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How Roshini Sanah Jaiswal breaks stereotypes to build 1000cr businesses
176 Plays10 months ago
Discover Roshini Sanah Jaiswal's journey from starting Bangalore’s very first premium bar and night club to leading the India franchise of the global Hard Rock Cafe. Learn lessons in leadership and resilience as she recounts navigating countless challenges to turnaround one of India’s oldest liquor companies. Now, she's building Swanrose, a global D2C brand in the beauty and wellness space, her most ambitious project yet.
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Transcript
Introduction and Personal Background
00:00:00
Speaker
So hi, I'm Roshni Sanaja as well. I am the promoter of Javedit Industries and I'm also the founder of Swan Rose India Private Limited.
00:00:24
Speaker
If you love stories about powerful women, then you will love this very special episode of the Found a Thesis podcast. Roshni Sanaa Jeswal has been a trailblazer throughout her career. She started Bangalore's very first premium bar and nightclub, and then scaled that one location into a nationwide chain that also owned the India franchise for Hard Rock Cafe. She was not done yet.
00:00:47
Speaker
Next, she joined her family business in the alcohol space, leading the turnaround efforts at the publicly listed Jagjeet Industries, which owns the aristocrat premium brand of whisky. What followed next was an incredibly hard eight years in which the company went through every crisis imaginable and yet emerged stronger and healthier than
Entrepreneurial Journey in Bangalore
00:01:06
Speaker
ever.
00:01:06
Speaker
Roshni is now building a global D2C brand in the beauty and wellness space and this might be her most ambitious project yet. Stay tuned for this fascinating conversation and please subscribe to Founder Thesis on YouTube or any audio streaming platform.
00:01:29
Speaker
I want to kind of understand your origin story. You're from a business family. Tell me a little bit about that. Like, what was it like growing up in a business family? What was the family business like? Yeah. What was starting business? I think growing up in a business family is having a lot of business conversations around the dining table. I think I was no different in that sense. But there was, I think, this overarching
00:01:59
Speaker
What was the business that the family was into? So the family had two different kinds of businesses, two public listed companies. One was Jagajith Industries, which was set up by my grandfather 74, 75 years ago. It's the first alcohol company in India. It started off as a distillery, but we also have our own brands. And our biggest brand, I guess, would have been and is now also aristocrat premium whiskey.
00:02:28
Speaker
And then there was Milk Food Limited, which was started in 1975 by my father. And that does, manufactures Milk Food Ghee. So it's a ghee brand. I mean, they, once upon a time used to do, they did the first ever yogurt. They did ice cream, which was sold to Nestle's later. And your father had siblings?
00:02:56
Speaker
My father has siblings. He has siblings. He's got two siblings. But the family has remained united like in most families, you know, in second generation. No, the family did split. How old were you that time? I mean, I was much younger. You're talking about this is in 2000. It's also started in, I would say in 2000.
00:03:17
Speaker
So it was actually pretty much at the onset of where my career was just beginning. I was starting the bar in Bangalore. It was exactly in 2000. It was 180 proof, trying to launch my career. Tell me about your career. What part did it take? Where did you go for your graduation and so on? And how did you end up starting a bar?
00:03:43
Speaker
So I was studying in New York University. And after I graduated, I worked there for a few years. And then at that point in time, I was dating someone. We were going out, and he was my boyfriend. And he got an amazing job opportunity in India. And he wanted to come back and start
00:04:10
Speaker
this company, you know, set up, you know, at that point, it was at a shop in India for, you know, this particular company. And we took a call, we said, I was from Delhi, he was from Bombay. And we said, let's go to a neutral territory. And you were not married yet, I guess staying in that same city with your family and all would have
00:04:35
Speaker
No, we were not. But it was strange because even though his family was from Bombay, you know, and the reason we actually went is also we heard so much about Bangalore being touted as this amazing, amazing city, Silicon Valley of India. So there's like a lot of hope and scoop in Bangalore and very cool, lovely weather, all of those things. But his family actually did move to
00:04:59
Speaker
his father and mother and sister actually did move to Bangalore also at that point so we said oh well what the hell it's a new city let's go and try and so we did go and try but when we got to India of course my boyfriend was quite at that point
00:05:14
Speaker
conservative. I think he was basically like, okay, we were living together in New York and he was like, okay, if you're going back to India, we have to get married. We cannot continue living there. So when we did come to India, we did get married. And then, of course,
00:05:32
Speaker
you know from there on we were living in Bangalore so that became our home and it was a rude shock because New York and the hype and what we were reading I think to me it was it was I was depressed I have to say I was depressed at that time because I was like oh my god
00:05:51
Speaker
just from the energy of New York, you know, it felt like this really, it was a beautiful town, but, you know, very sleepy, quiet, just didn't have that hustle and bustle that one was looking for. Especially like back in 2000. 2000 is when you moved, right? Yeah. No, we moved earlier. We moved in 1998.
00:06:15
Speaker
We moved in 1998. So the bar opened in 2000. That was two years later. And this must have been when Bangalore used to have that culture where in the afternoon all the shops would close because people would go to sleep. There was this sort of element of
00:06:31
Speaker
you had sort of curfew. So everything shut by 11 o'clock also. So, you know, it was like, I could never understand the logic of that. And then you had these, you know, these crazy rules and, you know, there's this concept of dance bars. So bars were a dirty word. A bar was a dirty word at that point. It meant that there was all kind of, you know,
00:06:57
Speaker
Other things that were going on. Yeah, going on behind the scene. But bub was OK. Bangalore was pub culture. But bub was just a very dirty word. Is there technically a difference between a pub and a bar? No, I think it's just people had known dance bars. And till then, there were no bars. I think it was always sort of pubs that people saw. And even when you walked in one,
00:07:26
Speaker
It was definitely reminiscent of what you would find in the UK, right? Brass and wood, and it was that notion of it. But in Bangalore, when we moved, I recall at that point there were about 250 pubs, and it was not even that. And sometimes all it took was a liquor license and
00:07:49
Speaker
Yeah, a broken now music system, money plant, you know, and that was a pub, because you could go there and drink. And, you know, the best of them at that point, I remember was a place called black Cadillac.
00:08:07
Speaker
actually at least to go there a lot and you know it was just an improvement on everything that I've just said but you know a little better because the music was better over there etc but so I think the notion of what was happening dramatically to to nightlife and what we were exposed to when you were in the States to where India was they were miles apart they were really really miles apart and
00:08:36
Speaker
So a bar essentially has that like a proper bar in it where you have all those bottles behind a bartender and the glass is hanging upside down and stuff. So that's how you would define a bar. Yeah, I mean, as you would define a pub as well, because you would have, you know, there is a threshold technically, which is the bar and the bartenders are behind it and you have your alcohol, that's also a pub.
00:09:00
Speaker
to the extent, but black Cadillac at that point in time, I mean, it was also very, these places were also very, very dark, right? There's this sort of, I think that it's a strain because the darker you kind of, you know, it was there and you sort of, you know, it was very dimly lit.
00:09:15
Speaker
it sort of worked around that and yes it wasn't a big colossal buy in a lot of these places because the places were small, they were small paths, they were buzzed. Okay so like you were not satisfied with the options there so you decided to start one yourself?
Establishing Hard Rock Cafe
00:09:30
Speaker
Like yeah I think they were yeah it was strange I think I looked at couple of things and you know it was a
00:09:36
Speaker
bizarre childhood dream. Anyways, to sort of throw it around. And my friends actually reminded me of this when I did start with this. And my God used to say, you're going to open a bar in a nightclub. And I was 14, 15 when I used to say that. So when I actually began it, it was not like I was thinking that at all. It was just I was thinking like, oh my God, how do I improve my life over here? I need a place to go to.
00:10:04
Speaker
And, you know, like I was used to going to and, you know, it was like, you know, how can we actually do that over here where we and I also saw that when we were going to these bars or these pubs right at that point in time.
00:10:17
Speaker
you were, you know, what we were wearing when we were going out in New York, you were wearing skirts and dresses and, you know, you were in that zone. And when you were here, you were covering everything as much as you could. And I was like, well, you know, the notion of being able to really dress up or dress sexy and be able to go out and really have a good time.
00:10:42
Speaker
that somehow just was not available or did not exist for women, at least. And I was like, well, why is that not here? So why can we not do that? And it was actually all those things that actually played in eventually. And everyone, and the reason I remember that 250 number was because it was thrown at me by journalists. It was thrown at me by friends. What are you doing? Are you crazy?
00:11:11
Speaker
And the investments in those days were also tiny that went into places. 180 proof was four and a half thousand square feet, which was unheard of in size to open something that big also. And then, you know, the renovation cost and it was on the crossing of St. Mark's and MG Road and we took
00:11:33
Speaker
this old building which technically may have just gotten demolished because that was the intention. But it was a 1912 building. It was the book society. And I just loved the building and I said, let's restore it. So the restoration and the renovation took over a year. It was way more expensive than something if I'd just gone into a new building and put up a bar there.
00:11:59
Speaker
But the idea was like beautiful, you know, 30 foot ceilings. And, you know, it actually became a sort of a speck for us even going forward as as life changed, that we always look for spaces with really high ceilings after that first property. So we started the whole building and converted it into a
00:12:24
Speaker
It was a, it was a one floor. It was just like a single, you know, it was like a, it was like a house. Like think about an old 1912 structure. It was like, you know.
00:12:34
Speaker
and we took the inside of them, like roots of trees, everything. So we just took that one space and there was outside of the backyard as well. So you had this whole internal space and we had a little bit of a half a mezzanine on the top. So you actually had space even on the top and then you had this hole right next to us at that point in time.
00:12:57
Speaker
was Barista. So there were these two buildings that had the same look. One part of it was Barista, and then there was 180 proof right next to it. And right next to us after that was Koshy's, which is, of course, an institution in Bangalore. So yeah, I mean, it was literally starting this, but this was book society, which belonged to the Bible Society. And so it was controversial.
00:13:24
Speaker
Did you buy it off them? No, we never bought it. We leased it. We rented it at embassy due to Virwani was the owner at that point of that. So I leased it through him actually.
00:13:47
Speaker
He went on to become a very, very good friend of mine as well, many years in. But yeah, I leased it through him. And does it still exist there? 180 proof? 180 proof doesn't. The building does. It became Hard Rock Cafe later. And in fact, what we did is we expanded it even further. So that Barista portion.
00:14:12
Speaker
what got included and so all of it, I think the total, I think then it must have grown to almost like 78,000 square feet. So it all became then Hard Rock Cafe and it's there today. I mean, it still exists. The building is still very much there.
00:14:32
Speaker
So I think we definitely did, if nothing else, we at least did service and we kept this beautiful historic building, brought it back to life and kept it up. How did you fund this? Through family money?
00:14:48
Speaker
No, so yeah, I mean, as in family money, you know, we were both actually, we were given I was given a flat, you know, when I got married, you know, for we sold the flat. And that's how it was funded. So yeah, it was it was personally as it is family money, because eventually did come from family source. But yeah,
00:15:09
Speaker
it was, you know, like that. And therefore it mattered. And, you know, we were young. And, you know, at that point, you also think that, okay, it is life savings, but, you know, you have the urge, but you can't afford to sort of just throw it out also. Like, so, I mean, everything was invested in it.
00:15:30
Speaker
And it was definitely a labor of love. At some point in time, the friends that we made in Bangalore all sort of came together. It was all very new, right? All these new friends and all of our friends actually strangely ended up being partially because of that. Architects and designers, because you were working with them. And these were people who had sort of actually, a lot of them had actually also moved to Bangalore from different parts of the world.
00:15:56
Speaker
Some had come from, again, New York, some had come from Calcutta. So it was strange how all our closest friendships actually started with what we were creating over here, because I think between Sandeep Khosla, Kabir Hira, who were both architects, and then Tanya, who was the graphic design, was not even heard of in that day and age.
00:16:22
Speaker
We used graphic designers at that point. And she was the first graphic designer around at that point. And sort of working with them, I think it was the creation. I mean, it was absolutely magnificent. And I think each of us, it was a labor of love.
00:16:37
Speaker
And so it cemented a lot of our future, I think, going forward. Everyone became famous on it, actually. Everyone. I think there was not anyone who was involved in this project, including the DJs that worked there. Everyone, I think, got famous and went on. So 180 Proof, I think, just did a remarkable amount in that, that it helped establish everybody that at some level touched it.
00:17:04
Speaker
Amazing. You were like the solo founder here when you started? When I started, yes. So it was mind as it started. And then my husband saw me having lots and lots of fun at 180. He actually quit his venture. And he also joined the bar six, seven months later. So he also joined the bar.
00:17:32
Speaker
and you know it was both of us because I mean it's just you are going every night and so you know he was also obviously coming every night and then I don't have to wake up at like nine o'clock anymore right but he does. My work only starts at about 12 31 in the afternoon and of course the curfew still plays out but you know it was
00:17:56
Speaker
It was always like, you know, it was always literally eventually you had so many friends and you got to know people so well that even though you had the curfew at least once a week, if not twice, 60, 70 people were coming to our house post-11 o'clock.
00:18:13
Speaker
So you'd actually have the bartenders, two, three guys from the bar, including, would just transfer. So the party would just transfer to your home. So it became, it was like, fabulous years to experience. It was just incredible. So tell me the journey. How did you do on the launch date? That must be, I'm sure, seared into your mind the day when you opened it up to public.
00:18:38
Speaker
So it was the 8th of March. It was crazy 2000. It was a couple of days actually before launch where the book society actually had a big candlelight vigil march across the streets. Basically, they were very, very upset that this bar was coming up.
