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Hungry for growth

Yusuf Begg | September 03, 2003

He does not see the south Indian restaurant chain Sarvana Bhavan as a threat to his Rs 16-crore (Rs 160 million) food business. And he wants a bigger share of the Rs 2,000-crore (Rs 20 billion) organised food sector pie.

Meet the 48-year-old Jayaram Banan, chairman & managing director, Sagar Ratna chain of restaurants. Anybody else not taking competition from a bigger player with major expansion plans seriously, may have sounded cocky.

But if Sagar Ratna's rival Sarvana Bhavan is growing in Delhi and setting up outlets in Jaipur and Agra, Banan too has put on his thinking cap and shored up his business plans.

Take a look at his business blueprint. In April this year he floated the Sagar Ratna Pvt Ltd to streamline the working of the 14 outlets that he owns together with the seven franchisees (which, incidentally, are all located outside Delhi).

Very soon he will appoint a CEO in an effort to corporatise his business.

"We've already zeroed in on the professional and just the paperwork remains," he adds. The process to appoint key senior managers has also been set in motion.

Sagar Ratna's expansion plans are also impressive. In the next couple of weeks there will be outlets in Mumbai and Patiala, and by the year-end in Delhi's Connaught Place.

Talks are on to expand the chain overseas, in places like Dubai, Singapore and the US. The next couple of years may also see 10 more outlets of Swagath springing up across the country.

Swagath is Banan's non-vegetarian, multi-cuisine restaurant in Delhi that was launched to expand his customer base.

Commenting on his business plans, Banan says that the company is not looking at opening outlets every second month.

"For us it is important to see if we can provide the service. For the Sagar Ratna chain, service is the USP," he adds.

Way back in 1994 he introduced north Indian vegetarian cuisine in his Sagar restaurants, which, till then, were primarily known as south Indian eating joints. (The first Sagar restaurant opened in 1986).

"We don't want to be labelled as a regional restaurant. We continue serving genuine south Indian food. Our aim is to become a chain where a family with varied tastes can eat what each of its member wants," explains Banan.

Opening up more outlets is not the only way to stay ahead in business. Sagar Ratna has grandiose plans to increase its product range.

Currently, the restaurant sells namkeens and an assortment of ready mixes.

"We'll take on Haldiram's in the snacks business," says a confident Banan. Land has already been acquired in the Noida area to set up a factory to mass produce snacks.

"We'll mechanise production and packaging and will be able to deliver healthy, hygienic food," promises Banan. Also in the pipeline is establishing a hotel management institute. "We need trained people to handle our production and related work," he says.

"We want to have a set up where we would cut down our dependence on outside resources." All these measures, hopes Banan, will add to the company's turnover.

Last year, Swagath added Rs 2.57 crore (Rs 25.7 million) to Sagar Ratna's Rs 16- crore kitty.

However, while Swagath has already clocked sales worth Rs 1 crore (Rs 10 million) this year, Sagar Ratna expects to touch a turnover of Rs 18 crore (Rs 180 million).

Food industry experts, however, say that in order to grow and beat competition, Sagar Ratna must expand its operations and grow its brand nationally.

"A national presence is important for it to move ahead of competitors like Nirula's or Haldiram's," says Hemendra Mathur, senior manager, food and agri business at Rabo India.

He adds that Sagar Ratna's core competency is south Indian cuisine and the restaurant chain will always be known for it.

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