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We don’t want to sell Parle: Chauhan

In a rare interview, the company’s chairman speaks of his long journey, the competition and his future plans
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First Published: Wed, Nov 28 2012. 12 00 AM IST
Vijay Chauhan says local competition will always be a bigger threat because of cost advantage. Photo: S Kumar/Mint
Vijay Chauhan says local competition will always be a bigger threat because of cost advantage. Photo: S Kumar/Mint
Updated: Wed, Nov 28 2012. 01 22 PM IST
Mumbai: He may be 76 years old, but Vijay Chauhan, the reclusive chairman of Parle Products Pvt. Ltd, exudes energy and enthusiasm even as he forecasts that the revenue of his company will be approximately Rs.10,000 crore in 2012-13. This would mean a 28% increase over last year in the revenue of the company that makes the world’s single largest selling biscuit, Parle G. The privately held company has been growing at around 20% a year for the last five years, and its revenue was around Rs.50 lakh when Chauhan joined it as a 23-year-old. The engineering graduate from the Massachusetts Institute of Technology points out that 15 billion Parle G biscuits stacked side-to-side (each biscuit measures 53mm), would be enough to cover the distance from the earth to the moon and back. That’s equivalent to the monthly sales of Parle G. Chauhan, the son of one of the company’s founders Kantilal Chauhan, has completed 50 years on the payroll of the family-run enterprise that is known for some of India’s most recognized brands such as Thums Up, Gold Spot (now owned by Coca-Cola India Pvt. Ltd), Frooti and Appy (owned by Parle Agro Pvt. Ltd, run by cousin Prakash Chauhan and family), and confectionary Melody and Poppins, besides biscuits Monaco and Hide & Seek. In a rare interview, Chauhan speaks of his long journey, the competition and his future plans.
Edited excerpts:
Your company was set up to make confectionary. What made you launch biscuits a decade later?
When we started in 1929, there were no Indian biscuit companies except for Britannia (now Britannia Industries Ltd), which was owned by a British company. Everything had to be imported. There used to be a biscuit brand called Glaxo that was being imported then, and we saw an opportunity to make glucose biscuits. Ever since, glucose (Parle G) biscuits have been selling in India. Today, it’s the world’s largest selling single brand. We introduced the biscuit just to fill the gap as the market evolved.
What was it like to manufacture biscuits in those days?
When we started manufacturing biscuits during World War II, all ingredients were in short supply and the government was giving us a specific amount of wheat flour to make biscuits for the military. We were not allowed to supply those in the open market. We made biscuits out of barley for public consumption. The packaging also was ingenious as we wrapped these in newspapers which were dipped in wax. The biscuit tasted horrible. I still remember the taste. But it was wartime.
You also made your own machines then...
At the time, we were not allowed to import machines. Licences were only given to industries that were deemed essential. Food companies did not fall in that category. Hence, we started making our machines to bake biscuits, for packaging and moulding. We still have a small workshop as we still design our machines. But we do not manufacture machines now.
Right from its inception, Coca-Cola had a problem with your cola brand...
We added a beverage in 1949 under the name Gluco Cola. It was the first Indian cola drink. Coca-Cola wasn’t present in the country then, but had registered its name here. It objected that Gluco Cola and Coca-Cola would be confusing for the uneducated, illiterate people of India. So we had to change the name after some time to Parle Cola. But then Parle Cola didn’t do so well. Gold Spot was the more popular drink at that time. In 1960, one of my uncles separated from us. He took the beverages business while we retained the biscuits and confectionary.
Can you tell us how many Chauhans are on the board of Parle Products?
At Parle Products, Sharad, Raj (his brothers) and myself are all second-generation owners. My son and two nephews are executive directors in the company. My other brother, Jeetendra, and a nephew, Amol, passed away in an air crash.
What about succession planning?
At the moment, we are all getting along fine. So we haven’t thought about succession planning. Me and my two brothers are managing directors and the third-generation (members) are all executive directors.
Most family-owned companies now have professionals who head them. What about you?
If we take a professional CEO (chief executive officer), what will we do? We like being hands-on.
What was it like during the strike in the 1980s, when there was almost a complete shutdown?
It was one of the toughest times. We had no production for eight months. We only had one factory then. But when we resumed work, the demand for our product remained and we got back our market share.
Your uncle Jayantilal Chauhan’s descendants exited by selling to Coca-Cola. Did you never consider the option?
Kraft Foods Inc. was in talks with us for the last five years. It wanted a controlling interest in our company, which we declined. We have had many suitors, but are not interested. As long as the boys want to run this business, we will be here.
What about acquisitions?
We have got more than what we can chew. I don’t want to get into something which we can’t handle.
What about a public listing?
There are no such plans at the moment. We don’t want to go public.
But the market is getting competitive, with multinationals, domestic and regional companies all looking to grow.
There is competition. We are the strongest here in Maharashtra, Gujarat and Uttar Pradesh, but not so strong in the South and East—we are a little bit (strong) in the North. The competition comes from smaller players. Like in the East, smaller companies sell their biscuits at a cheaper price than us. I don’t know how they manage their pricing, but we can’t beat that. Local competition will always be a bigger threat due to the cost advantage. Besides, multinationals like Kraft are not interested in making low-cost biscuits. It is a price-conscious market and there needs to be reach to sell volumes at low cost. But low cost does not mean inferior.
Have you planned to make any fresh investments in the business?
We own eight factories. These were set up to give us tax advantages. Additional capacities will be added by contract manufacturing. So we have not planned any new investments.
What about global expansion?
We have factories in Cameroon, Nigeria, Bangladesh and Nepal, and will expand further into Turkey and Brazil. We have taken on local partners in some of these markets for distribution.
What next for Parle?
We are a mass-consumption company and will remain so. We are studying opportunities that will address this audience. It could be anything in the foods space. I don’t want to reveal more.
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First Published: Wed, Nov 28 2012. 12 00 AM IST
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