00:19:07
Speaker
just really, really upset. And it was a very scary moment because we didn't know whether we'd open. And we had, of course, by then you've invested everything, right? You've even hired staff and everything is ready. It's ready to go. And for two days, this March sort of continued, you were being called, I was being called by reporters back and forward all the time to just sort of see what's going on. It was crazy. It was actually crazy.
00:19:36
Speaker
But I'm trying to remember what actually happened. It did subside because somehow we were allowed to open. And two days later, the opening did take place. And the opening for us was, we just
00:19:50
Speaker
We didn't know, right? Everyone had said, my God, you're investing this amount of money. It's too much money. You know, everyone look at the size of this place. And so one just didn't know, you know, there was that, you know, you had the sense of faith and vision and belief in yourself that you were doing this, but everybody around you was saying that it's not going to work.
00:20:12
Speaker
And so the idea for the launch also, and I think Bangalore had never seen this, was that we just opened it as a party, an open house party. So we sent out invites and we said, just come. And I think that was actually, we did it because we just didn't know where we would be, but it actually really
00:20:37
Speaker
It brought a lot of goodwill because you had this, you sent invitations out and we had 900 people walking through the doors that night. How did you identify whom to send invitations to? You need to send it to the right people, right?
00:20:52
Speaker
Yeah, so I mean, you know, these friends of ours who, you know, you know, Tanya, Sandy, we had a PR agency at that point in time, absolutely, especially with all of this. And I think they also helped a lot in terms of, you know, sorting out what happened. But I mean,
00:21:09
Speaker
you know, when something like this happens, I mean, I don't know how much PR you can do what you want, but if you know, it's going to I think people were kind also, I think Delhi somewhere else, boy, a whole different climate. But I think people were just really, really much, much kind over there. And, you know, the I think we also had the benefit that
00:21:33
Speaker
my neighbor on the right side was KJ George. He had an office. So he was also really supportive. He saw what we did with the building. So I think it was strange how I sometimes think that when you really work at something and you really believe in something, I think I don't want to use these words, but I would say that the universe kind of came together.
00:21:57
Speaker
yeah, to sort of help us sort of move forward. And I think that's exactly what happened over here. So yes, the list and all came from a lot of our friends who said, you know, oh, you've got to have these people at the PR agency said, you know, there. So it was we put together a list, we sent out cards to everyone and
00:22:17
Speaker
and didn't know whether they'd come or not because this was actually this was a very New York thing. New York launches a lot of bars and clubs by having a private party initially and inviting people and that's how they hope that word of mouth will fuel and that's exactly. It probably ends up coming on page three or something like that. Did you end up on page three?
00:22:39
Speaker
we did. We did many, many times for many things. I mean, so it was a mixed bag of things because it was also like, you know, it was the march and then it was the story and then it was
00:23:00
Speaker
the opening. So yeah, we did we ended up on I think not just page three, I think we were also on page one, a number of times over there. So for something or the other, because we took a lot of initiative, we
00:23:13
Speaker
we hosted plays there, you know, we actually did like what we call off off-Broadway kind of theatre there. There's this sort of woman-centric play which had sort of come out and rocked New York at that point in time called The Vagina Monologues. And yeah, so
00:23:34
Speaker
At that point, my friend Ruchika, who's a director, actually scripted this for 180 proof and took people who were technically not just actors, but they were people who used to visit the bar.
00:23:50
Speaker
had them act and did the vagina monologues in the bars. We used to keep doing different, different things. So it was inspiring. It was fun for, I think, people who were involved at every level. Yeah. How did the journey go in terms of what kind of revenues did you do each year? Tell me about how, from that one bar, what happened next?
Business Challenges and Lessons Learned
00:24:18
Speaker
So, we grew. Revenues were fantastic. I don't think bars had done this kind of revenue before. I can't even say these numbers anymore, by the way. They were very... I don't think anyone in India had done these kind of numbers. What would a good night bring you?
00:24:41
Speaker
I mean, you know, I'm going to sort of, you know, a long time ago, but, you know, we would make 70, 80, you know. 70, 80 lakhs is a good night. Yeah. Not a good night, a good month. Okay. Yeah. I mean, there's a difference. We have about, every weekend we had about 900,000 people coming in.
00:25:04
Speaker
But on even weekdays, where most places sat empty, we were sitting with about 250, 300 people coming in. And initially, when we had sort of looked at what kind of revenue we would do, that number was half. We had looked at half that number. We said we'd sort of hit somewhere in that zone. We would not be going above that because we looked at every spend.
00:25:29
Speaker
Bangalore people were also more cost-conscious and more frugal. And we said, well, it won't happen. But food was introduced. People were just there every night. It was pretty incredible in that sense. But it sort of begged. I mean, the success was overwhelming. It set us up for next level of growth.
00:25:56
Speaker
It was interesting because such big success and then we got so excited and we took a building in Indranagar. This was actually a building, three floors. We said, let's start doing Thales. Thales are very common in
00:26:13
Speaker
in Bangalore and we said why not do Thali's from across India in a clean sanitised smart environment and you know Sri Thaliwala came up you know we did the same with you know street food called Rasta food so it was one floor this one floor that and
00:26:33
Speaker
It failed. It bombed completely. One year later, we found that the ticket size was really small. So margins are very, very slim. Because even though you were in the fancier space, you were paying a little bit more, but you couldn't really get people to come and pay that much, right? Because you needed to drive numbers here. This was a volume game.
00:26:58
Speaker
very different from where we were sitting in the bar business, which was more sort of luxury versus this. And it required us to sort of, you know, sit there a bit like a muneem. And I don't think either Jay or I had the personality to do that. And we found that we were actually, we felt we were not doing badly, but our manager was taking us for a ride. But at the end of that year, we figured also that
00:27:22
Speaker
Even if we were to throw them out and start again, I don't know whether it was what we wanted to do. We learned early that this is not going to ever work for us, that we should not be in a value business or a volume driving business like this because we did not per se enjoy it. It was not what we were made of.
00:27:44
Speaker
and early learnings. So that was not good because we had had this massive success one year. And the next year, this bombed at the end of the year. And it was OK. It was bad from, I think, a leveller, let's say. It was a good leveller for us.
00:28:03
Speaker
from, you know, hey, being excited and, you know, at some point, you know, you can try to be, you're trying to be humble, but you know what, you're feeling quite pumped at that point. And then this happens and well, you know, it just corrected everything. And I think
00:28:19
Speaker
that level playing field that took us forward from there and we you know F bar approached us Michelle Adam for F bar through a friend of us Sanjay Mehtani at that point in time he was a really dear friend in Bangalore who later became a business partner.
00:28:36
Speaker
also. So he also joined hands with us two years later. So initially he did FPA in Bangalore and we did FPA in Delhi. And that kind of brought us to Delhi because FPA started here. And it went on from there. So 2005, another friend, master rights, Hard Rock Cafe came to us and we got the rights for India and
00:29:01
Speaker
then Hard Rock Cafe, five Hard Rocks opened, Shiro opened, you know, conceptually, again, you know, keeping the high ceilings and all of that, all these spaces sort of started, we started looking for warehouses, basically. That's the spaces we wanted, you know, with the ceilings and that field. So when we opened in Bombay, we went to the mills.
00:29:24
Speaker
Which year was this when you opened in Bombay? We opened in Bombay in 2005. Yeah, 2005. And Bombay had also, I think, pretty challenging times again, because some issue happened with the BMC.
00:29:42
Speaker
And we were ready to open and they seized, they locked our doors. And so that feeling of going bankrupt happened to us first, almost when it won 180 open. And then it again happened to us with Hard Rock Cafe. But there it actually happened. We were closed down, some license issue that was.
00:30:06
Speaker
In Bombay, I'm trying to recall what it was, but yeah, it was some, and for about six, seven months, so everything ready, ready to open, staff hired, food inside, they wouldn't even, you know, they just shut and sealed the place.
00:30:25
Speaker
So seven months, it was, that was very, very scary. Very, very frightening because I think, you know, then it's like, you know, you had not just invested or sold and made, but you had suddenly grown and now you had risked because this was even bigger than that. So you were risking everything again. How many properties did you have by then?
00:30:50
Speaker
So this was, so we had done F R and then we came to Hard Rock and Hard Rock was Hard Rock and Shiro together. So it was a huge undertaking in terms of, you know, so everything that you had earned in the last, you know, four years, five years was all went to this. Everything went to this because this was such a big property.
00:31:15
Speaker
And there were two of them. And I mean, if you see the size of it, I think it's almost like 12,000, 15,000 square feet between Shiro and Hardrock and the renovation and the staffing and everything, everything, everything, everything. So, you know, it was very, very scary time. And then from there on, it just sort of went on, you know, and we, I mean, after it opened,
00:31:38
Speaker
You know, again, did really, really well, took off and you know, you ended up, I sort of became less present in the business, much less present. My son was born, I, you know, for two years I took a bit of a sabbatical as well at that time.
00:31:55
Speaker
When did you come back? Like after your sabbatical? Which year was that? I came back around in 2008. I was sort of back doing bits and pieces back into it, but I didn't stick with it. I exited in 2013.
00:32:12
Speaker
OK. You know, for me, that was kind of the end. I was sort of done. It was really not feeling good. I didn't want to go to a bar every night. Also, my my son was growing up and it just somehow the life wasn't wasn't fitting. You know, there are many, many things that were going on at that point in time. Marriage was falling apart. Everything was sort of, you know, happening. I had already started falling apart in many ways. I was like, you know, I'm kind of done with this. I want to.
00:32:40
Speaker
leave and move away from it, which is what I actually did. So in 2013, I kind of successfully exited the business. You got like a cash exit? Did you get a cash exit? I got a good exit. I got a good exit. How big was the business by then? Like how many properties was it running? 33 properties. Wow. Massive. Okay. Mostly hard rock.
00:33:07
Speaker
No, so it was Hard Rock. It was Shiro. It was a CeeLo. It was California Pizza Kitchen. There was, you know, there was Ginger Tiger. There was, you know, it was a cross. There were little outlets. There were big outlets. So it was just some of them were just food focused. So the biggest thing, so one of the big things that happened when Sanjay Mehtani joined the business, he joined in 2005, was that he was brilliant with cocktails and food.
00:33:35
Speaker
OK, so the skill set of of that operational skill set of bringing in the food and you know, what should this flavor be like and what should that be? And just what should these things taste like? So he was very much that, you know, at that level. He was brilliant at that. So everyone was, you know, had their own sort of niches that were, you know, they were adding value at different levels. But over time, I think it just became really hard. My father
Navigating Industry Changes and Competition
00:34:04
Speaker
you know, sort of approached me in 2015 because he saw that I was well, I was doing nothing at that point in time. And and, you know, Jagajit was really, really struggling.
00:34:23
Speaker
So he just thought, would you like to come and join the company and help sort us, help with these problems and stuff. And my discussion with him was yes, of course. What had gone wrong? Why was it struggling in those 15 years from 2000 to 2015? What happened in it?
00:34:46
Speaker
So initially it did very well. It did really, really well. I think the downturn, if I recall correctly, actually started in 2012, was it 12 or 13? I think it started in 12 or 13. So it had two years or two and a half, three years of downturn before I joined it. And what was the buzz?
00:35:07
Speaker
So I think initially, one was not able to pick on these courses. But I mean, when we dissected it, of course, there are a bunch of things, right? One, we were massive for what we were actually producing. There were inside factors and outside factors. MNCs have become very powerful. Their lobbying with the governments had become very common. The government had sort of given their year. So the alcohol industry at that point was actually not being driven by domestic companies.
00:35:33
Speaker
It was actually being driven by the MNCs that had come in and really sort of played out Diageo, Purno, Riccard. All of these companies, Bacardi, you know, were really, really storming their budgets, their interest rates were nothing. So there was not even an even playing field for domestic industry. How can an MNC influence government policy to disfavor domestic industry? Give me an example.
00:35:59
Speaker
Okay, so this is not done in any obvious kind of way. Yeah, obviously. Absolutely not. So the industry body is, let's say, CIBC, which is the apex liquor body, which is where we all belong to. Confederation of... Exactly, of Indian alcohol and beverages industry. Yeah, CIBC. Okay.
00:36:23
Speaker
for example, so you lobby governments, you lobby access, when an access policy is coming out, we always do, like, you know, government will always ask, so you go and you talk to them. But so they had, so a lot of Indian companies were sitting in what we would call the regular segment, which is a segment, so regular segment is, at that point, it would have been even lower, I would say, so like 100,
00:36:50
Speaker
So, let's say the NIP, which is the biggest selling SKU across the industry, which is the 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML, 180 ML,
00:37:08
Speaker
So this power that you were calling this 180 ml is sitting at 70, 60, 70 bucks. So a regular segment is just that level segment. Below that you go to like country liquor. So this is just above the country liquor. It's in the IMFL segment. You're in the IMFL segment, but you're just that. Which IMFL for listeners is Indian. Indian made foreign liquor. Which I always thought was such a funny term.
00:37:35
Speaker
I don't know why we have this term, but we've got it. It basically means, yeah, so it's not, it's a sort of differentiating us from what we would call country liquor. That's what it was. Country liquor is literally, I think, spirit at its core sister, whereas this was more refined. It had something called
00:37:54
Speaker
VMS, vatted, mortared spirit, the percentage of which made it smoother and things. So at that level, not so smooth, but at this level gets smoother as you go upwards. So you have this regular segment and the regular segment is a lot of Indian industry are sitting in that regular segment and they're sitting in that one segment above, which is called the deluxe segment.
