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Jayesh Desai cannot stop

thinking about chocolatesthese days. It is not that hehas an irresistible sweettooth. In fact, Mr Desai's

growing obsession revolves aroundhis new confectionery business thatis fast taking shape.

The 38-year-old chairman of theRajhans Group sees chocolates add-ing a new dimension to his over Rs2,000-crore business empire, strad-dling across textile, entertainmentand real estate. "There are a very fewbig names in the domestic chocolateindustry. After the top two multina-tional companies, you will struggleto name the next big player," pointsout Mr Desai, who shot into the na-tional limelight last year after buy-ing cricket legend Sachin Tendulkar'sFerrari.

Seated in his plush group head-quarters, Rajhans House, in the heartof Surat, Gujarat, the young and dy-namic businessman starts reeling outstatistics to prove his point. Cadburycorners a whopping 72 per cent shareof the Rs 7,000-crore domesticchocolate market, followed byNestle at 18 per cent, and leaves theremaining 10 per cent to 150 othersmall players, notes Mr Desai.

"The chocolate market offers hugegrowth potential, with India's percapita annual consumption at a mere400 gm compared with the world's3.5 kg consumption," underlines theRajhans chief. A good quality prod-uct with stylish packaging can go along way in capturing the market, withrapid urbanisation further fuellinggrowth, adds Mr Desai.

Armed with details, Mr Desai andhis team have conducted extensivedue diligence of the confectioneryindustry. They have toured exten-sively throughout Europe and visiteda number of confectionery compa-

nies to understand their chocolatesand compared them with those avail-able in India. "A long time after visit-ing the US, almost a decade ago, topursue the airline business (whichwas later abandoned), I ventured over-seas to give shape to my chocolatedreams," reveals Mr Desai.

The Rajhans chief is convincedthat he can crack the Indian choco-late market. He has set the stage totake on the likes of Cadbury andNestle. He has roped in Ajit Tawde,an ex-Cadbury executive, who waswith the iconic chocolate major for25 years. He has also hired 3P Solu-tions, a Pune-based consultancy,which specialises in chocolate, foodand beverage industries, to roll outthe project.

Meanwhile, Mr Desai's chocolateplans are falling into place at a rapidpace. The group has already set up asubsidiary, Rajhans Nutriments, tosteer its chocolate venture andpumped in Rs 150 crore to take itforward. A modern chocolate factory,with a built-up area of about 3,00,000sq ft, is coming up on four acres inKosamba near Ankleshwar. It hasalso acquired chocolate-making ma-

After building a Rs 2,000-crore conglomerate, straddling across textile,entertainment and realty, Rajhans Group Chairman Jayesh Desai turnsto MNC-dominated Indian chocolate market.

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RAJHANS EMPIRE

1992ORIGIN

HEADQUARTERS

Surat

Rs 2,000+ croreTURNOVER

Textile, real estate,entertainment,hospitalityBUSINESSES

15,000+

EMPLOYEES

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chines from Denmark's Aasted,Germany's Sollich and Switzerland’sBuhler, the world-renowned choco-late machinery manufacturers.

The Kosamba facility is expectedto be operational by the next year.Rajhans has also opened an office inZurich, Switzerland. "My chocolateswill be conceived in Switzerland,have attractive Swiss packaging, tastelike genuine Swiss chocolates, butwill be made in India," adds Mr Desai,who swears by Reliance patriarchDhirubhai Ambani as his role model.

Rajhans is confident of making amark in the Indian chocolate market."With good strategies and brilliantmarketing ideas, it would not be dif-ficult to gain a decent market share.If Balaji (Balaji Wafers) can give atough fight to MNCs (multinationalcompanies) like PepsiCo India andCoca-Cola India, why can't we do thesame," asks Mr Desai. He may soundaudacious. But it is this audacity,coupled with sound research and ra-tionale, that enabled Mr Desai tobuild a Rs 2,000-crore empire fromscratch in just two decades.

Rapid riseThe Rajhans chief's rise is no lessinspiring than any rags-to-riches tale.It is the story of a young man from asmall village in Bhavnagar who madeit big in Gujarat. It is a ringing testi-mony to Mr Desai's grit and deter-mination that are driving him togreater heights.

"My father often asked me todream big. But I never believed thatdreams could come true so soon inlife. I set out to do business with amere Rs 500 in my pocket. Today, Irun a business empire, with 15,000employees, including professionalslike engineers, lawyers, charteredaccounts and MBAs, working underan ordinary graduate," recalls MrDesai, with a glint in his eyes.

Way back in 1992, Mr Desaisowed the seeds of the RajhansGroup by venturing into the edible oilbusiness. The first-generation entre-preneur set up Rajhans Vegetable OilTrading in Surat and soon made amark in the edible oil business.

