5

Keventers

Agastya Dalmia

As I walk up the driveway to meet Agastya Dalmia, I see an enclosure where a cow sits and chews cud serenely. It is almost noon on a hot summer afternoon but the cow seems unaffected by the heat. As I walk down the path, it looks up at me questioningly, shakes its head, and goes back to chewing its cud. I wonder if this cow is a descendant of the same family of cows that, almost fifty years ago, provided the main ingredient for the flavoured milk of Keventers.

Agastya laughs when I ask him about this. ‘I never thought about it actually, but who knows!’ he says.

I am in Agastya’s office—a small, single-level white building located on one side of a sprawling Akbar Road estate. From where I sit, I can see the cow still chewing away without a worry in the world. As I look around, I see more cows in the office—this time on the old labels of Keventers products displayed on the walls.

Keventers is a 100-year-old brand, as is evident from the labels. Keventers products included butter, ghee, condensed milk, ice creams, cassatas and, of course, the iconic flavoured milk. The business was bought, by Agastya’s grandfather Ramkrishna Dalmia, from one Mr Keventer, a Swedish gentleman, in the first half of the twentieth century. The original business was actually set up around 1922. As Keventer grew his enterprise, he set up factories in Aligarh, Darjeeling, Kolkata and Delhi. When Dalmia bought the business, he got the factories in Aligarh and Delhi, along with the Keventers brand. For a long time, Dalmia ran it as a B2B, or an institutional sales model. Their largest client was the Indian Army, who bought milk, milk powder and biscuits.

Dalmia looked at the retail business only when he introduced products like the now-iconic milkshakes, ice creams and cassatas. Today, people who work at Keventers relate stories which are part of the company folklore. This one took place in the 1930s, when the factory at Malcha Marg was producing ice cream, especially cassatas. They were loaded on to local thelas (carts), which finally supplied the goods to the distributors. These horse-driven thelas were the precursors to the modern-day ice cream vans. The ice creams found ready acceptance with customers, but when the company wanted to launch milkshakes, or flavoured milk, they were a bit apprehensive. India was a country where lassi was the most popular milk-based beverage. People at Keventers were unsure whether the average customer would be ready to accept the non-yoghurt-based drink. Current employees remember that the company was surprised and happy at the quick acceptance of their milkshakes. The now-iconic glass bottles with their tin foil covers were snapped up by customers and very soon, there were almost fifty outlets in Delhi selling Keventers milkshakes.

It is this 100-year old brand that young Agastya has relaunched. I wonder aloud if the burden of history sat heavy on his shoulders when he started work on the relaunch. ‘Actually, Keventers was a very small part of our family business,’ he says. ‘My grandfather had all kinds of enterprises. Do you know that he owned a company called Bharat Insurance that later became part of what is today’s LIC? And there was also an airline. I think it was called Dalmia Jain airline. It was also part of his business. And yes, PNB as well,’ he says quite matter-of-factly.

‘You mean Punjab National Bank?’ I asked.

‘Yep, he had a controlling stake in it. So you see, Keventers was just a small part of the overall business.’ And then excitedly he adds, ‘Oh I forgot, there were biscuits as well. Dalmia Biscuits,’ he says with a boyish smile. ‘So, really, it was no big deal relaunching Keventers.’

This attitude of ‘what’s-the-big-deal’ defines Agastya. He is the third generation of the Dalmia family—a family that was once was among the richest and most powerful families in India. Grandfather Dalmia was a very successful businessman with a diversified portfolio of businesses. ‘His story interests me,’ says Agastya and it is indeed a fascinating story.

A real-life rags-to-riches story

R.K. Dalmia was born in an ordinary Marwari household. His great-grandfather was a wealthy businessman but successive generations did not carry that wealth forward. Dalmia spent his early days in Kolkata in poverty. His family had moved in with his maternal uncle. R.K. Dalmia was a young man in his early twenties when his father died and the responsibility of the entire family came to him. It was not a small family that he had to look after either. The family consisted of R.K. Dalmia’s grandmother, mother, three sisters, younger brother and his wife. They all stayed together in a small room in Kolkata. In those days, they used to pay a princely sum of Rs 13 a month as rent. He was given some work by his maternal uncle in the bullion trading market, which enabled him to support the family. While he worked dutifully to keep the family going, Dalmia was ambitious and wanted to move out of his poverty. Even though he was a man of simple tastes, he wanted to go back to the heady days of his great-grandfather, when the family lived a life of luxury.

Dalmia understood basic English and had a good head for numbers. While working in the bullion market, young Dalmia would decipher coded telegrams that his firm would receive from bullion agents in London. Deciphering the telegrams and understanding the buy-sell instructions therein gave him an insight into the bullion market. This learning was invaluable and compensated for the lack of formal education in his life. He started putting his knowledge to the test and began speculating on bullion in the Kolkata stock market. Some small successes in speculative deals in silver made him want to take more risks. In his enthusiasm, he made some initial mistakes and could not pay his dues. This resulted in him being declared persona non grata within the close-knit community of traders. To a Marwari, his reputation is even more valuable than the money he has. Being boycotted by the community made Dalmia even more determined to win back all that he had lost. He found ways to work around the boycott and due to his persistence and a bit of good luck, he was able to earn back not only his money, but also his reputation.

