Chandubhai ViraniThe man behind the success of Balaji Group Published On: Thursday, February 12, 2015 Views 22013

About Chandubhai Virani

Chandubhai Virani was born on the 31st of January, 1957 to a farmer named Popatbhai Virani in a small village of 2000 residents named Dhun-Dhoraji in Jamnagar, Gujarat. His family consists of three brothers – Bhikhubhai, Kanubhai and Meghjibhai and has two children.

Chandubhai is considered to be a very down to earth person amongst the brothers and prefers to lead a simple life with a low profile. One may often find him wearing a simple white & green checked shirt to his office, where the walls are covered with pictures of his father, his gurus, Swami Vivekananda and a statue of Lord Hanuman with a background depicting the bridge which the vaanar sena (army of monkey’s) had built to take Lord Shri Ram to Lanka.

Chandubhai prefers spending time in the middle of Nature’s beauty which often begins and ends at their farmhouse. For the same reason; he also is often seen organizing business cum pleasure trips. Internationally, he loves American deserts, valley and jungles. Other than that; his likes include;

#          Reading literature related to agriculture

#          Eating home-cooked food with his favorite cuisines being Kathiawadi food

#          Although, he doesn’t particularly have any fancy for cars but as a family they owns all types of expensive cars like Innova, Mercedes, BMW, Skoda and many more.

Early Life

His story dates back to 1972! Rains were scarce and farming was becoming tougher with every passing day. Looking at the worsening conditions, his father sold of their ancestral agricultural land and gave INR 20,000 to the brothers and asked them to go and do business with it.

They migrated to Rajkot and as they belonged from an agricultural background, they decided to start a business of fertilizers and farm implements. Unfortunately due to lack of knowledge and experience; someone supplied them duplicate fertilizers and they lost all their money!

With high hopes but with zero options left in hand, Chandubhai at the mere age of 17 along with Bhikhubhai began selling refreshments in Rajkot’s Astron Cinema. From ticket counter to doorkeeper, they managed every department religiously and worked tirelessly!

Looking at their commendable efforts; Govindbhai – the cinema owner, handed over the canteen to them on contract basis in 1976.

And from here onwards, began their journey to success!

Balaji Group

Balaji Group based in Rajkot, Gujarat, India; is one of the leading manufacturers and distributors of potato chips and other grain-based packaged snacks such as Plain-Wafers, Kela-Mari-Wafers, Masala-Wafers, Simply-Salted-Wafers, Tomato-Wafers, Aloo-Sev, Chanal-Dal, Gathiya, Khatta-Mitha-Mix, Moong-Dal, and many more! Started as a micro business, it has evolved into a Multi Million Dollar Company of quality products with an indigenous taste.

Before they officially began Balaji Wafers; for six years or till 1982 they ran the canteen, after which they decided to make this their core business and invested around INR 20,000 in it.

They started serving wafers which was sourced from the only supplier in Rajkot along with home-made toasted sandwiches by their wives. They realized that Potato wafers was accounting for major sales of the refreshments – 80% to be precise, but sadly the supplier wasn’t able to meet the demands; hence, without further ado they began producing wafers at home as well.

Till 1989, wafers were made at Virani residence and were being distributed in and around Rajkot city. But due to demands increasing massively, in the year 1989; for the first time Balaji Wafers invested INR 5 lakhs and took their biggest leap by setting up a plant in Aji, ‘Gujarat Industrial Development Corporation’s’ industrial estate better known as ‘GIDC’ in Rajkot.

Subsequently, in 1995-96 another plant was instilled too! But this time Chandubhai keeping the future in mind installed a more technologically advanced semi-automatic plant with a capacity of 250 kg of potato chips per hour.

But within a couple of years; demand began exceeding the supply again, even when the plant was running on full capacity. Hence, a desperate need of better technology arose and in 1999 Balaji Wafers installed Gujarat’s first fully automated potato chips plant which was followed by another one in 2003-04 in Vajdi district with a capacity of 1,200 kg per hour.

The sales grew so quickly that by 2006, Balaji captured a 90% share of the potato chips market in Gujarat, and a 70% share of the namkeen category. Besides that the markets in Maharashtra and Rajasthan continued to grow rapidly too!

Highly motivated with the fast growth; Chandubhai or should we say Balaji Group in 2008 set up yet another plant in Valsad which had a processing capacity of 8,000 kg of potatoes per hour and producing 2,000 kg of potato chips per hour.

