SRS Group: How Anil Jindal built his Rs 5000 cr empire with a seed capital of Rs 10 lakh
Tapping emerging trends at the right time has helped Anil Jindal create a Rs 5,000 crore SRS group.
As a school student, I used to deliver milk in the neighbourhood, and in college, I took tuition classes. Needless to say, I had a strong entrepreneurial streak right from the start. After bagging a commerce degree in 1984, I was absorbed by my alma mater, Aggarwal College, Ballabgarh, in Faridabad, as an accounts lecturer. However, I wasn't too excited by the prospect of continuing with the job and decided to move on after just a year.
In 1985, I started a financial services business, which was effectively the foundation for the SRS Group. I put in Rs10 lakh, which came from the accruals in my tuition business. The economy had just entered a new phase of growth and consumption-led spending was on the rise. I spotted an opportunity and started extending financing for two- and three-wheelers, television sets and, later, for cars. I initially hired 14 people, and together we managed a turnover of Rs 45 lakh in the first year of operations.
Over the next 12 years, we enjoyed success in this vertical despite the market attracting several new players. Expectedly, the market soon became extremely crowded and fragmented. With the bigger brands flexing their muscles for an increasing market share, the industry began to witness an unhealthy competition and rising default rates. As a result, our internal rate of return fell beyond our comfort level. Hence, by the turn of the millennium, we had started looking at fresh growth avenues. We studied the emerging market dynamics, consumer trends, as well as shopping and lifestyle trends, and tried to sniff out the areas we could successfully tap. We even visited the international markets and finally decided to step into the lifestyle segment as it was in line with the emerging trend of westernisation sweeping the country.
The first step was the incorporation of the SRS Group in 2000. We then built the SRS Mallin Faridabad, and with that our sub-brands—SRS Cinemas, SRS Value Bazaar, SRS 7dayzand SRS Jewells— came into being. Since then, we have added more stores and geographies to our list. The period between 2004 and 2008 was a good time for the economy, and by extension, for us as well. A key rationale for starting these varied, though linked, businesses was to leverage the synergies in terms of brand building, marketing, operations, costs and visibility. This also enabled us to cross-sell our various offerings.
However, launching SRS as a brand and foraying into so many verticals so rapidly proved to be a challenge. It was a new domain, and while we were propelled by our passion and vision, we had nothing to fall back on in terms of experience or a foreign partner. To add to our woes, there were plenty of doomsayers—when we purchased the land for SRS Mall from HUDA, we were told that we had made a huge mistake by paying an exorbitant price for it. We were vindicated when the surrounding land was sold at a higher price about a year later.
Though we had the early-mover advantage, there were several teething problems. For instance, it was difficult to find trained manpower to manage the stores. So we hired the best we could and focused on developing fresh resources by training them, though it took time and we had to confront rampant poaching. Creating a strong brand was another issue. Despite the corporate brand, SRS, and our sub-brands, we did not have enough money for brand building and promotion. So we adopted the umbrella brand strategy, with SRS as the mother brand to build and nurture all our brands in a more cohesive, efficient and cost-effective manner.
The biggest challenge, however, was aligning consumer habits. Before organised retail, people would buy everything from mom & pop stores. Graduating them to modern outlets, with better choice, comfort, hygiene and transparency, was a tough task since they felt they would not get the best deals at our 'expensive looking' stores. So, we popularised our value offerings through extensive promotions and bargains—free movie tickets with stipulated shopping value, home delivery, etc. We then worked on creating regular consumers and promoted our other offerings to enhance their franchise.
In 1985, I started a financial services business, which was effectively the foundation for the SRS Group. I put in Rs10 lakh, which came from the accruals in my tuition business. The economy had just entered a new phase of growth and consumption-led spending was on the rise. I spotted an opportunity and started extending financing for two- and three-wheelers, television sets and, later, for cars. I initially hired 14 people, and together we managed a turnover of Rs 45 lakh in the first year of operations.
Over the next 12 years, we enjoyed success in this vertical despite the market attracting several new players. Expectedly, the market soon became extremely crowded and fragmented. With the bigger brands flexing their muscles for an increasing market share, the industry began to witness an unhealthy competition and rising default rates. As a result, our internal rate of return fell beyond our comfort level. Hence, by the turn of the millennium, we had started looking at fresh growth avenues. We studied the emerging market dynamics, consumer trends, as well as shopping and lifestyle trends, and tried to sniff out the areas we could successfully tap. We even visited the international markets and finally decided to step into the lifestyle segment as it was in line with the emerging trend of westernisation sweeping the country.
The first step was the incorporation of the SRS Group in 2000. We then built the SRS Mallin Faridabad, and with that our sub-brands—SRS Cinemas, SRS Value Bazaar, SRS 7dayzand SRS Jewells— came into being. Since then, we have added more stores and geographies to our list. The period between 2004 and 2008 was a good time for the economy, and by extension, for us as well. A key rationale for starting these varied, though linked, businesses was to leverage the synergies in terms of brand building, marketing, operations, costs and visibility. This also enabled us to cross-sell our various offerings.
However, launching SRS as a brand and foraying into so many verticals so rapidly proved to be a challenge. It was a new domain, and while we were propelled by our passion and vision, we had nothing to fall back on in terms of experience or a foreign partner. To add to our woes, there were plenty of doomsayers—when we purchased the land for SRS Mall from HUDA, we were told that we had made a huge mistake by paying an exorbitant price for it. We were vindicated when the surrounding land was sold at a higher price about a year later.
Though we had the early-mover advantage, there were several teething problems. For instance, it was difficult to find trained manpower to manage the stores. So we hired the best we could and focused on developing fresh resources by training them, though it took time and we had to confront rampant poaching. Creating a strong brand was another issue. Despite the corporate brand, SRS, and our sub-brands, we did not have enough money for brand building and promotion. So we adopted the umbrella brand strategy, with SRS as the mother brand to build and nurture all our brands in a more cohesive, efficient and cost-effective manner.
The biggest challenge, however, was aligning consumer habits. Before organised retail, people would buy everything from mom & pop stores. Graduating them to modern outlets, with better choice, comfort, hygiene and transparency, was a tough task since they felt they would not get the best deals at our 'expensive looking' stores. So, we popularised our value offerings through extensive promotions and bargains—free movie tickets with stipulated shopping value, home delivery, etc. We then worked on creating regular consumers and promoted our other offerings to enhance their franchise.
Our sincerity and good intentions paid off, bringing us the opportunities and resources we needed to grow. We have also tried to keep abreast of our consumers' needs as well as the markets, which has worked well for us. Our focus on tier II and tier III cities has also been rewarding since it has given us the first-mover advantage, which, in turn, has translated into benefits like higher brand equity and shorter break-even period, besides optimising the cost structure.
Today, we are a Rs 5,000 crore brand, employing 2,500 people. Our financials are healthy and we are confident that this will help us scale up to the next level with ease. Our future plans include adding to our existing list of stores and outlets to reach new geographies and new customers, with a stronger focus on international markets. We will, however, continue to concentrate on superior consumer experience and quality offerings, and hope that the revenue and profitability will be a natural by-product of this philosophy.
(As told to Sanjeev Sinha)
Today, we are a Rs 5,000 crore brand, employing 2,500 people. Our financials are healthy and we are confident that this will help us scale up to the next level with ease. Our future plans include adding to our existing list of stores and outlets to reach new geographies and new customers, with a stronger focus on international markets. We will, however, continue to concentrate on superior consumer experience and quality offerings, and hope that the revenue and profitability will be a natural by-product of this philosophy.
(As told to Sanjeev Sinha)
Source : By ET Bureau
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