However, Mr Desai was not quiteimpressed with the low margins. Hewas on the lookout for a venture thatcould propel him with faster growth.

Jayesh DesaiChairman, Rajhans Group

Sweet DreamSweet Dream

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He was quick to spot the huge growthpotential in the textile business. Notmany would know that the DiamondCity - nine out of ten diamonds in theworld are polished in Surat - is alsoIndia's hub of synthetic fabrics. Thecity, which gave birth to famous fab-ric brands such as Garden, Vimal,Parag and Praful, makes around 90per cent of polyester fabric used inthe country.

Mr Desai's gaze naturally fell onthe flourishing textile business ofSurat. In 1997, he forayed into thetextile business by setting up Rajhans

Mr Desai, beaming with pride. Withgreater growth in focus, Rajhans iseyeing the high-end linen segmentand also planning to enter the pre-mium shirting and trouser segment.

Rajhans' textile business was ingood shape in less than half a decadesince inception. However, Mr Desaiwas not the one to rest on his lau-rels. He was constantly in search ofnew businesses that could generatehigher revenue. By the turn of themillennium, he zeroed in on enter-tainment as the next vehicle ofgrowth.

It was quite by accident that theRajhans chairman stumbled upon theentertainment sector. "On one of myvisits to my sister's house inMumbai, I was taken to a multiplex. Iwas highly impressed by the ambi-ence there and felt like being trans-ported into a foreign land. I was surethat Surat, with its cosmopolitan na-ture and high spending power, wouldhappily embrace the multiplex cul-ture," discloses Mr Desai.

The diamond capital of the world

got a taste of an elite cinema housein 2000, when Mr Desai launchedRajhans Prime Cinema. Spreadacross 1.25 lakh sq ft in the city'stony Athwa Lines - Surat's bustlingshopping-and-entertainment district,encompassing about 20 lakh sq ft ofmall space - Rajhans Prime Cinemaelevated mundane cinema viewing toan ethereal experience.

With luxurious seating, an aes-thetic ambience, excellent acoustics,a high-end restaurant and a world-class games zone, Rajhans raised thebar for single-screen cinema. Astime passed by, a 125-seat previewtheatre was added to the 1,000-seatcinema house. Enjoy, a high-end res-taurant at the cinema house, soonbecame a hub for culinary connois-seurs. A banquet hall with a capacityto seat 200 followed. The theatrealso got yet another attraction, Siz-zling Salsa, a delectable eatery, whichhas become a popular destination forsizzlers and Italian cuisine.

"I had given the cinema house fiveyears to break even. To my surprise,the business broke even in just twoyears. I was convinced with the cin-ema house's high-growth potentialand decided to its replicate successin other cities and States too," addsMr Desai. Rajhans soon jumped onthe multiplex bandwagon. RajhansCine World, a subsidiary company,opened its first three-screen multi-plex in Nadiad in 2008 and followedit up with two more three-screenmultiplexes in Valsad andAhmedabad.

With a total of 11 screens and4,125 seats, including the single-screen theatre and three multiplexes,Rajhans is a big name to reckon within Gujarat's entertainment arena. Thegroup is expanding its multiplexes tomany other cities such as Mumbai,Vadodara, Navsari, Ratlam, Ujjain andAurangabad. The group is targeting torun 25 multiplexes with about 100screens by 2013. The Enjoy restau-rant, which is doing roaring business,has turned into a popular brand.Rajhans, which currently operates sixEnjoy restaurants, is adding another

five shortly and plans to add 30 moreeateries across the country by 2013.

The Rajhans Group got anothershot in the arm in 2000, with a pro-posal to construct a small commer-cial complex. This project turned outto be the foundation for the group'ssprawling realty business. "I realisedthat real estate generated good re-turns and so stuck to it," notes MrDesai.

Rajhans Construction, set up in2003, announced the entry of theRajhans Group into realty business.In about a decade, the real estatebusiness has become the robustgrowth engine driving the group andaccounts for about 70 per cent of itstotal revenue. Textile and entertain-ment sectors, on the other hand,make up 15 per cent each of thegroup's total revenue.

The Rajhans benchmark of com-mitment to quality can be discernedin many of its residential and com-mercial projects across Surat. Resi-dential projects like RajhansMaxima, Rajhans Aakruti andRajhans Himgiri, among others andcommercial complexes such asRajhans Plaza, Rajhans Point andmany others have turned Rajhans intoone of Gujarat's trusted and

Silk Mills in Sachin, near Surat. Fiveyears later, he opened Rajhans Poly-Prints, a dyeing and processing mill,in Kadodara, Surat. Rajhans soon be-came synonymous with high-qualityfabrics and began supplying to al-most all big textile players.