Dalmia was fortunate that some of the risks he took worked out for him. He timed the bullion market well and in the process, he earned well for himself. While his mother told him many times to be happy with what he had earned—‘We can all live a good life on Rs 50 a month,’ she is quoted to have said—Dalmia wanted more. He wanted to set up a business empire that would get the world to recognize him and respect him. The early rejection from the trader community still rankled and he wanted to prove that he could not be ignored. Dalmia went on to become one of the three largest industrialists in India and soon his family’s name was taken in the same breath as the Tatas and the Birlas.

‘I don’t really think that there was any business in which he did not have at least a small stake,’ says Agastya. ‘Our family was right up there,’ he says, gesturing with his hand up.

Agastya is right. The Dalmia business empire was spread across many sectors. After Dalmia made a fortune from speculating, some say gambling, on silver prices especially during the First World War, he went on to set up a sugar mill in 1933. This was in Bihar where the family had access to land. But he was not satisfied with one factory and one business alone and went on to establish, in the same district, factories for cement, asbestos, paper, board, vanaspati and chemicals. All the businesses were flourishing and the Dalmia brand was gaining respect within the country and abroad. After setting himself up in the manufacturing industries, Dalmia wanted to move into the financial world. With this in mind, the second stage of expansion of the Dalmia business took place and Dalmia marched forth confidently. He promoted a bank called Bharat Bank, which went on to open 300 branches in less than five years and functioned as a full-service commercial bank. He also had interests in the insurance sector as he acquired Bharat Insurance Company and then Bharat Fire and General Insurance Company. Besides these, he also set up a national safe deposit company that had strong rooms and large iron vaults in various cities of India.

The breakneck expansion happened in the last years of the 1930s and in the early years of the 1940s. It was evident then that India would soon gain independence. The British were not very confident of their businesses doing well after India became independent. They were looking to sell off their businesses and Dalmia saw this as an opportunity to grow his empire even further. Companies like Govan Brothers, Andrew Yule, Allen Berry and Co., and Bennett, Coleman & Co. were only too happy to sell their businesses to Dalmia.

Agastya comes back to his history. ‘Even though my grandfather had vision, some of the next generation could not carry it forward,’ he says with shrug.

The next generation certainly had many inheritors who could have taken the Dalmia business even further. His grandfather had six wives and seventeen children. The Hindu personal law, banning polygamy, was not yet in force, so Dalmia did not break any law by marrying six times. The first two wives were village women but the next four were well educated. While his first wife died early, he separated from his third wife. His fourth wife, Saraswati, was a well-educated and scholarly lady and it was with her that he spent most of his life. Saraswati is Agastya’s grandmother.

One of the reasons that the numerous inheritors of the Dalmia empire could not take the business forward is that R.K. Dalmia and his business partners ran into problems that all family businesses run into—they tried to get along after seeing success. Dalmia had grown his holdings by creating partnerships with other business families. One of the main partnerships was with the Jain family of Najibabad. Such was the relationship that the group was called Dalmia–Jain Group. Just when all seemed to be going well for the group, the partners decided to part ways. While it was done amicably and in the safe sanctuary of the Jain house in Mussoorie, the division did hurt the business.

It is said that a good businessman keeps on the right side of the government and politicians. And while Dalmia shared a cordial relationship with most politicians, he was closest to Muhammed Ali Jinnah. Dalmia and Jinnah were such close friends that Jinnah sold his house, 10 Aurangzeb Road, to Dalmia at the time of the Partition. Whether due to his closeness to Jinnah or his inherent convictions, Dalmia publicly criticized Nehru’s policies and even used the front pages of his newspaper to express his antipathy. He was vocal in his opposition to Partition and then the plight of the refugees. After India got independence, Nehru set up an enquiry commission to look into Dalmia using public money to fund the acquisition of his private companies. The Bose Commission found Dalmia guilty of using funds, collected as premiums in his insurance companies, as the seed capital for the acquisition of businesses, one of which was Bennett and Coleman. This resulted in a legal battle which found R.K. Dalmia guilty and sentenced him to a two-year term in Tihar Jail. Naturally, the companies that were at the centre of the legal problems suffered, but the other businesses lost their momentum too, as the owner was in jail. The one loss that hurt Dalmia the most was the loss of his most prized possession, Bennett, Coleman & Co. He lost the company to his son-in-law.

The son-in-law was Shanti Prasad Jain, whose grandsons Samir and Vineet Jain now run the Times of India Group. I failed to hide my surprise as Agastya told me about this. This fact is not as well-known as it should be, I thought to myself.

