Manjilas Looks for Expansion, Plans to Raise PE Funding

Kochi: Two years ago, when Destination Kerala featured Sajive Manjila of the Manjilas Group on the cover, the company was undergoing a major transformation from a family-run business to a family-controlled firm by separating ownership and management.

When we met Sajive earlier this month at the firm’s corporate office at Nellikkunnu in Thrissur for an interview, the veteran entrepreneur had something really important to share with us.

“Discussions are in the final stages to raise private equity (PE) funding. We have identified four firms and will select one shortly,” said Sajive. “We are planning to raise about Rs. 150 crore. The capital will be mainly utilised for expansion purposes. Besides, we are also planning to launch some new products. A part of the funding will be used for strengthening the supply and marketing operations of the company. If things go as per plan, we will be able to receive the fund within the next few months. I believe the company would be able to absorb the fund completely in three years. We have recently hired independent directors and consultants, who are presently supervising the entire process,” he added.

Manjilas was expecting its turn over to touch Rs. 550 crore in 2017. However, the impact of demonetisation and the implementation of GST on the businesses in general affected the company also. “The real turnover was slightly short of the amount which we predicted then. Following the implementation of GST, sales showed a dip last year. This year, our Onam sales were impacted due to the floods. But all these are temporary phenomena and we have the confidence to make a sharp recovery. With PE capital coming in, I believe we will be able to achieve the turnover target of Rs. 1000 crore by 2021-22,” Sajive informed.

Earlier, there were three limited companies – Manjilas Agro Foods (rice division), Q1 Foods and Ingredients Pvt. Ltd. (spices and rice flour division) and Manjilas Food Tech (ready-to-eat and extruded products division) – and one partnership firm – M O John & Sons Exports. The two limited companies and the partnership firm merged into Manjilas Food Tech. Post merger, the company has succeeded in streamlining marketing and distribution operations.

“As we combined the operations and avoided duplication, the employee strength reduced from 1650 to 1150. The decision was taken on the basis of recommendation from our consultant that employee strength was too high compared to the company’s turnover. Before merger, we had separate offices for many divisions. Some of them were working on rented premises. Now everything is under one roof. Even though we could not achieve the turnover target, the streamlining of operations helped us record a better margin as we were able to cut down unnecessary costs,” he added.

On the production side, Manjilas has shortened the stocking period to just 15 days. “After an internal assessment, we found that even seven days stock is enough. We used to stock finished goods for 30 days. Actually, that was not necessary. The plan is to limit the stock period to seven days in the near future,” he said. Currently, the operations side of Manjilas has three divisions – Kerala, outside Kerala and export. “Firstly, we will entrust an agency to examine our marketing operations. As per its recommendation, we would like to bring more professionals to strengthen our marketing activities,” he said.

In the current fiscal, Manjilas has been focusing on reducing the price of products by eliminating all non-viable operations. “Till now, we only considered overall sales. We never examined if each sale was economical or not. We have identified that several ineffective sales are happening. Measures are being taken to wind up those operations and reduce the selling price to quote lesser than that of our main competitors. This will help customers get Double Horse products at a more affordable rate now,” he informed.

The company also did activity-based costing which revealed that certain products are being sold incurring losses. “At the same time, we found that some other products are giving us very good margins. Based on this, now we have to chalk out a marketing strategy,” he added.

Across Kerala, Manjilas is covering less than 13,000 shops at present. “Roughly, there are around 60,000 shops in the State. This shows an immense potential for growth. We are now looking at engaging a professional agency to manage the logistics side of the business. Major manufacturing companies outsource their logistics. After production, they will collect the products, store in their warehouse and deliver to merchants as per our schedule. We have the option to track the delivery. So, moving forward, I feel we should also go for it,” he said. Sajive Manjila was recently in Sri Lanka as part of a trade delegation of Thrissur Chamber of Commerce and Industry and he visited Hayley’s Advantis, Sri Lanka’s leading logistics player.

For Manjilas, as of now, rice constitutes 40 per cent of the business. In future, rice business will come down to 25 per cent as more investments go to other segments. Rice products constitute around 50 per cent while masala is less than 10 per cent. Manjilas has its main manufacturing centre based in Pollachi with three production units. It has two processing units in Palakkad for rice. Manjilas is one among the three companies in Kerala which has rice mills approved by the USFDA.
Meanwhile, Manjilas had to defer its expansion plans in the ready-to-eat segment as the market is not yet ready.

“We had plans to invest in it. We even took a facility on lease in Kochi. But again, since the market was not receptive, we deferred the plan. People are mostly concerned ingredients and shelf life. For instance, ‘payasam’, one of our products, had a shelf life of one year. However, customers were skeptical. They believe that if ‘payasam’ should last for a year, it should contain chemicals. That’s a misconception. No chemicals are added to increase the shelf life of our ready-to-eat products. We do retort packaging. Here, the product is packed in a special pouch and processed at 1200C under high pressure (30 psi) which in turn neutralises all bacteria to achieve longer shelf life. Unless the pouch is opened, it will have a shelf life of one year. At present, people here are averse to the practice. But I think things will change in the near future,” he said.

Manjilas has major operations in Karnataka and Tamil Nadu as well. “Our approach has been to target the Malayali population in these regions. As part of our expansion plan, we will now enter Mumbai, Delhi and Kolkata markets. We are in the process of manufacturing products to cater to regional taste. However, the larger plan is to have a pan-India presence for which we need some common products, which will be accepted by people across the country,” he said. Sri Lanka is another market, which Manjilas is now trying to tap.