Food entrepreneur Sadananda Maiya, 66, still swears by the lessons he learnt over four decades ago in the kitchen of Mavalli Tiffin Rooms (MTR), the restaurant his father Parampalli Yajnanarayana Maiya and uncles started in 1924 in Bengaluru.
Forty-four years on, those learnings are the core of his latest venture, Maiyas Beverages and Foods, the packaged food company he founded in 2012. The firm is his second entrepreneurial venture; the first was MTR Foods, the packaged foods division of MTR, established in 1976. In 2007, Maiya was forced to sell MTR Foods to Norwegian conglomerate Orkla ASA. The terms of the sale restricted Maiya from competing in the same segment for five years. But for a man obsessed with the business of serving food, it was only natural that he would start his second innings from where he had left off.
Apart from the golden brown crisp dosas and moist idlis, Maiya also learnt the recipes for business success the hard way at MTR. “I cannot forget what I learnt at the onset of my career. The head cook, Narayana, at the MTR kitchen was 20 years my senior and one of the most regarded professional cooks in Bengaluru. He was trained by my father. He always carried a stick with which he used to hit me if I ever got a recipe wrong,” recalls Maiya, who entered the family restaurant business in 1971 immediately after completing his degree in electrical and electronics engineering from the BMS College of Engineering, Bengaluru.
For the next two years, Maiya worked as an assistant cook at the MTR restaurant located at Lalbagh Fort Road, a mecca for discerning Bengalureans who love their idli and sambar. It is here that Maiya perfected the distinctive taste of rasam and sambar as it is made in Udupi, a temple town in Karnataka which is also the Maiya family’s hometown. “I had to be present in the kitchen at 4.30 am. As a tradition, we had to perform a puja before the cooking began. The first dish to be cooked was sambar [a lentil-based stew with vegetables], followed by saagu masala [mixed vegetables] and other regular dishes. Around 6 am, we would start preparing the dosa batter,” says Maiya, who is no longer associated with MTR’s restaurant business after a family split in the mid-’90s. “The teaching helped me understand the basics of what goes into making good food.”
While Maiya was mastering the family’s culinary secrets, the mid-1970s marked a turning point in his career that laid the foundation for the packaged food business of the family-run restaurant. During 1975-77, when Emergency was declared in India by then Prime Minister Indira Gandhi, a Food Control Act was passed restricting the prices of food items sold at restaurants. The cap made it impossible for MTR to maintain quality standards.
“In 1976, we were selling an idli for 25 paise, but the government told us to sell it at 10 paise. Similarly, dosa had to be sold for 50 paise instead of the prevailing price of Rs 1.25. We ran the restaurant for 19 days and incurred a loss of approximately Rs 1 lakh. Finally, we had to shut shop in May 1976. Incidentally, we were the only restaurant in Karnataka which closed on this count as everyone else compromised on quality and quantity to sustain their business,” recounts Maiya. Even though the restaurant was shut for three months, its staff was paid and given food during that period, he says.
The need of the hour was diversification: MTR started selling packaged mixes, spice powders and chutneys from its restaurant premises on Lalbagh Fort Road. The new entity, MTR Foods, was spearheaded by Maiya. The firm started with rava idli and upma (made of roasted semolina or coarse rice flour) mixes followed by sambar and rasam masala powders; it had only four products till 1982. In the process, Maiya realised the market potential for instant food (mixes and powders) and started focusing on packaging and distribution.
MTR Foods started distribution in 1983 with 10 shops in Bengaluru to sell its mixes, masalas and powders. By 1984, there were about 12 items under the MTR Foods brand. In 1992, the manufacturing unit was shifted from the Lalbagh Fort Road premises to Bommasandra, an industrial suburb of the city.
