DAIKIN

We Aspire To Cross Rs 8000 Crore In Revenues In 5 Years: Blue Star

Established during World War II with the vision of creating a long-running institution, Blue Star is today India’s leading air-conditioning and refrigeration company boasting revenues of Rs 4000 crore. The company which is celebrating its platinum jubilee year is looking to double its revenues to Rs 8,000 crore in the next five years. BW Businessworld’d Bhakt Vatsal Sharma caught up with the company’s top management including chairman Suneel Advani, MD Vir S. Advani and joint MD B. Thiagarajan to talk about the business, succession plan, and the road ahead, among other things

Excerpts:

How did your organization come up with the name Blue Star and could you describe your journey of 50 years?
Suneel Advani: The company was established by my father during World War II. Companies like Larsen & Toubro, Mahindra & Mahindra already existed at that time, which were named after their founders. But my father wanted to build a company and an institution which would exist long beyond his lifetime. He didn’t know who were going to be the successors down the line so he chose a name that was uplifting, inspiring and aspiring to something greater and he thought of ‘Star’. The name still felt incomplete and after referencing names of colours he finally came up with ‘Blue’, which turned out to be apt for his interest towards the cooling business…

My journey so far has been exhilarating.  A few days earlier, while speaking to my employees, I couldn’t recall one day in 50 years when I wasn’t excited to go to work. I never faced the Monday blues like many people. I and my elder brother followed the principles our father had laid down for himself and the dream of building an institution that would last forever. That vision drove the enthusiasm of taking Blue Star to the next phase of growth with the same principles that govern this company 75 years later.

With Blue Star gaining a huge market presence with its wide range of products, how do you wish to consolidate your achievements?
We don’t want to consolidate, we want to grow instead of protecting our assets. I haven’t come to a point where I feel the numbers we are touching right now is high in market share which is sustainable. We are still growing our market share. We are in an economy that’s growing at 7-7.5 percent a year and in the air conditioning industry which has less than 5 percent penetration in this country compared to other home appliances, and there are 1.3 billion people who will demand for better and efficient energy conservation air conditioners in a tropical country like India where cooling plays a vital role for humans, food, water, workplaces and pharmaceuticals. The future for cooling is as great in the country as the time my father set out to open Blue Star.

As I go into retirement, I feel very happy and satisfied with fulfilling my part of my father’s dream and Vir is walking that same path along with the joint managing director B. Thiagarajan and has subscribed to this vision since two decades, making some vital contributions to the bigger picture.

What are your expansion plans?
We stand today at Rs 5000 crore revenue and I told my staff a few years ago to increase the revenue to Rs 8,000 crore when our brand completes 80 years of its existence. We are in the midst of that strategic decision now. What do we do to grow the existing business clients? Which new businesses would we get into as we move forward which will propel us to that number? These are some of the questions we are finding the answers to and the expected growth numbers are fairly reasonable and achievable for us.

Will you involve yourself in the main decisions of the company even after retirement?
I’ve completed 50 years in this company and after all this time I feel that I am done. I have the biggest investments making me the single largest shareholder. Hence, yes I would still have an interest in the brand even though my day-to-day involvement has reduced at least since a couple of years. I am available to the management for advice, opinions and different perspectives but apart from that I don’t intend to be involved and want to spend more time with myself, my wife and my four grandchildren.

What advice would you give to the upcoming business leaders?
My first advice would be to tell them to read a lot and that was one of the key principles I followed for the longevity of my own career and the company. As a leader, you have to constantly learn and seek knowledge because of the rapidly changing world of business and you got to stay on top of it. It obviously is not easy with the pace of change we are seeing but the leaders of tomorrow have to be bold and courageous. Another personal advice I’d give to the next generation of entrepreneurs is not to be greedy. And if you look at the numbers, we are littered with large companies whose reach exceeded their grasp, as the phrase goes, to cause unsustainable debts. We retained the control of our company and grew prudently and we stuck to our knitting along with managing our core. The new businesses are a threat to the founders of the very same organizations because of immense competition and rapid change in the visions that the business leaders of tomorrow would see adaptability as a key component of the longer run.

What drives your interest in and passion for art and would you be interested in writing a book given your great command over the English language?
The passion for art flew naturally through me, I suppose. I have two siblings, my brother has minimal interest in art but my sister is very interested and went to J.J School of Arts as a student. In my early 30s we got $4 million as compensation from HP as we were distributor for all their products in this country; it was a huge sum during the 1980s. I decided to buy a painting for the company, which was a big cryptic of Mother Theresa by M.F. Hussain and his biggest painting at that time. From then on I got a better sense of art. I succumbed to it only to realise I have more art than I can house including my office space which is filled with them. I am a reader and I love the written and spoken word. There is a book called Reach For The Stars which is the third edition of our history at Blue Star. We had three editions of the company history which I authored mainly. I oversaw a similar format of a book when I was president of Jai Hind College. Having said that, I am more of a reader than a writer having an interest in the genre of non-fiction, history and philosophy. It is more of literature I read than novels and you grow into that with age.

How do you plan to drive the initiatives of Blue Star ahead? Could you share some insights from the legacy Blue Star wishes to take ahead?
Vir Advani: Thiagarajan and I have been running the company since the past three years and with Mr Advani retiring as the non-executive chairman we see business running as usual. Of course, we rely on him and his brother for continuing advice. We have a three-year strategic plan which we have charted for Blue Star mainly revolving around our market share, profitability and existing lines of business along with adding adjacent lines of products and solutions. We are also focusing on HR and our people who will be the key drivers of our business. I exchanged portfolios with the Joint MD where I took over HR from him and he took over the project’s business from me, we are both learning new areas of the business. I am quite focused on the people’s side of the business for the next couple of years.

B. Thiagarajan: 
One of the key imperatives is margin expansion which can come through backward integration in manufacturing. We have to become more relevant to the aspirational middle-class families because growth is coming in from tier 3, tier 4 and tier 5 towns and they are our first-time buyers in quite a few product categories. We will reap the benefits of the next commercial construction cycle which will take off in the near future and we will contribute to that growth in terms of revenue and profitability. This is also a challenge but also a huge opportunity for us.―BW Businessworld

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