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With a large factory, big marketing plans and a bigger ambition, Jayesh Desaiis ready to storm the bastion dominated by foreign chocolate companies.

IBJ RESEARCH BUREAU

sweet, intoxicatingaroma fills the air nearKosamba on the out-skirts ofSurat. The en-chanting scent leads

to a sprawling factory beside theSurat-Vadodara national highway.Large metal cylinders are continu-ously grinding and refining chocolateinside this huge facility spread across

six acres.

"We source the richest cocoabeans from Ghana and use only the

best quality of milk, sugar and otherelements to make luxury chocolates,"stresses Jayesh Desai, seated in hisplush office at Rajhans House in thehearl of Surat.The 42-year-old chair-

man of the Rajhans (Desai-Jain) Groupis more than impressed that his state-of-the-art facility has turned hisMade-in-Surat Swiss chocolate dreaminto a reality.

The Rajhans Group chief is con-vinced that he can crack the Rs 9,000-crore Indian chocolate market, domi-nated by multinational companies(MNCs), like Mondelez (formerlyCadbury) and Nestle. In fact, the mar-ket that Mr Desai is targeting is evensmaller, comprising the Rs 1,500-crore,premium, luxury chocolate segment.But this niche market is highly poten-tial and expanding at a breakneckspeed.

Mr Desai too is similarly moving at

a very rapid pace. In a matter of twoyears, his group company Rajhans

Nutriments has put up India's third-largest chocolate factory near Suraton 2,50,000 sq ft of built-up area. Theplant, which can produce 25 tonnesof chocolate per day, is churning outtwo Swiss chocolate brands.Schmitten and Hoppits.

Mr Desai sees the premium choco-late business adding a new dimensionto his nearly Rs 4,000-crore businessempire, straddling textile, entertain-ment, real estate and hospitality. TheSurat-headquartered business con-glomerate has earned a big nameacross Gujarat and Maharashtra, andalso made inroads into other najor cit-ies across the country. With choco-lates, Rajhans aims to become ahousehold name with pan-India pres-ence. It also wants to be a part of the

26 ocroesR zoro INDIA BUSINESS JOURNAL

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elite club of premium chocolate-mak-ers. No doubt, it is quite a challeng-ing task for a two-year-old Indianchocolate company looking to stormthe bastion of centurv-old. estab-lished MNCs.

Branding blitzkriegRajhans has taken this challenge quiteseriously right from the beginning. Ithas pumped in around Rs 400 croreinto its chocolate factory to matchworld-class standards. Mr Desai andhis young team of professionals andmanagers have spent a significantamount of time touring Switzerlandand other European nations to under-stand the nuances of making premiumchocolates.

The manufacturing facility housessome of the world's best chocolate-making machines acquired fromDenmark's Aasted, Germany's Sollichand Switzerland's Buhler.

Meanwhile, Rajhans, flagshipbrand Schmitten has made a splashacross the country with its catchycommercial by a leading advertisingagency, featuring film star PriyankaChopra. Actor Siddharth Malhotrahas been roped in to promote its otherbrand, Hoppits, through another se-ries of adverlisements. The companyhas lined up a Rs 7O-crore marketingcampaign to promote Schmitten andHoppits through commercials as wellas an in-film promotion campaign.

Incidentally, the name Schmittentoo has an interesting backstory, re-flecting an intelligent marketing strat-egy. It is a result of a brilliant twist tothe English word smitten, meaningstruck or overwhelmed by love. It wasdecided that inserting 'ch' - reflectingthe abbreviation for Switzerland (CHbeing the short form for ConfoederatioHelvetica) -into 'smitten' would be aperfect fit for a chocolate based on aSwiss recipe. Besides, Schmittensounds more German and gives a richfeel ofluxury to the brand.