Even as the MTR brand was growing, the Maiya family split the business among the second generation in 1994. Sadananda Maiya retained control of MTR Foods, the division he founded, while his cousin, Harishchandra Maiya, took over the restaurant business. Sadananda also entered into a trademark agreement with his cousin—Rs 1.5 crore was paid by him to Harishchandra for the MTR name. “In those days, a trademark was required for manufacturing businesses and not for running a restaurant,” says Maiya.
However, disagreements ensued, brought on by faulty legal documents which were riddled with inconsistencies. After his cousin’s demise in 1999, it was shown that Maiya still owed him approximately 50 percent of the trademark’s value, a claim he contested until 2007 when the compensation payable had escalated to a whopping Rs 24.3 crore.
The only way Maiya could raise the money to settle the claim was to sell MTR Foods, which he did in 2007 to Orkla for Rs 364 crore—more than double of MTR Foods’ revenue of Rs 164 crore.
Maiya continued as managing director of MTR Foods for one-and-a-half years post the takeover. “I had a five-year term, but after completing a year, I decided to leave. I realised that I cannot work under somebody, having been my own boss all this while,” says Maiya, whose relationship with MTR Foods has suffered ever since he launched Maiyas Beverages and Foods after the non-compete agreement expired in 2012. (MTR Foods refused to participate in this story.)
Maiya admits to a strong emotional connect with MTR Foods. “I built the food business from scratch. But once you give it up, it is gone. My son and I built Maiyas Beverages and Foods, coming out of our comfort zone. I have done more than what I did at MTR. The learning has only made us better,” he says.
Today, the Bengaluru-based Maiyas’ packaged food products reach about 50,000 retail outlets across Karnataka, which has a network of 120 direct distributors in eight district headquarters and 70 indirect distributors to tap into the interiors of the state. Pan-India, the products are sold at approximately 75,000 outlets, including 700 modern trade stores such as Reliance Retail (part of Reliance Industries, which owns Network18, publishers of Forbes India), Big Bazaar, More and Foodworld. The company’s vision and plans for growth have also found a partner in private equity firm Ascent Capital Advisors, which invested Rs 120 crore in the business in March 2014.
“There is an emerging opportunity in the snacks and savoury market in India which is getting organised. There is a lot of scope for the company to become a pan-India brand and who could achieve that better than Sadananda Maiya, a proven entrepreneur in this category. He has brought a lot of technological improvisation in the food business, in preparation and preservation, to maintain the freshness of the food item for a longer period,” says Raja Kumar, founder-CEO, Ascent Capital Advisors.
Currently, Maiya is planning to raise a second round of funding to fuel his venture’s expansion plan and Ascent Capital is looking to participate again.
The next expansion phase is to establish the Maiyas brand across South India and then nationally. In Tamil Nadu and Andhra Pradesh, it is looking to scale up its network to 100 distributors each (mostly indirect) in six months. At present, the brand retails in the west (Mumbai and Pune) through stores such as Reliance Retail, D-Mart, and Big Bazaar. Over the next four months, the company plans to focus on the northern market, beginning with the Delhi-NCR region.
While 80 percent of the revenue from the packaged food business comes from Karnataka, exports constitute around 15 percent of the income, which largely includes mixes, masalas, sweets and ready-to-eat. Maiyas products are present in the US, Europe, Middle East, Singapore, Malaysia, Japan and Thailand.
“After I sold MTR Foods, my son wanted to start a restaurant, but I was not keen. But he was determined. He has seen the pain that my family has given me,” says Maiya. In 2008, his son Sudarshan entered the restaurant business by opening an outlet in BTM Layout, a neighbourhood in south Bengaluru. However, within eight months, they had to shift to a bigger place as the first location could not host many people.
Currently, Maiya’s restaurant and packaged food businesses operate as two separate entities. “The idea behind starting the restaurant was to build a base brand at least in southern Bengaluru where people are familiar with Maiya. At the first outlet, I was the accounts-cum-HR head of the company. I managed the attendance record, performance and compensation for about 120 people at the restaurant. For six months, I did it alone,” says Sudarshan, executive director, Maiyas Beverages and Foods. Like his father, he picked up the nuances of running the business in the kitchen.
