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Business News/ Mint-lounge / Ramesh Tainwala | Life packed in a suitcase
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Ramesh Tainwala | Life packed in a suitcase

Ramesh Tainwala | Life packed in a suitcase

Frequent flyer: Ramesh Tainwala shuttles between Hong Kong, where he works, and Mumbai, where he lives. Image: Jayachandran/MintPremium

Frequent flyer: Ramesh Tainwala shuttles between Hong Kong, where he works, and Mumbai, where he lives. Image: Jayachandran/Mint

By his own admission, Ramesh Tainwala is not comfortable with PowerPoint presentations and prepared speeches. But that doesn’t stop him from tossing numbers and telling the story of how the company that filed for bankruptcy in September 2009 is back on track post restructuring and is looking at a billion-dollar listing on the Hong Kong Stock Exchange by mid-June.

Frequent flyer: Ramesh Tainwala shuttles between Hong Kong, where he works, and Mumbai, where he lives. Image: Jayachandran/Mint

Not surprisingly, when I meet him at Indigo Deli at Phoenix Mills in Mumbai over tea, he is chatty, relaxed and cheerful. Not surprisingly again, the evening lasts close to 2 hours because Tainwala likes telling stories.

As a postgraduate from the Birla Institute of Technology and Science (BITS), Pilani, Tainwala applied for jobs with Asian Paints and Century Spinning and Indian luggage manufacturer VIP Industries Ltd, India’s largest luggage company—but was rejected. That was in 1981. Nearly two decades later, he became the president (Asia-Pacific and West Asia) of Samsonite Asia Ltd, VIP’s biggest competitor. Tainwala today heads this most profitable region, which accounted for over 40% of the operating profit and a third of the $1.2 billion (around Rs5,400 crore) net sales of the parent in 2010. He is also one of the key people in the management team of six for the parent holding.

There is more than one twist to the Tainwala-Samsonite-VIP saga. Tainwala’s connection with VIP runs deep. He started his career in 1981 with a plastic trading company that was a vendor to VIP Industries. After a five-year stint, he started his own company, Tainwala Trading and Investment Co. Pvt. Ltd, for commodities trading and plastic sheet manufacturing and once again became associated directly with VIP Industries and Asian Paints as a vendor.

“I was always aware that I had not got a job with these companies and yet am crossing paths with them time and again," says Tainwala.

The next twist came in 1995. Samsonite was in talks with VIP Industries for a joint venture. The talks failed and the company, unable to find any other suitable partner, took on Tainwala, a vendor, as a silent partner for the India entry. “I was lacking the experience and funds," he says, explaining that he had approached the company in the past and even hosted management on their visits to India, but was never considered worthy of being a partner.

By 2000, Samsonite had failed to make inroads into the India market and was almost ready to pack its suitcases and exit the country. VIP Industries, a clear market leader with over 90% market share in the organized trade, had proved too tough a competitor.

“It was an embarrassment for me. I could not face my family and friends as a failure," says Tainwala. He requested the American parent to change his partnership status and give him management control for two years.

According to a Samsonite-commissioned Frost & Sullivan report released earlier this year, Samsonite, which also owns the American Tourister brand, gained the leadership position in December in India with a 16.8% market share. The study is part of the prospectus submitted to the Hong Kong Stock Exchange earlier this year. VIP Industries, which operates the VIP, Carlton and Delsey brands, has a market share of 15.8%, according to the report.

The sales figures are a bone of contention between the two companies. Samsonite saw sales of $77.9 million, or about Rs350 crore, in India in 2010, according to the prospectus. In 2010, VIP Industries posted sales of Rs679.2 crore in India, almost double the figure (an independent 30 September Networth Stock Broking Ltd report says VIP Industries is the leader, with a 58% market share).

Tainwala discredits VIP sales figures as “inflated". In turn, Dilip Piramal, chairman, VIP Industries, debunks the Frost & Sullivan report and Samsonite’s leadership claims as “inaccurate".

The turnaround in India saw Tainwala rework the price, size, design and colour strategy for India. Consultants had told the multinational corporation (MNC) that Indians consider black inauspicious, so products in that colour should be avoided. Samsonite followed the advice till Tainwala became chief operating officer. Today, black accounts for 70% of its overall sales.

In addition, Samsonite sold at a premium to VIP in India, so for the value-conscious, Tainwala got in American Tourister, a brand the company had acquired globally. More than half of Samsonite’s sales in India are from American Tourister.

The organized retail trade channel was dominated by VIP. Samsonite worked around the challenge by launching its own retail store network. In 2000-02, the company opened 200 retail stores. Today, company-owned showrooms account for 60% of Samsonite’s retail trade in India; in other parts of the world, the figure is just 10%.

The change in strategy worked. “Sales in India soon equalled the rest of Asia, excluding Japan," says Tainwala.

Samsonite’s turnaround in India got Tainwala acceptance within the company. In 2004-05, he was offered a partnership for the West Asia, Central Asia and Africa regions. In 2007, this was extended to include China. In February, he became the executive director.

Looking back, Tainwala says he realized the company’s model of having a team of expatriates running an operation in a market they were not clued into was never going to work. “They used to come in, start training and implementing processes without understanding how the market works," he observes, sharing an anecdote of how approval for opening a showroom would take three-five months. By then the property would be off the market and the company would have to start all over again.

“Asians were not empowered to make any decisions and that was one of the biggest failings of the company," says Tainwala, who divides time between Hong Kong, the region which the MNC has chosen for its public listing, and Mumbai, where his family lives.

Even as he scales new heights, Tainwala may still be carrying past baggage, so his most momentous achievement may still be in the making. After all, to lead the company to a clear win in the home market would be incomparable payback.

sapna.a@livemint.com

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Published: 16 Jun 2011, 08:09 PM IST
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