The downturn shrunk the bottomline of Luminous Power Technologies by 25 per cent. But the company's 47-year-old founder and CEO Rakesh Malhotra brushes it aside as a temporary hiccup and continues to focus on Luminous’ new expansion drive.
The CEO of one of India’s biggest and most successful inverter and battery manufacturing companies, Malhotra exudes a mysterious calm and confidence, a probable hint to the challenges he’s faced, starting from his early date with failure.
He was very young — in his 20s — when he launched his first company.
The venture went bust. People wrote him off. But he struck back in a big, bright way with Luminous.
The Rs 900-crore inverter market was generous to Malhotra. From a modest company with a Rs 3-crore annual turnover in 1995, Malhotra steered Luminous to a high of Rs 680 crore in sales in 2008-09.
In the latter half of 2008, the economic slowdown hit Indian shores. His rivals responded by cutting jobs and salaries to stay afloat.
Malhotra, however, was busy with the company’s expansion into new sectors like telecom.
The downturn did affect his business. But in it, he also sensed an opportunity — to invest and arm his company for bigger battles ahead.
“The long term market looked positive and we had to be prepared to cash in on the opportunity,” he says.
The downturn was a letdown no doubt, but Malhotra took it in his stride.
“We were not an exception. The single biggest blow to us was the depreciation of our inventory. With prices of raw materials — copper, iron, steel and lead — rising, our bottomline was hit by 25 per cent. It limited our growth to an extent,” he says.
That was around the time when Luminous Tele Infra, a company that provides backend solution to telecom operators, was launched.
“We did not face problems in acquiring finance for the project. Our credibility helped in getting funds from bankers,” says Malhotra, who essentially fought the slowdown by cutting costs.
“We did not do it by cutting jobs or salaries. We chose to cut down on wasteful expenditure like costs relating to raw materials, electricity, etc. We encouraged our staff to come up with innovative solutions. With employees themselves getting involved, the battle was half won,” Malhotra says.
The take-your-employees-in-confidence philosophy has earned him loyalty. “Luminous values its staff a lot,” says Paresh Pradhan, who has worked in the company for 18 years.
Pradhan joined Luminous as a sales engineer and heads the company’s new telecom business now.
“It’s a professionally-run company that mentors and trains people within the organisation and helps them take up bigger responsibilities. That’s the reason I chose to stick with the company despite receiving several lucrative offers from rivals,” he says.
As dust gradually settles on the slowdown, Luminous is gearing up to achieve a turnover of Rs 1,000 crore by March 2010.
Going by Malhotra’s record, the aim is definitely not a pie in the sky.
The 47-year-old electronic engineering graduate from Jadavpur University worked in companies like Siemens and Tata before venturing into his own business developing and marketing power back up systems for personal computers.
Technological innovation has been one of Malhotra’s key focus areas right from the start.
“In 1985, UPS was exorbitantly priced and it used to be very heavy. While a PC was priced at Rs 1 lakh, the cost of a UPS was Rs 50,000. So, an engineer friend and I decided to design a new-age UPS which would not only be compact but would also cost less than half the price of the existing UPS,” he says.
However, as Malhotra candidly admits, his maiden venture bombed after a year.
“The product was a big hit initially. Priced at Rs 10,000, they sold like hot cakes. But, complaints about the UPS’s unreliability started pouring in soon. For one year we travelled the country addressing complaints. From design engineers we became service engineers,” he says.
It soon dawned on Malhotra and his eight-member team the business model was unsustainable.
“All our investment was wiped out. At the end, all that was left with me was a bank balance of Rs 50,000,” he remembers.
That’s when Luminous was born. With just 30 staff on board when it started, the company now has over 1,000 people on its roll. “We export our products to 28 countries. We have also ventured outside by opening a UPS manufacturing plant in China’s Guangdong province in 2007,” he says.
The calm confidence is hard to miss.