 "M V Praveen")
Morf India Limited is a 15-year-old water and sewage treatment company with operations throughout southern India. Last year, it signed a brand licensing agreement with Electrolux Home Products Inc to manufacture and market their Kelvinator range of home water purifiers and air purifiers in India and Sri Lanka. Capvent AG, a Swiss PE fund, recently picked up a majority stake of 51 per cent in Morf. M V Praveen, the company's Managing Director, in an interaction with T E Narasimhan, explains the company's expansion strategy. Edited excerpts:
How do you plan to make use of Capvent AG's equity infusion in Morf?
Morf has entered into a brand partnership with Electrolux to manufacture and market their Kelvinator range of water purifiers in India and Sri Lanka. These equity funds will be mostly spent on establishing a national footprint and a leadership position for Kelvinator purifiers in the next three years. Specific areas of spending will be product development and advertisement campaigns. A portion of the fund shall also be used for executing large water and sewage treatment projects under the Morf banner, which has been our mainstay for years.
How do you plan to reinvent Morf and scale up faster?
All these years we have been growing year-on-year by 20-25 per cent and the funds for expanding operations came only from internal accruals. Therefore, our growth was relatively slow. The market for water purifiers and water/sewage treatment plant is growing at an astonishing pace. The point-of-use purifier segment alone is today a '1,800 crore market and is estimated to reach a size of '7,500 crore in the next three years. This apart, the sewage treatment space is also expanding, given the number of multi-storey and multi-block apartments coming up on the outskirts of every major city in India, and now various state governments have made sewage treatment plants mandatory for all large apartment blocks.
This equity infusion has eliminated our major [financial] weakness and now we have the wherewithal to aggressively expand our operations in the shortest possible time. Besides, Kelvinator is a very popular brand name in India and evokes a nostalgic connect with most Indian customers given its presence in India for the past several decades. This brand legacy will greatly help in expediting our expansion plans. We have drawn up a clear road map for our future growth and our priority in the next one year will be to bring out new feature-rich water purifier models; expand and strengthen our reach through the MTBN channel and the conventional retail model throughout India; and conduct advertising and promotional campaigns.
What is the multi-tier business network (MTBN) that you are going to roll out across the country, and how does it work?
The water purifier market is still predominantly a direct sales-driven market, though a distinct shift to retail sales is being seen off late. MTBN is a unique direct sales model, which essentially comprises of three layers of channel partners with clearly non-overlapping responsibilities which complement each other. MTBN is designed to give us a robust infrastructure and considerable resilience to our operations. This model will give us manifold reach in a very short time at a significantly lean fixed cost base.
When and how do you plan to grow from regional to national?
We presently have operations in Tamil Nadu, Andhra Pradesh and Karnataka. We have close to 55 super channel partners (the first tier in the MTBN) in these three states. Recently, we entered Kerala by appointing a super channel partner in Kochi. However, operations are yet to gather momentum there.
We plan to expand our operations to all Tier-I cities outside South India in the next six months. We have already started recruiting team members to head operations in major Tier-I cities in northern, western and eastern India. Unlike in South India, we will first launch our products in retail stores in other regions and once that is consolidated, we will roll out our MTBN model.
