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Feature Magazine | Feb 05, 2011

"In the North, West and East, we’ve strengthened our distribution network in the top 100 cities.
"—Jyotiroop Barua, VP, Sales & Distribution, MTR Foods
MTR
Main Course Recipe
MTR Foods is challenging established biggies in its quest to becoming a national brand.
Ajitha Shashidhar

MTR Timeline

1926 Yajnanarayana Maiyya opens Mavalli Tiffin Room in Bangalore.

1949 MTR brings out its famed rava idli.

1976 Maiyya’s son Sadanand gets into the family business.

2002 Aquarius Investment Fund buys 14% stake.

2003 Morgan Stanley buys a 24% stake.

2007 Orkla buys a 100% stake in MTR; Sadanand Maiyya continues as CEO and member of
the board.

2008 Sadanand Maiyya exits MTR.

***

B angalore may be synonymous with IT nowadays, but for many years before IT began to be
used as a byword for the Garden City, its chief claim to fame (apart from its robust defence industry,
of course) was a tiny restaurant-turned-foods major, MTR, or the Mavalli Tiffin Room.This Rs 280-
crore company, which gave India its first rava idl—after a rice shortage during World War II forced
it to tweak the key ingredient in this favoured breakfast item—is now in the throes of a major

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professionalisation endeavour that will eventually see it transformed into a national foods brand.

And, sure enough, MTR Foods, a family-run business until it was bought out by the $10-billion
Norwegian food and metals company Orkla in 2007 for $100 million, has been gearing up to take on
established players, a road that will be both difficult as well as tricky.

“Our biggest challenge (on this path) was to professionalise MTR,” points out Sanjay Sharma, the
Chief Executive Officer of MTR Foods.

For starters, MTR put in place professional practices before expanding into newer segments . “We
did not add to our portfolio. Instead, we
decided to remain dormant [for three years
"We wanted to be following the acquisition by Orkla] trying "While taking on
a real Indian to get our business processes right.” In established
vegetarian association with the Mumbai-based brand players, our
brand—but consultancy, Market-Gate, MTR also biggest challenge
modern in terms undertook an extensive exercise to first was to
of format and understand what ‘brand MTR’ really stood professionalise
presentation." for. MTR."

“We decided that we wanted to stay in the

realm of being an authentic Indian vegetarian brand, which would be modern in terms of format and
presentation,” says Vikran Sabherwal, Vice-President, Marketing, MTR. Prior to the buyout, MTR
Foods also did not have a marketing team. “Marketing was handled in bits and pieces by the sales
team,” Sabherwal says.

The distribution chain too was not scientifically mapped out. “Distribution was random and based
on gut-feel . We were in 200 towns in the East and North where the brand had no equity,” says
Jyotiroop Barua, Vice-President, Sales and Distribution. That has
changed now with the adoption of a two-pronged distribution strategy.
“In the North, West and East, we’ve strengthened our distribution "Competition in
network in the top 100 cities and towns and have shut down the ready-to-eat
(operations) in 70-80 towns,” Barua says. Simultaneously, it has category will
increased its presence in South India where the brand is virtually a come from big
household name, especially in the spices and vermicelli categories. brands and
restaurants."
Key Challenges

Even with the professionalisation drive, the road ahead for MTR is challenging, experts aver.
“Managing the transition from a South Indian gourmet brand to a national brand servicing different
cultures will be a huge challenge,” says Ramesh Rao, Managing Director of the Bangalore-based
brand incubation firm, Scion Brand Incubation.

MTR has extended itself into far too many categories, Rao says. “Each of these categories has
strong contenders, and making a mark for itself in all these segments would be a big challenge.” The
company, however, is focusing on the ready-to-eat and the breakfast mixes categories, says Sharma.

Industry veterans peg the ready-to-eat food category at Rs 400 crore, and say MTR has a
comfortable market share of over 30% in the segment. The breakfast mixes category (where MTR

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positions its rava idli mix) includes cereals brands such as Kellogg and Quaker Oats. This is a Rs
500-crore market, they say.

