(L to R) Anurag Kumar, Chief Progress Officer, Pratik Pota, MD and CEO, Eureka Forbes, Gaurav Khandelwal, Chief monetary officer, Mahnaz Shaikh, CHRO at Eureka Forbes. Picture: Mexy Xavier
The place had all the trimmings of a wonderland. There was love, peace, and concord. It was a wonderful kingdom that was disconnected from the skin world. The residents liked their benevolent ruler who had a formidable and undisputed stint for 4 many years. Pratik Pota tells us extra about this fascinating world. “Among the many inhabitants, there was an immense sense of delight, possession, and belonging,” says Pota, who was surprised by the naivety of the inhabitants and their unshaken perception that the solar would by no means set on the empire. Their unbridled optimism gave start to dogmatic hope: Issues would by no means go mistaken. “It appeared as in the event that they have been caught in a time warp,” says Pota, who unfailingly noticed deepening fault traces within the once-impregnable fortress.
The largest purple flag was the character of the dominion. “They lived in silos,” says Pota. There have been a number of mini-kingdoms inside the kingdom: Retail, direct gross sales, after-sales, service, advertising and marketing, and so forth. Each vertical had its full-fledged setup: A CEO supported by a advertising and marketing workforce, a gross sales workforce, a merchandise workforce, and a channel workforce. So, there have been a number of CEOs and numerous groups. And guess what occurred subsequent? “Somewhat than preventing the competitors, they began preventing one another,” underlines Pota, who was dismayed to see an absence of synergies and lack of collaboration among the many groups. “Within the assembly room, individuals from separate groups would begin preventing,” he recollects. Information had no place of their lives, buyer obsession had taken a again seat, and expertise and innovation have been perceived as aliens.
What, although, was alarming was a cussed reluctance to see the writing on the wall. “Sab theek hai [all is well] was the overwhelming feeling,” recollects Pota. The dominion had been progressively dropping its gloss, the ruler was finally changed, however the inhabitants nonetheless couldn’t sense the hazard. The corporate was in disaster, the model regarded jaded and had misplaced its approach, however a way of urgency was conspicuously lacking.
Pota grew to become the chosen one to ship a impolite jolt. “Of us, we haven’t grown for 10 years,” underlined the veteran, battle-scarred company warrior, who joined Eureka Forbes in July 2022. “In different phrases, Aquaguard has been posting declining gross sales for a decade,” the previous CEO of Jubilant FoodWorks—the grasp franchise of Domino’s in India—reiterated in Lonavla, round 100 km from Mumbai. In September 2021, Creation Worldwide, an American agency, purchased Eureka Forbes, the patron sturdy flagship of Shapoorji Pallonji Group, reportedly for Rs 4,400 crore. After 10 months, Pota was appointed managing director and CEO, and some months later, he took the management workforce to an offsite at Lonavla to tug them out of their ‘wonderland’.
The CEO lived as much as his fame of not mincing phrases. On the offsite, he shortly unmasked the grim facet of wonderland: Blunderland. “The volumes haven’t grown for 10 years,” he stated, underlining one other flip facet of falling gross sales. Eureka Forbes, he identified, has a big service part. “If we do not promote, we don’t get service income, which implies we have been engaged on a smaller and smaller pie.” There was a surprised disbelief. There was one other harsh actuality that the Eureka Forbes workforce was fortunately oblivious to: A dipping market share.
The chief was bleeding from a number of cuts. And some deep cuts got here from its tardy response mechanism. As an illustration, take Kent RO. The rival model rolled out its RO gadget in 1999, roped in Bollywood actor Hema Malini as its face, and launched a hyper-aggressive advertising and marketing and promoting marketing campaign. Eureka Forbes, the smug market chief, reacted to the onslaught after six lengthy years. By then, its market share had dipped from 80 p.c to lower than 40 p.c. One other occasion of delayed response was the way it tackled the risk from LG. The Korean biggie launched a stainless-steel water air purifier in 2016 and gained market share, whereas Eureka Forbes began sliding. The chief once more took six years to reply. The dearth of an innovation pipeline was additionally a drag on Eureka Forbes.
At Lonavla, Pota was away from his imaginative and prescient. The model, he stated, wanted reinvention, reimagination, and a turnaround. A metamorphosis technique, known as Operation Udaan, was rolled out with a mission to drive penetration, innovation, differentiation, consciousness, affordability, relevance, entry, and distribution.
