Paritosh Ladhani says that the company is looking to increase its capacity to 32,000 bottles per minute by next year, up from 22,000 currently
As SLMG Beverages, one of Coca-Cola’s anchor bottlers in India, is looking to invest USD 1 billion over the next five to six years to boost capacity and market positioning, the company is not yet prepared for an initial public offering (IPO). Paritosh Ladhani, Joint Managing Director of the company, notes that they are focused on growing the company’s top and bottom line.
In an interview with BW Retail World, Ladhani emphasised that the company is aiming to set up four to five more plants in the next five to six years. The Coca-Cola bottler is targeting Rs 20,000 crore in revenues during the same period, as it looks to end the current year on a high by clocking double-digit growth. Edited Excerpts:
As you have already notified a USD 1 billion multi-year investment program, what are the key immediate priorities for capital expenditure over the next 12 to 24 months?
We have just finished our investment in Bihar, which is about Rs 1,200 crore. We have started the groundbreaking for Gorakhpur. The Chief Minister was there at the groundbreaking ceremony. These two are roughly Rs 2,000 crore. We have already invested or plan to invest this year and next year. We are investing Rs 200 to 300 crore more in fleet management, new coolers and new warehouses in the market. Ideally, we should set up four to five more plants in the next five to six years.
With rising demand for low-sugar, functional, and regional-flavour beverages, how is SLMG aligning its portfolio and bottling strategy to cater to these changing preferences?
We are a complete portfolio company. We have Diet Coke and we are also into Sprite Zero. We cater to every consumer. We have brands like Rimzim, which is a jeera-flavour aerated drink. We have Schweppes as a sparkling water and tonic water and ginger ale. We have products for everything.
The new players are going to come and challenge us. It depends on how sustainable they are. We have been sustainable in the business for the last 32 years in India and for over 137 years in the world. It is a great place to be in. The new entrants challenge us more. We become more aware when the competition is always good. It keeps you on your toes.
You have hinted at a potential IPO in the past. What milestones must SLMG achieve before you feel ready to go public, and what would be the primary objective of the listing?
It is always good to go public. Our gross turnover would be about Rs 8,500 crore this year in beverages. When we reach USD 2 billion, which we are gunning for in the next five years, we will be valued more. The good thing about IPO in a growing market is that every year you postpone your IPO, your valuation will go up more if you are growing.
We are not prepared for it right now. It requires a lot of preparation. And it is good also that we are focused on growing our top line and bottom line and investing in the business. The more we do that, the better value we will get. It will take some time.
The company has set ambitious revenue targets of Rs 20,000 crore in the next five to six years. What key growth levers will drive you to those milestones?
The per capita consumption (PCC) of our markets is still very low, as it is only 30. The markets like Punjab and Haryana have got PCCs above 60 to 70. First, we can touch there. We do not need to do anything different from what we are doing. We have to keep on providing the best products to the consumers, investing in the market in terms of coolers, right distribution and best tasting products. People should be able to drink ice-cold Thumbs Up or ice-cold Maaza at arm’s reach.
We just do not need to do anything different. We just need to stick to our strengths and do the most basic things. Sell with a lot of enthusiasm and ensure that the products are quality products like we always have.
Since you are expanding heavily in UP and Bihar, how do you see the consumption and route to market dynamics shaping in these particular markets?
Talking about UP, we have one of the best expressways, in-load systems that have helped us a lot in reaching the remotest of villages. We are at a seven and a half lakh outlet penetration in UP and Bihar. We have more than 2,200 distributors in UP and more than 4,000 sub-distributors. Every year, we expand our distribution by about 10 per cent and we get a lot of support from the infrastructure development, which is going on in UP.
There is also a continuous supply of electricity, that has helped our trade a lot. So the more UP grows, the more opportunity it gives us. As the infrastructure it grows, the more opportunities it gives us to expand our penetration in the market.