Rao of Scion, however, argues that competition in the ready-to-eat category will not only come from
established brands, but also from local restaurants that offer home delivery options. “Most
consumers today prefer ordering dal makhni and roti from a nearby restaurant rather than opening a
cardboard box, warming the dish and eating it. MTR has a huge challenge in trying to change the
mindset of the consumers,” he points out.

It was Sadanand Maiyya (MTR founder Yajnanarayana Maiyya’s son) who was instrumental in
introducing the concept of packaged food in India way back in 1975 when MTR launched rava idli
mixes as well as snacks and chutneys in ready-to-eat packs. This was also a clever way to de-risk
the business, as the Food Control Act (which mandated that food should be sold at very low prices
during the Emergency period) had made the restaurant business unviable.

What Maiyya did was to invest in a packaging technology (with the help of the Mysore-based
Defence Food Research Laboratory) that helped the food remain fresh without the need to use
preservatives. Maiyya eventually scaled up his business and by the early nineties, MTR Foods was a
promising Rs 30-crore South Indian brand with a presence in many categories including ready-to-
eat, frozen foods, spices, vermicelli and so on.

Maiyya’s vision was to make MTR a national food brand that offered ready-to-eat options in various
Indian cuisine. “We are sharpening Maiyya’s vision of building MTR into an indispensable
companion of every Indian kitchen,” Sharma says, adding the intention is to increase revenue to Rs
500 crore in the next two years.

“The Maiyyas were more intuitive entrepreneurs. For instance, most of the products that we had
launched (before the Orkla buyout) were based on gut-feel,” says Ganesh Shenoy, Vice-President,
Finance and IT, and an MTR veteran since the family ownership days.

“We had never invested in consumer research. Orkla, on the contrary, lays immense stress on
research. They have given the company strategic direction without disturbing the local
management,” Shenoy says, adding that even the current expansion drive (which includes setting up
a factory for packaged spices) is wholly being funded by Orkla. “Orkla’s strategy worldwide is to
buy family-run enterprises and create a better value system for them without disturbing their
original architecture. This philosophy is enticing for a person [read: Sadanand Maiyya] who has
nurtured the brand,” says Sharma.

Different Approach

That may be all very well, but analysts tracking the food and retail industry feel it will be the Rs
1,500-crore ready-to-cook (pasta, noodles et al) segment that will net better returns in India.

The reason why ready-to-cook scores over ready-to-eat is simple, says Devendra Chawla, Head,
Private Brands, Future Group. “Indians are hardwired to believe that food is best eaten fresh.
Women are reluctant to leave a (large time) gap between cooking and eating food. They believe that
fresh, cooked food is healthier as well as tastier.”

Most Indians prefer a ready-to-cook noodles or pasta simply because it enables them to add a

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personal touch to the cooking, Chawla believes. “A homemaker won’t mind buying a bhuna masala
paste, as that would save her from the monotonous task of chopping onions and garlic and grinding
them into a paste, but when it comes to the main course, she would rather add her own touch. The
big challenge for the ready-to-eat brands would be to break this mindset.”

In fact, most food and grocery retailers are shying away from introducing ready-to-eat private
labels. The Future Group, for instance, is present only in the ready-to-cook segment, under the Tasty
Treat brand. It will take at least a further seven to 10 years before the ready-to-eat category makes a
mark in India, says Ashutosh Chakradeo, Head, Buying, Merchandising and Supply Chain,
HyperCity. “Most Indian families look for ready-to-eat options only when they travel abroad. There
is also a spike in sales of this category during college admissions season when students move out of
homes.”

Yet, Sharma is undeterred by the pessimists. He is confident MTR’s ready-to-eat options will
become an integral part of the Indian kitchen in five years’ time. On the cards is not only a foray
into the pure-play North Indian and South Indian cuisine segments, but also a diversification into
sub-categories, such as Chettinad, Jain and Bengali cuisine. “Our mission is to deliver authentic
Indian food to our consumers,” Sharma says.

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