Agastya must be used to this response because he wore an almost indulgent smile as he explained, ‘Yup! Shanti Prasad Jain was my grandfather’s right-hand man. My grandfather got his eldest daughter, Rama, married to S.P. Jain. When my grandfather went to jail, he had his son-in-law keep the newspaper business going. He spent about two years away from the business.’ Add to that that R.K. Dalmia had to pay back the capital he had taken out of his financial companies. To raise the monies, he pledged Bennett, Coleman & Co. to Shanti Prasad Jain. ‘And then the business was sold to S.P. Jain. Look at what it has become today,’ Agastya says a bit wistfully. And I think to myself that this young man claims Vineet and Samir Jain as his nephews!

The Times of India Group was just one of the businesses that the Dalmia family, even with seventeen inheritors, was not able to hold on to in the next generation. But maybe that was the problem—too many inheritors fighting among themselves. Add to that the problems with the government and tax authorities and the business went the way that most family businesses do in the second generation—southwards.

Banking on a retro legacy

The Keventers and the biscuits business were part of the second generation’s inheritance and Agastya’s father got his share in it. But from all accounts, his father, Gun Nidhi Dalmia, was more keen on running the biscuit factory, as the product had built a loyal customer base under the brand of Dalmia Biscuits. The factory was in Punjab but the family decided to sell it during the 1980s. Militancy in the state was at its peak at that time and it was getting difficult to run the factory. It was not safe for the employees, the management or even the owners. So, the factory was sold and shut down. Back in Delhi, the Keventers factory had also been shut down a little earlier, but it was for a completely different reason.

Edward Keventer had established his diary factory in Malcha Marg and when Dalmia bought the business, the factory continued to supply dairy products. ‘Back in the 1940s, Malcha Marg was on the outskirts of Delhi,’ says Agastya. ‘So, you can imagine that after the 1960s it became a little difficult to operate a factory there,’ he smiles impishly. ‘It became a diplomatic area and I guess the cows just didn’t fit in.’

Even after the Keventers factory shut down, there was one enterprising stockist in Connaught Place who continued to sell Keventers to the multitude of people who came to buy it. ‘Basically, this guy went ahead and continued to use our brand. He made his own milkshakes, put our name on it and sold it to people. My father was busy with other things but in spite of that, he got them shut down at least three times,’ says Agastya. The family did think about Keventers occasionally, especially when people talked to them about buying Keventers flavoured milk from the Connaught Place outlet. ‘Everyone assumed it was our product,’ laughs Agastya. So sometime in the mid-1980s, the Dalmias decided to file a lawsuit against the stockist. After many years of a court case, the matter was finally resolved in 2009 and the stockist had to change the name of his business.

‘But we realized what the stockist had done when we relaunched Keventers milkshakes. Over the years, he’d had used his own formula and extra sugar. So when we started selling our own milkshakes, people didn’t like them. We could not understand it! They wanted more sugar and a stronger flavour,’ says Agastya, shaking his head disbelievingly. ‘We did not want to do it but we had to make our shakes sweeter. Otherwise people would not buy them. They kept saying, “This is not Keventers!”’ he laughs incredulously. ‘Can you imagine? Telling the real Keventers that their product does not taste like the Keventers!’

Original Keventers! The flavoured milk that Delhi grew up with. Did Agastya use the original formula to make his milkshakes when he re-launched Keventers? I ask.

‘When the factory shut down, no one thought of preserving anything, let alone the formula. These labels that you see,’ he says waving his hands around, ‘were also found in some scraps lying somewhere. I guess no one realized or understood the value of all of this back then’. With a rueful smile he says, ‘It would have been so wonderful if someone had preserved the formula. We would not have had to go through all this experimentation.’

The formula may not have been preserved but the brand has persevered thanks to the stockist. With the brand remaining in the public domain, did Agastya understand the value of the brand as he was growing up? ‘Not really,’ he says, ‘The court case was going on and I was busy playing tennis and studying. So, the brand was somewhere at the back of our minds. But I never really thought about it while I was growing up.’

So how did he think about relaunching Keventers? ‘Actually, a good friend asked me what I planned to do with the Keventers brand after we won the case. I was happy playing tennis and business was the last thing on my mind. But when Aman asked me, I thought to myself—why not? Let’s do something with Keventers. It is as simple as that!’

And Aman Arora agrees. He says that the idea to relaunch Keventers ‘just came up.’ Having drunk the Keventers milkshakes all through his school life from the Connaught Place outlet, he felt that someone within the family had to keep the brand going, else the Keventers name would be lost. ‘Why not us?’ says Aman. He and Agastya had known each other since college and they already had a business relationship. Delhi Street Football, a five-a-side football league on the lines of Futsal, had been Aman and Agastya’s first venture. It was quite successful but the two friends did not take it national. This time, when the two decided to collaborate again, they were both clear that this business was going to go national.

Agastya remembers all the discussions he had with Aman before working on the relaunch of Keventers. But even before that, I wondered, did Agastya need to take the extended family’s approval, considering that the brand had originally belonged to all of them?

‘Not really,’ he says and then explains that when the Malcha Marg factory land was sold to DLF, it was essentially the dairy business itself that was sold along with all brands and products. After the deal was done and the financial settlements within the Dalmia family completed, Agastya’s father asked DLF to transfer the Keventers trademark back to his name. ‘And DLF had no problem in giving it back,’ says Agastya. After going out of the family for a brief time, the brand Keventers came back, this time as the property of Agastya’s father.

