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Checking in for growth

Soumik Sen | December 20, 2003

Ashok Malhotra has had his share of misfortune. At 13, when his classmates were busy buying school uniforms and text books for the next term, he was forced to drop out of school and start working in a Jallandhar bookshop.

Today, the class eight dropout, has just opened the first five-star luxury hotel in Noida, the fast-growing Delhi suburb.

Malhotra, the chairman and managing director, of the MBD Group, is also looking at aggressive expansion in the book industry, in which he is a key player.

The hotel in Noida is proof, if it were needed, that the Rs 120 crore (Rs 1.2 billion) MBD is serious about its venture into the hospitality industry.

Last year MBD took over the Ashok Group's airport hotel in Kolkata. It has now been renamed the MBD Airport Hotel. The foray into hospitality is managed by Malhotra's two daughters, Monica and Sonica.

Isn't it a big move from books to selling hotel rooms? Malhotra insists that he has always been interested in the hotel industry.

What's more, he and his daughters spotted an opportunity even though the travel business was in the doldrums last year when they clinched the deal to buy the Kolkata hotel.

Now they've spent Rs 55 crore (Rs 550 million) on the Noida hotel but reckon that it will bring good returns. The hotel has been designed by Bangkok-based design house P49.

Says Malhotra: "When we started the hotel the hospitality industry wasn't looking very healthy, but by God's grace, by the time we opened, the sector has hit a new high."

Despite the massive investment, the daughters are confident that the Noida hotel will break even by April. "A deluxe business hotel that is very trendy and fashionable was what Noida needed urgently," says Sonica.

"Also there was the dire need to cater to the corporates which have their factories and offices here," she adds.

There are bigger plans for the future. The group will set up two more hotels -- in Ludhiana and Jallandhar -- in the next two years. Besides that, Malhotra would also like to make a foray into healthcare and start a hospital.

But Malhotra isn't neglecting the publishing industry where he made his millions. He's looking at ways of printing in India and selling abroad in a big way.

MBD's children's book division -- Holy Faith International -- is agressively eyeing the European market. MBD has applied for RBI permission to open an overseas subsidiary.

Once the permission comes through, it plans to buy rights to publish around 20 medical and IT titles. These will be printed in India and sold abroad.

Malhotra reckons that revenues in the publishing business will grow at 20 per cent. "The cost of publishing there is quite high - what they sell for around euro 50, can easily be sold for Rs 100 by us," he says.

There are other plans on the anvil. "Children's book sales are booming the world over and we will be looking at launching education titles and comics for the domestic and international market," says Malhotra.

Malhotra has travelled a long distance during his 45-year career. MBD started as a single publication publishing house and today it sells books in every Indian language, in India as well as abroad.

It was in 1965, that his first publication, Gyani Guide, was born. "I was around 19 then, when I went to a publisher's office at noon, and saw the frenetic activity -- it was enough to convince me that the business I really wanted to be in was publishing," he says.

So, he completed his matriculation and graduation, through correspondence, and proceeded to get into the business.

Punjab University had then, just introduced a course on general administration. Malhotra saw this as an opportunity and wrote a simpler book for students in five days. The book reached the market in another five days and sold more than 10,000 copies -- a hit in the publishing world, by any standards.

Understanding the need to internalise production, as much as possible, to increase cost effectiveness, Malhotra realised the need to have his own printing press. And at the age of 26, he acquired a press for Rs 22,000 in Ludhiana.

"When I went for a printing and publishing exhibition the next year, I realised the urgent need of setting up a base in the national capital, to expand the business," he says.

So, the first MBD book shop came up at Nayi Sadak, and then in 1986, he proceeded to open the first printing press here.

Today, MBD has 26 branch offices across the country and export offices in Canada and the Gulf countries. It employs more than 1,500 people, has four printing presses and even a paper mill at Palwar.

Says Malhotra: "I reckoned that if the entire publishing work -- from paper sourcing to the final stage of distribution can be done under the MBD banner -- we'll be able to be cost efficient and provide better value to the customer."

MBD's core area is still educational books. The company has published over 5,000-plus titles in more than 25 languages, and also brings out two magazines -- Democratic World, for politicial affairs students and Education Today, a career magazine.

"Educational books are a necessity, especially in India," he says," and the segment has tremendous growth opportunities, as literacy continues to pick up."

Can MBD make it in an entirely new field? It believes that the BPO, auto and consumer electronics majors, which have offices in Noida will be their first customers.

Also, the Noida Toll Bridge has halved the time from the airport to the hotel. So the Malhotras reckon that their unusual combination of books and hotels will both thrive for the foreseeable future.

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