After graduating with a degree in computer science and engineering from Visvesvaraya Technological University (VTU) in Belgaum, Karnataka, in 2005, Sudarshan worked as a software engineer for three months at German software company SAP. But soon, he realised it wasn’t his calling. “I went to my father and told him that I have already wasted four years studying engineering. I don’t want to waste more time working. I joined MTR Foods in 2005,” says Sudarshan, who worked as a cook for the first six months at the MTR kitchen followed by a stint at the MTR retail outlet where it sold food products.
Sudarshan, 32, looks after the front end of the business (sales and marketing) at Maiyas Beverages and Foods. “Our first strategy was to build a distribution base. This is our third year of retailing under the Maiyas brand. Unless we have a strong distribution base, we have no business in marketing the product. We are focusing on strengthening our distribution channel,” says Sudarshan.
Currently, Maiyas runs six restaurants across Bengaluru, but it is not keen on expanding its chain outside its home turf immediately as it is focusing on scaling up its packaged food company.
Brand experts say Maiya knows that scaling a restaurant business can morph into a glass ceiling as it is difficult to run it with a centralised kitchen that supplies food, and still maintain the quality and freshness that is its USP. A franchise model may not work either. “Every restaurant is a local business that has to be run with a local mindset. Therefore, he has jumped out of the skin of the basic restaurant business and has decided to package his food and beverage offerings for a taste-at-home experience. The logic is simple. If you cannot come to my restaurant, my restaurant will come to you in a packaged form,” says Harish Bijoor, brand strategy specialist and CEO, Harish Bijoor Consults Inc, a Bengaluru-based brand consulting firm. Bijoor is also on the board of directors of the company.
For the financial year ended March 2015, Maiyas’ packaged food business had revenues of Rs 96 crore, while the restaurant business contributed approximately Rs 39 crore, taking the total to Rs 135 crore. At present, the restaurant business employs about 300 people while its packaged food division has a workforce of 400 people across the country. “By the end of the current fiscal, we are looking at a revenue of Rs 200 crore. And in the next five years, we are targeting a total revenue of Rs 1,000 crore. Whatever I have achieved in 25 years at MTR, I have done it in three years at Maiyas. When I sold MTR Foods in 2007, its revenue was Rs 164 crore and this fiscal we will cross that figure,” says Maiya.
Cross-town larger rival MTR Foods Pvt Ltd currently garners revenues of approximately Rs 700 crore with a presence in packaged foods items across breakfast, lunch and dinner to snacks, desserts and beverages. It retails packaged variations of products such as rava idli, upma, sweet mixes, spices and masalas. At present, MTR directly exports to 27 countries including Australia, the US, Japan and the UAE.
According to retail consulting firm Technopak, the organised packaged food industry in India is pegged at approximately Rs 1,65,000 crore as of March 2015, and is expected to touch about Rs 2,65,000 crore by 2020, growing at a compound annual growth rate (CAGR) of about 9.5 percent. The packaged food category typically includes snacks/namkeen, ready-to-cook (RTC) and ready-to-eat (RTE) foods, biscuits, chocolates, confectionary and other items.
Ankur Bisen, senior vice president (retail and consumer products), Technopak, is optimistic about the regional growth story in the packaged food space with players such as MTR, Maiyas, Haldiram’s and Bikaji Foods. “Food as a segment is a heterogeneous category as far as tastes are concerned from a consumer perspective. It is very difficult to create a national response with one product to cater to the taste. Local brands, because of their strong regional focus, come out with products customised to such diversity of food tastes and, thus, are able to be locally relevant,” he says.