With the brand secure within the family, the two young friends sat together to work out what exactly they wanted to do with a 100-year-old brand. ‘There was no formal, structured discussion. I followed my gut a lot,’ he says, and decided that it was the Keventers milkshake (originally flavoured milk) that they would focus on. The reason for this, as he explains, was that Aman and he realized that neither of them had run a full-fledged business before. ‘Delhi Street Football did not count as we saw it as more of a hobby and less of a business,’ he says. As they worked on a plan for an actual business, they wanted to keep it simple. ‘We decided that we would focus on only one product to start with and then see how the business developed,’ he adds. And since the brand Keventers was almost synonymous with milkshakes, ‘It was a logical decision for us to go with milkshakes,’ Agastya explains.

Once that decision was made, both Agastya and Aman sat with Gun Nidhi Dalmia, Agastya’s father, to get advice on how to go about it. ‘The key questions we had to answer were ‘what’, ‘how’ and ‘where’. In spite of various people suggesting that we look at other food products, we were clear that we wanted to sell only the milkshakes,’ he says.

‘The questions to discuss and debate thereafter were more around whether to go into manufacturing or retail, whether to sell only milkshakes or have some food as well, whether to look at it as a dairy business or as a restaurant business, to sell in own outlets or rented stores, set up stores of our own or go the franchisee route,’ says Agastya. As part of working out the answers to the questions, the two had many meetings around the dining table. And did they always take the elder Dalmia’s advice, I ask. Agastya answers with a chuckle, ‘Dad had asked us to focus on manufacturing and we decided to focus on retail.’

Third-generation entrepreneur—a different breed

Once that decision was made, Agastya and Aman both realized that neither of them had any experience either in the dairy business or in the food business. They had many conversations between them to figure out if they should get a consultant who was a dairy specialist or someone who had expertise in running a food business. Initially, they got someone with technical knowledge about the dairy industry and milk products. ‘We used to focus on the fat content and the texture of the milk,’ Agastya laughs. They had no clue about this but they did realize, very quickly, that once the technical details, including fat content, protein content and other such aspects, were finalized, they could be outsourced accordingly. Hence, they did not have to waste time on the technical details.

By this time, the partners had also realized that the business they were venturing into was a retail food business. Therefore, they needed someone with experience in that area. And with that in mind, they zeroed in on Sohrab Sitaram, who has over eighteen years of experience. He came with a credible background, having studied hotel management, worked in the F&B department at Taj Hotels and he also knew the food industry very well. After leaving the Taj Group, Sohrab had set up, as an integral part of the team, some well-known restaurants which include Hungry Monkey, Chi Kitchen and Bar and Zingo Star in Delhi.

‘Sohrab was much older than us,’ says Agastya. The age gap was more than fifteen years as the young partners were in their mid-twenties while Sohrab was pushing forty.

‘He started as a consultant with us,’ says Aman. The experienced consultant then built an excellent rapport with the young men and soon, he was offered a partnership. Today, there are three partners in the Keventers business, with Aman and Sohrab as minority partners and the majority of the shareholding firmly controlled by the Dalmia family. The roles of the three partners are well defined with Agastya as the brand promoter and Aman handling the audits. Sohrab, as the CEO, is the one who has the responsibility of running the day-to-day operations.

Agastya is the third generation of the Dalmia family in business and it is a common belief that business sense comes from the genes. ‘Coming from a family that has had many years of business experience, I am sure the journey must have been easy,’ I comment. ‘Not at all,’ says Agastya surprisingly, ‘While we had the brand and the goodwill of Keventers, we were inexperienced and made many mistakes on the way.’

For example, the first mistake he made was to look at the business as a dairy business. ‘I thought that the key to success was the right quality of milk,’ says Agastya. Very soon he realized that the business was not about the quality and composition of milk, but was about selling a branded consumer product. The hero of the product was the flavour and that required all the attention. ‘As we had a vendor who supplied us the milk, we were able to give them the specifications and then do random sampling to keep a check on the quality of milk,’ he says. ‘What I had to do was to learn the process of making a milkshake from scratch along with understanding the flavours,’ recalls Agastya. He and Aman took months to learn how to make the perfect milkshake. They experimented churning milk with ice cream in a blender but found that it took a long time to pour out the finished product. ‘We did not think that the customer would wait at the counter for so long and neither did we want impatient customers lining up,’ he says. The premixes, in the form of flavoured syrups, were a viable option as these could be added to the milk and blended very quickly and efficiently.

But in the absence of the original formulations, the flavours had to be built from scratch. Many combinations were tried and experimented with. ‘How did you know that hazelnut would be preferred to butterscotch? Or which version of the chocolate or strawberry premix would be more popular?’ I ask him.