"Apart from theprodtctper se,thebrands stand out with their position-ing in modern retail and television

NAL INDIA BUSINESS JOURNAL ocroBER 2016 27

commercials," notes Mr Desai. As thecommercials draw public attention,Rajhans has slotted Rs 50 crore for anaggressive retail expansion. The 12variants of Schmitten (eight differentflavours) and Hoppits (four flavours),in the meanwhile, are finding their wayonto the shelves ofscores ofretailersacross I I cities through a strong net_work of distributors. This March,Schmitten was ranked among the top-50 brands in the 1lth edition of India'sBuzziest Brands rankings.

The Rajhans Group chairman iscertainly pleased with the perfor-mance of his chocolate business inthe past two years. "Last year, we dida business of Rs 75 crore. This year,we will be achieving sales of aboutRs 150 crore, and I am targeting tocross Rs 500-crore sales in Z0l7-Ig.We have a capacity to go up toRs 1 ,200-crore turnover,,' addsMr Desai. He has also set an ambi-trous target to gain a market share of15 per cent in the next three years fromabout the current 3 per cent.

An inspiring journeyMr Desai's sales and market share tar-gets are certainly too ambitious. Butit is this ambition, coupled with im-maculate planning, grit and determi-nation, that has enabled him to buildthe over Rs 4,000-crore Rajhans em-pire from scratch injust 15 years.

The rise of the Rajhans Groupchairman is a classic rags-to-richesstory. Born in a small village inParavadi near Bhavnagar, youngJayesh helped his father in his gro-cery business. Those were toushdays for rhe family of six siblings.struggling to make the ends meet.However, this did not stop youngJayesh from dreaming big and settingbigger goals.

After his graduation, he set off toMumbai, where his elder sister lived.He took up a small job in the dreamcity for a paltry monthly salary ofRs 300. Jayesh was convinced thatthis was not the life he wished for.Returning to his village, he continued

"Why Csn't SchmBe ANo. I Brcrnd?"

Meanwhile, Rajhans House, thenerve centre of the group's activi_ties, is teeming with scores ofyoung professionals. The Rajhanschief considers his over 7,000-strong workforce as one big family.Interestingly, over 30 per cent ofthem, including those in decision-making posts, are women, a policythat the group has been religiouslyfollowing. It is perhaps this demo-cratic atmosphere that has pushedRajhans to greater heights. Betweenpushing his chocolate business andtaking s(ock of his other companies.Mr Desai spares time for IBJ for anexclusive interview. Excerots:

A s a young boy. Jayesh

A Desai would olten admireL r swanky cars that came tohis village. Today, the RajhansGroup chairman owns a fleet ofluxury cars, including cricket legendSachin Tendulkar's Ferrari. The ac-quisition of Ferrari shot Mr Desaiinto the national limelight. But foryears, he toiled diligently and si-lently to build the vast Rajhansempire.

The man with the Midas touchhas attained almost everything thathe missed in his younger days. yethe continues to remain groundedlike the legendary celestial swan -Rajhans (equally at home in thematerial and spiritual realms).Mr Desai could not have found amore appropriate name for his busi-ness conglomerate.

r What prompted you to enter thechocolate business?

A recent global survey shows thatthe average yearly consumption ofchocolate in India is just 350 gm perperson as against the 3.5 kg per per_son in European countries. The In-dian chocolate market is growing at15 per cent per annum and is set to hitRs 20,000 crore in the next five years.After the top-two MNCs, you willstruggle to name the next big playerin the Indian chocolate industry. Thisopens up a huge opportunity for aplayer like Schmitten.

r So, how has thejourney ofyourchocolate venture been?

I am pleased that our manufactur_ing facility is rhe third largest in rhecountry in terms of capacity and ranksfirst technology-wise. Like all ourbusinesses, we have had to strugglea lot initially. But when your inten_tions are good, and efforts are fo-cused, you can win at the end. I aminspired by a quote of SwamiVivekanand: "When you go on a newpath, and if do not face difficulties,the path then is not the right one.', Ithas been difficult ro fight establishedplayers. But when Samsung can re-place Nokia, Facebook can makepeople go mad in ten year, andWhatsApp can be sold for Rs 2.5 lakhcrore, why can Schmitten not becomea number-one brand?

r Howdoyouproposeto achieye thattarget?