00:38:15
Speaker
So the Diya Ajupanos come into the deluxe, they come into the semi-permanent. There is a price band. Yeah, so it's like 180 rupees, 90, 120. So the segments are 20, 30, 40 rupees apart. Okay. Earlier the segments were wider. So you come in and you start lobbying government for price, right? So what happens is because you're not really controlling your price also. So the segments start collapsing. The price is set by the government, is it?
00:38:43
Speaker
Yes, you're in that bracket, in that excise bracket, so it's set by the government. Everything is controlled by the government. The only place where you have free pricing is Maharashtra. Everywhere else is this kind of government. So the segments start collapsing. So what happens is if I have a consumer today who is a regular segment drinker and he's buying, let's say, my 180 ml for
00:39:05
Speaker
60 rupees and today the deluxe segment has become 70 rupees because it has dropped from 90 to 70. Now the jump for him is tiny so not tiny but small enough and if he wants to upgrade he upgrades there and that started happening a lot in the industry. So this is one example and there are several. So
00:39:34
Speaker
So it sort of pushed into the upper segments started collapsing. It became more reachable. And this is a good thing for the consumer in one way because they are able to upgrade. It was a bad thing for the industry at large.
00:39:47
Speaker
Basically there was a move towards premiumization which Jagajit kind of lost out on. You did not have premiumization. Yeah, I think at that time most a lot of companies were struggling. I think Radico was struggling, Jagajit was struggling, Tilaknagar was struggling. What are the flagship brands of Radico, Tilaknagar?
00:40:10
Speaker
So Radico's flagship brand today, of course, they've gone seriously premium. So it would be Rampur because they are now in single mall, but 8 p.m. and they had magic moments. Their vodka was the biggest. And for Telaknagar, it was their mansion house brandy.
00:40:32
Speaker
So, Telaknagar is very south driven, not north. Oh, okay. That's why I'm not heard of. Yeah, I'm not heard of it because it's a south, south brandy sort of Telagana, Andhra, those markets. Mohanmikan, that would also be in the same. Yes, Olmok. Olmok actually defied, I think has probably, it's very different from everybody else in the sense that it is defied everything because somehow there is,
00:41:00
Speaker
It's cross status, it's cross status. Everybody I know doesn't matter who they are, which economic bracket they sit in, Old Monk is sitting on their, if they have a party, they'll have a bottle of Old Monk. And that's amazing because they're sitting with a Scottish single malt, Indian single malt, blended Scottish whiskey, and 250 rupees old, Old Monk is right. So it's kind of amazing in that sense. So it's kind of,
00:41:28
Speaker
gone through these segments in an amazing way. But I mean, this is one example of Haji, but they had tremendous budget. So the advertising, the Saragat advertising, the sponsoring of cricket, this, I mean, the money that was there was significant. And I think the Indianist industry was going through a pretty hard time also at large.
00:41:50
Speaker
suffering. ABD was perhaps one of the few BAN India companies who was doing very well at that point in time. Yeah, ABD's allied brewers. Allied blenders and yes, yes, yes, yes. What was their flagship brands? Officer's Choice. Okay. So they were Officer's Choice also in the regular segment and they had
00:42:18
Speaker
officer's choice blue, which was that deluxe segment. So we all did. So we had aristocrat in the regular, and then we had aristocrat premium whiskey in the deluxe segment. It was that sort of existed, but it was just the shaking up of the sector. Then it was outside factors like prohibition,
00:42:42
Speaker
You know, you know, state ban, some of the other, Gujathas have been around for ages as a dry state. But, you know, Bihar went into, you know, became a dry state.
00:42:55
Speaker
There was conversations kept coming up about Telagana, Andhra, those conversations. But Rajasthan meant for a highway ban, no liquor shops on highway. So there were different, different things that were happening across. So the alcohol industry is a combination of everything inside and everything outside that is going on.
00:43:18
Speaker
you know, that just sort of hits you. Yeah, you're not fully in control of your destiny. You're not in control of your destiny actually. The regulatory regime determines a lot. Yeah, yeah. And you know, and it's kind of crazy because I mean, today we are such a forward thinking country and economy and I think we just have to, you know, brace this and say, you know, the whole world drinks this. Now let's just be responsible, create responsible drinking and
00:43:44
Speaker
be okay with it right. This whole sort of oh my god drink it but drink it hidden and you know the stabooness around alcohol has not changed. So there's still like a nanny state regime in alcohol like in terms of government controlling a lot of things that still exists today also.
00:44:00
Speaker
Yeah, of course it does. It's not like I mean, it was it was an eye opener when I went to Africa, right? It was being sold like FMCG. I mean, like the same shop that I bought detergent in, you know, you were buying, you could buy booze. I mean, I mean, you know, if you talk about technically revenue, I mean, you can have a lot of, you know,
00:44:22
Speaker
reinforcement of corrective advertising, responsible drinking notions and advertising. That could be done in public interest. But just from a revenue perspective, if you deregulise alcohol to that extent, I think the revenue collection
00:44:42
Speaker
could be significant. Why is that? Like right now there's a lot of leakage in revenue, there's a lot of alcohol. No, no, I think you can have much more because it's still limited, right? You can have much more. The access opens up. The access opens up, right? There are ways of regulating it. For example, you could put it on, you could do it through e-commerce.
00:45:05
Speaker
Right now you can't do e-commerce for alcohol. You could do e-commerce with alcohol also, right? And this is like, oh, I don't want a child buying, but the easy way is today with digitization of controlling, you know, buying. And you can't set a policy for the 10 people who are going to violate the policy, right?
00:45:23
Speaker
policy must be set for the majority. And yes, you will have 20 people violating that policy. But that you deal with, right? If you set it collectively. But that should not be your thought when we are setting policies. So I think it can be because the employment that is generated through the industry, the revenue that is generated for the states through the
00:45:46
Speaker
through the alcohol sector. And I think if we were to, our biggest sort of naysayers are basically women.
00:45:57
Speaker
And if we were to really, you know, and I think, and there is a thing that, you know, okay, you know, women, you know, feel that, you know, my God, alcohol, you know, leads to abuse, et cetera. Well, actually alcohol perhaps exaggerates abuse. It doesn't lead to abuse because abuse is coming from a different beast. If a man is going to beat a woman.
00:46:18
Speaker
and abuse a woman, he's going to do that any which way. That's coming from a misogynistic mindset. It's not coming from alcohol. Alcohol just makes it, activates it at a different level. So if we were to, and I really think, and I think this is now with parliament and reservation for women, I think, if the alcohol industry, and we've tried to talk about this earlier, that if we could actually
00:46:46
Speaker
create mandates across states where the mandate is to hire 50% of the workforce is actually generating employment for women 50, 60, 70%. Because it's not intensive work, right? I mean, it's mottled feeling, right? You could always have the more intensive work, you can hire the men.
00:47:14
Speaker
It's very easily doable. And in the southern states, anyway, it's driven by women. So if you look at alcohol companies, you have women there, women workers. 90, 80, 90% of your workers are women there. Wow. OK. Yeah. Bangalore, Hyderabad. I have a couple of questions about specific states. So when a state goes dry, does the alcohol consumption in that state become zero? Or what happens? No.
00:47:44
Speaker
just get illicit alcohol there. So you'll get it either smuggled from border states, which also happens. And you suddenly have created a new breed of employment for people, everybody under a tree who can now go and start making alcohol.
00:48:05
Speaker
And that's why you have the death toll increasing. And you also start pushing people to drugs. OK. So a lot of people then go to drugs, and it's actually terrible. OK. Would you say Goa is the kind of ideal state in terms of their policy? Because Goa has alcohol, like you were saying about in Africa, you saw it was being sold like FMCG, every store.
00:48:36
Speaker
Yeah, no, they also have policies, but Goa is a decently liberal state. I think they function from a slightly different mindset. They're also the cheapest in terms of the excise policy. So actually, alcohol is the cheapest in Goa, which is, of course, also, you know, this is also an interesting thing how we, you always have, you tend to have an expensive state adjacent to a cheap state.
00:49:00
Speaker
And that's a little silly, I would say. Maharashtra is the most expensive state in alcohol. And then you have Goa right next to it. And why is Maharashtra the most expensive? You said Maharashtra people can set their own prices. Yeah, but excise duty. Excise duty. The duties are high. The duties are very high. So I mean, most of the price of anything is basically excise duty you're paying.
00:49:30
Speaker
How much of the price is excess duty on an average? The average is what? 70%. Wow. So if I'm buying something like if I'm buying a beer for 100 bucks, 70 rupees is going to the government. Yeah. So yeah, stay high. It's very high. Wow.
00:49:47
Speaker
Okay, okay. It's very hard. Varies, varies, but approximately, yeah. Okay, okay. How does pricing happen? The government needs to give you a price for every product you want to launch? They're brackets. So you have these excise brackets. So if you are sitting in this bracket, this is your excise. If you go to this bracket, your excise will change.
00:50:17
Speaker
Okay, so you can choose your price. The duty that you pay out varies. So you have an ex-distillery price, which is your price, and then you fall into a certain bracket and that's where your excise will get slotted. Okay, okay. So tell me about your journey. So you reluctantly, or you had some reservations when you joined Jagadeeth, publicly listed company, 4,000 employees struggling. What next?
00:50:42
Speaker
So, yeah, I mean, you said you also asked what else went wrong. I think there were a bunch of things. We lost two very big strongholds in the company just when I was entering also. And this was a manager who was actually a general manager of the factory, Vijay Kapoor. He was basically looking after all of Hamira, which is where all our production, everything took place. And then there was Mr. Banga, who was the head of our sales, glorious Mr. Banga.
00:51:12
Speaker
They both, one went through cancer and eventually one was fired for integrity issues and the other one, and then he also got ill and he passed away, but they both did eventually pass away. But they both, so there was a big void in the company also. Yeah, your sales head and your manufacturing head are both not there.
00:51:35
Speaker
Yeah. Even more than a manufacturing head, he was, you could say by default a CEO for all purposes. Okay. So what happened is that, so you had this suction where both these people suddenly left or were not there in the system. So if there was a problem, that problem now, if we were already going down a hill, we were now rolling.
00:52:03
Speaker
down that hill even faster because the void was inconceivable to actually fill because you try filling
00:52:12
Speaker
you know, positions when you are bleeding as a company and there are not many people of good caliber who would choose to join you. Yeah, everyone would know. Yeah, they would know what's happening in the industry. Like people within the industry would know what's happening and they would be reluctant to join. Correct, correct, correct. Absolutely. So it was, it was very, it was, those were very hard years. So there were a lot of things. There were things like this that were happening. There was things like there were legacy issues. We had a lot of, you know,
00:52:41
Speaker
people in our company and we didn't have production, Hamira was built as this giant which was supposed to take care of production across India. It was built during that time with policy changes, etc. Today you cannot produce in one state and then transport.
00:52:57
Speaker
because you have import and export duty in every single state. So you have to actually manufacture or fill at least bottle in every single state. So our formulations go to each state and then you fill in those states to avoid that. So you couldn't actually, Jagajit could not be used for what it was once created for. And it was not just alcohol, right? That's one vertical. You also had the food division.
00:53:23
Speaker
So we had started with one factory and then there are four units of food division there, which was basically you were manufacturing. We were contract manufacturers for GSK producing boost. So at that point in 19 years, we were doing that as well.
00:53:41
Speaker
Boost is a malted... I mean, because it's a malted drink for milk. Yeah, so you put boost into milk and so it's for children and stuff, you know, protein, high energy vitamins, et cetera. And it made sense for Jagdeer to do this because you're already dealing with malts for alcohol? So my grandfather had started this. We used to have our own products, Mortova and Viva.
00:54:08
Speaker
Okay. So he sold, I don't know the whole story behind this all, but he sold Mortova to GSK. And I think part of the deal was that he contract manufacturer for them. So it was Mortova, it was Boost. It was all of that that it sort of played out. And so, you know, it started with one unit and our relationship was became a 19 year relationship. And then
00:54:36
Speaker
HUL took it over, and then it has continued with HUL, so the manufacturing. But now there are, earlier it was one factory, now there are four different units there. So that continues, so that vertical, plus we have country liquor. So we are the second largest, I would say, in the state.
00:54:57
Speaker
of Punjab so we also manufacture country liquor. This was another thing country liquor all used to be all molasses based once upon a time. We all went to grain based also we took everything to grain to try to even I think quality regardless of what price segment you're in you have to give quality and so I think the industry also generally moved in that direction of quality and giving grain even in country liquor so that also happened
00:55:25
Speaker
Why does grain improve quality? So molasses is sugarcane product. Yeah, it is. And there was also this whole thing of pollution in terms of how it also pollutes the environment much more.
00:55:43
Speaker
the grain move was I think it was also I would have to say that it's also perhaps somewhat psychologically driven by the British as well or colonialism in our heads at that point in time, the notion that grain, grain, grain, grain, but I mean, you know,
00:56:00
Speaker
India was always molasses centric. I think we are reviving that today, where we are thinking that what is wrong with molasses? Can we not do rums all made with molasses at the end of the day? So let's go back into molasses because that's what we used to do.
00:56:19
Speaker
So there was a shift and country liquor was, you know, is that other verticals for us as well. We also do, Jageet also has commercial real estate. And so, and then there's a distillery, which you are selling ENA.
00:56:37
Speaker
What is ENA? ENA is Extra Neutral Alcohol. So this is a base alcohol spirit that you use for yourself or you can sell to others. And sanitizers. Yes, it is used in sanitizers, but it is also used across the alcohol industry.
Strategic Innovations and Growth During COVID-19
00:56:54
Speaker
So this is your base spirit that you have in a bottle before everything else goes on to create that formula or the blend, I would say.
00:57:05
Speaker
So yeah, so we have ENA as well. And now we're also doing ethanol. So we have an investment of 200 crores that is going into an ethanol plant as capex. Ethanol is also a base spirit.
