Destiny?s ways can be strange. It can make you do things you never would have imagined doing in the ordinary course of business. With B K Goenka, vice-chairman and managing director, Welspun group, destiny did play its part. It made him explore new avenues, plunge into areas he never would have. ?That?s life,? says the 48-year-old wistfully. ?You will always get what you are destined to.?
Hailing from a Marwari family that was into the export of foodgrains, one would have thought that Goenka would continue with the same trade. Quite to the contrary. Goenka did not show much inclination for his family business. He yearned to do something else. He says, ?I always wanted to do something different.?
This he did by getting into the textiles business in 1985, following it up with the manufacture of saw or submerged arc welded pipes, used for transporting oil and gas, in 1995, then steel and power generation in 2004, and now retail. Retail, in fact, is his newest baby, which he began a couple of years ago. It is spearheaded by his wife Dipali, who looks after Welhome and Spaces ? home textile stores that cater to the lower and upper ends of the market respectively. It?s a business Goenka is very excited about because it helps him get a foothold in the domestic market ? something he never quite did earlier ? since he was focused on exporting his products abroad. ?When I got into the manufacture of towels in early ?90s, the government was promoting export of textiles in a big way. It was an attractive business to get into.?
Goenka took full advantage of the incentives provided by the government to export oriented units (EOUs) and was quick to scale up production, even quicker to find new markets for his products. Currently, Welspun India is the largest terry towel maker in Asia and one of the top four producers in the world. It makes mostly bed and bath textiles, exporting them to some 32 countries. He supplies these products to some of the top retailers in the world earning much of his revenue from these places. He?s also made a few key acquisitions in recent years. These include the largest towel maker in the UK, Christy?s, and bath-rug maker Sorema in Portugal. He?s setting up a greenfield project in Mexico for decorative bedding and has a separate venture with Zucchi of Italy for the manufacture of bath robes. All of this means that his hands are literally full. But that?s one part.
The pace and scale with which he?s expanded his home textiles business has necessitated strategic focus on individual units, which is why Goenka recently announced the demerger of Welspun India. Its retail, international and investment businesses will be hived off into separate entities ? Welspun Global Brands Ltd and Welspun Investments Ltd. The home textiles manufacturing business, on the other hand, will be retained in Welspun India. ?There was need to impart this strategic focus to both marketing and manufacturing,? he says. ?Global Brands will essentially look at marketing and distribution of our products, while Welspun India will focus on the manufacturing bit. Both the companies are capable of running on their own steam. We will unlock value in the process.?
He intends listing the demerged entities by April next year. Welspun India, a listed company, on the other hand, will resume trading at the same time.
The demerger is likely to help Goenka devote his attention to the domestic marketplace even as he continues with his international operations. Almost 85-90% of the group?s revenues, for the record, come from exports, but Goenka realises he needs to tilt the skew a bit if has to take advantage of the growth in the local market. He says, ?There?s no point in getting into anything and everything. We have to be focused about what we are doing and be the best in it.?
One way Goenka realises he can do this is by increasing the turnover of his group quickly. He?s set ambitious targets for this, but that?s Goenka for you. He loves dreaming big. Says he, ?The textiles business is doing about $400 million in revenue at the moment. I am looking to take it to about $1 billion in two years. Saw pipes is doing about $2 billion currently. That should go up to about $3 billion in the same time. So put together, I am looking at about $4 billion in group revenues in about two years from now.?
The ease with which he gives out numbers belies the effort he has put in to set up his business. There were many ?hiccups?, but Goenka simply didn?t give up. Says he, ?I?ve seen good as well as bad times. But I was clear about one thing. I would not back out.?
And back out he didn?t, even if that meant sacrificing personal pleasure to put in those extra hours of work. It was required, he says, for his business to grow. In a sense, Goenka realised he had a thing or two to prove to himself before he did so to others. ?I was determined,? he reasoned.
And his instincts have not failed him yet, friends and family have come to realise. Getting into the manufacture of saw pipes is one such gamble he took. It?s a highly capital-intensive and technologically-driven business. Goenka was actually eyeing projects in infrastructure. He realised producing saw pipes had great prospects and plunged into it headlong. Ironically it?s not as easy as it sounds. Goenka had no domain knowledge or experience in the business. So breaking in would prove to be difficult, he knew. He was determined anyways. He got in, set up his enterprise and began exporting saw pipes. Today, Welspun Gujarat Stahl Rohren is clearly the money spinner for the group, supplying saw pipes to key oil and gas companies in the world. It has facilities in Dahej and Anjar in Gujarat. At Anjar , the company will be setting up a plate-cum-coil mill ? one of three of its kind in the world ? in the near future. It will also set up a spiral pipe-making facility in Arkansas, US. All of this will take the capacity of the company to 1.75 million tonne per annum by March 2009 from the current 1 million tonne per annum. ?I am quite satisfied with the way the saw pipes business has shaped up,? he says. ?But I rather not rest on my laurels. Because that will make me complacent.?
This desire to excel keeps him on his toes literally. Peers attribute Goenka?s success to his aggression, nimblefootedness and ability to spot opportunities quickly. Like, he has got into oil and gas exploration with the Adanis in a venture where his company has a 35% stake. He continues to scan the landscape for acquisitions even as he organically grows his various businesses.
In steel and power, for instance, Welspun recently acquired the sponge iron business of the Aditya Birla group for over Rs 1,000 crore. The acquisition clearly imparts scale to its sponge iron manufacturing business. Welspun, for the record, manufactures both sponge iron and steel products such TMT bars, ingots, billets etc. The acquisition gives it a ready raw material source since sponge iron is used to make steel, which, in turn, is used to make saw pipes. This kind of backward integration into raw materials is critical if Welspun has to secure its production downstream. Volatility in the price of commodities is not lost on Goenka. ?It?s important we secure ourselves against uncertainties,? he says.
This practical attitude is something, Goenka says, he?s picked up from his father Gopiram. ?He believed in common sense to take you a long way.?
He loves spending time with his family and is proud of his wife?s achievements as head of the retail arm of the group. ?She has the aptitude for it,? he says. ?If you ask me, nobody can get anybody into business. You have to have the desire and willingness to do it and demonstrate the ability. Before retail operations took off, she looked after the designing of our various products. She?s been able to take all these learnings into the retail venture.? With a pan-global business to manage, Goenka, has to keep his eye on the big picture. He says, ?We have people of different nationalities working with us. The challenge is to keep everything together.? Looking at the way Goenka has managed this far, the likelihood is he will in the future.
Fact File
* B K Goenka is vice-chairman & managing director, Welspun group
* Turnover: $3 billion
* Target: $4 billion by 2010
* Areas of operation: Textiles, retail, saw pipes, steel and power
* Has a focused approach to his businesses; aspires to be the best
* Aggressive in terms of both organic and inorganic growth