‘Oh! We thought we had an easy answer. We used to call our friends and family and ask them to taste the flavours and rate them,’ says Agastya, ‘And that was a big mistake! We had our friends on the lawns of the house, tasting various flavours and it was like a party. We had these long tables put out on the lawns with the bottles of various flavours lined up on them. We even had small shot glasses next to the bottles, so that our friends could taste the flavours. But very, very soon, we realized that this was the surest way of getting confused. If there were five friends, we got twenty opinions! And you know how it is with friends—they’ll say anything!,’ Agastya laughs. ‘So, today, there are only two people who taste the products and decide about the flavours and they are my employees, not friends,’ he says categorically. Indeed, it is Shorab who tries new flavours and Aman gives his feedback. The final approval rests with Agastya.

‘Given the experience with friends and their “well-meaning advice”, the first Keventers store opened in a place where my family and friends may not be regular visitors,’ laughs Agastya. ‘I wanted the store to be in a place where I could make mistakes and not have friends and family talk about it. Pitampura was chosen since the financials—rent, security deposit and initial capital expenditure—were low,’ he says. The added advantage was that he would be able to concentrate on the business without worrying about any kind of ‘social pressure’.

As Agastya speaks, his inherent sense of business is evident. Hearing him tell his story, it is difficult to believe that this is a twenty-five-year-old without any formal business education, recounting the story of his enterprise. It is normal for the next generation of any business family to be inducted into it to learn the ropes. It is also usual that the induction occurs after the next gen has completed postgraduate studies, usually from a renowned university overseas. But Agastya is a graduate in English literature and saw no merit in wasting two more years studying for an MBA.

‘College degrees are a waste of time really! They don’t teach you anything that you can use in practical life,’ says Agastya very seriously, ‘and I don’t believe in them’. He is living this statement. He went to Sanskriti School in Delhi, where ‘I was your normal school kid. Didn’t really focus on studies. I loved playing tennis,’ he says. But his mother, the noted writer Manju Kapur Dalmia, had apprehensions about her son and his then ambition to become a tennis player. She felt that the game was extremely competitive and that no one would recognize Agastya as a good player unless he kept winning. Like any other mother, she too did not want her son to go through disappointment.

After school, Agastya began his undergraduate studies at St Stephen’s. ‘But I did not like my subject there, so I left and went to Hindu College,’ says Agastya very matter-of-factly. And how did that go? He laughs and says, ‘I did not stay there either. I left Hindu College as well.’ He found that there was nothing he was learning by attending classes. His passion at that time was tennis. Despite his mother’s concerns, he continued to concentrate on playing tennis well and reached the national level. ‘But I had to quit. I just wasn’t good enough,’ he says with brutal honesty. So, in a sense, his mother’s apprehensions did come true.

‘Did you manage to get a degree at least?’ I ask him. Agastya looks at me with a what-do-you-think look, laughs and says, ‘Of course I did. I enrolled in a distance learning course and was taught by the faculty of Miranda House.’ Manju Dalmia was a professor at the girls’ college and her colleagues tutored the young Agastya for his distance learning course.

Agastya says he is extremely fortunate that he grew up in a family that believed that the role of the parents is not that of a controller but that of an enabler. His mother’s family also played a part in his upbringing as did the fact that he was a late child. His mother was forty-one years old when she had Agastya. He is the only brother of three sisters, though one of his sisters died in a tragic road accident years ago. ‘My parents actually were quite hands-off in their approach to bringing up my sisters and me,’ says Agastya. So, the children were free to follow their own dreams and more importantly, were allowed to make mistakes. There was no overbearing approach to not drinking or not smoking. Agastya says that since they were allowed to make their own decisions, all the children realized early on that there was no fun in breaking rules because there were no rules to break.

His mother, a professor of English, had a different upbringing from his father. ‘My mother’s side of the family is completely different from my dad’s,’ says Agastya. ‘My mom’s father was a senior bureaucrat in the government and my dad comes from a business family. It is really fun to see the two sides come together at family functions,’ he says with a naughty smile, ‘They literally stand apart!’ And then there is the difference in the number of family members!

His mother’s side of the family is much smaller compared to his father’s side. Agastya has sixteen aunts and uncles, of which five aunts and one uncle is ‘immediate family’. That is, these are the children of R.K. Dalmia and Saraswati—one of Dalmia’s six wives, who was Agastya’s grandmother. Of his five aunts, two stay at Malcha Marg with their families and the remaining five families stay together in a Lutyen’s Delhi bungalow. Each family has their own living space, complete with a kitchen, within the sprawling bungalow. But the lawns are a part of the common spaces. If anyone wants to use the lawns for an event or a party, they ask the others on the family WhatsApp group. Similarly, the Akbar Road family group gets excited about getting together on occasions like Diwali or birthdays. ‘And if we don’t get any response on the WhatsApp group, that’s when we write emails to each other,’ laughs Agastya.

Within this ‘immediate’ family, Agastya has eight cousins and couple of them were used as sounding board for the relaunch of Keventers. Each cousin is doing his or her own thing. A couple of them have turned entrepreneurs. One has launched a premium olive oil in India by the name of Leonardo Olive Oil. Two others run Dalmia Cement. ‘I did talk to my cousins, but it was just like any other matter that we discuss. I did not see any need to ask them for advice. But they did know that I was going to revitalize Keventers,’ says Agastya.