00:57:21
Speaker
It's also a base spread, but ethanol is obviously for fuel. So the difference between ENA and ethanol is the number of columns that you actually have. What do you mean by columns? It's a bit technical, but it's columns. So you have a certain number of columns, the grade of quality.
00:57:42
Speaker
for the spirit. That gives you a certain level of quality for the spirit. So, ethanol requires a certain quality. ENA, because it's used for alcohol, is required, a certain type of quality is required for that. So, for ethanol, it's for blending purposes with fuel because it's actually, I guess, it really saves the import bill. You can save, you know, I think it's 40-50,000 crores is anticipated, right, that you're saving from an import bill if you can blend
00:58:11
Speaker
now to end, but now 20% into into into petroleum. So so this, this vision of Mr. Moody's, of course, you know, which is what it says it's sustainability, it's great. But so we are, you know, we've got our licenses, we've got our environmental clearance, we've got our funding,
00:58:30
Speaker
from the banks recently. So we are beginning, what, end of November? I think the plant begins. It's a nine-month outlier for us to actually build this plant out. And from there on, it literally jumps our revenue significantly again because on the back of this, you know,
00:58:51
Speaker
We get a very healthy beta from day one and it gives a lot of cash flows to us. And, you know, you put about 400 floors on your top line. Wow. The first year of a full year of operation. Amazing. So what was the top line when you joined 2015? Roughly, I mean, I don't need an exact number. I would. What was it? I think it was about
00:59:22
Speaker
900,000 crores, I think about there. I know we went down to, if you look at the decline that sort of hit, so it was at I think 1500, so I think when I came in it hit 1000, it was at that, 1230. And then it continued sliding.
00:59:47
Speaker
And in 2018, when I had to shut the distillery down, a massive hit was a 350, 400 throw hit we took in terms of the top line when that happened. So in 2019, we were sitting at 250 crores. Wow.
01:00:11
Speaker
In 2019 we were 250 crores when the restructuring took place and the turnaround which we were expecting with the restructuring and it was a very scary again very scary time because it was like this was almost in 2018 it was almost over and at that point in time you know what I'd learned in
01:00:32
Speaker
my FNB business, which was technically the franchise model, I literally bought that into into Jageetu. I said, what is really important at this point? And what's really important here is to really, really save the brand. So let's do these very small contracts, not long, because I knew what that meant if we did long contracts with local players, find local players who have local strengths, who can fund the business and pay us a royalty.
01:01:01
Speaker
We did that and that's how we funded our brand and our business. We also did a whole revamp of restructuring. A lot of our brands were looking tired, fatigued.
01:01:16
Speaker
We just reenergize the browser, did new packaging, new labels. We did all of that 2018 and 19. And we were kind of ready and we started seeing a slight turn in 2020 and then COVID hit. And luckily in 2019, because we had done a bunch of these things, I think we were able to also hire the hiring. I had struggled with the hiring for three, four years. We had a lot of change. So we had people joining, leaving, joining, leaving, because it was just not
01:01:46
Speaker
the people we needed. And then in 2019, we finally hired someone, I think, a little very strong with regards to strengths with the factory. The same, a little bit more Vijay Kapoor strength in what we had lost, let me put it that way. And we were able to restart the distillery, oddly enough, in February. And I think nobody envisioned at that point.
01:02:12
Speaker
I had a very bad feeling that this was going to be very, very hard. But we started the distillery in February and March, literally six weeks later, it exploded. So it was lucky, the timing of it was lucky. And then we did the sanitizers to keep the factories alive so that we could, not a single worker, did we cut salaries, everyone was employed.
01:02:39
Speaker
But you know, you know, alcohol was still being made, but the whole idea of actually going into the sanitizer was like, what is the factories get shut down? How should we become? How can we be necessary? You know, and it was to really become necessary at that point in time. And so the sanitizer move was really there and the sanitizer
01:02:59
Speaker
opened up a whole other avenue for us because it was initially it was just regular sanitizer, but it propped the question in my crazy entrepreneurial brain of why do I have to use this thing time and again, time and again? Do I brush my teeth 20 times a day? 20 times a day. So can I find a sanitizer that I can use once a day or maybe twice?
01:03:29
Speaker
And that technology then came from the USA and that company then became Swan Rose India, which is a separate entity and that sanitizer became just human.
01:03:42
Speaker
the brand, and that was the first 24-hour sanitizer. Then again, we launched in both countries. Before we come to Swan Rose Journey, so here's my understanding of what you did at Jagdhi. So from 2015 to 2018 or 2019, it was essentially about cutting the bloat, like you joined a very bloated company. It was cutting the bloat. It was cutting the bloat.
01:04:07
Speaker
It was trying to bring in processes. It was trying to bring in technology. I am a very, I tend to be quite HR forward.
01:04:19
Speaker
There are people who are HR driven, and then there are people who are not. I tend to be HR driven. So I really hired. One of my first hires was a very significant head of HR who I had worked with earlier at JSM. I brought him on board because I did believe that he would be able to help me really build a team.
01:04:44
Speaker
to also sort of, you know, deal with what we called, you know, just, you know, the labor issues that we were having in the factory with, you know, a lot of workers. You know, I think we tried to put a lot of policies in place. We tried to sort of, you know,
01:05:02
Speaker
And I think we've had, you know, much better relations. We've built much better relations, you know, constantly with our workers. You know, we have town halls, which, you know, we listen to them and we try to sort of, you know, because I mean, at the end of the day, if they're working for us, you know, it is our job also to try to help. We can't, if the wish list is 100, we can't take care of 100 things.
01:05:29
Speaker
can we at least take care of 30 things, 40 things, right? So it's, then some of those things are very, very, very, very little. And it depends on, you know, what is the cost to the company, right? At the end of the day also. So we have done a lot in terms of it, workers with one side of it, blends was another side of it, you know, blends were much more, much more expensive, because they had a lot of all our blends actually had imported VMS.
01:05:54
Speaker
What is VMS? You get it from Scotland. It carries a duty of 150%. Generally, when you have a 700, 800 rupee bottle, those have VMSs.
01:06:13
Speaker
500 rupees wide also. But at 100 rupees, 150 rupees, most brands across India will not have VMS. And we did. So we did have imported because we really, you know, for us, our blends were very, very important. Quality was very, very important.
01:06:29
Speaker
Our blends were also much more expensive. So there was a lot of rationalization at different levels of the company. And sometimes we would just do something and something from outside would come and hit us and storm all the work that we had done for that one year. And that was also happening, right? Give me an example. Suddenly the industry shakes because of something like demonetization shook the country, right?
01:06:56
Speaker
So it shook everybody. Now, when we are, you know, struggling to come out at that point, KKR, of course, supported us, as I told you, I think in our last course, I was telling you, KKR came in and, you know, they were amazing. They supported us and they had no business to support us, actually, because we were... So KKR is an American private equity firm. Private equity firm. They came in in 2017 and I think they...
01:07:18
Speaker
They believed. They believed in me. They believed in the story. They believed that I would stand there, come, hello, high water. And I did. So they supported us. They supported us. The bank supported us. How much stake did KKR buy? And this was like a? They didn't buy. This was debt. They gave us debt. Oh, OK. They gave us debt. So it was even harder in some strange way. Equity is still.
01:07:47
Speaker
OK, but you don't have the pressure of recruitment with equity. Yeah, they gave us debt. They gave us debt. They they gave us debt. And, you know, it was incredible because through those years, we I mean, the the baggage, I think of, OK, you entered the company and now you're going to kill the company. You will be that third generation. I mean, like from the outside, it must have seemed like you're driving it to the ground because you joined at 1000 CR.
01:08:17
Speaker
And it just went absolutely down. Absolutely. It absolutely was. It was. I mean, there's no other conversation that you can have, right? I mean, you know that you are. And here you are doing everything, and yet you are not able to, because you're not able to hire the right people. You're struggling at every place and everywhere you are going. But through that whole journey, not a single payment was defaulted. Nothing. Everything.
01:08:47
Speaker
you know, every creditor eventually got paid, everybody got paid, everybody. And the bank loans, I mean, my God, I mean, the banks were like, you know, they were the God, we were like, oh, good God, whatever you need to sell your underwear if you have to. But don't be late in a payment that you want to make. So to, you know, people who've invested in you. So I think that also really stood by us very well, because for the longest time, the banks did support us.
01:09:15
Speaker
But in 2018, the year that I all went very south, that's when the banks also, you know, our limits, our credit limits got pulled. Yeah, 2018, the demonetization would have caused the... 2017 was demonetization. Right. Okay. 2018, the bank pulled our limits and... That's why you had to shut the distillery. Yes. Cash flows went dry. And that's also one of the reasons we went to the franchise model.
01:09:46
Speaker
We tried to get our franchise partners to a, went to this royalty, but also to give us, so this is a thing that Hard Rock makes you do is like, you have to give them a deposit. Okay. So what it actually did, and some of them we were able to negotiate as interest free. So it gave us cash flows, not to maybe drive a distillery, but to survive.
01:10:15
Speaker
When your back is to the wall is when you really come up with the most creative solutions.
01:10:22
Speaker
Yeah, I mean, it feels creative today, but at that point it was just, you know, it was a glimpse and we didn't know even if that would work, right? It was just trying everything, but it was important to go there. But in my head, you know, I was seeing, you would see the numbers, you look at everything, but I believed we were going to turn. And I think that's what I kept telling my team repeatedly. I'm like, it's going to happen. We are going to survive. We are going to survive. We are going to get through this.
01:10:53
Speaker
And I think those that are still there, remember that they said this and they come up and they say, you know, if it was not, I don't know how you did it because we used to come to your room and, you know, we would have all this and you'd be like, you know, optimistic and upbeat.
01:11:13
Speaker
Those are all entrepreneurial things, I guess, right? So somewhere along that sort of really aided me. Were you putting up a show of being optimistic or were you genuinely optimistic? I was genuinely optimistic and I think I would have been severely ill, right, if you bring it home also. I'm also that person that cuts out, right? So, I mean, it is there but I come home and I'm
01:11:38
Speaker
I cut off. So I'm not carrying, Oh my God, you know, it's very rare, but I'll carry so much work in my head that it's going to completely stress me out. So I think if I had had, if that was going on, I would have probably dropped it somewhere in the middle in those, in those five years. But, but no, no, I don't believe that was sort of, sort of going on in my head. So I think it just sort of, sort of moved from there. And
01:12:04
Speaker
That move also when COVID hit, it was a difficult one because we didn't know whether we'd get through and we did. So that early years with the sanitizer with everything and we started seeing spark and then when the markets, we actually spoke in February and I mean, again, I think intuition, premonition, I had gone to the US in February.
01:12:31
Speaker
And suddenly there was a lot of COVID conversation. India was not having a COVID conversation. So I had also become aware, and I was reading, of course, Lancelot, and you were reading WHO, and you were reading a lot of this. I like science, so I read a lot about these sort of things.
01:12:48
Speaker
And so in February, early February, we started the history and had gone to the US as well. And I was like, okay, so this could actually happen to us. And we started, we reached out to all our franchise partners, and we actually asked them all to, we said, we asked them to manufacture. We asked them to create, you know, fill the warehouses with finished goods.
01:13:18
Speaker
And they were very hesitant because they didn't want to make those investments. And it took a lot for us to convince them to really push out and do great finish goods. We said we didn't know. I was pretty sure we were like, factories don't know when.
01:13:35
Speaker
if they would get closed, you don't have finished goods, we don't even know if the warehouse would be closed and you could think, but I think at least keep finished goods. Let's keep finished goods. I think it really served us well also because those finished goods when we came out of the lockdown and suddenly the shops were all dry. If you would not- No one else had inventory. Yeah, so it's the people who had the inventory that were able to throw it into the stores.
01:14:02
Speaker
that people who are buying then wanted the alcohol and then it created trials for us, cheap trials. And actually our blend is very good and you had new packaging that complimented that.
01:14:20
Speaker
And the trials took place repeatedly. And that kind of, I think, also created a churn for us in some way where we were able to get consumers on board, a lot of consumers on board.
01:14:37
Speaker
So, I mean, there are certain things that sort of, you know, that created those kind of things, but I mean, my God. And then COVID, of course, you know, we didn't think that, but we grew 62% in that year. We reversed close to 50 crores of losses that year in 2020, and we broke even. This was on the back of just that one decision to have inventory.
01:15:05
Speaker
No, it was on the back of a number of decisions. I think it was everything that happened in 2018-19 that helped us survive. Better blend, better packaging. Better blend, better packaging, starting the distillery. Distillery was a huge driver of everything that happened. And the distillery is essentially providing the input to others. Yeah, it was providing input to other bottlers. It was providing input to other companies and also to
01:15:33
Speaker
you know to yourself and of course your franchises and franchises and sanitizers and other people not even your own franchisees other people because people don't buy ENA in Punjab to take to you know Andhra for example
01:15:49
Speaker
They will buy ENA around there. So you sell to your vicinity. They buy ENA in their vicinity because you don't want to transport it. So it's pretty much we sell to, we would sell to people in and around our circle, Chandigarh, Delhi, you know, in that zone. Punjab will sell to them, will not sell to the South. Unless there's an absolute need.
01:16:13
Speaker
Okay, so I wanted to ask you a little bit on how the franchisee model works. Who does sales then? Like, do they hire sales? Is there such a thing as sales? Like, you know, FMCG has like a large sales team where these area sales managers are responsible for their territories? Yeah, there is. Alcohol?
01:16:34
Speaker
Yeah, absolutely. There is absolutely there are sales teams. So this is all part of negotiation with the franchisee, whether it is yours or their sales team. Sometimes more often than not tends to be a blend. So the team tend to be, you know, a couple of people from your team.