With two plants in Surat, mannedby more than 8,000 employees andchurning out 90 lakh metres of fab-ric per month, Rajhans has carved aniche for itself as a premier textilecompany. "It has been ages since Iwent about marketing my fabric. To-day, the market comes to us," notes

Company: Rajhans Cine World

Segment: Multiplex

Properties: 4

Screens: 11

Total seats: 4,125

Share of group revenue(%): 15

Expansion: Targeting 25multiplexes with 100 screensacross India by 2013

ENTERTAINMENT

Rajhans' realty business, quite unlike its peers that are bruised by bearishsentiments, is growing at a quick pace.

Company: Rajhans Construction

Segment: Residential andcommercial projects

Build-up area (sq ft): 60 lakh

Share of group revenue(%): 70

Expansion: Surat apart, majorprojects coming up inAhmedabad, Vadodara,Chandigarh, Mumbai and Kolkata

REAL ESTATE

Rajhans Cine World has a policy of focusing on tier-II-cities, something that bigmultiplex chains are warming up to today.

Companies: Rajhans Silk Mills &Rajhans Poly-Prints

Segment: Sarees, dress material

Manufacturing units: 2

Capacity (mtr): 90 lakh/month

Share of group revenue(%): 15

Expansion: Entering high-endlinen shirting & trouser segments

TEXTILE

With its two state-of-the-art manufacturing facilities in Surat, Rajhans has carveda niche for itself as a premier textile company.

The group, which is expanding itsEnjoy restaurant chain, is alsoplanning to launch boutique hotels.

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Will you take us through thelong journey of Rajhans?

My business career began withedible oil. Rajhans Vegetable OilTrading, set up in 1992 in Surat, didgive decent returns in the first fewyears since inception. But I waslooking for high-potential sectorsand gradually zeroed in on textile,entertainment and real estate,which have transformed Rajhansinto a Rs 2,000-crore group.

What are the focus areas forfuture growth?

Rajhans will be focusing onentertainment, real estate andconfectionery in the near future.Vadodara will soon house theRajhans Cine World multiplex. Weare also setting up multiplexes inNavsari, Ratlam, Ujjain andAurangabad. As far as realty isconcerned, we have about 40 lakhsq ft of development happening inSurat alone. We have alreadyentered other cities likeAhmedabad, Vadodara, Chandigarh,Kolkata and Mumbai. Throughconfectionery, Rajhans is forayinginto the retail market for the firsttime and I am sure that we willsoon become a household brand.

What led you to pick upconfectionery as the next bigopportunity?

After the top two MNCs, youwill struggle to name the next

big player. There is huge potential,given the low consumption ofchocolates in India. I am convincedthat we can capture a big marketshare with best quality chocolates.A modern chocolate factory iscoming up in Kosamba, which willstart operation next year. We arelooking for a woman celebrity asbrand ambassador to endorse theproduct. I am confident that we willbe able to achieve Rs 500-crorerevenue in the very first year.

You had almost entered theaviation business a few yearsago. What made you to back off?

In 2004, most of the airlines

abandoned it.

What is your managementstyle?

We have teams of managerswith clear-cut hierarchy andjurisdiction. All my employeesare free to take their owndecisions within the givenjurisdiction. However, theyhave been expressly prohibitedto cross their limits, whateverbe the cost or benefit. Withthis, we are able to maintain asystem within the organisation.

Yours is an inspiringsuccess story. What do youattribute the success to?

The credit should go to mywife, Trupti. She may not behelping me in my day-to-daybusiness. But she has alwaysstood by me, providing me themoral support and enabling meto concentrate on the busi-nesses. I have always believedin taking calculated risks. I haveforayed into various ventures,but only after making sure thatthe success ratio is at leastabout 85 per cent. Perhaps thishas kept Rajhans growingdespite many diversifications.

How do you see Rajhansgrowing in the near future?

The group has been growingat a compounded annual rate ofabout 30 per cent in the pastfew years. We will have to growat a little higher pace in theyears to come. I want Rajhansto be among the country's top-ten business houses. I still haveat least another 10 to 15 yearsand should be able to achievethis goal by then.

Cricket and luxury cars are JayeshDesai's twin passions. The

dynamic Rajhans Group chairmanmaintains a fleet of high-end cars,including BMW and Jaguar. Yet he isfairly grounded and literally a friend,philosopher and guide to his 15,000-strong employees. Mr Desai is equallypassionate about his businesses, with aknack of spotting the next bigopportunity. Hailing from a humblefamily, Mr Desai, the fifth among sixsiblings, dreams of his coremanagement team of about 250driving to work in Mercedes E class.No doubt, it looks like an ambitiousdream, but he has a habit oftransforming dreams into reality.In an exclusive interview to IndiaBusiness Journal, Mr Desai talksabout the Rajhans Group, its excitingjourney and his future plans.