While the cousins may have known about his plans for Keventers, they certainly did not come to the Pitampura store. It was a small store with three employees. Given that a 100-year-old brand was being relaunched, it was done in a fairly low-key manner. Advertising was done only through flyers and posters in the neighbourhood. And who was the first customer, I ask. Agastya had to think hard to answer my question. He screws up his face and looks up at the ceiling as he tries to remember, ‘The first customer was a man with a walking stick. No, I don’t think he was an old man, but I think he had had an injury or something and was using the stick because of that,’ says Agastya. The first transaction was a simple one. ‘He came in, looked at the options and asked for a shake. That’s all’.

The Pitampura store had patties and sandwiches too, besides milkshakes. The shake itself was served in plastic glasses. But he realized very quickly that the customers were unhappy with the plastic glasses. So thick-paper glasses replaced the plastic ones. But even this was not acceptable to customers. For one, people wanted to know why Keventers was being sold in paper glasses. ‘They missed the bottles,’ says Agastya. ‘For some reason, people walked into the store and expected to have their shake in a bottle. And when they saw the glasses they said, “Your store in CP uses bottles. Why are you using paper cups?” ’ he continues. Even after the Connaught Place store had changed its name, the association with Keventers had continued in the minds of the customers.

And then there was the logo that needed a design. Keventers was being given a new lease of life by young people. The brief they had given their design agency was to give them a contemporary logo. The logo they selected had a ‘bubblegum’ look and feel. It was red and tried to portray a young, peppy look with the fonts used. But this too caused a dissonance in the minds of the customers. People remembered Keventers as part of their childhood or had heard about it from their parents. They did not know that Keventers was being launched in Pitampura. Instead, they thought that the company had finally opened another store to sell their milkshakes. So, the young and peppy look and feel of the brand puzzled them. They came in and saw the staff in red uniforms. ‘Since the logo was red, we made the uniforms in the same colour too,’ explains Agastya. Moreover, the store itself had a young feel, given its decor. ‘But the feedback from our customers made us realize that they were looking for heritage, a legacy. They were puzzled by our logo and the overall look and feel,’ says Agastya.

The only similarity between the Connaught Place store and the Keventers store was the price per shake. The stockist in Connaught Place had been selling his version of Keventers for Rs 50 per shake and the price was kept the same at Pitampura. ‘But he was paying a ridiculously low amount for rent and could afford to sell at Rs 50. We had to pay market rent and realized that the price point had to change,’ explains Agastya.

Taking ground-level experience into account, the decision was made to shut down the Pitampura store within three months of opening. ‘It is better to fail fast because it teaches you what not to do. Or how to do things differently,’ says Agastya. The failure made him realize that he had to go back to the drawing board if he wanted to get it right. ‘Once I realized that the model was not working, I needed to act quickly. There was no point in hanging on to the business just because I started it. Better to cut my losses, literally, as the store was making losses, and move on,’ he says.

The art of scripting a turnaround

So, the store was shut down and the two friends regrouped to plan for the next steps. The duo chose a new design agency and gave them the brief for a new logo. The agency was told that the heritage of the brand and the 100-year-old legacy had to come through clearly. The bottles had to be brought back too as Keventers was synonymous with glass bottles. And most importantly, the price point had to be corrected. ‘Pitampura was like doing my MBA!’ says Agastya. He points out that he learnt more about all aspects of business in those three months than he may have in a two-year course. ‘When people say, “What they don’t teach you at Harvard Business School . . .”, I now understand what they mean,’ he says.

Along with the brand, bottles and flavours, the team also had to decide on the future locations of the stores. Learning from his experience at Pitampura, Agastya decided that the new stores had to be in a place where footfall is high. He also realized that the product had to be positioned correctly. Shopping areas and malls were a logical choice. Select Citywalk was the preferred location and negotiations began with the owners of the mall for a location. ‘We waited one full year for the store to open,’ Agastya remembers. The plan was ready but the site was not. ‘And each time we looked at an alternate site, the mall got back to say that they will give us the space shortly,’ he laughs.

However, when Keventers opened at Select Citywalk, it was worth the wait. It was a new-looking store with a colonial theme. The logo was in elegant black and beige and the uniforms of the staff were also changed to these colours. The iconic Keventers bottles were back in the store and no food was served. The focus was only on milkshakes, sold in bottles. ‘By focusing only on freshly made milkshakes, we kept away from existing players like Verka, Amul, Aarey or even Coca-Cola, who sell preserved beverages,’ says Sohrab. He goes further to explain that customers see the milkshake as a ‘fresh’ product because it is made right there in front of them. The other benefit is that as all the ingredients, except milk, have a long shelf life, they do not have to have large refrigerator units at each store. Since milk is a perishable item, it is ordered each day through the company’s own supply chain.

One major point of differentiation is that while coffee, cold coffee, tea and other beverages in shopping areas are sold in disposable paper or plastic cups, Keventers sells its milkshakes in glass bottles.