01:16:52
Speaker
And then a couple of people from their team for every state always tends to be a blend. But yes, sales is an important part and sales teams in alcohol and the alcohol industry tend to be huge. One of the more nightmarish things about this industry is that you don't have real time data actually in sales. So you have excise data, which comes at the end of the month.
01:17:21
Speaker
which is available to you and access data tells you what that this stuff was moved from warehouse to retail to the retail level except exactly and then basis so that your first buyer is actually the first buyer is the retailer and then your second buyer is actually the consumer so you have to first be able to get it on the shelf and
01:17:45
Speaker
But I think that's true actually of even if MCG right you're getting it on the shelf and so it's that shell space and then What is driving that shell space is obviously a certain amount of you know? Value that you're bringing and the consumer is asking for your brand and then they want it and so on so
01:18:04
Speaker
And your sales team also can influence that product. I guess that's what the sales team does, like going to retailers, influencing that product. Absolutely. So encouraging them to buy your brand and then order it. And then the brand comes from the excise depots. It depends what the regulation is in that particular state. It comes to the retailer and then from there. So we have that number from the excise, right? We know that
01:18:28
Speaker
a thousand cases went to such and such or five shops or 10 shops or whatever. Then we don't know at what point the consumer bought that. But we do know the second cycle of ordering. So this data of actually getting real-time data
01:18:50
Speaker
something that we actually tried to do, which was a thought, but we never really proceeded with it, which was to actually create an app to be able to do this. But, you know, again, regulated industry. So I think the best person to actually do something like this would be the government in itself so that, you know, we could actually get a real time data when you know, for example, that, you know, some shop number 50 in Rajasthan is
01:19:15
Speaker
It's looking like it's only got two units of your product and you know that there's a potential stock out. So as a company, we are now counting on the retailer to go and make that call as opposed to as a company, if you could also have that information.
01:19:32
Speaker
then you can act on it. And we had sort of thought of, you know, it's easy technology actually, very easy to do, very easy to do through visualization. You just need integration with the point of sale software. Correct, exactly. And very easy to do. I'm assuming everything which is sold at the retail level, the government has that data, right? Because the retailer would also be paying some duty or something when he sells. Correct, absolutely. So yeah, so it goes,
01:20:02
Speaker
There's that whole, yeah. Okay. But just some way to make that available to you is what is the missing loop here. Okay. Yes. Yes. So we get data on a 30 day basis, right? So you get it. And so you don't really get
01:20:19
Speaker
Technically, you don't really have consumer data like that. Because your consumer is that guy, but unless you are able to reach him, because, you know, so you have a notion that this is the person you can stand outside that line, and you know, but that consumer who is that person, it's not digital, it's not, so the targeted consumer, you do consumer research, and you know who that consumer is, who's drinking you, and you're creating it, but that real direct link is somewhat missing.
01:20:48
Speaker
Now opportunity for a startup to actually collect that data at retail. Such a difficult industry that sometimes you just say it's not worth the trouble, right? You're like, oh my god, let someone else do this. Yeah.
01:21:08
Speaker
What else do you have to do to drive sales? One is, of course, the product has to be good enough. Second is, you have your sales team, which is encouraging retailers. What does an alcohol company do? Width of distribution is critical, obviously. What does that mean? That means some places have districts, some people have, you know,
01:21:30
Speaker
you know, localities. So you, if you, there are 500 stores, width of distribution has been all 500 of them. That would be the first thing because if you are, what is seen
01:21:44
Speaker
That's that famous thing, right? So you need to have width of distribution is one of the most critical factors. Once you have and you have shelf space with the distribution, not under the shelf, but visible, you know, so if you've got that, that's your first thing. Like then the second thing is, of course, other incentives in terms of, you know, advertising. So earlier, surrogate advertising was a big player here. You could at least do surrogate advertising, but now you can't even do that anymore.
01:22:12
Speaker
Oh, really? Yeah. So, like, like, that's not allowed now. So, you can do it if there's a genuine surrogate that exists. But I think the, so the genuine surrogate means I think I'm not, I mean, I could be wrong here, but I think the figure today is that you have to have sold at least five crores in revenue.
01:22:36
Speaker
from that, you know, so it's not just like, you know, I've used a CD or like, you know, CDs are very common. Bacardi music. Yeah, absolutely. So those those things are very, very common at a certain point in time, which have sort of, you know, or who buys CDs?
Marketing and Brand Strategy in Alcohol Industry
01:22:54
Speaker
Correct. Who buys CDs, but like water, soda, all of those things could be part of everything. So
01:23:02
Speaker
So then how do you market them? Like, can you do like parties or like events? It's a very, you know, because even that is actually comes under scrutiny. So it's a very media dark industry. So it's a very difficult industry to launch something in. How do you communicate whether you have a whiskey or vodka or gin? It's very limited mediums. And I also think it's technically wrong. I mean, just like any other industry, you know, it is it's
01:23:32
Speaker
You know, it drives, you know, it's creating employment, it's doing a whole bunch of things. So, yes, you want to keep it protected. Have, you know, ads after 10 p.m. You know, like a lot of countries in the world, sensitized information only appears after 10 p.m. after kids are asleep.
01:23:50
Speaker
So there are ways of doing this. I'm very against the fact that we are not allowed to actually advertise. I think we should be allowed to advertise. And I guess with digital advertising, the YouTube and the Facebook algorithms are smart enough to show the ads only to adults.
01:24:11
Speaker
Well, you're not allowed to, right? Even there, you're not allowed to actually. Yeah. So technically, you know, per se, yeah, you can sort of flaunt it here or there, but I mean, you know, you're not really allowed to do any of this. You're not supposed to be on YouTube. You're not supposed to be on any of these mediums. Your website is your medium. Okay. But these MNCs like, you know, Purna Ricard and all selling Bacardi and I'm sure they have big marketing budgets. What do they spend it on?
01:24:41
Speaker
Well, they used to spend it on advertising. They spent it on promotions. So there are sales promotions. Like at the point of sale. At the point of sale. At the retailer. The display, at retail. You can put the hoardings, boards, all of those. It's creating all of that. So they can spend a lot of money there. Remember, this has become harder and harder in the last, I would say, three, four years.
01:25:08
Speaker
Earlier, at least you were still allowed to do surrogate. You were doing surrogate. Most companies were. It's become very, very hard in the last four years, I would say. So now surrogates have also sort of gone beside some new consumer act has come out. So it's just become.
01:25:23
Speaker
are kind of crazy but yeah I mean you could do it otherwise but today you can't even do that so what's the point so it doesn't make sense you know for me to say something I have to now go and invest so unless I now create another brand now let's say ACP Water now start physically selling that ACP Water
01:25:45
Speaker
And it hit 5 crores of sales. Yeah. So at first let me drive it to that number, right? So it takes me a year maybe to drive it to that number. And then I start doing that. Then I can sort of say, ECP water.
01:25:57
Speaker
And then let me also be in a lookalike bottle, technically, the association, which is all very difficult. It's all very hard. It sounds ridiculous. So I just think that some of this is a bit nonsensical. Just let people advertise, let it do it at a certain point in time. Eventually, we are an adult nation. Yes, there are kids in the nation, but like everywhere else. But you have to admit that
01:26:26
Speaker
You as a company exist because of this. There is value in the aristocrat brand because it is not easy to launch new brands. There is the existing brand awareness of aristocrat because of which...
01:26:41
Speaker
despite everything, the brands had value and hence you got the KKR loan also. And I'm assuming that would have played a big part. Yeah, I absolutely think so. I think that we have a huge heritage. We have a heritage from, you know, we have a royal heritage from Maharaja Jagajit Singh, from Kapoor Salah.
01:26:57
Speaker
That's why it was called Javejit industry and that's why the first brand was called a aristocrat. So we have a massive heritage going back to royalty actually unlike any other industry, any other alcohol company in India. There's a lot of royal heritage that we have but
01:27:15
Speaker
There are very few Pan-India companies. Yes, Akshay, so to speak, there are five Pan-India companies. It's a very difficult industry. There are what we would call tons of barriers to entry. And therefore, to date, I think, even though I talked about, even Tilak Nagar, for example, I said very huge, huge market in terms of volume, but south-driven. It will not, so Jagajit still sits as one of the top five companies in the country.
01:27:43
Speaker
which is a pan-India company. We exist in 19 states. Top five among Indians or top five overall? I'm not talking about volume driving. I'm talking about just from pan-India presence. There are only five companies and we are in the top five. There is only five and that's it. So there are hundreds of other companies, but they are not pan-India. There will be two states, three states, four states.
01:28:10
Speaker
And more recently, of course, with the advent of craft and this love for alcohol and this premiumization, which has been fantastic. So you have a lot of brands coming into the market at the premium segment, because that's the, as I said, that draws passion when you come there. So when you're doing the mass segment, it requires a different kind of instinct. And this was another problem that I had when I actually joined, right? Because my instinct was not in this mass segment.
01:28:38
Speaker
which I had already realized. My instinct was actually sitting at a different segment. So it is my vision to actually drive this to, and we've now driven it to, premiumization. Over the last three years, we've grown every year, 20%, 30%. So we've gone from 2019, $25 million in revenue to $75 million this year on target for $100 million next year. And then our jumps become much greater flirting from next year because the ethanol plant comes in.
01:29:07
Speaker
And as I said, these revenues that are sitting with our franchise, actually, there are revenues. So we today are a, we ended this year, we are going to end this year at 750 crores. So when you look at the 750 crores, and if you look at the revenues that our franchise partners have of Jagajith is another 700 crores.
01:29:32
Speaker
Okay, so you've crossed the peak revenue in a way with Jagati Thadpre, you joining? We've crossed it, yes, absolutely we've crossed it. So now the thing is, can we now bring these, eventually bring some of this back to us, right? Like, can we bring these franchise partners and start taking back our states as our cash flows improve? So what happens is that if our state is down 200 floors in revenue,
01:29:57
Speaker
That 200 crores literally when you take the state back, you bring that right back into your top line, which is not reflecting on your top line today. So it's unlike any other instance of any other company, our growth for the next four years, five years, we will become a 4,000 crore company.
01:30:20
Speaker
in the next three to four years, I would say. And it will happen very fast simply because all of this coming back to us, the ethanol plant, all of these measures, and the fact that we are premiumizing. There's another big, big premiumization bent also. You know, Royal Pride, you know, against Blender's Pride, we had done a market test for two years in Chhattisgarh with it. We've now launched it at that level.
01:30:47
Speaker
AC Black is coming against Royal Stag, whiskey. We have a nascent, you know, scotch-level whiskey, blended scotch, which is called Damgood scotch, which is against 100-5% teachers that launches next year. It's already been, you know, tested in markets. So we have a lot of this criminalization happening across next year.
01:31:09
Speaker
which will already some of it is already started, some of it is going to come in next year. But the turn has happened, you know, and suddenly, you know, I mean, for the first two years, I don't believe the stock market or investors actually supported us. Because I think they wanted to really see where the where is the story actually going.
01:31:26
Speaker
You know, is this actually a true turnaround? Is it not? But this year, if you look at it, you know, I think our share price, the stock market has started supporting us. Investors have started supporting us. Our share prices, I think, jumped 150 percent. Wow. What is the price today? Today, I think three days ago, it was about 150, 150, 150. So we are sort of at the cusp of when you were at your lowest point, what was it then like when you had to shut down the distillery and
01:31:55
Speaker
I think it was 30 rupees, 22 or 23. Okay, so five X. Yeah, I've done a crazy jump over this last 12 months. It's just gone bonkers. And I think, you know, with everything that's going on, you know, the news came out of the ethanol plant and we were at 130 and it went to 155, 160. And I think historically it's never done over that, right? So it's suddenly now crossing
01:32:21
Speaker
over where it would ever have been. And I think in the next two, three years, as every year, I think you're going to see a significant jump because significant improvement going. And I think now the story has become three years in is fully believable that this company has done a massive turnaround. And I think everybody and everybody had just completely written us off.
01:32:43
Speaker
So it's been an unbelievable learning, remarkable journey. And I think good to go from here on set path. And three months ago, I resigned as corporate restructuring officer because I was like, OK, a lot of my job, which I was here for, is now done. And now it's already set on a track.
01:33:09
Speaker
So of course you never took on like the CEO role.
01:33:13
Speaker
No, I never did. I never did. Your father was the CEO? No, my father was not the CEO. It was a bit of a void because I was, by default, playing somewhat that role, but I wasn't playing that role because I was not. I mean, I know where my skill set was as well. It was not that of a CEO. So I never wanted to take on that role. So I was playing the role of a corporate restructuring officer, which is what my role was. But maybe by default, I was playing that role because there was no one sitting in that seat.
01:33:42
Speaker
My father and good God, gracious, incredible, amazing, amazing man, because I don't know how many people actually do this. When I sat down with him, you know, in 2015, I said to him, I said, you know, you, I cannot work with you, with you calling half the shots and, you know, questioning me. So either you helmet to me and I will live, do and die with it. However it goes in whichever direction, the accountability, responsibility is mine.
01:34:11
Speaker
Or then I don't take it. And hats off to him, he did. So he completely backed off. Did I not walk into his room through these very deep, dark days? Yes. And I think there was a lot of, and I think that he also in that sense, I think there was a lot of support from him in that sense that he was like, you know,
01:34:33
Speaker
You know, it'll be okay. It's, you know, it was that sort of, you know, Oh my God, like what the hell have you done? But, but, you know, it will be okay. You know, it's going to be okay because a lot of the bigger decisions I would always go and say, what do you think I'm doing this? You know, I mean, like walking out of Kerala as a market for me was like, Oh, 700,000 cases. But every case I sell, I lose 20 rupees. So in a, in a company that's already bleeding.