Quick ahead to December 2024. Quantity dip is now a factor of the previous: The July to September quarter of FY25 was the fourth successive quarter of double-digit progress for the corporate. The product enterprise grew by 20 p.c, promoting and gross sales promotion spend grew 40 p.c year-on-year, the adjusted Ebitda margin elevated to 11.5 p.c, and revenue after tax grew 83 p.c year-on-year, to Rs 46.7 crore.
The corporate has circled on one other entrance: From Rs 200 debt to Rs 100 crore surplus final 12 months. One other outstanding facet of transformation has been the truth that the expansion of water purifiers and vacuum cleaners was pushed by a mix of quantity and a rise in common promoting value; in contrast to the previous, it was not a pricing-led progress alone. Nonetheless, to decode the transformation, one should return to the previous.
The seeds of a brighter future, Pota says, have been sown after the Lonavala gathering. For Operation Udaan to achieve success, he sensed that one thing drastic needed to be completed. A brand new proprietor and a brand new CEO, it was extensively perceived inside the Eureka Forbes institution, would usher in disruptive modifications. For a 40-year-old organisation, Eureka Forbes was based as a three way partnership between Forbes and Campbell (a Tata Group firm) and Electrolux of Sweden in 1982. The Tatas bought its stake to Shapoorji Pallonji in 2001. The corporate had a big direct gross sales workforce that was beset with excessive prices and low margins. It was extensively rumoured that the brand new administration would shut down this channel.
Pota, subsequently, made empathy the core of his transformation blueprint. “I made a decision to kill apprehension, concern, and anxiousness,” he recollects. “Neglect shutting down, I need to double down on direct,” he introduced. The reassurance was adopted by a battery of fast steps designed to get rid of inconsistencies in advertising and marketing technique. Often, the direct gross sales workforce was requested to promote merchandise at the next value in comparison with retail. Pota, who was instrumental in relaunching PepsiCo’s Mountain Dew with an inspiring tagline, Darr ke aage jeet hai [beyond fear is triumph], killed value differential. In a single go, Pota introduced clients again into the reckoning. “One value for one product was an enormous unlock. This satisfied us that we have been strolling the discuss,” he recounts. “One purpose why we had not been doing nicely was as a result of we had not been investing. So we stated we might put money into functionality, model, and drive improvements.”
One other integral strand made the transformation attainable: A brand new-look workforce. Within the following 9 months after changing into CEO, it grew to become obvious to Pota that the present core workforce was reluctant to chunk the bullet. The standards for selecting up new workforce members was easy: Leaders with stints at robust foundation-building firms like HUL, P&G, and Asian Paints, with some years at a digital or new-age firm. Pota needed a workforce that was agile, experimentative, and fearless. Round 80 p.c of senior administration was infused with exterior hires. The squad was geared up with new-age R&D, class advertising and marketing, digital, engineering, product administration, and information science capabilities. (See field.) “A captain is nothing with out a profitable workforce. I’m lucky to have constructed that at Eureka,” says Pota.
The workforce had its activity reduce out. As chief human useful resource officer (CHRO), Mahnaz Shaikh knew what it could take to rally the workers behind a trigger. In a pointy disconnect from the previous, she rolled out a company-wide ESOP programme. The transfer transmitted a strong message: All managers throughout grades, features, and places have been now homeowners of the corporate, working collectively and in the direction of a standard aim. “This was an industry-first method,” says Shaikh. “We needed to sign that everyone performs a essential function within the transformation journey.”
The brand new chief monetary officer, Gaurav Khandelwal, inculcated a brand new language and mindset. “Essentially the most basic shift has been the mindset to problem the established order and willingness to attempt new issues, even when a number of fail,” he says. Nonetheless, a enterprise with over Rs 200-crore debt wanted rather more than a mindset reboot; it wanted rewiring of inner and exterior enterprise practices. “We purchased in digitised collections,” he says, including that inside 18 months Eureka Forbes noticed almost 85 p.c of collections changing into digital. Annual upkeep expenses (AMC) have been revamped. In 18 months, he claims, almost 50 p.c of AMC gross sales moved to the digital platform.
The chief progress officer too had a transparent imaginative and prescient: To drive progress and penetration. The water air purifier section has a paltry 6 p.c penetration in India. The massive query was the way to make additional inroads. The reply lay in a slew of issues: Driving relevance, entry, and innovation; specializing in replacements; nudging customers to purchase real filters; quickly scaling vacuum cleansing on the again of handy options like robotic and cordless cleaners; and rising the air purifiers and water softeners. “This framing has enabled useful resource deployment and large initiatives in the direction of progress areas the place now we have a proper to win,” contends Anurag Kumar.
