Cash Negative

By Ramesh Akkineni

Y C Deveshwar in an interview

But your FMCG, minus the cigarettes, is cash negative.

We can be cash positive in no time, the day we decide to slow down investments. No one in the world has created 20 new brands, 13 of them big ones such as Aashirwad wheat flour where we're the number one after just three years with a 52 per cent market share; our market share in biscuits is today around 10 per cent. To create new brands, you have to spend like the existing number one, but without the revenue base - we've done precisely that, hence the losses. Our aim is to be the number one player in each segment.

Your board doesn't look at the losses?

It does, but you have to look at the balance and at the value created. On an annualised basis, my FMCG business will be worth around Rs 2,000 crore (Rs 20 billion) by the end of the year.If you go to buy this business, you'll spend at least Rs 2,000 crore to do this. So, I've created value of Rs 2,000 crore by spending a few hundred crore rupees.Five years from now, the turnover will be Rs 5,000 crore (Rs 50 billion). I'm happy to spend up to 10 per cent of my PBDIT on creating new businesses at any point in time, today this is around 5 per cent.

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