01:34:59
Speaker
and I've got 40 crores of losses, should I intrigue that by a further 10 crores because I only exist in Kerala as a state and I had to pull myself out of there. And the reason for the loss was because you were not bottling in Kerala.
01:35:14
Speaker
No, the reason for the loss was that Kerala government had not given a price increase for five years. And the government has the choice, right? They choose not to give price increases. So as you know, and this is even more prevalent in the last couple of years, look at the commodity prices across everything, glass, cardboard boxes, everything. Everything is going through the roof. But if you don't get price increases there, if you're in this regular deluxe, et cetera, segment, your contribution margin is tiny.
01:35:43
Speaker
And so what is happening is you're getting complete erosion of that margin as you go on. You said you can choose your price, right? And whatever price you choose, you pay excise duty accordingly. Now you're saying that the Kerala government sets the price for you? So for example, if I'm sitting in the segment of that 100 rupees for the 180 ml,
01:36:12
Speaker
So they give you a price increase based on your ADP. So that price increase comes, for example, in every segment they'll say, we are taking this segment up by giving the 10 rupees or 20 rupees or 50 rupees that translates to 10 rupees or 20 rupees to the consumer.
01:36:28
Speaker
But that margin changes, right? So what is the excise slab is increased? Is that what you're saying? Or the price at which I believe distribution is. The price increases in that slab for you, right? So the consumer is instead of paying 100 rupees, maybe paying 110 rupees. So once you're selling at a specific price, you can't increase the price on your own. The government tells you when you can increase the price.
01:36:57
Speaker
Well, you could choose to move to the next segment, but then you lose your consumer. Okay. Okay. Okay. Because your excise duty will go up. So moving to the next segment would mean a significant jump up in the price. Absolutely. Absolutely. And you basically have to follow also industry, right? So if you're in a certain segment, you are, your competitors are sitting in that segment. So you're watching your competitors, right?
01:37:20
Speaker
And now these are healthy competitors. You are not a healthy competitor at this point because you are struggling. So they are sitting there. You're dying sitting over there. But if you move up, you've lost your market.
01:37:33
Speaker
Right, right, right. So the only way to increase prices when the government says, okay, this slab for this excise duty is now instead of up to 100, it's up to 110. And therefore, you're also able to increase your price. Yeah, so it sort of moves. So the government dictates that price increase and gives it to you, you know, at various times. And they have different, by the way, every state has a different mechanic.
01:37:53
Speaker
Because like I said, every state is a very different how they work, right? So it just completely depends on the state. But it is largely controlled. So it was those kinds of decisions. I am walking into his room and I'm saying, you know, I'm
01:38:08
Speaker
What do you think? Do you think we should continue? Because I think we can't. And he's like, no, you're right. You can't. You have to pull out. So he's understanding, and he agrees with the decision. But so I think that somewhere along, he knew that what I was doing was right, perhaps, in every way. But there were lots of gaps. So there was a cash gap, which we got some of it, but then a lot of other things happened. And then there was a team gap.
01:38:37
Speaker
How did you fill the cash gap? Like you went and approached KKR or was that an inbound? I did. I did. I did. I approached KKR and I think Sanjay and Tashwinder both really believed the story and they came on board and it was quite fast, the whole thing, how it happened.
01:38:58
Speaker
you know, we at one point went, you know, we had in the sun who came on board. So, you know, alone went to in the sun. We never did a corporate restructure. So no bank ever got, you know, cut in size in, you know, their debt or we just nobody had to write off any write off anything, nothing, nothing, none of that happened. So it was actually just the restructuring was well internal.
01:39:21
Speaker
Everything is internal. I want to kind of understand what is the difference between a private equity debt versus a bank debt. Like, why couldn't you have just gone to more banks for debt? Why did you go to private equity for debt? What was the fundamental difference? No, bank would not have given it to us. Okay. So when you're not at bank grade, then you go to private equity and you probably pay more. Yeah, you're paying more, yeah. But I mean, yeah, I mean, I think it's just the banks would never have given it to us.
01:39:49
Speaker
Private equity is more willing to embrace risk. Yeah, I think they are more willing to embrace risk. Yeah, I mean, more skin. Yes, exactly. And then they take a higher percentage for that as well. And at that point also our bankers were, we had state bankers. So we had Punjab National Bank, Canberra Bank. Those are the banks. And Canberra was actually the one that initially, Canberra was at Punjab. I think Canberra pulled our limits first. And then it kind of left to a cascading effect to the others.
01:40:19
Speaker
And they must have had some mandates that they can't give a limit beyond certain amount to a loss-making company. Yeah, exactly. And I don't blame them. I don't blame
Overcoming Challenges with Optimism and Strategy
01:40:32
Speaker
anyone. I think from an outside picture, when people are looking in, we knew what we were doing inside to fix things.
01:40:39
Speaker
I think everybody, even sometimes, you know, I may have been extremely optimistic and I said, you know, just bend your head, keep going, keep going, keep going. Was it like your fundamental nature to be optimistic or could you see something which others couldn't?
01:40:58
Speaker
To me, the world is the glass is half full. I think that comes from, I don't know, I mean, so I think everyone can look at the glass as half empty, right? But I mean, there is, and I think that is maybe a certain amount of grace I consider that we've all been blessed. So the glass is half full, I think it's very negative to think of it as half empty.
01:41:27
Speaker
So for me, I am born an optimist, but I do see I'm not optimist and I'm not unrealistic.
01:41:35
Speaker
If there is a lion standing in front of me, I am not going to run into that lion. That is not going to happen. I'm very objective as well. But I did see, for me, the glory of the heritage of the brand and what it was. And there were significant improvements that we could do. And I think that's what we've done. So even if you look at our sales, we are roughly growing a million cases every year.
01:42:05
Speaker
since 2020, it's just been that jump, right? And I think my salesperson probably hates me, but I keep putting pressure. I'm like, go to 2 million cases a year, because you can do it, right? He's like, you've got to be crazy. But I said, no, we can. We can actually, because here we are sort of jumping in. One of the prime markets to perhaps look at was Assam as a market. It was an incredible market. We were out of the market for five years. We went into it, I think, in 21.
01:42:31
Speaker
Yes, I think 21 it was, and we started from zero. This probably never happened, I think, for most people in most companies. We went from zero to 60,000 cases a month in one year. So 5,000, 10,000, 15, literally jumping, jumping, jumping, jumping, and huge jumps every month. And so there are certain states, and we said, what are the lessons here that we can learn from this?
01:42:56
Speaker
God is an amazing model. So can we take this model and now replicate this model? And I think we're trying to, I don't know if it's successful or not, but we're trying to actually replicate that model in another state of ours. What are the lessons there? What caused that passive growth?
01:43:13
Speaker
So I think a lot of it was also a team, the strength of the actual sales team. It was a partial COVID. So a lot of teams were not going out. This team was actively going out and selling. It was the width of distribution, which I talked about. It was the placement and it was the team going there, making sure that that visibility in the shop is there. You put something there and you walk away and you don't go there for three weeks.
01:43:40
Speaker
That's not what they were doing. So they were going back to show that because the posters lifecycle is what? It's three days. Yeah. Right. That's what the shop poster is. Right. So you've got to build all of these life cycles. And they were very strong in terms of what they were doing. Of course, there was there was certain marketing support that even our franchise partner was giving them beyond beyond their sales schemes and things to to retailers. But a lot of that actually really, really helped.
01:44:09
Speaker
So we've got, I mean, my head of sales has got like a list of about 20 items that he scripted in far more detail and operational excellence is what drives. You just have to consistently do the boring things every day.
01:44:29
Speaker
Yeah, absolutely. And you need the team to be able to do it. So right, when you are, I mean, how do you make sure that that guy, because you're sitting in a corporate head office, or you're sitting in Punjab, or wherever you're sitting, right, who is sitting in Rajasthan or Telangana, and that sales manager is there, is actually driving the team and getting it done. So, I mean, I know, like, these days, now they have, you know, Salesforce has that app,
01:44:55
Speaker
geographic mapping because how do you know he's gone to, he's saying I'm making these visits as part of his route. How do you know he's actually doing the visits?
01:45:07
Speaker
because he's not actually selling something at that time. All he's doing is going and having conversation and seeing that everything is the way it needs to be. Most of it is not a sale thing that day. So how do you know that? So it's seeing all of that that sort of went on. But yeah, but I mean, I think the Jagajith for at least, thank God it's done and
01:45:30
Speaker
I can live another day and say, okay, I was not that generation. I want to ask you one more. Do you typically base your decisions on gut or on data? How do you decide? Let me say that. I love data. I am a huge fan of data. I love technology.
01:45:59
Speaker
But data is not always available. And so, for example... Then you're in a data dark industry. I'm in a data... I mean, it's not... I wouldn't say data dark, but it's data delayed, latent. Everything's latent over there, right? Okay. But if I... So if I look at the startup world or Swan Rose where, you know, the clean beauty, I mean,
01:46:23
Speaker
We don't get, we get data because we are on e-commerce, so we're getting data pretty quickly and fast, right? Almost real-time. Almost real-time, we're getting that. So that's the biggest contrast and comparison that we have, right? We get it over there very, very quickly. So a lot of our decisions are based on that. But, you know,
Venturing into Clean Beauty with Swanrose
01:46:40
Speaker
there is something, what I call emergent
01:46:44
Speaker
It's called emergent strategy. We may have a strategy, but there's instinct and data that have to work together sometime. I will never contradict data. But sometimes if data is flawed or not visible or you don't trust the data, the instinct is definitely playing out.
01:47:03
Speaker
Because again, there is something about data. We all use this lovely word data. But who is analyzing that data? What is that data? Who is collecting that data? All of these things, credibility or hygiene of data hygiene, what is that? All of those things matter. And we see this happen time and again. So one has to be very, very conscious of all
01:47:27
Speaker
of what you're actually doing with the data. So I think it plays off both. But I would say that generally in life, my instinct, I think for me have been being pretty solid. If I do lean into them, you know, in business, we look at data, but a lot of my decisions will come from just pure instinct. I think the instinct of COVID
01:47:51
Speaker
the instinct of sanitizer, all of that was instinct. That was driven by instinct. You had no data about COVID coming about. I had no data. I had no data there. Absolutely. That was pure gut. That was pure gut, right? But the story for me was past pandemic.
01:48:08
Speaker
when countries go into war, past pandemic, and which other country, which other industry that survives, you know, those that build warships, those that build uniforms, those that are, you know, catering to something else. There's a thought with that, right? So if you want to call that data, then that's historical data that's played into what I would call instinct. So was it pure instinct? Possibly not, because it came from something that I had obviously read, learnt at a time in my life which I used.
01:48:37
Speaker
And so I think that that's what it is. I don't think, you know, I think that's that's information. I think most data is coming from that. But, you know, just human became swan roe zinc, and that became the sanitizer. And it was great was it happened for that one year, but eventually, you know,
01:48:55
Speaker
Even with the start-up, we were like... So the sanitizer was called Just Human. The 24-hour sanitizer. The sanitizer was called Just Human. Yeah, and the name actually came from... One last question about Jagjit. So you resigned. Who's running the ship now? You have like a CEO? I mean, we took on a CEO anyway in 2019. As I said to you, we were able to bring in teams that we were able to really build. So it was not just one person. We brought in about four or five people between 2019 and 2020, about five, six people.
01:49:26
Speaker
that were really able to help different parts of it. And from there on, you know, it's been sort of, you know, going, so I've been working with him, but every year I've taken one step backwards because I felt more comfortable with the role being played out the right way. So I know where today I can give input and where I don't need to give input and operationally,
01:49:50
Speaker
I have done X number of years there, and I'm like, OK, so this is, it feels solid, like he's there. Today we are looking, for example, succession planning is happening today in terms of the organization. We're looking at different things, like what can we do with a single mall? So I'll play those roles at different levels, but I won't play it on an operational level. I do literally a once a week meeting to just sort of 90 minute meeting.
01:50:18
Speaker
There's another thing that, you know, we've basically implemented in Jogarit is called the Entrepreneurial Operating System, EOS. It's very sort of processed and very sort of prioritization goals, company goals, individual goals, metrics measured every week. Because if you, again, some of these are things that we never did, like you don't measure it, you don't know.
01:50:45
Speaker
what you've achieved or what you haven't achieved. And so a lot of these things which we put in now, so I attend that one meeting, that 90 minute, which gives me a look at exactly what is happening.
01:51:01
Speaker
Beyond that, I really don't need to do too much. I'm like maybe participating half an hour, if at all, 40 minutes a day on Jagaji today. The rest of my time, my next 12, 13, 14 hours, actually, I would say for the last year has been so wonderful.
01:51:18
Speaker
because it's also six products in personal care, significant amount of products. Yeah, so tell me about this one Rose Jenny. So you started with just human as a sanitizer. How did that? And you said you launched in the US also. We did. We launched because actually the technology came from the United States. So
01:51:40
Speaker
the anti-microbial coating technology was US-based. Were you exporting from India? No, we were manufacturing in the US. You set up your own manufacturing. We did it during COVID. Everything was virtual. So we found a third-party manufacturer. We sent our formulation to them. We sent bottles from China.
01:52:07
Speaker
We did the whole mapping of this all virtually during COVID. In India, it was alcohol-based. In the US, we wanted to do non-alcohol-based in India. The cost was too high. We also didn't know whether people would believe it at all.