Balaji Group’s Valsad plant is considered to be one of the largest potato chips-making units in Asia and as a matter of fact the entire plant has been sourced from USA, Australia, Netherlands, Germany, Japan and China.

After so many years, today they have manufacturing units in Rajkot and Valsad which in a combined capacity produce 3,400 kg of chips per hour.

As a whole; Balaji Group processes around 450,000 kg of potatoes per day and 400,000 kg of namkeens per day. They have a network of 550 distributors and its products are sold across 400,000 retail outlets across India.

To run the whole show, they also generate direct and indirect employment for 250,000 people. And in a rare scenario; 70% of Balaji’s workforce comprises of women.

Balaji Group is truly a unique company where each member is treated like a family member, they get full meal at just INR 10 and is also known for standing by its employees in times of their needs.

‘Value for money’ – a motto that the company has adopted to ensure affordability across its consumers, sells namkeens at prices as low as INR 05 – INR 30.

As a whole; Balaji clearly dominates the market with its share of the local potato and vegetable chips that has grown to 13.7% in 2012, from 9.5% in 2008, whereas on the other hand, PepsiCo’s share has drastically fallen from 69.7% to 56.8%.

To add to that; with a share of 70% & 90%, the group also has a huge dominance in the western markets and Gujarat, respectively. And not only in Gujarat, but their products, which are as high as 60, are equally popular in Maharashtra, Rajasthan, Andhra Pradesh and Goa, too!

Other than that; Balaji group has also been in plans to raise funds worth INR 200-400 crores by selling not more than 15-20% stakes of the company for future expansion which includes setting up manufacturing plants. Using the investment; the company is also eyeing an entry into the northern and southern markets in the near future and for starters; they will be looking at strategic partnerships with the local players.

The group had hired Ernst and Young to find the best suited investors and around 15-20 investors have shown interest as well.

A lot of talks happened with some of biggest entities such as PepsiCo, Kellogg’s & Capital International Privet Equity Funds (CIPEF) but for various reasons the deal did not go through.

Due to such experiences; in 2014 the company dropped the idea of stakes sale and began its preparations for an IPO and may be raising roughly $400 crores from the equity markets.

And looking at their current turnover of over INR 1,200 crores with an expected rise of 25-30% in 2014-15 and a valuation of INR 4,000 crores; getting the desired funds should be a piece of cake for them.

TRIVIA

• The brothers had also tried to run a boarding and lodging for college students but that too failed miserably!

• “Balaji”, the name came into being because during their cinema canteen days, they used to keep an idol of Lord Balaji which later got transformed into a small temple. This is how the God’s name got associated with the product.

• There is a big Gaushala in their Kalavad road factory where 200-300 cows are taken care of.

• Balaji Group also has a joint venture between Balaji Wafers, ISCON Group and SP Chips Potato Pvt. Ltd is the manufacturer of potato flakes near Boriavi a small village in Gujarat. It holds a plant with a capacity to manufacture 1200 kilos of potato flakes and caters primarily to suave consumers.

• Every day, school or college students visit the plant where they are shown a film on the success story of Balaji and also get a chance to interact with Chandubhai himself.

Achievements

• Economic Times has acknowledged Balaji Group as the ‘Sultan of Wafers’
• International magazine – Asia Pacific food online published a special article with ‘Chip Off the Old Block’
• Balaji Group since long is a respected member of ‘Snacks Food Association’.

End Note

From a small wafer business which started in a canteen of small theater with one tawa, to making INR 2.4 lakhs in the first year’s revenues and finally becoming an INR 4,000 crore company; Chandubhai’s Balaji has come a long way.

Many, initially used to mock his wafer venture and now shockingly wonder the reason behind his supreme success.

But what many don’t see is the fact that their success is dependent on their knowledge, experience and most importantly their failures! Because they fell so badly and so many times that eventually they began to learn things, to do it themselves.

They exactly knew how many ingredients like spices, potatoes, etc. go into its making, to get its indigenous taste which is its specialty. Due to their cautiousness, extreme care was taken on minute things like quantity of oil used in the product, to the most important things like hygiene level. And because they are also sensitive about what the new generation wants, they have maintained the health consciousness of the products, which is why they have received popularity amongst the new generation too!

Other than that; Bhikhabhai’s son Keyur Virani is an engineer who has successfully modernized the Rajkot and Valsad plants. And now; the Valsad plant is in process to go for total automation for which new machinery has been bought from Australia, Japan, Germany and America. Thus cutting costs and time consumption massively!

Hence; when you combine all these factors to the overall picture, you get a successful Balaji Wafers Group!