Lastly, the chief digital and product officer was tasked with stirring up a brand new tradition. Nithyanand Shankar labored with one among India’s high UI/UX design companies to revamp the patron app and web site. He constructed an in-house product and expertise workforce, incubated a data-science workforce to leverage thousands and thousands of information factors to construct predictive fashions, and constructed and scaled ecommerce enterprise throughout Amazon and Flipkart. “We constructed a best-in-class digital workforce that operates like a start-up inside a 40-year-old firm,” he reckons.
With a handpicked workforce in place, the captain added extra fizz and topping. “We took a tough have a look at Ebitda [earnings before interest, taxes, depreciation, and amortisation] margin,” says Pota, who had a fame at PepsiCo and Jubilant for taking a look at the whole lot via the Ebitda lens. “We have been at 3.5 and 4.5 p.c Ebitda margin. This was unacceptable,” he says. Purpose? Ebitda margins in client durables companies hover between 9 and 12 p.c. However Eureka Forbes was not only a client sturdy firm due to a big service enterprise. So, the brand new benchmark was 16 to 17 p.c. “We started to chop prices,” he says, sharing different measures resembling higher managing money, tightening stock, specializing in realisations, and shifting to digital funds.
Then got here the transfer of rationalising stock-keeping models (SKUs). In 2022, Eureka Forbes had round 200 SKUs of virtually comparable merchandise throughout gross sales channels. “You may’t replicate each single SKU for each channel. So we trimmed it to 45 SKUs,” says Pota. The following large ask was to make individuals purchase new merchandise. It was a tricky activity due to traditional class limitations. Customers, says Pota, understand branded purifiers to be costly. Why pay Rs 15,000 when you will get a less expensive native model? With the added value of five-years AMCs, the full value involves round Rs 30,000. “We needed to deal with the price of possession subject,” says Pota. This was completed by making purifiers inexpensive. Pota rolled out a air purifier with a price ticket of beneath Rs 7,000 in March 2023, and launched a tv advert marketing campaign that focused a standard technique of utilizing material to filter faucet water: Sar se kapda hatana hai toh nal se kapda hatane padega [if you have to remove the cloth from your head, you have to remove the cloth from the tap].
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The gambit paid off. “Our gross sales from April skyrocketed,” says Pota, who aggressively invested within the R&D workforce to roll out a bunch of modern merchandise, resembling Aquaguard Slimtech, which blended performance with aesthetics, and Aquaguard Blaze Insta, which was loaded with on the spot sizzling water expertise, and Aquaguard UTC (under-the-counter) that might be put in beneath the kitchen counter. An organization that was starved of innovation for years now had a wealthy product pipeline.
The brand new homeowners are elated with the turnaround. “We’re proud to champion Eureka Forbes on its transformative journey right into a premier well being tech firm,” says Sahil Dalal, managing director at Creation India, which owns a 62.56 p.c stake in Eureka Forbes. Underneath Pota and his workforce of CXOs, the corporate has bolstered its market place, pioneering innovation and elevating buyer satisfaction, he reckons, including that the corporate is making certain a pointy concentrate on expertise and product innovation. “We’re assured within the firm’s dynamic progress trajectory,” he provides.
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Regardless of a change in fortune, Eureka Forbes must cope with a collection of potential challenges. The largest is wooing a brand new set of customers who migrated to different manufacturers and rivals during the last decade. “Rekindling an outdated romance isn’t simple as a result of there are new lovers,” says Ashita Aggarwal, professor of promoting at SP Jain Institute of Administration and Analysis. One wants a compelling purpose to return to the model. There are robust multinational rivals in addition to a bunch of home-grown challengers who’ve grown aggressively at the price of the chief. “The model wants to remain aggressive in advertising and marketing, promoting, and product innovation for a number of extra quarters,” she says. One other problem for Eureka Forbes is to drive the penetration of water air purifier and vacuum cleansing classes. “A frontrunner has to do it. And when one does it, there could be hits and misses,” she says, including that sustaining the turnaround tempo could be one other formidable subject.
Pota, for his half, reckons that there isn’t any U-turn from the transformation street. “In a approach, we have been India’s first D2C firm some 40 years again. Now we have to turn out to be a health-tech D2C firm,” he says, including that Eureka Forbes should get in sync with the altering profile of new-age customers. “From an outdated cassette tape we have to turn out to be a Spotify,” he indicators off.