01:52:25
Speaker
So we said, let's just take it to, so we did the non-alcohol version in the US and we did both countries, Amazon and our website. But as we were doing this, we, you know, the thought was also there, right? You know, COVID was, it was a response to that, but the entrepreneur, second order, the spirit had come back alive again of being or wanting to be an entrepreneur. And I was like, well, do I really just want to be, you know, doing, is it sanitized or am I,
01:52:54
Speaker
my game or what is it? And I had a massive autoimmune disease, which I'd experienced, which, you know, had sort of affected my hair and my skin and, and, you know, a lot of learnings that came from there or what I experienced at that time was that why, and the gap in the market that I saw was that if I want a product that is effective and I'm a woman of a 40 and I'm not dissing any brands here,
01:53:22
Speaker
I go to department store, really, really expensive brands. I look at 40 ingredients on them. Two of them will be dirty.
01:53:28
Speaker
So why do I have to put this dirty product on my skin? Because I think we were very conscious about what we eat and what that does outside. What we forget is that the skin is the largest organ and everything that we put on it is also having a conversation and going inside. And we became very, very sort of mindful of that. And we said, well, can we not create clean products? And then when we go to organic vegan products,
01:53:54
Speaker
If you're an older woman, God bless you because you'll be waiting months and see nothing happen.
01:53:59
Speaker
So we looked at the California Prop 65 list, and we said, let's look at this list at our holy grail. And everything on that list, 900 Bandai. What is this California Prop 65 list? So it's a very exhaustive list of dirty ingredients, toxic ingredients in the industry. In the beauty industry? In the beauty, personal care industry. It is much greater than the US FDA list.
01:54:25
Speaker
I think that we are testing 10 items or 20 items. This has got 900 items. So we looked at that list and we said we will look at this list and we will not have any of these ingredients in anything, but we will not just be a vegan, natural. We will do synthetic, but it will be cleaned. Why?
01:54:46
Speaker
because my target market is women like myself who are over the age of 40 but who want to see improvements in their skin, in their tone, and they're dealing with the biggest changes in their life. So we said, why is it that nobody's actually addressed this with a clean beauty by actually combining this? And then we said,
01:55:06
Speaker
was one whole element of it, which was interesting was that, again, something that happened during my O2M is you stand in front of the mirror and you see yourself. And, you know, today you look hot and sexy and five days later in the same clothes, you look at yourself in the mirror and you feel like crap.
01:55:23
Speaker
And it's nothing other than something that's gone wrong in your head, right? So we said, how strange is it that people, nobody's touched the emotive part of beauty? And this is, if you don't feel good, how the hell are you going to look good?
01:55:40
Speaker
And that became the white space that we found. And we said, let's go after this. So the science became the science of neurokismetics. Again, we searched everywhere and we found this and we thought it was very powerful because again, very nascent stage in the industry, neurokismetics, the science of neurokismetics is the skin-brain communication. Everything that you've put on your skin has a conversation with your brain.
01:56:07
Speaker
What is that conversation that it's having? Is it a positive or is it a negative conversation? And how can we drive that conversation further? Because if you're saying that you can put something on your skin and it's talking to your brain, can we put something into your serum or cream or product that will make you feel better?
01:56:29
Speaker
So let's make you look better if you want to, but let's also make you feel better simultaneously and sort of bringing those two far sets together.
01:56:39
Speaker
I guess like a body shop would be like an accidental neurocosmatic company. I mean, because there is so much of fragrance in their products, which definitely does create fans out of users. I mean, it's not like intentional. So I think they source ethically. They go to all these countries in the world and they source, but very different to us, right?
01:57:06
Speaker
I don't know how clean. I have not gone and looked behind body shops' ingredients, actually. But I don't know how clean, genuinely clean, all the ingredients are. For us, so there are two aspects to this. Neurocosmetics, the science is, it's not just, so it's everything sensorial. That's one side of it. That's the softer side of the science. The science side of it is the actives, the peptides.
01:57:35
Speaker
that sort of link to neurotransmitters. And that's the conversation that happens in the brain, right? The peptide is a chain of protein or amino acid. The building blocks that create collagen or elastin in your skin. So when you put peptides for a 30-year-old in a cream or a 35-year-old to what I will put for someone who's 45 or 50 will be completely different. It will be a much stronger peptide because I know that woman at that age versus that age needs a very different potency.
01:58:05
Speaker
to give her or drive results because our whole claim is that we don't want to, we believe every day matters.
01:58:13
Speaker
And, you know, looking and feeling good should be something that you experience every single day. So it's about empowerment. And to do that, you can't be waiting for three months to see results. You need to see results week one, week two, week three, right there. So all our products are actually driven around, you know, and we make those active claims wherever we can, for example,
01:58:39
Speaker
Right now, we started with personal care, but the skin care is launching end of November, early December. In the personal care, you look at the anti-dandruff shampoo. Within seven days, clean product, complete reduction in 80%, 90% reduction in dandruff.
01:58:54
Speaker
You look at the hair growth serum. You just look at the reviews. Most people, the hair loss stops immediately. Does the hair grow back? Sure. The hair growth does grow back, but that is less under my control from an ingredient perspective and more on your hair cycle. So if you, by default, entered and used my product when your hair cycle is in the hair growth cycle, sure, you'll see hair growth.
01:59:25
Speaker
So, you know, and that hair growth cycle for all humans is a four month cycle. So, you know, it depends where you are in that cycle. So it's everything. But I mean, for us, this the clean beauty and, you know, hitting this demographic, which has been completely ignored in India, that is not a single brand that is focusing on women between the ages of 40 and 55. These are women who
01:59:50
Speaker
who have money, who have reached a certain age. They may be mothers, they may be corporate women, and their skin is going through by and large hell by that time because there are so many hormonal balance changes and all of that that's happening. In the US also, and that's an aging population, and it's shocking that
02:00:11
Speaker
It's recently, actually, that have brands,
Global Market Focus and Expansion Strategy
02:00:13
Speaker
I would say as recent as a few years ago, that some brands have now really started coming in and really targeting. Everybody else is loose in their language, anti-aging. Well, anti-aging is just too vague.
02:00:31
Speaker
Yeah, even like a 30 year old would be possible. Using an anti-aging product. Yeah, absolutely. Everywhere, because your skin starts aging from your late 20s, right? So technically, you know, you are going to use an anti-aging product any which way.
02:00:48
Speaker
In terms of pricing, you would be competing with, say, a body shop kind of a pricing point? No, we are premium, so our shaboos and our personal care ranges in India, it's about between $1,100 for a $250 ML to
02:01:09
Speaker
scrub is at 1800, the hair growth serum is more expensive. So it's somewhere in that 1100 to 1800, 1900, different products are falling in that segment. But that's personal care. The same year. Who are the other brands in this range? We don't, we look at them not as our competitors because they are, but they're in our price range, Karma, Forest Essentials, Amino, 82 degrees East,
02:01:38
Speaker
They are sort of in our segment, but not from a concept, not from a science, not from anything. We are very sort of, we are actually country agnostic. We believe that we should just go to the country where you get the best ingredient.
02:01:56
Speaker
for that if it is a concern or cause. Even though we are Swandros India's Indian, we have a US entity called Swandros Inc. We've launched in the US, and we've always considered ourselves, again, a global company. And we manufacture in the USA again.
02:02:14
Speaker
So that we get that made in USA label. It's the manufacturing Portland or Oregon manufacturing for the USA. We manufacture in India and India for India. Formulations are crafted in California. Identical. Identical formulation. Your R&D team sits out of California.
02:02:34
Speaker
Yes, our formulators say actually we have one team sort of in California, we have someone in Europe and we also have in Korea. So we've also tied up recently Korea and we will also be manufacturing skincare.
02:02:49
Speaker
in Korea. Korea is also a large market for beauty products. It is, but we're not using it to sell. We're not going to sell in Korea. We are going to actually sell our market for USA and India to focus markets. In fact, for us, our primary market is actually the United States.
02:03:08
Speaker
Okay. So you're in Korea for the talent, like Korea has the talent for creating products. We are in there for two things. So Korea has a very short innovation cycles. Okay. So I want to, so all our products, a lot of people in the industry, as you can see, there are hundreds of companies that have joined.
02:03:34
Speaker
They go to a third-party manufacturer. The manufacturer will have formulations. They will just buy the formulation. They put it into their packaging and they throw it out. We don't do that. We don't do that because we are neurocosmetics and we are very specific about what we want in our formulations.
02:03:53
Speaker
And so we build, there might be something very base and we will build the blocks on top of it. We will say we want five peptides of this level. And that's what also makes our formulations expensive. So that's been a big challenge because we've tried to be as conscious as we can for India. So the same product, that same 250 ml shampoo that is selling here for 1100 rupees is selling there for $27.
02:04:20
Speaker
And the skincare will show even more of a disparity, right? But it's the same skincare that is coming to two countries because I think most important because we saw this earlier, like a lot of brands that came to India shortchanged India in the sort of branding that they did. So they had the same brand that was there, came to India, but somewhere the formulation was different.
02:04:49
Speaker
Right. You're talking about the mass market like the New Year's. I'm talking about a lot of MNC brands, actually. I'm not taking any names. I'm not going to take any names, but I'm talking about a lot of... I think it's fairly...
02:05:01
Speaker
It's well known like you go to a like say if you go to GK you will have shops which sell imported versions of Nivea and Vaseline and so on. It's the same product which is sold for one-fourth the price in a neighboring shop the Indian version but the imported version sells for four extra price because people know that there is a difference between what is sold in India and what is the same product from another country.
02:05:25
Speaker
So that's not true of ours, right? So actually, our products, I remember you were categorical. I was like, there's just no way, whether it's packaging or whether it's ingredients. That's the same thing. India is getting exactly the same thing as the US is. At some time, maybe in the future, I don't know, today it was important for us to have a made in USA label to really establish us as a global company. And I think we would have been known as an Indian company if we did, in manufacturing. But maybe over time, you know,
02:05:56
Speaker
Maybe over time we move our manufacturing to, you know, India and just keep it here. And then, you know, you know, once the brand is established, once it's established, because actually it's the same ingredient and there is, it affects my gross margins, right? They have really brilliant gross margins, but you know, obviously it cuts into it because U.S. manufacturing is much more expensive.
02:06:16
Speaker
than Indian manufacturing. What kind of revenue are you doing in US and in India, which is a bigger, obviously US price points are higher, but just from a revenue perspective. So we just started there actually. We started that two weeks ago. So very early days for us over there. October is going to be our first month in the US. Actually, it was supposed to start simultaneously. We ran into issues with our manufacturing, really locating and finding a good manufacturer. And that's why we got delayed in the US.
02:06:45
Speaker
But the fact is it should have actually started in April in both countries, and it didn't. So this was delayed because of that, but we have started there, and we'll see what it does over there. Here, I will just say this to you that we actually started from, let's say we started in March from a zero base year in terms of revenue, and we have grown roughly about 30% every month.
02:07:07
Speaker
and we continue to grow. So the product market fit is seemingly really good. Customer retention is really good. We've got early days, four months of data only, but we're looking at almost 23, 24% customer retention. So we find that people come back to us again and again. So even if sometimes we've had two stock outs, so early days of startups going through the chaos of startup.
02:07:36
Speaker
you're seeing that if something, one product is not available, that customer is coming in back and buying another product. So I think the brand is speaking to them louder than anything else's.
02:07:49
Speaker
And I'm personally really, really excited about the skincare, which is actually coming out later this month. And that will be, that's a made in, we tried to do that in India and we could not. So that's a made in Korea product. And I had sort of, I went there a few months ago to actually close the unit and begin the iterations of this particular product, which is coming out, which is,
02:08:14
Speaker
Very, very powerful. So a lot of the skincare sitting in, I would not compare it to skincare in the current shops or DTC eCovers platforms. I would compare a lot of our skincare, at least the initial skincare with what you would actually get at a dermatologist clinic. So this is sitting at the cusp of what you would generally do in a medi spa.
02:08:39
Speaker
So it's very potent. It's very, very strong. It delivers very high-powered results, but it is expensive because I could do the same thing by putting a lot of crap in there for you. But that's not what we are as a company. By the end of current financial year, what do you estimate would be your monthly revenue from India and the US? Would you cross, say, once a year a month in India?
02:09:05
Speaker
So we, let's say March end, right? March 23. So we have looked at a value of both countries. We will be at about 900,000. Okay. Indian rupees. USD.
02:09:21
Speaker
Oh, wow. Amazing. Okay. So almost a million, almost a million, almost a billion dollars, almost a billion dollars under share. We also have, we also have, percentage from US in this, your anticipation. So, so, so.
02:09:36
Speaker
Because the US has started six months, almost lost six months, it's almost a 50-50 split. But I would say that going forward, what happens is that the revenue from the US becomes almost 70%. India is about 30-35%.
02:09:57
Speaker
But the jump between year one and year two is also significant because there are a lot of learnings this year. Suddenly our products, so this December, end of November, December, we will have three more products. And end of February, we will have another. You almost have 12 products by March end also. And that product cycle of three, three, four, four products every quarter is very aggressive.
02:10:21
Speaker
And that is going to continue. So the vision is that we have 18 products, and we will at that point in time sit down and say, OK, which are the heroes, which are not, what are doing really well, do we need to revalue some of these, or do we continue?
02:10:40
Speaker
We'll see how that goes. But the idea is to get to an 1820 product company before we in personal care, skincare, hair care. So we've actually done the bag, right? So a lot of people will just do one, just hair care or just skincare. And I think one of the reasons why we chose to come in with personal care, though even it was about the skin.
02:11:04
Speaker
What is the difference between personal care and skincare? What's an example of? Hair care is shampoo conditioner and all of that. Skin care is a body lotion, body butters, body washes, it's scrubs, etc. But what we are finding is that there is also today what we call the skinification.
