How these Two Brothers Re-built the Success of their Family Business
Today the company has the highest profitability margin of over 18 per cent
F or these brothers, their true calling was forever into their family business. While elder brother Chetan did Bachelors in Petrochemical Engineering from Pune University, and later an MBA from Boston College, Rishi went to Boston University for his Bachelors in Science and Business Administration. But they both came back to join their family business of manufacturing ceramic tiles, Kajaria Ceramics Limited, and help their father grow it further. Chetan took a dive into marketing and operational management of the business, but when Rishi had come back in 2000, the IT revolution in India had just started.
Rishi said, “I started an online platform Floortoroof.com to aggregate manufacturers and dealers into building materials all over the country and serve it as an online marketplace. But it was not the right time for it and we had to shut it down after two years.”
Soon, they travelled with their father to China and found that they could import and sell vitrified tiles into India. They started selling these in India from 2003 and soon saw the volume rising, so much that they also set up a plant for vitrified tiles in India. Chetan said, “In our business, the closer our production facilities are to the market, the lower are our costs of delivering it to the end consumer. We saw high growth potential in tier-II and tier-III cities and so started expanding our reach everywhere.”
Chetan recalled that their first acquisition of a manufacturing plant was in Gujarat and that contributed greatly to their learning experience. Now, they are planning an expansion of their Rajasthan plant in September. Chetan added that the company has partnered with smaller manufacturers to grow their reach in local markets. While this is definitely a high, a certain friction was felt when some of these partners used to question on the profit sharing pattern. This, Chetan was soon to allay, when he would showcase the advantages of branding, market presence, leadership and volumes of growth an association with Kajaria would usher to these partners.
On the other hand, Rishi recounted that after the e-commerce fiasco, he was quick to leapfrog into the family business and successfully transformed the day-day business with the introduction of SAP and other IT integration within the company. Incidentally, with about Rs 2,800 crore revenues, around Rs 200 crore profit after tax and a debt free balance sheet, Kajaria is touching the sky and is the topmost company in India in tiles manufacturing with the highest profitability margin of over 18 per cent.
(This article was first published in the June issue of Entrepreneur Magazine. To subscribe, click here)