CavinKare to split business into four different streams

The transformation – termed as CavinKare 2.0 by the company – is also seen as a step towards its IPO.

In a first step towards succession plan, Chennai-based fast-moving consumer goods (FMCG) major CavinKare on Monday announced the restructuring of its businesses and also roped in the generation next giving charges of separate business verticals.

Announcing the restructuring on Monday, CK Ranganathan, chairman and managing director of CavinKare indicated that the business will be split into mainly four different streams – FMCG, ecommerce, retail and research and development.

The transformation – termed as CavinKare 2.0 by the company – is also seen as a step towards its initial public offering (IPO).

The current director Venkatesh Vijayaraghavan has been elevated as the group chief executive officer in charge of the FMCG business.

Ranganathan’s son Manuranjith Ranganathan was entrusted with the retail segment and daughter Amudhavalli Ranganathan as head of e-commerce.

However, Ranganathan will continue to be in charge of the research and development division.

When asked if the move can be seen as a first step towards a succession plan, he said, “Absolutely, somewhere people should learn.”

While Manuranjith, also in charge of the dairy, hospitals, bakery and salon divisions, will be directly reporting to his father, as FMCG and e-commerce businesses are interlinked, Amudhavalli will be reporting to Vijayaraghavan.

Ranganathan said that through the current restructuring, the group’s aim is to achieve a turnover of Rs 5,000 crore in the next few years and will also invest around Rs 900 crore across various verticals in the next three years.

“FMCG will continue to be very big but dairy will have an opportunity to overtake.

"Investments in the dairy segment will be close to Rs 400 crore and the balance will go for ecommerce, digital, hospital and retail expansions,” he added.

At present, the group revenue is to the tune of around Rs 1,700 crore.

“There is a definite drop in revenue due to the pandemic as several of our businesses got affected, otherwise we would have crossed Rs 2,250 crore by now.

"Our businesses are currently around 92 per cent of the pre-Covid level,” Ranganathan said.

Raising concerns on the rising container shortage and raw material price hike, he blamed that companies are involved in ‘cartelisation’ in both the businesses.

“We are not able to fulfil the demand and import and exports are facing problems due to container shortage.

"Why would container and raw material prices be so high? Across, we can see cartelisation,” he said, adding that rising fuel prices are adding to the pressure in the FMCG segment.

The company may pass on this rising input costs in a limited way to the consumers.

Along with the expansion in e-commerce, the group also wants to spread its wings on SANCHU Animal Hospital.

It had plans to expand the services through a nationwide chain of 100 hospitals by 2024.

Currently, Ranganathan is the chairman of CII Southern Region and also the the President of TiE – Chennai (the local chapter of the global network called The Indus Entrepreneurs) and is also set to take over as the President of All India Management Association (AIMA) next month.

When asked whether this is a move towards his retirement, Ranganathan said, “I am now taking out 50 per cent of my time to spend outside the company in the form of CII, TiE and AIMA.

"I have many more years to go and will be very active.”

Photograph: Courtesy CavinKare