Ravi Jaipuria’s $5-billion dream

New Delhi: Ravi Kant Jaipuria is 62 and knows it, but is setting himself an audacious goal that he admits will probably be his “last one”.

Jaipuria wants the revenue of his group, controlled through RJ Corp., and spanning businesses in carbonated beverages, ice-cream, fast food, schools, real estate, retail, and healthcare, to cross $5 billion (Rs.34,000 crore) by 2020, from around $1.6 billion now.

Jaipuria, whose name is often mentioned in the same breath as PepsiCo Inc.’s Indian operations —he is one of the company’s largest bottlers—says the $5 billion target is “not just a number”.

“It’s an achievable goal.”

RJ Corp. has a plan. Revenue from the company’s main businesses—Varun Beverages Ltd (bottling) and Devyani International Pvt. Ltd (fast food), companies that are named after Jaipuria’s children—are expected to double by 2020. And much of the rest will come from dairy, Jaipuria’s next big bet, and retail.

Jaipuria seems to have it all worked out. Even as the group expands the bottling business to new countries, and grows the fast-food business through new brands (Devyani International is a master franchisee for several global brands) and outlets, it will build a large dairy business and create a front-end for all business through retail.

He admits that growth in the other businesses will be slow.

Currently, around 60% of RJ Corp.’s revenue comes from Varun Beverages—the second largest bottling partner for the US food and beverages company PepsiCo. According to Jaipuria, bottling will remain the largest piece of RJ Corp’s business. Devyani, which accounts for 7-8% of RJ Corp group’s revenue, has the master franchise for Pizza Hut, KFC, Costa Coffee, and a few other international brands, and also operates restaurants under its own brands such as Vaango and Foodie’s Bar. This business will show steady growth, Japuria said.

Ravi Jaipuria’s decision to go big in dairy may have something to do with PepsiCo CEO Indra Nooyi’s November 2014 statement that her firm would look to launch value-added dairy products in India. Photo: Vishal Koul/Outlook Business
Ravi Jaipuria’s decision to go big in dairy may have something to do with PepsiCo CEO Indra Nooyi’s November 2014 statement that her firm would look to launch value-added dairy products in India. Photo: Vishal Koul/Outlook Business

White gold

Dairy, Jaipuria says, is “the big bet”. “The target is to take our dairy business in India to $1 billion in the next five years.” Devyani Food Industries Ltd has been selling Cream Bell ice-creams in India since 2003, and will now expand into every possible dairy product—from ghee, yoghurt and lassi, to flavoured buttermilk and cheese. “The focus will be on value-added products and milk-based ready-to-drink products,” Jaipuria said.

Devyani Food Industries, at present, accounts for just around 4% of the Group’s estimated revenue. Its revenue for the year ended 31 March 2015 was Rs.452 crore and it made a profit of Rs.25.11 crore.

Dairy is not an unknown territory for Jaipuria. While he has stuck to just ice-cream in India, he runs the largest dairy company in Uganda, and has companies in Kenya and Zambia, that sell a range of dairy products like milk, butter, ghee, yoghurt, cheese and powder milk.

The target is to take our dairy business in India to $1 billion in the next five years. The focus will be on value-added products and milk-based ready-to-drink products

Jaipuria’s decision to go big in dairy in India may have something to do with PepsiCo chairman and chief executive officer Indra Nooyi’s November 2014 statement that the firm would look to launch value-added dairy products in India.

If PepsiCo executes its plan, Jaipuria could be a preferred partner. A spokesperson for PepsiCo India Holdings Pvt. Ltd declined comments for the story.

Jaipuria plans to set up three green-field dairy plants—one each in West Bengal, Haryana, and somewhere in western India —within the next two years at an estimated investment of Rs.100-120 crore each.

Dairy won’t be an easy business to crack. Devyani Foods will be operating in a crowded market. India’s fragmented dairy market is dominated by Gujarat Co-operative Milk Marketing Federation (GCMMF) that sells milk and other dairy products under the Amul brand.

Nestle India Ltd has been selling dairy products in the country for more than 100 years.

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