNDED: 2002
TURNOVER: Undisclosed
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Spot the MNC? Well, nor can we, but it is
HLL |
Can big business ever be cool? Just
ask India's premier fast moving consumer goods company, Hindustan
Lever. In 2002, the company forged an alliance with Coimbatore's
hoary Arya Vaidya Pharmacy to provide Ayurvedic 'wellness' treatments
through a chain of salons it proposed to start. The first Ayush
Therapy Centre-there are now 10 across four cities-opened for business
in Chennai in June 2002. To date, some 80,000 customers have paid
anything between Rs 750 (for a basic oil bath) and Rs 12,000 (for
a correction of imbalance, in ayur-speak) for a brush with the pharmacy's
time-tested remedies. Then there are the products, some five of
them currently, again based on the pharmacy's recipes but reinforced
with hll's emphasis on efficacy and safety. By 2005, HLL hopes to
have 50 clinics catering to 150,000 customers a year, in place.
The clinics themselves are run by franchisees and monitored by
a Lever manager. And professionals poached from AstraZeneca and
Dabur are helping the company build new capabilities in research
and supply chain management. "The response has been amazing,"
says Vipin Chawla, Business Manager (Consumer Healthcare), HLL,
"If we continue like this, there is no reason why the chain
cannot be taken abroad." He's right: there's no reason why.
-Nitya Varadarajan and Abir Pal
Its Heart Is In The Right Place
VASCULAR
CONCEPTS
DRUG-COATED STENTS
FOUNDED: 1998
TURNOVER: Rs 35 CRORE
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Angels in bunny suits? For users of Vascular
Concepts' stents, its workforce is no less |
It was an idea that burned within
biomedical engineer Swaminathan Jayaraman when he was working for
Intravascular Inc in the US. "I realised that if the talent
available in India could be tapped effectively, it could lead us
to bigger inventions within a shorter time and with lesser amount
of money," he recollects. And so, the engineer returned home
and founded Vascular Concepts. Today, in a field dominated by transnational
giants such as Johnson & Johnson, Boston Scientific, and Medtronic,
the small Bangalore-based company has a 25 per cent share of the
Rs 90-crore stents-think small self-expanding stainless steel tubes
that keep blood vessels open after surgery-market. Attribute that
to the R&D factor. Jayaraman himself holds 35 patents; Vascular,
30; and the company's state-of-art Sirolimus Eluting stent (it reduces
restenosis or the recurrence of blockage in the blood vessel) is
currently undergoing pre-clinical trials in The Netherlands.
Much of Vascular's ability to undercut multinationals stems from
its lower costs of R&D. The manufacturing itself, reasons Jayaraman,
is secondary and can be outsourced. This is just what the company
has done: its manufacturing is done by a company based in Germany.
Still, Vascular has been unable to translate its success in the
domestic market into a launch pad for its obvious global ambitions.
"Indian clinical trials are not accepted in Europe," says
Jayaraman. "And it is very expensive to do them there; we are
looking to raise $10 million (Rs 45 crore) for the next big leap."
The pragmatic engineer realises that technology alone cannot help
Vascular go global and admits that the company's success in the
US can largely be attributed to the fact that it gets its manufacturing
done in Germany. Its showing, however, has given him reason for
cheer. "Given the right kind of backing, we can become a leading
player globally," he gushes.
-Venkatesha Babu
A Kitchen Garden In My Pocket
PROALGEN
BIOTECH
NUTRACEUTICALS MAKER
FOUNDED: 2003
TURNOVER: RS 1 CRORE
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See the vegetables? Proalgen's N.S. Balamukundan
insists they are there in the pic |
A decade ago, any talk of substituting
the active nutrients that can be derived from a field full of carrots
with that extracted from a pond of algae would have been dismissed
as fanciful science fiction.
Today, this is near-mundane biotech. Chennai-based Proalgen uses
microbial sources to produce natural active ingredients, thereby
increasing volumes exponentially. For instance, the company extracts
carotenoids from an algae instead of carrots, lycopene from a fungi
rather than tomatoes, and lutein from another algae, not marigolds.
In all three cases, the benefit is scale and a shorter growth-to-harvest
period. Mathematically, a kilogram of algae can produce 10 per cent
beta carotene as opposed to a kg of carrots that does .0002 per
cent; and 50 acres of algae can produce as much lutein as 40,000
acres of marigolds.
That makes the business a lucrative one to be in. "There
is so much pent up demand for our products globally that a quick
ramp up is the need of the hour," says N.S. Balamukundan, Managing
Director, Proalgen.
Proalgen develops (and patents) its own strains of microbes and
extraction technologies and is in the process of acquiring 150-200
acres of land near Chennai for its new-age farm.
This year, the brothers NS who founded the venture, Balamukundan
and Venkatesh, expect revenues to nudge the Rs 7 crore-mark, largely
on account of carotenoids. Little wonder, then, the Tamilnadu Industrial
Development Corporation (TIDCO) is eyeing Proalgen for a strategic
stake.
-Nitya Varadarajan
The Medium Is The Message
TANTRA
T-SHIRT MAKER
FOUNDED: 1997
TURNOVER: Rs 5-6 CRORE
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What's on my T-shirt? Tantra's Ramchandani
(left) and Vimal Mariwala will be upset to know we couldn't
read that |
Marshal Mcluhan would have approved
of Tantra. Tantra who? well, a t-shirt is a t-shirt unless it is
a Tantra, that's who. Buy a Tantra T-shirt if you are fed up with
Nike Reebok and Tommy Hilfiger screams a presumptuous tag on one
Tantra T. Another tag proclaims that Sting, Paul McCartney (Editor's
note: we'd edit that name out if it is the pursuit of cool we're
after) and Bill Clinton have sported Tantra Ts. Not bad for a seven-year
old company that sells T-shirts with, what else, cool messages.
"Cult." "Semi-underground brand." "Capturing
the brown race." These are just some of the terms Ranjiv Ramchandani,
a 30-something former advertising pro and one of Tantra's co-founders
describes the brand. "The medium (Ts) was completely unexplored
when we came on the scene," he says smugly. "Now, we have
the kind of mindshare and impact that a big corporate would die
for."
Only, a big company may not be able to replicate Tantra's model.
All its designs come from a network of copywriters and designers
gainfully employed everywhere. And just one in every 500 gets approved.
"Our mindshare is bigger than our business share and that is
just the point," grins Ramchandani. "We are here to build
long-term equity." It seems to be working: Tantra Ts adorn
shelves in some 500 retail stores across the country. Shoppers'
Stop? Yes. Lifestyle? Yup. Globus? That too. The company owns a
cutting, making, and tailoring (CMT in garment-speak) unit in textile
hub Tirupur that churns out 5,000 Ts a month. And Ramchandani claims
the products meet "all international quality specs" for
knits. Still, the brand's turn of phrase runs the risk of offending
a starched shirt or two. Its Mental Inside T, a play on the Intel
Inside logo attracted a notice of sorts from the chipmaker. "Get
some perspective guys," was Tantra's response. "We are
not in the microprocessor business."
-Priya Srinivasan
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