These glass bottles contribute hugely to the popularity of the brand. Initially, the store had a bin where customers could drop their bottles after they finished. ‘But we found that people just did not want to throw the bottles away. They wanted to carry them back,’ says Agastya, ‘And I like it. I like it that after finishing, they are hesitant to throw away the bottle.’ The bottles, therefore, became the focal point in social media promotions. ‘On our Facebook page, we show how to use the bottles in different ways. And now people have started posting photographs of themselves with the bottles,’ says Agastya. Since customers wanted to take the bottles back home, Keventers started changing their bottles so that customers could build a collection at home. Their colourful bottle for Holi was a big hit with customers. ‘Now we plan to have different bottles for different occasions,’ says Agastya.

With the growth in business, the size of the team also expanded. While growing the team, Agastya says he chose experience over enthusiasm. ‘I want people who are over forty to work with me. They work best as they have experience,’ he says. The people at the stores are a bit younger though. The employees at each store are supervised by the store manager. ‘I have a weekly meeting with all my store managers. They are my eyes and ears on the ground. They tell me directly what the customer likes and what he does not like,’ says Agastya. Besides the weekly meeting, Agastya manages his business by data. He looks at all sales numbers and trends on a daily basis.

Managing people is not easy and Agastya finds some behaviour patterns especially puzzling. ‘I know that some employees cheat at the store,’ he says. Pilferage is one problem that he has identified and missing cash is another one. He finds it very difficult to understand stealing. He sat down with his store managers to work out if they could train the staff better.

He decided to have the young staff trained on the values of bring part of a family business, which has a heritage and a set of values. ‘I could see that there was immediate resonance and a feeling of belonging within the employees,’ says Agastya.

‘It helped to set the base but I built in practical checks and balances into the process as well,’ he says. He made financial reporting more detailed and made the store managers more accountable in these matters. ‘The pilferage has certainly gone down but has not stopped completely. But we find that the instances of adverse behaviour are from the newer staff—not from the ones who have been with us awhile and have been taken through training about values,’ he says. He also believes that these problems helped him build a better process. ‘So in a way, I am happy when such problems are found out. It keeps me on my toes,’ he says.

One other problem that the young team ran into was the expansion of their business. ‘We were clear that we did not want a dine-in model,’ says Agastya. Keventers wanted to supplement the shopping experience of their customers and hence, it made sense to be in areas where there was a high footfall. ‘We wanted people to pick up a milkshake and continue with whatever they were doing,’ adds Aman. The Keventers stores were conceptualized to be approximately 100-square-feet outlets in busy locations. After their initial expansion of three or four stores within Delhi, Agastya realized that if he wanted to get to 100 stores in the near future, he needed a better solution than just a franchisee model. ‘Based on our initial experience, I could see that dealing with so many franchisees would be a problem,’ says Agastya.

This is where a discussion with his dad helped. He sat with him to discuss issues in the expansion plans of the business. Agastya was looking for a way to make the best use of the franchisee route. ‘That is when my dad told me to speak to Javed Habib,’ remembers Agastya. Javed is a well-known hairstylist and Agastya couldn’t understand how this would help.

But it did. ‘The advice I got from Javed is the best advice that I have gotten till date,’ says Agastya, with a bit of awe in his voice. He spent a few hours with Javed and walked away with one piece of simple advice: Go the master franchise way. Instead of working with many franchisees directly, Javed suggested that Keventers mark out territories for their business. Following Javed’s advice and a discussion with his team, Agastya chalked out the expansion plans and got his franchise team to start work immediately.

The master franchise route involved selling territory rights to a master franchise, who then further created multiple franchisees within a given period. After sourcing the franchisee, the master franchise was responsible for managing them on a day-to-day basis and for training the staff of the franchisees. ‘The collection of royalty payouts, management of expenses and renewal of contracts is also the responsibility of the master franchise. I wanted him to have a skin in the game. That is what Javed advised,’ says Agastya.

I wonder whether that means abdicating all responsibilities. ‘Not at all,’ Agastya says a bit indignantly. ‘We give complete support to the franchisees at all times—pre- and post-opening. This is an ongoing process. Should they want our advice regarding site selection, we are there to help them. We have created a training model with various modules for training the staff. The marketing of the brand on social media and outdoors is done by us. Marketing is essential to drive footfall to the stores and the franchisees appreciate this,’ explains Agastya. ‘And it is working already,’ he adds happily. They have enquiries almost every day from people across the country wanting to be a franchisee.

A lot is working for the young man who is the third-generation scion of the Dalmia family. For one, he has given the popular generational adage a twist. It is commonly said, and data shows it to be true, that the first generation builds, the second consolidates, and the third withers it away. Shirtsleeves to shirtsleeves in three generations is the common saying. But here is Agastya, a third-generation son, who has revived Keventers, which had withered away in the second generation. And he does not even have a formal education in management.