Today, Maiyas boasts a manufacturing facility backed by the latest in food technology for its processed food business spread across 20 acres on the outskirts of Bengaluru on Kanakapura Road. About Rs 80 crore was invested in setting up the plant. The company uses methods such as retort technology in its packaged food products, which allows for a longer shelf life through sterile packaging. “We are giving curd rice in a packaged form with a one-year shelf life. Typically it has a shelf life of six hours. No chemical is added and taste-wise, there has been no compromise,” says Maiya, who has a PhD in the application of nanotechnology in food processing from Columbia University.
Between end-2008 and 2012, Maiya was building the base for its packaged food business by working on the food technology front, while also lending a hand to his son to set up the Maiyas restaurant business. “I was working in the food technology space since 2002 during the MTR days to improvise and innovate on the product front. The PhD degree was an extension of that work. I started thinking about building the Maiyas manufacturing plant for the packaged food business only in 2010 after completing my PhD degree,” he says.
Maiyas has recently launched new concepts such as thayir vadai (curd vada), bhel bar and rasmalai (dessert) in packaged form with a shelf life of one year, compared to the typical 2-3 hours. For six months, the new products are kept on a trial run at its food counters in restaurants. In the bar form, it has launched new varieties such as bhel (snacks), ragi (finger millet) and fruit and nut.
However, some customers feel products like bhel bar might be more appreciated in the foreign markets among Indians who don’t have access to local snacks. “Bhel is an extremely Indianised snack item. It is prepared using various chutneys which gives it a moist texture and a very distinct taste, which is difficult to replicate in a bar form. It might take some time for Indians to get used to such concepts,” says Umesh Kumar, 51, a local resident and a regular at the Maiyas restaurant in Jayanagar, Bengaluru, for their filter coffee.
Taking cognisance of the inevitability of ecommerce, in October this year, Maiyas Beverages and Foods partnered with Gurgaon-based logistics company Delhivery for domestic deliveries and cargo firm End2End Logistics Global for international deliveries of its mixes, masalas and other packaged foods. For payment collection, it has tied up with online payment services company PayU, which will also take care of cross-country purchases. The company is in the process of partnering with Amazon as well. Currently its products are available at online grocery stores such as BigBasket and others. Maiyas has also built an ecommerce app for consumers, which is expected to be ready by the end of this year.
The Indian Railways is their next focus for the packaged foods portfolio—a key market given that the Railways transported over 23 million passengers a day in 2013-14, according to its website.
Bijoor points out that for the company, it is an FMCG play that can reach every nook and corner of the country and beyond. “He (Sadananda Maiya) has cobbled together his Rs 100 crore with a keen focus on South India. His next Rs 100 crore will come from here as well. And from then on, his next Rs 200 crore will come from India at large. And then, there is the Indian diaspora to reach out to as well. To that extent, I see this business to be robust and growing,” he says.
However, there are challenges such as supply-chain constraints, which include vendor quality and availability as well as packaging limitations in the food processing business that has not allowed for a strong regional player to go national.
Industry experts say that food safety is a major concern as is the need to maintain operational excellence across the value chain. Not only in manufacturing, but also in how the item is transported to retail shops and sold because quality of storage is a big issue.
Maiya admits that the challenge is distribution. “This is one area where companies mostly fail. I have learnt my lesson at MTR Foods when I had developed the sales and distribution network. I used to travel with bags from one shop to another—leg work just cannot be substituted in this space. One needs to do the rounds.”
Despite being a family-run company, Maiya has instituted a board which has well-drafted governing rules and includes himself and his son, and two external board members —Ajay Mittal, director at Ascent Capital, and Bijoor. “Typically what happens in a proprietary environment is that people get used to saying yes to whatever the promoters say. We want a third party perspective which would be critical of the decisions of the promoters,” says Sudarshan.
Even as his earlier brand, MTR Foods (now part of Orkla), scales new heights, Sadananda retains the enthusiasm and rigour of any other budding entrepreneur. “There are very few people who can build a brand in a lifetime. To build two brands in a lifetime—that is an even rarer achievement,” he says.
Clearly, the taste of success is addictive, one that Maiya cannot get enough of.