The billion-dollar food and beverage firm, RJ Corp, is now set for a major expansion of its various business arms. RJ Corp chairman Ravi Jaipuria sees opportunity and growth at a time when industrialists and economists foresee India’s economy going in a slow-growth track. In an interview to FE’s Timsy Jaipuria and Ashish Sinha , he shares his plans for 2012. Excerpts:
How was 2011 for RJ Corp?
This year has also been good for our business across all divisions. We have seen 15-20% growth in our and restaurant business. The KFC business has even seen a 25% same-store sales growth and, of course, the soft drinks business continues to grow. However, with rising costs and food inflation, the margins have been under pressure, but, luckily, our top line is growing. Over all, volumes have grown by 40-45% and 2012 is looking even better.
In terms of numbers, can you share how you performed this year?
We would have done over R500-600 crore of business. Next year, we should do R1,000-crore business with aggressive growth expected from both beverages and food business.
We are also going to add more stores in 2012. This year, we have also invested in the business as well as made acquisitions. Next year, too, we will be investing heavily in the business.
With slowdown creeping in, do you see 2012 as a challenging year ahead for RJ Corp?
Next year will be a year of expansion for us. We are going to add 200-250 new stores, which include more Pizza Hut, KFC restaurants and Costa Coffee outlets. Next year, like 2011, we will be in the investment mode. Of our total expansion, we should add 100 stores each of Pizza Hut and Costa Coffee. We will be expanding in smaller towns.
I do not see slowdown impacting the food and beverage business. Even in 2008-09, we registered high growths when there was an overall slowdown.
How are you planning to fund your expansion?
So far, the funding is from internal accruals. This year, we must have invested R600-700 crore in the business with R350 crore going in for setting up Greenfield bottling plants ? one in Haryana and another in Assam. We have invested and expanded in Africa. We are in the process of doing internal restructuring, which should give us R150 crore. We are well funded for 2012. Our investments in 2012 will be similar to what we have invested in the business this year ? around R600-700 crore.
You had plans of going public in 2012. Does that still holds?
Yes, we are very much interested in listing Devyani International, which runs KFC, Pizza Hut and Costa Coffee chains in India. But this should happen during 2013. We would not list before Devyani International becomes a billion-dollar company. And we are looking at diluting a maximum of 10% when we list it. Yes, we did plan to get listed in 2012, but we have not touched a billion-dollar mark and, currently, if we opt for listing, then we will have to dilute up to 25% stake, which is not what we want.
What is the current valuation of Devyani International?
In May, the valuation was around R1,800 crore with ICICI Ventures picking up 10% stake. Since then, the business dynamics have changed a bit. So, I guess we should be valued at R2,500 crore now. So, in another 15-24 months, we aim to reach a market cap of $1 billion and that is when we will list Devyani International.
Apart from entering B- and C-category towns, which are the other growth points for you next year?
We are already in cities like Durgapur, Siliguri among others. We see good growth coming from Africa. We have recently ventured in Zimbabwe and Mozambique. 2012 will be more of a consolidation year. We might look at new territories in Africa itself like, say, South Africa.
