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Excerpts from IIFL’s interview
with M B Parekh, MD, Pidilite Industries
A generation of Indians has been charmed by TV and print
advertisements of the white-glue brand Fevicol. M B Parekh is at the
helm of affairs of the consumer specialty-chemicals company Pidilite,
which owns and markets Fevicol. From an industrial-pigments player
to a consumer company with multiple top-of-the-mind brands, it’s
been a long and fulfilling journey.
The genial Mr Parekh completed his graduation in chemical
engineering from UDCT Mumbai, and went on to study for an MS in
the same subject from the US. He then worked for two years in
Medlabs near Chicago before coming back and joining his father B K
Parekh’s business.
Since then, he has driven Pidilite’s business on one key guideline:
me-too products are a bad idea for any sustainable business in the
crowded consumer-product segment. Starting at a time when his
competition in pigment dispersion products were MNCs and white
glue was not used in India, Pidilite has chosen to pave its own path.
Not that this serial innovation has been sustained without its share
of pain. A number of product ideas either languished on the drawing
board, or failed to sell in volumes. But this has not swayed Mr
Parekh from his commitment to nurturing nascent product ideas.
Mr Parekh is today spearheading a management transformation in
Pidilite. He is now busy grooming new managers and leaders to hand
over the baton.
You started as a company making white glues, industrial
chemicals and consumer specialty chemicals. Was this part of
your early vision?
We work in an iterative manner while holding true to our unique way
of doing things and our core values. Most of our segments have a
unifying theme, or focus on the kaarigar (artisan) community, which
included carpenters, masons, electricians, plumbers, etc. We have
always tried to add value to this set of key influencers in the
purchase decision. From the early days of Fevicol adhesives (more
than 30 years ago) we mailed them furniture design books. Today it
is a standard material that carpenters rely on all over the country.
You are currently one of the largest consumer specialtychemicals
players in India. Where do you see this business
five years from now?
As the economy develops, we keep focussing on allied areas with
high growth potential which can bear fruit after a few years of effort.
For example, we started the construction chemicals business almost
15 years ago, and for a few years we were not sure if this will take
off. This business made no money for the first ten years, but we
continued to put in focussed effort. We did the hard yards of
educating customers about our 150 products. We now think the
future in this business is bright, as threshold volume levels have
been surpassed and growth rates are very robust. Five years down
the line, this business could form a fairly big component of Pidilite’s
overall revenues, and emerge as a key growth driver.
There is another very strong product range—the industrial
maintenance business. Just as we have products like M-Seal and
Fevikwik in consumer maintenance, there are a range of products
possible for industrial maintenance too. These products have
enormous potential, given the thousands of small companies across
the country. Industrial maintenance is more a sundry retail sort of
business that is not in the B2B mould at all. This business runs
through distributors who are located in industrial areas and sell to a
large number of small units. It falls under the umbrella of MRO
(maintenance repair overall), covering both industrial and
automotive. We acquired a company called Cyclo in the US—an old
brand but a very small company—with no significant presence in the
US, but selling to 40-50 countries from there, with annual revenues
of US$12m–14m. This business, targeting the automotive
aftermarket segment, can now also come under the MRO umbrella.
Thirdly, we have launched the Hobby Ideas retail store chain—a pilot
project to assess the segment’s potential, including that in overseas
markets.
In short, a number of business that are now small, could grow
substantially 5–10 years down the line, and keep our growth
momentum going.
What are your thoughts on inorganic growth options? How do
you assess the suitability of potential takeover targets?
We are not keen on acquisition for the sake of numbers. Unlike some
companies who use acquisitions as one of the means to meet their
revenue or volume targets, we have no compelling need to go for big
acquisitions for the sake of numbers. If there is a good opportunity
to make meaningful progress in some segment or geography, we
would be open to it, but not for the sake of delivering inflated
numbers.
Among the many initiatives that you have undertaken, what
would you call your biggest mistake?
There have been many mistakes, but more importantly, they were
learning opportunities. We are generally shy of spelling out
projections like five-year targets. That makes it much easier for us to
accept mistakes, which are inevitable when you try new things.
