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This Singh is chicken king

August 18, 2008 08:38 IST

In July, Kanwar Deep Singh opened two mid-size eateries in New Delhi under the catchy name, Republic of Chicken, and completed a business loop none other has ever accomplished.

"We are the only integrated player in the whole world in the quick food service business," he said.

Chandigarh-based Singh, 48, grows maize through contract farmers and processes it into chicken feed at his mill, owns hatcheries and poultry farms, runs a chicken processing plant and now sells the produce through his own outlets - all in Punjab. Nothing in the entire chain from feed to chicken sausages, he said, comes from outside.

Just who is Singh? He is the promoter of two publicly-traded firms, Alchemist and Alchemist Realty. The first has interests in pharmaceuticals, steel, tea, floriculture and now foods - Republic of Chicken is a division.

Alchemist Realty has real estate assets worth Rs 7,000 crore (Rs 70 billion) at various locations in the North. He also has interests in hospitals, the media and aviation through closely-held companies.

And Singh believes in doing business in style. He travels in India and abroad in his own jets. A suite is booked for him round the year in a 5-star hotel in South Delhi. His two cellular phones and his black Mercedes parked at the hotel's portico all carry fancy numbers.

He is nattily dressed for our meeting and a gold watch dangles from his wrist. Like all other well-heeled men of our times, he has produced a bilingual film, Devaki, and has plans to set up an ayurveda village near Chandigarh.

But what he hopes will catapult him into the big league is his foods business. Singh may not be as big in the poultry business as Venkateswara Hatcheries, but his plans are no less ambitious.

The name, Republic of Chicken, came from McCann Erickson, which has also designed the promotional advertisements. In order to give it a distinct corporate identity, the agency has come up with a Republic of Chicken flag and anthem. The visiting cards of its executives look like arrowheads.

All told, Singh wants to set up 1,000 outlets - diners, takeaways and home deliveries - in the next two years at a cost of Rs 800 crore (Rs 8 billion). This money he plans to mobilise from Alchemist's internal accruals, debt and private equity.

To get private equity, Singh has set in motion plans to demerge Republic of Chicken into a new closely-held company. Alchemist shareholders may be compensated with some other group asset.

Singh expects each outlet to do annual business of around Rs 3 crore (Rs 30 million). "Cash break-even will happen within the first three months and we will recover our full investment in two-and-a-half years," he said.

The Delhi outlets, Republic of Chicken executives said, already rake in about Rs 60,000 daily each from about 180 diners. Takeaways add another sizeable sum to these numbers, they claim.

The margins, of course, are fat and healthy. While dressed chicken sells for Rs 75-80 per kg, frozen preparations can sell for upwards of Rs 300 per kg! Scalability of the business should not be an issue with Singh.

Analysts said only 7 per cent of the Rs 25,000-crore (RS 250 billion) chicken market is with organised players. As their prices are only 4-5 per cent above unorganised sellers, people like Singh are expected to grow rapidly.

Several businessmen find poultry and chicken a high-risk business. In the last few years, there have been several avian flu scares that have caused prices to plummet.

Still others wonder if Singh will be able to get enough real estate for the proposed 1,000 outlets or does he have enough management bandwidth to grow at this pace? "I started from scratch 27 years ago. People kept coming and the caravan only got stronger," Singh waxed philosophical.

He is also confident competition won't catch up with him in a hurry. "It will take anybody three to four years to build the infrastructure we have. That is a huge entry barrier for others," said Singh.

BS Reporter in New Delhi