Nirula’s acquisition has brought in welcome change. But the true test of survival starts now...
ENAM Securities in 2007 demonstrated that Indian consumers spend 51% of private final consumption expenditure on eating out. Malaysia-based Navis Capital, which manages funds worth $1.6 billion, wanted to bet big in the fiercely growing Indian QSR market and Nirula’s was the route they chose. “Navis supported with the necessary funds and we started totally revamping the organisation,” says Samir Kuchreja, CEO & MD, Nirula’s Group. While the logic was not questionable, have the acquirers been able to achieve the intended?
The biggest challenge for such an acquisition has been on the cultural front. Admits Samir, “It was difficult to convert a family-run business into a professionally run one, but we knew we had to implement such changes to survive in the competition.” From management model to food menu, there was an elephantine transformation post the acquisition that reverberated throughout the organisation. Products that didn’t contribute much to the company’s turnover were hived off. Bucked up by the financial expertise of Navis and the deft leadership of Samir, Nirula’s started aggressively spreading its reach. And what it couldn’t achieve in seven decades, was achieved in seven months. Till 2006, the company has grown at 10% and last year it has recorded a growth of more than 40%. There’s more! In seventy years, they opened just 4 to 5 outlets, but in seven months they rolled out 12 to 15 outlets. And the current number of outlets is 60. Now the company has resorted to the time-honoured franchisee route for a pan-India presence. “We tied up with South Asian Hospitality to open stores in Rajasthan and in Gujarat; Goa we are looking for franchisees,” affirms Samir. With an exorbitant investment of Rs.1.5 billion, the company plans to roll out 200 stores globally by 2011. Samir announces that he’s all set for UAE to hunt for a franchisee partner. Truly this acquisition has brought fresh energy to the company, but now that it faces the thick of global and local competition, its true sustainability will be tested.
ENAM Securities in 2007 demonstrated that Indian consumers spend 51% of private final consumption expenditure on eating out. Malaysia-based Navis Capital, which manages funds worth $1.6 billion, wanted to bet big in the fiercely growing Indian QSR market and Nirula’s was the route they chose. “Navis supported with the necessary funds and we started totally revamping the organisation,” says Samir Kuchreja, CEO & MD, Nirula’s Group. While the logic was not questionable, have the acquirers been able to achieve the intended?
The biggest challenge for such an acquisition has been on the cultural front. Admits Samir, “It was difficult to convert a family-run business into a professionally run one, but we knew we had to implement such changes to survive in the competition.” From management model to food menu, there was an elephantine transformation post the acquisition that reverberated throughout the organisation. Products that didn’t contribute much to the company’s turnover were hived off. Bucked up by the financial expertise of Navis and the deft leadership of Samir, Nirula’s started aggressively spreading its reach. And what it couldn’t achieve in seven decades, was achieved in seven months. Till 2006, the company has grown at 10% and last year it has recorded a growth of more than 40%. There’s more! In seventy years, they opened just 4 to 5 outlets, but in seven months they rolled out 12 to 15 outlets. And the current number of outlets is 60. Now the company has resorted to the time-honoured franchisee route for a pan-India presence. “We tied up with South Asian Hospitality to open stores in Rajasthan and in Gujarat; Goa we are looking for franchisees,” affirms Samir. With an exorbitant investment of Rs.1.5 billion, the company plans to roll out 200 stores globally by 2011. Samir announces that he’s all set for UAE to hunt for a franchisee partner. Truly this acquisition has brought fresh energy to the company, but now that it faces the thick of global and local competition, its true sustainability will be tested.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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