When we make an endeavour, we are fully aware that we need to be
able to accept failure and modify or pull back. When I said we work
iteratively, I meant that many such small efforts are ongoing; we
avoid big leaps of faith.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Excerpts from IIFL’s interview
with M B Parekh, MD, Pidilite Industries
A generation of Indians has been charmed by TV and print
advertisements of the white-glue brand Fevicol. M B Parekh is at the
helm of affairs of the consumer specialty-chemicals company Pidilite,
which owns and markets Fevicol. From an industrial-pigments player
to a consumer company with multiple top-of-the-mind brands, it’s
been a long and fulfilling journey.
The genial Mr Parekh completed his graduation in chemical
engineering from UDCT Mumbai, and went on to study for an MS in
the same subject from the US. He then worked for two years in
Medlabs near Chicago before coming back and joining his father B K
Parekh’s business.
Since then, he has driven Pidilite’s business on one key guideline:
me-too products are a bad idea for any sustainable business in the
crowded consumer-product segment. Starting at a time when his
competition in pigment dispersion products were MNCs and white
glue was not used in India, Pidilite has chosen to pave its own path.
Not that this serial innovation has been sustained without its share
of pain. A number of product ideas either languished on the drawing
board, or failed to sell in volumes. But this has not swayed Mr
Parekh from his commitment to nurturing nascent product ideas.
Mr Parekh is today spearheading a management transformation in
Pidilite. He is now busy grooming new managers and leaders to hand
over the baton.
You started as a company making white glues, industrial
chemicals and consumer specialty chemicals. Was this part of
your early vision?
We work in an iterative manner while holding true to our unique way
of doing things and our core values. Most of our segments have a
unifying theme, or focus on the kaarigar (artisan) community, which
included carpenters, masons, electricians, plumbers, etc. We have
always tried to add value to this set of key influencers in the
purchase decision. From the early days of Fevicol adhesives (more
than 30 years ago) we mailed them furniture design books. Today it
is a standard material that carpenters rely on all over the country.
You are currently one of the largest consumer specialtychemicals
players in India. Where do you see this business
five years from now?
As the economy develops, we keep focussing on allied areas with
high growth potential which can bear fruit after a few years of effort.
For example, we started the construction chemicals business almost
15 years ago, and for a few years we were not sure if this will take
off. This business made no money for the first ten years, but we
continued to put in focussed effort. We did the hard yards of
educating customers about our 150 products. We now think the
future in this business is bright, as threshold volume levels have
been surpassed and growth rates are very robust. Five years down
the line, this business could form a fairly big component of Pidilite’s
overall revenues, and emerge as a key growth driver.
There is another very strong product range—the industrial
maintenance business. Just as we have products like M-Seal and
Fevikwik in consumer maintenance, there are a range of products
possible for industrial maintenance too. These products have
enormous potential, given the thousands of small companies across
the country. Industrial maintenance is more a sundry retail sort of
business that is not in the B2B mould at all. This business runs
through distributors who are located in industrial areas and sell to a
large number of small units. It falls under the umbrella of MRO
(maintenance repair overall), covering both industrial and
automotive. We acquired a company called Cyclo in the US—an old
brand but a very small company—with no significant presence in the
US, but selling to 40-50 countries from there, with annual revenues
of US$12m–14m. This business, targeting the automotive
aftermarket segment, can now also come under the MRO umbrella.
Thirdly, we have launched the Hobby Ideas retail store chain—a pilot
project to assess the segment’s potential, including that in overseas
markets.
In short, a number of business that are now small, could grow
substantially 5–10 years down the line, and keep our growth
momentum going.
What are your thoughts on inorganic growth options? How do
you assess the suitability of potential takeover targets?
We are not keen on acquisition for the sake of numbers. Unlike some
companies who use acquisitions as one of the means to meet their
revenue or volume targets, we have no compelling need to go for big
acquisitions for the sake of numbers. If there is a good opportunity
to make meaningful progress in some segment or geography, we
would be open to it, but not for the sake of delivering inflated
numbers.
Among the many initiatives that you have undertaken, what
would you call your biggest mistake?
There have been many mistakes, but more importantly, they were
learning opportunities. We are generally shy of spelling out
projections like five-year targets. That makes it much easier for us to
accept mistakes, which are inevitable when you try new things.
When we make an endeavour, we are fully aware that we need to be
able to accept failure and modify or pull back. When I said we work
iteratively, I meant that many such small efforts are ongoing; we
avoid big leaps of faith.
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