Ravi K Jaipuria (RKJ), one of PepsiCo India’s largest franchisee bottler, says that despite a slump in Pepsi sales, he is going ahead with capacity expansion plans with an investment of Rs 100 crore over a period of next six months.
The investment will see setting up of two new plants through Varun Beverages (a bottling company of RKJ and part of the Rs 1,200-crore Jaipuria Group) at Bhiwadi and Jaipur in Rajasthan and also a foray into the manufacture of crowns and plastic shells for glass bottles, RKJ chairman Ravi Jaipuria told FE. One of the largest franchisee bottlers for Pepsi, the Jaipuria group collectively forms about 45 per cent of Pepsi’s total franchisee business.
According to Varun Beverages president-finance Mr RP Gandhi, the company is spending Rs 60 crore to set up a new bottling plant at Bhiwadi, Rajasthan, with an installed capacity of 80 lakh cases. A 15-acre plot has already been acquired by the company and the plant—commissioned last month—is expected to come up by March 2004.
Additionally, the company plans to raise capacities at its Kosi plant in UP by 30 lakh cases, pumping in an investment of Rs 15 crore.
As part of its backward integration venture, Mr Jaipuria is setting up a new plant for manufacture of crowns and plastic shells at Ajmer Road, Jaipur, with an investment of Rs 25 crore.
While admitting that Pepsi’s sales were hurt post-cola contamination controversy, Mr Jaipuria, however, maintained that “it was difficult to assess whether the slump was due to the controversy or a lean monsoon. Weather has played a spoilt sport, too, and the season has been dull so we can’t really say whether sales have been hit by the pesticides issue alone,” he said, adding that otherwise 2003 has been an excellent year for soft drinks sales.
With the new initiatives, the RKJ group which operates through two companies—Varun Beverages and Devyani Beverages—hopes to achieve a sales turnover of Rs 600 crore by the end of 2004, and Rs 720 crore by 2004. The company posted a sales turnover of Rs 500 crore in 2002.
The RKJ group led by Mr Jaipuria has seven Pepsi bottling plants spread around the country in Greater Noida and Kosi (UP), Alwar and Jodhpur (Rajasthan), Goa, Dharwar (Karnataka) and Kathmandu. The total capacity at these units is about 220 lakh cases per year or 5,000 bottles per minute.
Besides the soft drinks business, RKJ is also firmly entrenched in the foods and education business. Part of the Rs 1,200-crore Jaipuria Group, which has interests in diverse fields including Pepsi, Pizza Hut (he’s the sole franchisee of Pizza Hut in North India) and DPS Schools, Mr Ravi Jaipuria has more recently set his eyes on the emerging dairy market. He has formed a joint venture company with brother Mr CK Jaipuria to bring in the French dairy major Candia into the country. It recently launched a range of ice-creams branded Cream Bell in the country.
Apart from Mr Ravi Jaipuria, Mr CK Jaipuria is Pepsi’s largest franchisee bottler and owns Pepsi bottling units in Jammu, Vizag, Guntur and Delhi.