02:11:30
Speaker
of hair. So what you would do on the body you are now doing on the on the hair. So like you're taking a scrub and putting it into your hair and your scalp.
02:11:42
Speaker
And it's all of these things that are now being used. So it's not just a shampoo and a conditioner. And the hair mask is also quite old now. But then our hair serums and drops and all kinds of nuances that are coming into hair care, which are now heading towards the hair. So you have that, which is hair. And then you have the personal care, which is the body. And then you have the skin. For us, I think. What is personal care? Some examples?
02:12:09
Speaker
So your body wash scrubs would be body butters, body lotions, that would all be person care. And skin care. And deodorants, deodorants, you see that everything that you're using on the body is more personal care. Skin care largely we talk about things on the face.
02:12:30
Speaker
OK, got it. That's the differentiation. Like to remove black circles around the eye? No, it could be a day cream, a night cream, a serum, acne, face oil. Yes, dark circles show, of course, it could be anything. But related to the, you're putting something on your face and that's becoming your skincare routine. So when you talk about skincare routine, you're not generally referring to your body.
02:12:59
Speaker
You're referring to skin over here. And the reason of this route of personal and hair care versus the skin care was also because we knew the skin care was going to be way more expensive. What we wanted people to do was
02:13:15
Speaker
get entry, a good entry point for people to come in, consume, understand the brand, like us, enjoy us and therefore, if you've already enjoyed our products at this level and you trust us and you believe and you like these products, will you now try a product which may be much more expensive?
02:13:32
Speaker
But this is now the skin care, right? And that was the idea of the personal and the hair care. Also was the fact that it has a cycle of 30 days. When you use these products, you're using them every day and you consume them in a 30 day period. Whereas skin care, a 50 gram jar is sitting for two, three, four months sometimes.
02:13:50
Speaker
because that's how long it takes for you to use. So the repetition cycle was also much slower in skin care. So we said that was a very, very conscious decision that we begin with this line, we go to that. And that's kind of what we are doing. OK. You said you had a lot of learning from year one to year two. What were some of those learnings?
02:14:18
Speaker
Yeah, I mean, I think one was, of course, you know, in terms of our agencies, right?
02:14:27
Speaker
of what we learned from the sanitizer business was a lot about the e-commerce platforms, about Amazon, the functionality, functioning in the US. It was almost like a trial basis. We learned all the mistakes that were made. We were blocked. We lost Seller Central. Listing, we went down for this reason. So all of those learnings that were actually a lot of digital learnings that we had
02:14:51
Speaker
over the course of the sanitizer business, we have been able to correct self-correct when we've put this into place because this is also an e-commerce slash DTC business, right?
02:15:04
Speaker
It's all of these things that have sort of played out, but even in terms of strategy and holding on to strategy, we've said that whilst we've created and we follow the same EOS system even in Swandros, we've said, because it's a startup, strategy can be a little bit more emergent.
02:15:27
Speaker
because we are moving so fast. So for us what we said is one of our one of our one of our core values here is agility with purpose.
02:15:40
Speaker
And we live that value and that is about speed. So yes, you'll make an error, but better to make a decision faster, even if it is wrong than to be very slow processed. So it's about everything is about speed over here.
02:15:57
Speaker
fail-fast model. But you asked me about what is it about Korea? So Korea does that very 90-day, four-month cycle of innovating and being able to bring things out much faster than anybody else. So from a supply chain perspective and
02:16:16
Speaker
my supply chain guy left and we found him a very, very expensive resource. And I've technically had to sort of take that out to my own shoulders, which has been a fair amount of a nightmare. And we are a seven people team here. So we're trying to do two countries. Seven is incredibly lean for like a million dollar business. Amazing.
02:16:36
Speaker
Yeah, it's seven people. We'll be adding maybe two or three more. But honestly, a very elite team. It's like a garage team. Let's put it that way. We are a garage team. And nobody's got someone under them to do their job, right? So you find you've risen to a certain point in life. So this is a bigger difference, right? You go to a legacy business, and you delegate everything. You sit here, and you're not delegating everything. You are doing it yourself, right, again.
02:17:03
Speaker
So it's a big cycle of change again that's sort of come with this business and supply chain has been a nightmare. So we've gone to China, we were dealing through traders, we said costs were really bad, quality was a problem. So we said, let's go take in control of supply chain. We've gone to Korea, to factories. So I think the thing is that what can we control? And some of the learnings came from COVID also having a diversified supply chain, right?
02:17:32
Speaker
Should we just be in one direction or two directions? We know these things are going to happen to us quite frequently going forward. As a young company, perhaps not very smart sometimes, I think, by doing this as a maturer company, yes, absolutely required. But
Future Vision and Business Sustainability
02:17:47
Speaker
it so happened that the US was required. We couldn't exactly manufacture for India in the US. We had to manufacture in India.
02:17:54
Speaker
The skincare came out of Korea. So did it make sense now to carry it to India to manufacture where we didn't believe the India could actually manufacture the skincare. So rather than take it, you know, so by default, it is actually ended up being these hubs of manufacturing. But it's it's played into what we need for the moment. And yeah.
02:18:20
Speaker
In a couple of years, what do you see just human as? Do you see it as becoming something like a body shop or something like that? Like a global company with a global presence, retail stores all over? Or is it going to be pure online? And what do you see it as?
02:18:40
Speaker
No, I think the vision for Just Human over the next five, six years is we will go to retail in 18 months to two years. We will hit certain numbers in D2C and e-commerce. We will 100% go to retail. Our wish list, of course, our first part of our wish list, at least for the US, is Sephora. In India, we will go to Modern Trade for sure, because our pricing does not allow us to really list with Kiranas.
02:19:10
Speaker
Unorganized retail. I mean, it will not really, general trade will not work for us. So we will go to foreshore because India even worse. I mean, because the US market, at least 60% of the US market is on e-commerce. Beauty is brought on e-commerce. India, actually, we are still penetrating, penetration increased, but we're only at 18%. So India is still sort of growing. I think people are still nervous about putting their credit cards in. And all of that still continues in India.
02:19:37
Speaker
So you look at your cash on delivery, like I was hated doing CODs, but we found that exactly necessary here completely. You have to do CODs on delivery. Right. Because it's a low-trust market. Yeah, it's a low-trust market. So it's over brand building and takes time, I think, for you to.
02:19:54
Speaker
create that. But yeah, it is absolutely good to retail in a big, bad way. That's very, very important for us. The vision for us is very clear as to where we'd like to be in five, six years. Our revenues take massive jumps in year three. The retail outlet reach is really just that pushes us really to a whole different level as a company.
02:20:21
Speaker
Our growth margins also, you know, today we said that India is about 74%, India, the US is about 81%. I know that having brought all the supply chain under our own control, and the moment we build out our inventories, right, today we are really, you are saying charge us more, but we don't do more than 5000 units, China will not even do
02:20:41
Speaker
As it is, that's a big fight. They wanted to do 100,000 pieces, not 5,000 and 10,000, right? So I know that over this year, we will actually be able to, although those relationships are building, and we've already got better pricing than we were getting from our traders. So we know that goes straight to our bottom line. So we know our gross margins are already going to stand improved.
02:21:04
Speaker
by March 10, 15%. So, you know, where can we take it? So, the learning was this also. So, the sanitizer, because there was a price issue, there was COVID, our gross margin was only 48%. I will never do that again.
02:21:24
Speaker
I want to understand this as someone who's an outsider. When you hear 80% gross margin, as a consumer, the first thing you think is I'm being ripped off. What is the difference between your gross margin and what you actually make as a profit?
02:21:40
Speaker
So that's not my net margin, that's my gross margin, right? So for example, I mean, today's start to year one, right? I'm bleeding as a company, right? Because I'm spending on marketing, I'm spending on supply chain buildup, I'm bleeding. I'm not, that's not like, so I might have a gross margin. What it basically means is that eventually, as a company, I will do well, right? So- Yeah, once the economies of scale kick in. Once the economies of scale kick in. So for me, for example,
02:22:09
Speaker
consumer looks at me and says, you know, what they need to look at me and say is that, my God, what is she giving us? Is she giving us a good product? Is she giving a product that works? That's the most important thing.
02:22:21
Speaker
At the end of the day, for me to exist as a business, to employ people, we are carrying fixed costs. You carry variable costs. We pay factories for production. We have marketing budgets. Amazon takes, let's just put it this way, platforms take 30, 35% of listing fees, right? If anyone thought it was free to be on Amazon, better than being hit again, right? Okay, so you're paying that and that's just to be present. That's not then to show an ad.
02:22:52
Speaker
it's different your your your emitter margins are very different to your gross margin your gross margin is the health of your business at one level which is one level now everything else drill down what is your net margin coming to right so we are expect you to break even next year we break even so it's a very quick break even and that's only because again we've tried to keep our company healthy because we know that there are there was a time when people were just
02:23:19
Speaker
What's the point? We'll die if we don't have good margins, right? What are we doing the business for? So this was a big learning for me from the sanitiser business in terms of our gross margin, because it really, we did great sales, but we bled. And there was no way to stop the bleed if our gross margin was low. So if you're in the e-commerce business, you need to have an average gross margin of 70%.
02:23:45
Speaker
Okay, very interesting. If you are lower than that, you are going to be wiped out sooner or later.
02:23:51
Speaker
So most tech companies, software and all will have about 100%, 90, 100% gross margin. And that's just the way you need to be structured to survive the business. It doesn't work in any other way. So it's not like you will end up with a net margin and you're being ripped off. No, not at all. All these are the costs which have to be accounted for.
02:24:16
Speaker
Right. So five years down the line, what kind of revenues do you see yourself doing? So we are looking at, you know, we're looking at a valuation and this is our goal. 2028, 28, 29, we've looked at a valuation of about a billion dollars as a company.
02:24:39
Speaker
And that's what we are working towards. So the whole team is working towards it. This is a number that is on our deck and this is a number that we see at every single meeting. Every single human being in our company sees that number. But valuation is so subjective, right? I mean valuation is in the eyes of the investors. No, it's a multiple. It's a multiple. So which means your revenue needs to be
02:25:00
Speaker
This industry has multiples of anywhere between 3x and could be 3 to 8x, depending on where you are. So there was a time earlier, if you look at like some of who we consider competitors, for example, in the US would be a company like Drunk Elephant.
02:25:18
Speaker
Tacha would be a competitor for us, right? But not direct. Tacha is probably the closest competitor because she talks about this whole, you know, the field of science. She doesn't talk about the science, but she talks about the skin, brain, this sort of whole sort of connection. But she's, you know, she's sitting at one level.
02:25:39
Speaker
But more from the aroma and the lighter, the softer side of it. We sit on both sides of it. So it's different. But if you look at them, they were both sold in the last three years. One at 891 million after six years. The other one also sold. She's likely a touch as old. I think a 10 year run.
02:25:59
Speaker
P&G bought her and I think one was bought by Unilever Ventures. So it just depends like who, what. But you need to be at least like a 150, 200 million revenue. Yeah, you need to be at least a 200 million revenue, yes. You would need to be at a 200 million revenue.
02:26:17
Speaker
Amazing. Yeah. So I mean, you know, for us, even our projected revenue for the year three, because we go to retail and I mean, we've kept it pretty, we've been very conservative and I know it sounds like a huge leap, but I recently, so we are, we started having some investor conversations. We are looking at a seed raise fundraise, right? And how much are you looking to raise? We're looking to raise $2 million. Okay.
02:26:42
Speaker
So we're having, and this is one of the, so this is about our investor who knows the business and who doesn't know the business. And this investor actually said, why are you only at 35 million in year three?
02:26:58
Speaker
So I was like,
Conclusion and Future Aspirations
02:26:59
Speaker
you know what? Honestly, you're absolutely right. Actually, when we did the numbers, they were higher. But we purposely dumbed down the numbers because people look at us in amazement and say, how can you be? So to not get questioned on your credibility.
02:27:20
Speaker
we crashed the number. So he says, but you know, you could be, you'd be doing this revenue in this year. And I'm like, thank you. We believe that. Yes, we do. We are in alignment, but we can't show that on a deck when we are presenting to people, but we can, we can get there. And, you know, the understanding of something, we also believe like something like the science of your cosmetics is where the science of the microbiome world was 15 years ago.
02:27:47
Speaker
And the US market is ever ready because they will be able to understand it faster. Yeah, early adopters. So we do believe that even that in terms of education or getting or reaching
02:28:05
Speaker
And of course, they still have TikTok. Right. Beauty influencers. Correct. We don't have TikTok. So influence is a big part of this, right? I'm a beauty ambassador, beauty influencers across the industry. I actually find some of them, you know, are real time people, sometimes somebody, you know, it doesn't even have to be an influencer. It was crazy because they had such an incredible experience with our products and they've come out and they're gasping about it and
02:28:35
Speaker
And you're like, OK, this works even better for us. Because I think an influencer at the end of the day, everyone's gotten tired of some influencers, right? It's just too much of just selling, selling, selling. And you know that it is not necessarily genuine. Whereas if it's just someone who's used your product, and they might have 2,000 followers or 500 followers, but the fact is, if they've used your product and then they've put it out because they've loved something, well, much more power.
02:29:04
Speaker
I mean, so TikTok has replaced Facebook as the way to market to the US audience. Well, Facebook has anyway been a slightly dying medium, right? I mean, Meta is a bit aged. It was for exactly the demographic that I'm targeting, in fact. Yeah, 40 plus. Yeah, they are the ones who are actually present on Facebook. But everybody else has, I think, dumped it gone, you know, a long, long time ago.
02:29:34
Speaker
Amazing. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.