He joined his father and founder of the company, B P Agarwal, about 10 years back. Surya Food & Agro is now a Rs 500 crore company. Shekhar Agarwal speaks to DARE about the strategies, challenges, and his entrepreneurial journey in this business.
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| Shekhar Agarwal Priyagold (Surya Food & Agro) |
What is the genesis of your business?
We have been in the business of food products since the beginning. Before starting this company, my father, Shri Ballabh Prasad Agarwal, had a business of manufacturing coconut oil in Calcutta. When he moved to Delhi, there was no big market for coconut oil in the North. It is then that he decided to explore some new areas of opportunity and decided to roll out the biscuit manufacturing business. The objective has always been to provide exceptional quality products at a reasonable price for the average consumer.
In 1993, Surya Food & Agro had a very modest start with a small unit at Greater Noida, which had a capacity of 25 tonnes per day. The initial investment of Rs 4 crore came in from the coconut oil business as well as bank loans. We got a very good response for our first product, under the brand Priyagold. Ever since, we have not looked back. As of now, our company has four plants, located at Greater Noida, Lucknow, Surat and Hyderabad – with a capacity of producing 1,50,000 MT per annum. Our manufacturing capabilities, along with strong brand building and distribution capabilities have enabled us to command a sizable market share over the years.
How did you deal with the competition from established players in the industry?
We carved a niche by getting into the premium biscuits segment, instead of glucose biscuits. By doing this, over the years, we have grown to become the number one in northern and central India, and number two in the western region. This is of course talking only about the premium or non-glucose segment. However, about 70 percent of the total biscuit industry comprises of glucose biscuits. On a national scale, when one includes glucose biscuits too, we stand at number three.
Having said that, of course, there is competition – and competition is necessary for growth. We take our competition as a challenge that we have to overcome. With this approach, we have seen our company grow at a stable 20-25 percent year-on-year.
Why did you foray into the the fruit juice business?
India is a growing market, when it comes to the fruit juice segment. Indians have begun to take health and wellness seriously. The consumption of fruit juices has seen a surge with more and more consumers becoming health conscious. Also, there are only a few established players in this segment like Tropicana and Real. We were looking at diversifying our business in the food segment and this space looked full of opportunities to grow our business. We are doing fairly good, with a growth rate of 30-40 percent in this market.
You are getting into confectioneries too. What is the plan to gain a foothold?
In the confectioneries market, there are a lot of players in the country. However, most of them are regional. At a national scale, there are only a few players in this market. There is enough room for more players to enter this segment on a national level. We have a strong brand building and distribution capabilities in our biscuits segment. We plan to use the same channels and our existing networks to target the same consumer group as our biscuit segment. So, as far as capturing a market in the confectioneries segment is concerned, it should not be a problem for us.
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MANTRA/ Be positive. There is nothing impossible in this world if you work hard. You need to change yourself to meet the changing needs of the consumers to be successful. |
How about your contract with the IRCTC?
We have to set up food kiosks for sale of our products i.e. biscuits & juices. We plan to do this at about 200 railway stations which will translate into approximately 500 food kiosks spread across various cities in India. Around 150 kiosks will be functional soon. Of course, doing all of this is a challenge in itself. But then, expansion is always a challenge in businesses. For us, this contract largely means a lot of visibility, which will help us in strengthening our brand building exercise.
What’s you take on the rural markets?
One should not ignore the fact that a very large segment of our country’s population still lives in rural areas. Keeping this in mind, we accord a high priority for marketing and distributing our products in these markets. Our approach has been to enable small scale distributors to take up our products at a very local level. These distributors happen to be very industrious and help us in penetrating into rural markets.
Where is the big money?
Right now, the growing markets are those of fruit juice and confectioneries. The fruit juice business is growing at a steady 30-40 percent. Of course, the biscuit segment is what makes a huge chunk of the current turnover i.e. around Rs 425 crore. As for the juices segment, it is churning about Rs 60 crore.
Does it help to have celebrities as brand ambassadors?
We have always had a celebrity who is popular pan-India and can represent a mother-wife image. Previously, we had Priya Tendulkar and now we have Karisma Kapoor. And, yes, it does help to have a known face endorsing your brand.
You might have a good business going with a good turnover but if you want to build a brand with a strong recall value, having a celebrity promote your products definitely helps in adding a certain value to it.
One noticeable trend is that people today go for brands. For consumers, it does not matter if the product is as cheap as Re 1, as long as it has a brand name to it. So for creating a stronger brand recall, we plan to have multiple celebrities endorsing our brands.
One unforgettable milestone achieved...
As a company, we grew at a stable Rs 20-25 percent per annum. In the year 2003, the company touched the Rs 100 crore turnover. For me, reaching that figure has been the biggest and most unforgettable milestone. Right now, we are sitting at Rs 500 crore. The next challenge is to hit a Rs 1,000 crore mark by 2011.
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