“I have always believedin taking calculatedrisks. I have forayedinto various ventures,but only after makingsure that the successratio is at least about85 per cent. Perhapsthis has kept Rajhansgrowing despite manydiversifications.”

"I wantRajhansto be amongIndia’s top-tenbusiness houses"

like East-West Airlines, DamaniaAirways and Jet Airways were inbad shape. The aviation industryseemed to be lucrative and I took itas a challenge to enter the business.I had visited the USA, negotiatedwith Raytheon Corporation andclinched the deal to acquire five

aircraft of 21-seater each. Butafter so much of progress,

something prompted methat aviation was not my

cup of tea and hence I

“Rajhans will be focusing on entertainment,real estate and confectionery in the nearfuture.”

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valuable brands.Starting with a Rs 10-crore

project, Rajhans today boasts of 65ongoing projects spread over about60 lakh sq ft across Surat,Ahmedabad, Vadodara, Chandigarh,Kolkata and Mumbai, both in resi-dential and commercial segments.The group recently forayed intoMumbai with two projects - a shop-ping-cum-commercial complex inGhatkopar and another project on SV Road in Santa Cruz.

Right movesIt has been quite an eventful journeyfor the Rajhans Group. In about twodecades of its existence, the diver-sified conglomerate has coveredconsiderable ground and is eyeinggreener pastures. With a Midastouch, Mr Desai's vision, planningand ability to tap the right opportu-nities have stood the group in goodstead.

Meanwhile, the Rajhans chief isfocusing on entertainment, realty andconfectionery sectors to drive thegroup's future growth. Incidentally,Surat is growing at a rapid pace andhas been named by many recent sur-veys as one of the future cities withhuge growth potential. The City May-

ing up to today. With over 1,000movies churned out and 300 croretickets sold every year, the Indian cin-ema market accounts for a chunk ofthe entertainment pie. And multi-plexes are where movies are madeand unmade today, in terms of boxoffice performance. As Rajhans ex-pands its multiplexes into smallertowns, it is set to reap rich dividends.

No wonder, high-growth sectorsare propelling the Rajhans Group,which is growing at a compoundedannual rate of about 30 per cent inthe past few years. The new confec-tionery business, meanwhile, hashuge potential to multiply Rajhans'fortunes. Mr Desai is rather upbeaton the new business, which he be-lieves will turn Rajhans into a house-hold brand across the country.

"Our chocolates will occupyshelves of the country's major retailoutlets in 90 days of operation. Weare targeting Rs 500 crore of revenuein the very first year," stresses MrDesai. It is no doubt a high-stakesgamble for Mr Desai as he pitsRajhans against the likes of Cadbury.But if his chocolate gamble pays off,Rajhans could possibly hit the sweetspot in the next few years.

"Our new chocolate venture,Rajhans Nutriments, with thebest global benchmarks, willdrive the group to greaterheights."

PANKAJ JAINDIRECTOR, RAJHANS NUTRIMENTS

"We are ready with a slew ofstrategies to take onestablished multinationalcompanies and revolutionise theIndian chocolate market."

SHUBHRA KALLANIMARKETING HEAD, RAJHANS NUTRIMENTS

"Quality of chocolates will play avital role in establishing ourbrand. We are travelling acrossthe world to churn out the bestquality products."

ZANKHNA DESAIPROJECT COORDINATOR, RAJHANS NUTRIMENTS

ors Foundation, an internationalthink-tank on urban affairs, rankedSurat fourth in a recent global studyof the world's 50 fastest-developingcities.

Surat apart, Rajhans is now ex-panding its activities across Guajratand the rest of India. The group's re-alty business, quite unlike its peersthat are bruised by bearish senti-ments, is growing at a quick pace."There can be no slump if you are intoquality construction at good loca-tions," adds Mr Desai. In fact, herightly chose tier-II cities beforeembarking on projects in big metrosand the strategy is certainly payingoff.

The group is also foraying intohospitality with a chain of boutiquehotels planned across pilgrimagecentres, hill stations and businesshubs. It has short-listed Shirdi,Mahabaleshwar, Goa, Udaipur andVaishnodevi in the first stage of de-velopment. In fact, work on boutiquehotels in Shirdi and Vaishnodevi isset to commence pretty soon.

Rajhans' entertainment sector toohas always focused on tier-II-cities,something that big multiplex chainslike PVR and Big Cinemas are warm-