Corporate Reports

B u s i n e s s i n d i a u t h e M ag a z i n e o f t h e c o r p o r at e wo r l d

Charting growth plans

Nilkamal group plans to more than double its revenues in the next two years
against `1,095 crore in 2010. But the steady growth notwithstanding, the company now plans to more than double its revenues in the next two years. currently, the plastics business that includes moulded furniture and material handling accounts for nearly `1,300 crore in sales, while the rest comes from the groups retail venture @home that sells imported knocked-down wooden furniture, which the company says will be its next focus area. we hope to touch combined revenues of more than `3,000 crore in the next two-to-three years, says Manish parekh. the numbers may seem overtly optimistic in the given timeframe, but the company says its possible and cites the growth potential of its home furniture business. the size of home accessories market is estimated to be about `60,000 crore, says Manish parekh. and only 5-6 per cent of that goes to the organised sector, he adds. we see immense potential of growth in the business. nilkamal forayed into home accessories and wooden knocked-down furniture business in 2005, setting up a chain of stores in south and west india under the brand @home. the brand, positioned as a middle option between affordable and highend luxury segments, is retailed through 20 large format companyowned stores, which clocked annual revenues of `190 crore last year. going ahead, nilkamal plans to increase the total number of stores to 30 by 2013 and also plans to hive of @home stores into a separate company and tap the equity markets to raise capital. But how easy will it be to compete with established names like durian, godrej interio and multinational giants like ikea, which have their manufacturing facilities? nilkamal imports all its knockeddown furniture and home accessories from southeast asia and china. there is enough room for everyone in this market, but we may begin manufacturing here for this segment

hese days weekends invariably turn out to be the busiest part of the week for those at the suburban Mumbai headquarters of nilkamal group. though this may seem a tad unusual to some, the management team led by the second generation of parekh family, promoters of the `1,500 crore nilkamal group, does not think so. the challenge is to reach the next level and weekends are strictly for review and brainstorming, explains Manish parekh who, along with elder sibling hiten (both in the early 40s) and cousin nayan, run the company founded by their fathers Vamanrai and sharad V. parekh (aged 76 and 66 years now). the older parekhs are no longer actively involved in the day-to-day running of the business, preferring to let the next generation (all three are executive directors in the group) call the shots, as the group readies itself to enter new businesses. Much of our time these days is spent planning what we ought to do next and how, says 38-year-old nayan parekh, who handles the groups manufacturing division. nilkamal began as an independent

venture, set up in 1981 by Vamanrai and sharad parekh, after they decided to break away from family run national plastic industries, founded by group patriarch Vrajlal parekh in 1950 as a manufacturer of plastic buttons initially. it was a big decision those days, the market was small and there were regulatory hurdles for import of raw materials and machinery, says hiten parekh. But the decision paid off. nilkamal began with manufacturing plastic crates, supplying to dairy farms in Bombay and bottling units in the city but expanded its product base to moulded furniture and material handling in the following years. the company went public in 1991 raising `1.8 crore to start its first plant in nashik, Maharashtra. it has nine plants in india and the neighbouring sri lanka. Doubling its revenues nilkamals sales rose by 12 per cent to `343.14 crore in the quarter ended december 2011, from `304.13 crore in the previous quarter ended december 2010. on an annual basis, the company has registered gross revenues of `1,318 crore in 2011, as
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Corporate Reports
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B u s i n e s s i n d i a u t h e M ag a z i n e o f t h e c o r p o r at e wo r l d

sudipta BanerJee

Manish: planning for the next level

Hiten: overseeing new projects

Nayan: we offer solutions

as well, says Manish parekh. the company has ventured in production of mattress to be sold under the @home brand and its first plant is expected to become operational this year in hosur, tamil nadu. Much of the current plans are based on the companys capabilities and synergies between its existing and new businesses, whether its retail or manufacturing, says the nilkamal management. Many a time, our customers are not aware of the cost-effective solutions available at our end, says nayan parekh. and the challenge is to identify those needs and offer solutions, he adds. the entire range of nilkamal products is made on that philosophy right from the early days, when group founders Vaman and sharad parekh made rounds of bottlers and dairy companies to sell plastic crates as a replacement of metal containers. products of nilkamals material handling unit now range from catering to a wide range of other sectors; it is also the biggest supplier of plastic crates to both pepsi and cocacola in india. we offer solutions, says nayan parekh. of course, the solutions have to be in tune with our strengths and capabilities and there is a huge scope of expansion. indias current utilisation of plastic is 8 kg per head per year, as against 23 kg internationally, he adds. But overcrowding by too many players remains the most obvious pitfall. its difficult to say how nilkamal will emerge, but the players are

doing the right thing by building capacity since the use of plastics will go up manifold in future, says Jayesh rambhia, chairman, all india plastics Manufacturers association. Failed ventures But breaking away from the plastic mould, the company also has signed joint ventures with foreign players like bito lagertechnik Bittmann gmbh, germany, to make metal storage systems for the export market. and its not always that nilkamal has got its calculations right. in 2006, the group announced its foray into real estate development, tying up with a Mumbai-based real estate firm. the venture failed to take off. the group has also exited its joint venture for moulded furniture in Bangladesh with sas group, after losses piled up. we have only become wiser, says nayan parekh. old-timers at nilkamal say that

Net sales
(` crore)

1,318

1,095 815 951

2007
Consolidated figures

2009

2010

2011

group founders Vaman and sharad parekh had set different roles for themselves, to avoid overstepping on each others toes and keep the company intact. and the legacy has continued. hiten, the eldest of the three, oversees new project developments and also day-to-day operations of the group company, while Manish looks after the daily functions of the plastic furniture division and also the @home brand. nayan, son of group managing director sharad parekh manages manufacturing and operations of the material handling division. the managers are empowered to take key decisions but everyone makes sure that no decision is taken in isolation, and so, it helps to bounce ideas and decisions off each other, says nayan parekh. when we were planning to start our first manufacturing plant in nashik in 1991, it took us more than three days of deliberations to reach a consensus, says paresh Mehta, financial controller, nilkamal. But, when in 2000, we decided to open a manufacturing plant in Barjora in west Bengal, it didnt take more than three hours to decide. this speaks volumes about nilkamals emphasis on systems and processes, he adds. it definitely augurs well for the shareholders that both generations of parekhs are involved in the business, says Mahendra doshi, executive director, lkp securities, Mumbai, who is also an independent director in the board.
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