We have created our own sDace

"About 70 per cent of the Rs g,O00_crore Indianchocolate market exists in 11 major cities. our strategy

is to focus all our efforts in these cities.,,

28 ocroneR zoroINDIA BUSINESS JOURNAL

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today. My product packaging and

its look and feel have been appre-

ciated by all. The product has beenplaced at airporls, five-star hotels

and modern retail outlets. These

are the places where I want it tobe seen. We are focusing more

on qualitative distributionrather than going for quan-

titative distribution. About70 per cent of the Rs 9,000-crore Indian chocolate mar-ket exists in 11 major cities.

Our strategy is to focus allour efforts and ensure thatour products are available inthe catchment areas in these 11

cltles.

r Withdiversificationdrivingyourgroupts success, is there any newsector on your radar?

"After the top-two MNCs,you will struggle to namethe next big player in the

Indian chocolate industry.This opens up a huge

opportunity for a playerlike Schmitten."

I am toying with the idea ofsetting up a B2B (business-to-

business) e-commerce start-up. It is a unique concept ofproviding a platform formatching spare capacityutilisation. particularly inthe SME segment. We see

a lot of entrepreneurs los-ing out due to either a lackof utilising their full manu-facturing capacity or do nothave the requisite manufac-turing capabilities to stayafloat. We have been work-ing on this for the pastnine months. The e-com-merce platform, share-economy, is now ready tobe launched next month.

"We arglaunching a B2B

e-oommerce start-up, srlareeconomy,

next month. lt is aunique concept of

providing a platformfor matching spare

capacity utilisation."

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INDIA BUSINESS JOURNAL ocroBER zots 29

The World Of RajhansOrigin: 1996Headquartersr SuriiBusinesses: Real estate.entertainment, confectionery,textile and hospitalityBranches: Mumbai, Chbnnai, Delhi.Kofkata, ZurichTurnover; Rs 4,000 croreEmployees: Z,0OO*

DE

ENTERTAINMENTCompany: Rajhans Cineworlderofertiei: ioScreeni: 40Seats: tb,ObOExpansion plans: 25 properties withmore than 100 screens by 2O17

TEXTILECompanies: Rajhans Silk Mills &Rajhans Poly-PrintsSegments: Sarees & dress materialManufacturing units; 2Location: Sachin, SuratCapacity: 2lakh metres per day

HOSPITALITYCo1p,?ny: Rajhans HospitatityeirnG=nioy & siizring Siisaneitaurants: O

Location: Surat, Ahmedabad.Valsad, Nadiad & Mumbai

30 ocroseR zoroINDIA BUSINESS JOURNAL

with the family's grocery business.Months later, he joined his friend inSurat in 1996, and the two started trad_ing in edible oil. "After an initialstruggle, we struck success in theedible oil business. But I was not tookeen on this business as the marginswere too low," recalls Mr Desai. Heforayed into textile in 1999. The dia_mond city, also home to famous fab_ric brands, proved lucky forMr Desai. His two textile ventures,Rajhans Silk Mills and Raihans polv_Prints, began earning profits soon.Today, Rajhans is a reputed textilecompany, known for its high qualitysarees and dress material.

Mr Desai refused to be complacentwith the success of his textile busi_ness. In a bid to offer the multiolexexpereince to non-metro cine-slersalso. he ser up a multiplex in Surat bythe turn of the millennium. At present,group company Rajhans Cineworldboasts of ten multiplexes under thebrand name Rajhans Cinemas, with 25more slated to come upby 2017.

The group's foray into real estate adecade ago brought it name, fame aswell as fortune. Rajhans Infracon, withits signature projects in both commer_cial and residential segments, contrib-utes about 70 per cent to the group'stotal tumover. Surat apart, the com_pany has presence across Vadodara,Mumbai, Chandigarh and Ratlam, hav_rng constructed 30 million sq ft ofbuilCup area. It is also engaged in l7ongoing projects, involving 90 millionsq ft of builrup area in these cities.The company plans to enter other po-tential markets like Ahmedabad, puneand Indore in the near future.

