After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.
In 2003, there was an unforeseen change at Parliament House: Members of Parliament noticed that the insides of the building, cleaned by the Central Public Works Department (CPWD), looked like they could do with some more scrubbing, while the areas around the library and the annex had taken on a brand new squeaky clean finish.
The CPWD, which had been cleaning government buildings in Lutyens Delhi since Independence, had outsourced part of their job to a little known company from Pune, Bharat Vikas India. Armed with high-pressure water jets and industrial vacuum cleaners, instead of the usual brooms and mops, Bharat Vikas managed to make such an impression on the MPs that they asked the firm to bid for contracts for the main Parliament building, Rashtrapati Bhavan and the Prime Minister’s residence.
It has been eight years, and two governments, since then. But no matter who has held the purse strings, Bharat Vikas has bagged the contract each time. “Given that the Parliament is a very sensitive location to operate in, I would say their performance has been good,” says Neeraj Dasandani, executive engineer, CPWD.
Winning the bid to clean India’s highest corridors of power helped Bharat Vikas Group (BVG), the holding company, write its own success story and become the largest housekeeping company in India.
But, in 2003, winning the bid to clean the Parliament House brought its own problem. It was a small company, with revenue of less than Rs. 10 crore, and bidding for the six-month contract would need an upfront investment of Rs. 50 lakh in equipment.
While some within the company balked at the cost, BVG founder Hanmant Gaikwad was convinced. “If we did good work, I saw no reason why the contract would not be renewed,” he says. This decision saw the company increase its revenue from Rs. 16 crore in 2005 to more than Rs. 400 crore in 2010. He has also attracted private equity investments from Kotak Private Equity and 3i Capital.
Equity infusion is what will propel the company into a full-service facilities management company, believes Gaikwad, and is the only way he can maintain high profitability in an industry known for sub-scale players and low profitability. “I won’t be surprised if we clock Rs. 2,500 crore in the next five years,” he says.
With 25,000 employees, BVG is not a large company. But India’s facilities management services (FMS) industry — estimated to be worth $2.85 billion by 2012, according to a Grant and Thornton report — is highly fragmented. It has just about 15 organised players (who have less than 10 percent of the market share) and 500 small operators, among whom many have struggled to grow.
The 38-year-old Gaikwad’s success has more to it than a good business decision. His childhood in Pune had been a tough one: A chronically ill father had depleted the family savings and, on his father’s death, he was left scrounging for his fees in the third year of college. Unable to afford the Re. 1 bus fare to college on most days, he cycled 21 km each way.
Former colleagues remember Gaikwad as a man in a hurry. But until 1997, he — an engineer at the Pune Tata Motors plant for three years by then — had no idea he would get into the business of cleaning.
In 1997, a couple of events changed the course of his career.
Gaikwad and a colleague, Ganesh Limaye, saved the Tata Motors management Rs. 2 crore by suggesting ways to use old electric cables worth Rs. 2-3 crore that were simply going to waste at the plant. “At that time, no one would bother with old cables,” says Limaye, now in charge of BVG’s purchases. Gaikwad and Limaye studied the cables and realised they could be used for new car models after some modifications. This won Gaikwad instant recognition from his employers and this would help him in future deals and projects.
The second incident was when some people from Gaikwad’s native village in Satara, Maharashtra, approached him for jobs at Tata Motors. The plant management agreed to hire eight of them, but could not employ them on the company rolls. Gaikwad suggested that he could employ the people in a trust he had registered and Tata Motors could pay the trust. Given their confidence in him, Tata Motors not only accepted his suggestion but also helped him get Rs. 60 lakh in loan from Tata Finance to buy cleaning equipment.