Chataka Pataka Tangy Tomato Snacks happens to be all over Gujarat — present in almost every paan shop and organised retail outlet, but with no jumbo billboards screaming its delights. With simple ideas that may seem outlandish in this age of brazen marketing, Chataka creator Balaji Wafers Pvt Ltd has managed to fend off bigger players like Pepsico and Haldiram’s in the Rs 600-crore Gujarat market for over two decades since launch.
“Balaji survives solely on word-of-mouth publicity,” Mahesh Manjawala, executive director, Triton Communications, adding that the group has few advertisements to its name. That publicity, say industry watchers and rivals, comes from the Gujarat-based snacks maker’s ability to localise flavours. “Balaji understands the palate of the consumer well,” says Mr Manjawala.
Indeed, Balaji products like Chataka Pataka, Ratlami Sev and Sing Bhujiya, among others, suit the tastes of a specific market. The company offers masala wafers to cater to the Gujarati palate, chaat masala for the Maharashtra market and a range of spicy snacks for Rajasthan.
Here, it scores over Haldiram’s, which too has flavours to cater to the North Indian palate, by a better understanding of the Gujarati consumer. Balaji’s pampers the Gujarati’s sweet tooth by keeping its khatta-meetha less spicy.
“Balaji’s product mix is just right,” says Mr Manjawala.
Those products get an extensive reach in Gujarat, courtesy 10 sole distributors and a 400-dealer network, complemented by a fleet of 150 trucks and 3,500 minivans.
According to industry watchers, tremendous dealer support is one of Balaji’s key strengths.
Balaji keeps its dealers happy and is flexible in dealings, says Shashin Shah, an Ahmedabad-based dealer. “Our salespeople always get easy money,” he says, adding that the group encourages dealers to arrange their own fleet, for which they are compensated. Not to forget a certain factor called pricing. Balaji’s namkeen and wafer packets come for as less as Rs 1 and Rs 5, respectively.
Balaji MD Chandu Virani says volumes help him offer such prices. The pricing plan drove PepsiCo’s Kurkure down the same path, he says, adding that his rivals had to offer similar schemes to retain consumers. This strategy of marrying price, flavour and distribution is estimated to have catapulted the group to a 90% share of the state’s wafers market and 70% of the namkeen market. After beating local brands like Samrat & Real, Balaji has since spread to Maharashtra, Rajasthan and Madhya Pradesh, eyeing a bigger bite of the Rs 3,000-crore branded snacks market.
Rivals are understandably frustrated with Balaji’s success. But some months ago, Lays and Haldiram’s got a godsend opportunity to learn management practices from the group. Representatives from the two companies came calling at Balaji’s premises, taking in operations at the plants and potato fields where the company sources its raw materials. Lay’s went back a lot wiser. “We are impressed by the simplicity and efficiency of Balaji’s operations,” said a PepsiCo spokesman while Haldiram’s could not be reached for its comment.
PepsiCo has since been trying to convince Mr Virani for a sellout.
The group is against the idea, focusing instead on an expansion overdrive. Plans are afoot to expand the snacks range and cater to the global markets. Balaji is also embracing innovations; an automatic food-tech potato processing machinery was installed recently at one of its plants.
Like most family-run businesses, Balaji too had humble beginnings —its delivery van sputtered to life on a loan of Rs 25,000 from a 1,000-metre plot in 1989-90.
Before that, Chandu Virani, born in a farmer’s family, moved to Rajkot from Dhundhoraji village in Jamnagar after acute drought in the mid-1970s snatched all means of livelihood. “While our attempts to do farm equipment business flopped miserably, robbing our family of savings, I also had to shelve plans to run a dairy retail outlet,” he recollects.
At 17, Mr Virani was meeting ends by working as a canteen boy & doorkeeper at Rajkot’s Astron Cinema for Rs 90 a month. Help came in the form of Mr Virani’s then employer, Govind Khunt, who outsourced the canteen business to him and his brother. From that ramshackle canteen, Balaji has grown to a group that boasts of three plants—two in Rajkot and one in Valsad—that churn out 30 lakh packets per day and a Rs 300-crore turnover in 2008-09. Mr Virani still refers to his former employer as “seth”, much to the latter’s embarrassment, who believes “Chandu has grown in stature and is now a seth himself”. Those days helped Mr Virani find a name for the grandiose business that was shaping up in his mind.
“In 1983-84, a small Hanuman temple was set up in the cinema hall’s canteen. That inspired me to name the then homemade potato wafers Balaji,” he says. Today, Balaji’s aura of invincibility, which allows it to even host rival representatives, is a hot topic in B-schools, discussed maybe over its own snacks.
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