But with an open mind, he continues to learn each day. He believes that putting together a good team, with a mix of enthusiasm and experience, is the key to growing the business. The aim is to take the number of stores to 100, not only in India but also in Nepal and other neighbouring countries. ‘I want to create value for all of us,’ he says. The ‘us’ includes himself, his partners and the employees. As the valuation of the firm increases, he is open to a strategic partner coming in. And what will he do then? ‘I am learning to play the piano. And have started studying astrology,’ he says. Both these activities fascinate him.

‘How much of business can I do and for how long? I will set it up, create valuation for all,’ he says. But for the time being he wants to do more of what he knows best—‘Sell a shake’!

Conclusion

Keventers today is a small business. Does it have the potential to become India’s Starbucks? Only time will tell. What Keventers does have for sure is a promoter whose life, in many ways, is similar to his grandfather’s. And there is irony in this situation.

For financial reasons, R.K. Dalmia could not have a formal education and taught himself on the job. The lack of formal education did not come in the way of his success. By contrast, Agastya could have gone to the best universities anywhere in the world as financing his education was not a matter of concern. He consciously chose to keep away from formal education and instead, learnt on the job. When he says that his business education came from the store in Pitampura, he is absolutely right.

His grandfather met with early failure in his business but it only motivated him to do better. Years later, Dalmia’s grandson also failed in his first outing as a businessman. The Pitampura store could not succeed. But very astutely, Agastya focused on the learnings from the failure and did not let it deter him.

While he has displayed his inherent business sense in various decisions he has taken along the way, what remains to be seen is whether the fire in his belly burns as strongly as it did in his grandfather’s. The starting points bode well and present themselves in the many business calls that Agastya has taken almost instinctively: to spot an opportunity in the market when Aman spoke to him about Keventers; the decision to focus only on one product at the start of the business rather than spread themselves thin; the call to get in an experienced partner to complement his own enthusiasm and drive; to be ruthless in addressing failure and moving on with the business; to listen to advice from people and act on it.

However, he has taken some calls which may come in the way of the success of the brand. Keventers is a retail business and Agastya wants to create value for all stakeholders in the medium term. However, he has chosen to go slow in expanding the business. A retail business requires scale and the plan of 80–100 stores in two years is not enough to build a national brand, especially in a country like India.

A company that wants to build a national brand needs to be more aggressive in its business plans and look at 100 stores in one year and then double that in the next. Should he want comfort, he should take a look at the statistics of the food business in India.

Cafés and milkshake stores are part of the overall QSR—quick service restaurants—industry in India. A Technopak report from 2014, with inputs from the Credit Rating Information Services of India Limited (CRISIL), show the overall industry (organized and unorganized) to be at approximately Rs 2.5 lakh crore and with an 18 per cent compound and annual growth rate (CAGR) to reach approximately Rs 4 lakh crore by 2019. Within this market, the chain food services (CFS) market (any brand that has more than three outlets) is slated to be at approximately Rs 33,000 crore by 2019. The café business, which is one of the components of CFS, is projected to be at approximately Rs 4000 crore in the same time.

Clearly, there is a market potential for the growth of Keventers. There is also the example of other players who have had business successes. One example that Keventers could look at is Café Coffee Day (CCD). This coffee chain too started with one outlet in Bangalore, selling coffee at a premium at Rs 25 per cup when, by comparison, local coffee was available at Rs 5. Today CCD has almost 2000 outlets but more importantly, it has a private equity (PE) funding of over $200 million. It is also a listed company.

An expert in the food industry says that Keventers has an advantage that CCD did not—of the brand Keventers. For a retail business, the recognition of the brand is one of the key strengths. Keventers, with its 100-year-old heritage, can afford to be aggressive in expanding the brand. The same expert says that rather than use the next couple of years to open 80-100 stores, Agastya should immediately look for external funding to grow the business. The early start has already proved that there is a business model in place that can be scaled up. The business needs experienced professionals across all functional areas and capital to fund the growth. ‘It is better to own 55 per cent of a much larger business than to own 80 per cent of a small business,’ says the expert.

Access to funding will also enable Keventers to use all forms of advertising, including print and television, for marketing its brand and products. A leading name in advertising says that Keventers is shortchanging itself by limiting the marketing to social media and some outdoors. ‘I would love to get my creative team working on Keventers,’ says the advertising expert. ‘We don’t often get a chance to work on a 100-year-old brand in the retail space and I can already see some fantastic work that we could do around it,’ he says excitedly.

It is important for the brand to assert itself quickly on the national scene as the entry barriers for this business are almost non-existent. The early success of Keventers products has proved that there is indeed a market for fresh milkshakes. So, in a sense, Agastya has conducted a proof-of-concept, as it were, for the market. If he does not expand aggressively, any multinational or even an Indian company can move into the fresh milkshake business. Anyone with deep pockets can create a brand, market it well and become the leader in the business. Barista and Café Coffee Day launched roughly around the same time in India. Barista took the slower and more measured route to expansion while CCD went aggressive. Today, the difference in the size of the business, and the valuations thereof, for both the businesses is huge. Barista, which was seen to be strong in north India in the early 2000s, has been overtaken ruthlessly by CCD even in its backyard. Keventers could go the same way and it would be a shame if the early work done by Agastya was used by someone else to grow their own brand.

References

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