The Rs 1200-crore Syska Group has seen a dramatic rise riding on its strong dealer network and online strategy.
For a company that has now become synonymous with electrical fittings, you’d be surprised that Syska was moving to a different tune some 30 years ago.
It began as Shree Sant Kripa Appliances Pvt. Ltd (SSK Group) in 1989 involved in the distribution of T-Series audio cassettes, CDs, and audio video systems. Started by brothers Rajesh and Govind Uttamchandani, the Syska Group today is a Rs 1200-crore company of which 70 percent comes from Syska LED, 20 percent comes Syska accessories and the remaining 10 percent from other segments.
Talking to SMBStory, Rajesh Uttamchandani, Director of Syska Group, says, “We are not an electric company so there were many challenges and ups and downs before we came to where we are.” Today, the Group has grown into a domestic leader and diversified into Syska LED, Syska personal care, Syska mobile accessories, and Syska Wires.
Rajesh says in the next two to three years, they plan to go public.
The second generation leaders Gurumukh Uttamchandani and Gitika Uttamchandani, children of Rajesh Uttamchandani, have joined the family business and are handling a large portfolio of Syska personal care products and Syska mobile accessories.
The group caught mainstream attention following its successful media campaign with celebrity endorsements for its LED segment. Besides, Bollywood actors Irfan Khan and Amitabh Bachchan (who was signed as a brand ambassador for Syska Wires), Syska has also roped in television actors making the group a household name.
But that is just part of the story. What drove the growth for Syska is its loyal, growth-oriented, and high performing distribution network. And that’s where the group hit bull’s eye. For any consumer-facing company, cracking the complicated distribution channel is the most challenging task. But for Syska, it was its core competency, as Rajesh tells us.
In a conversation with SMBStory, Rajesh Uttamchandani shares the group’s journey through its early years, how they kept their focus on one thing and then went on to diversify into other categories, how they eventually set up their own manufacturing units - “only after we had figured out what our appetite was,” - and many more milestones.
Here are the excerpts from the conversation.
SMBStory: From spreading music to spreading light, it was quite a start for the Syska Group. Tell us a little about the early years.
Rajesh Uttamchandani: In 1989, we started with the distribution of T-Series and shifted to Kelvinator (which was later acquired by Whirlpool). We moved to Samsung because we wanted the entire spectrum of electronics, and television was missing in Whirlpool. In 2002, we took the distribution of Nokia in Maharashtra. By 2008, when the Nokia market share was 91 percent, we left Nokia to join Samsung.
Such was our credibility that the majority of our distribution network moved with us to Samsung. Samsung gave us the distribution for five states. That is the biggest business (Rs 10 crore plus) we are doing with Samsung only in the mobile segment.
We also joined Samsung’s exclusive appliance dealership for Mumbai, Pune, Goa, and Maharashtra periphery. That company is doing Rs 600 crore. We also set up 30 Samsung Cafes in Mumbai under the Syska Retail chain.
At that time, a thought struck. Why don’t we launch our own brand? We thought of bringing more items that were not in direct competition with Samsung and thought of going into solar or LED lights.
However, we always saw ourselves as a B2C company and since getting into solar meant having to knock the B2B door, we went with LED lights and launched Syska LED in 2012 getting the first-mover advantage.
Syska LED has established a pan-India presence through its vast distributor network. The group is now spread over 100 locations across India, offering customers advanced solutions of LED lighting ranging from residential, commercial outdoor, and industrial & decorative.
SMBS: Your distribution network is an enviable one, something that others may want to emulate. How challenging was it to develop this channel?
RU: For any company setting up a solid distribution network is the toughest task. But we have been doing this for the last 30 years, so for us, it is the easiest thing to do.
SMBS: So, how did you go about building this network?
RU: Initially, we deployed manpower on the ground so that we could drive the show. We had about 1,800 people working with distributors to iron out the process. Usually, companies hire one or two people and rely on the distributors which takes the control away from them.
In our strategy, initially, the ROI will not be visible. But deploying our own manpower is essential to provide the required push. As a result, the dealer, who was doing a business of Rs 10 lakhs two, three years ago, is today clocking Rs 3 crore to Rs 4 crore. Now, we tell them to appoint their own manpower and drive the show.
We have also tied up with various banks to provide capital assistance to our distributors thereby making our channel strong and streamlined.
SMBS: Your celebrity endorsement marketing strategy also worked for you, didn’t it?
RU: We have seen brands like Whirlpool, LG, Nokia, and Samsung grow using unique marketing strategies. It was good learning. We engaged a marketing partner who executed that learning.
SMBS: From selling other brands, you now have your own manufacturing units. How did that come to be?
RU: We set up a manufacturing plant only after we had a solid distribution network in place. Only when we figured out what our appetite was, is when we set up the units.
We have made a total investment of over Rs 350 crore to set up state-of-the-art manufacturing facilities across the country. This investment will also facilitate huge employment opportunities.
The manufacturing units are in Shirwal, Rabale, Chakan, and Rewari alongside a state-of-art manufacturing unit in Noida for camera modules. The manufacturing plants in Shirwal, Rabale, Chakan will have a production of lightings varying from bulbs, tube lights, panel lights, industrial lights etc.
With the aim to support the government’s initiative of Make in India, we have made a further investment of Rs 75 crores to set up the fourth manufacturing plant in Rewari (Haryana). This will be used for manufacturing various types of wires and cables in terms of setting up the production facilities on 6 acres out of total 19 acres at Dharuhera-Rewari, Haryana, India.
The plant will employ approximately 300 employees in the first phase.
At full capacity, the plant would produce over 15 lakh coils a month. Syska Wires and Cables is targeting a revenue of Rs 500 crores in FY18-19.
We can see exponential opportunities for wires & cables business in India. The household wire segment is a Rs 12,000-crore market and the segment is expected to boom. This is further fueled by the low penetration of organised players in the Indian market.
SMBS: You have not shied away from going digital. What was your digital marketing strategy and how are you digitising your processes?
RU: So, we got an insight from Amazon India to launch our personal care products online. At that time, Philips had the majority of the market share. We were told that our brand had a good recall value. On Amazon, our hair dryer is number one now. Like the OnePlus phones, we also launched exclusively with Amazon and Flipkart. The first year, we did Rs 50 crore, and this year we did Rs 150 crore. Now, we have gone offline also.
We are also using digital to connect with the distributor network. With our advanced CMS, we know the stock position with our distributors and information like which stock is moving more and act accordingly.