The company has been a pioneer in bringing Reverse Osmosis (RO) technology to India and is today a household name in the water purifier segment industry across the country. The Dollar Business caught up with Mahesh Gupta, Chairman & MD, Kent RO Systems, at the company’s manufacturing facility in Roorkee in Uttarakhand, to understand what’s stopping Kent from tasting ‘pure’ success in overseas markets.

Interview By Deepak Kumar | June 2016 Issue | The Dollar Business 

TDB: You have achieved phenomenal success in your RO-based water purifier business. How did it all begin? And what prompted you to name your company as Kent?

Mahesh Gupta (MG): I started my career in 1978, as a petroleum engineer with Indian Oil. But after 10 years, I quit the company to make oil flow meters, under the brand name Kent Oil Meters. In 1998, when both my children suffered from jaundice, I sensed the need to have a water purifier at home and I was not convinced with the options available in the market. After many trials, I came up with the reverse osmosis (RO) technology. And, once I made the water purifier for myself using the technology, I thought it would be good for others too, and that’s how Kent RO systems was born. And after the business took off, I thought I would name it Kent as we were popular at that time as Kent Oil Meters.

TDB: How has the journey been so far? What challenges did you face in your path of success?

MG: The journey has been challenging, but at the same time, exciting and enjoyable. Our biggest challenge was to convince people that they do not only require purified water to drink, but most importantly, they need a good water purifier. Only 2% of the Indian population use the RO-based water purifier, and I still find it difficult to encourage people to go for safe drinking habits, such as using a water purifier. In India, a water purifier is still not a commodity. So, the day it becomes a commodity, I would say I have overcome my biggest challenge.

TDB: How has been the penetration rate of your product in Tier I and II cities, and villages?

MG: We are present in most of the towns and blocks, however, we are yet to enter the villages. Our products are a little pricey, even our low-end product costs about Rs.16,000-18,000, which is a little too high to market in villages. Also, there is a perception among villagers that a water purifier isn’t required. And even if they feel the need, they aren’t willing to spend such a huge amount. But once people realise the necessity of drinking clean water, it won’t be really difficult to enter the rural markets.

TDB: Why did you choose Hema Malini as your brand ambassador?

MG: Between 1999 and 2005, we did not have a brand ambassador. But in 2005, when we decided upon a media campaign, we felt the need to have a brand ambassador, because, a brand ambassador will help us cut on costs. So we made some research to find out who would fit the role. Hema Malini was just what we were looking for because she was not only popular as an actress, but also a mother and a good dancer. And roping her did us good because we gained a lot of customers through her popularity.

TDB: What is the share of revenue you spend on R&D? Do you import any component? And if yes, from where?

MG: We spend about 5% of our revenue on R&D. And although we import some of the components, we are focused on innovation. We have our own technology and patents. We feel that if we have to stand out and remain ahead of our competitors, then innovation has to be the first focus. We are the first company to make mineral RO purifier, which keeps the mineral intact with zero wastage.

TDB: Your exports have been just 3% of the total sales. Are you satisfied with the export performance?

MG: We are an emerging enterprise which still relies upon expansion, however, we are expanding almost 20% every year. We are not a multinational player, thus we do not have enough strength in exports. And since our product is not a commodity, it is difficult to generate demand overseas. So, our current strategy is to work in India and expand our footprint in overseas markets later.

TDB: So, you don’t want to export your products, not even to neighbouring countries?

MG: We started in Delhi-NCR, and it has been so far so good when it comes to the Indian market. And it’s not that we don’t export. We are already shipping our products to Sri Lanka, Bangladesh and Kuwait. We ship everything from India. We don’t advertise our product in foreign countries because everything is available on our website through Indian diaspora. So, whatever I have done in India, I would like to exercise the same in other parts of the world. However, we are looking at increasing our exports. I believe 30-40% market expansion will happen, every year, going forward. Once we mature in the business, we will plan a country-wise or region-wise strategy. This year we expect Rs.35-40 crores revenue from exports, against Rs.24 crores last year. For us, the Middle East and the African continent look attractive.

TDB: The GST bill has been stuck. Is it hurting the industry?

MG: It’s all political. When Congress had put up the bill in the Parliament, BJP never allowed it a passage. And now that BJP is trying to take up the bill, Congress is reluctant. The Indian political atmosphere seems too much in turmoil to clear the bill. Otherwise, GST would have helped the economy grow. The opposing parties will never like the ruling party to steal the credit for a growing economy.

TDB: Has anything really changed on the ground since the inception of campaigns such as Make in India and Ease of Doing Business?

MG: Perception has changed and people have started talking about manufacturing within the country. However, it is unfortunate that in the last two years, we have been hit by drought.
In addition, the global economy is not doing very well, and exports are down because demand has declined. The interest rates have come down, but the financing situation hasn’t changed to help ease business ventures function – banks are not ready to finance loans easily.

No doubt, business registration facilities have improved. But then laws are different in states and at the Centre – there are certain laws that needs to be implemented at state level and can only be implemented after an approval from the government in respective state. Hence, state governments have to be equally motivated to encourage manufacturing in their respective regions.

TDB: India’s overall exports have been falling month after month. Do you think FTAs can help exports grow?

MG: In my opinion, we will give away our market to foreign countries by signing FTAs. Rather than pushing exports, FTAs unify the world market into one. And everyone wants to protect their home turf first. FTAs, to me, will not benefit the country. We have an FTA with Malaysia, but we have not benefitted. Malaysian equipment is available in India at a lower price, but our exports to Malaysia have not been significant.

TDB: What can the government do to stall the decline in India’s exports?

MG: Exports have fallen in dollar value, and not in quantity. Our imports have come down and our cash account balance has fallen considerably. The demand is not picking up currently because of the global economy and we do not expect exports to move up immediately. What we need to focus on is quality and innovation, and that is not happening.