Hospitality was the next sector thatMr Desai picked up as his group con-tinued to diversify across businesses.With Enjoy chain of restaurants andSizzling Salsa, specialising in Conti_nental and Italian cuisine, RajhansHospitality has carved a niche for it_selfin the hospitality sector. Besides,the company is in advanced stasesof setting up [ive-srar boutique io-

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Raihans' chocolates Schmitten and Hoppits have made a splash across thefeaturing Bollywood celebrities Priyanka Chopra and Siddharth Malhotra.

country with their catchy commercials

among top global players for abig pie

of the small premium chocolate mar-

ket. His nascent chocolate company'splans to take on big, establishedMNCs seem rather audacious. Butbehind this audacity is a cautiousmind that makes a meticulous calcu-

lation of risks and returns. TheRajhans chief adds that it is after thisthorough calculation that he has em-

barked on his chocolate adventure.It is this planning, coupled with a

knack of spotting the next big oppor-

tunity, that has built Rajhans into a

multi-crore business conglomerate. "Ihave forayed into various ventures,

but only after making sure that the

success ratio is at least about 85 per

cent," discloses Mr Desai, whoswears by Reliance Industriesfounder Dhirubhai Ambani.

Interestingly, there seem to be

some similarities between Mr Desaiand the seniorAmbani. Like the Reli-ance patriarch, Mr Desai too made bigfortune in the textile business.Mr Desai, a rank outsider, is now tak-ing on the established chocolate com-

panies just like the Reliance founderfought entrenched players over three

decades ago. For now, Mr Desai ap-

pears to be drawing enough inspira-tion from his role model to taste suc-

cess in his chocolate venture. r

tels of 120 rooms each in pilgrimagecentres, such as Shirdi, Tirupati and

Vaishnodevi, with about Rs 600 crore

of investment.

Big betThe serial entrepreneur inMr Desai is now immersed in his na-

scent chocolate business. Within a

short span of time, his flagship pre-

mium chocolate brand Schmitten to-day occupies shelf space beside the

premium brands of Mondelez, Nestle,

Ferrero Rocher and Mars. Brand con-

sultant Harish Bijoor points out thatSchmitten is zeroing in to occupy and

dominate the premium chocolate mar-ket space, dominatedby Cadbury Sik,Nestle Kit-Kat Senses and luxurybrands of Ferrero Rocher andother Belgian, Swiss and Italianchocolate-makers.

Meanwhile, the Indian premiumchocolate market is passing throughan exciting phase. Agrowing numberof health-conscious Indians is wak-ing up to the huge benefits of darkchocolates. They see premium choco-

lates as a healthier alternative to fat-rich, traditional sweets and othermass-market chocolates. A combina-tion ofrising wealthy Indians, chang-

ing tastes of the young populationand a rising trend of gifting choco-lates, among others, has transformed

India into one of the world's fastestgrowing chocolate markets.

No wonder, established and new

MNCs are moving swiftly to gain fromthe very small, but high-potential and

fast-growing, Indian premium choco-

late market. Mondelez India, the mar-ket leader with nearly 70 per cent mar-

ket share, is setting up a manufactur-

India is emerging as one of theworld's fastest-growing chocolatemarkets.

ing facility in Andhra Pradesh, its big-gest one in the Asia-Pacific region. Itis also launching new brands and

bringing products from its global mar-

kets to India. Nestle India, the sec-

ond-biggest player, is also on a simi-lar brand-launching spree to arrest itsdeclining market share of around 14

per cent. Newer global players, likeItaly's Ferrero Rocher and US-basedMars, have also heated up the marketwith big investments and brandlaunches.

Mr Desai's chocolate venture findsitself in the midst of an intense battle

INDIA BUSINESS JOURNAL ocroBER 2016 31