Darshan and Manan Patel of Vini Cosmetics on recovery, risk and family relationships
The father and son team behind Vini Cosmetics, the maker of Fogg deodorants, say they are bullish on the Indian economy, its pandemic recovery and are exploring new investment opportunities.
Entrepreneurs Darshan Patel, 58, founding chairman and managing director of the family business, works in tandem with next-generation Manan Patel, 27, chief executive of their family office Vini Investments in Ahmedabad, Gujarat.
Darshan Patel launched his own cosmetics venture in 2010 after two decades working as managing director with his brothers Girish and Devendra in their co-owned and co-founded family business Paras Pharmaceuticals. The firm was acquired by UK consumer goods Reckitt Benckiser later that year for a reported $726 million.
Darshan Patel has earned a reputation over 25 years as a brand-builder and for creating new categories in over-the-counter, wellness and personal care products. He is credited with creating some of India’s most popular homegrown brands, including Moov, Krack, Dermicool, Itch Guard and D’Cold.
The Patels’ Vini venture went on to launch dozens of new brands in the past decade, notably its flagship body spray Fogg, face powder White Tone, powder cream Glam-Up and Ossum, a fragrance body mist for women.
The Indian perfumes and deodorants market was worth more than $970 million in 2019 and forecast to grow by more than 13%, to surpass $2 billion by 2025, due to rapid urbanisation and the emergence of online retail, according to market research.
In 2017, Manan Patel took responsibility for their single-layered family office and manages assets of more than $272 million. Before joining the family business, he worked as an analyst and portfolio adviser at India Infoline Wealth Management for two years. While studying his MSC in Marketing and MSC in Finance in London, the Bangalore business management graduate interned with private equity firm Bay Capital Partners in the city.
The Patels tell CampdenFB about business opportunities and growth strategies in Covid-19 recovery as well as best to communicate and set relationships in a family business.
What do you look for when seeking new business opportunities?
Darshan Patel (pictured above): I look for the untapped opportunities in the market which can become the new needs and wants of consumers. The potential of that business category, density and dynamics of the market.
Research has always been the most significant path for me, before venturing into any new product category, to know the pulse of the market as well as understanding the consumer’s needs and wants. The main objective of launching any new product for us is to gain market share and at the same time how we can fulfil unsatisfied needs of consumers. These are the two primary things we take into consideration before entering into any new category.
How is your family business and family office adapting to and addressing the coronavirus pandemic?
Manan Patel (pictured right): In this uncertain environment, it’s the need of the hour to stay focused, set short-term goals, take one day at a time, monitor the progress regularly, be flexible and adaptable in our work approach. At the same time, work with the utmost care and caution for the people and the team working with you.
What have been the toughest decisions you have had to make to preserve the family business during this uncertain time?
Darshan Patel: We have a workforce of about 1,200 people on the field. Once the unlocking of different regions started, the toughest decision was to bring them back to work with the fear of their safety; my team’s safety will always be my utmost priority.
How do you intend to fund family business growth in 2021?
Darshan Patel: Keep exploring newer categories looking at the new normal and needs of the consumers. We are also open to an inorganic growth if any such exciting opportunities arise. In our view, there are many exciting and untapped opportunities which can be explored to create a niche in the market.
Which asset classes or sectors are exciting you as investors?
Manan Patel: As we are managing family wealth, we are a bit conservative on our risk exposures. Being a major stakeholder in Vini, we also consider it as equity only, keeping rest exposures in the ratio of 70% Debt and 30% Equity. Saying that we strongly believe that to create a long-term compounding of wealth no asset class can beat equity in long term. We believe in the India growth story and as a family office, we are very bullish on Indian economy.
In our view, there are three phases in this pandemic—lockdown phase, unlock phase and growth phase. We believe that it will take at least two more quarters to reach the growth phase, but overall, looking at the global dynamics, India as a market looks very attractive to us.
I also believe, in this volatile environment, risk management is very imperative for portfolio management. There should be a fine balance between generating returns and controlling risk. All family offices need to recognise risk, understand risk and control risk with prudence to preserve wealth.
As we all know, globally we are into the low-interest rate regime, so returns on a fixed income are not that attractive as it used to be earlier. So, we are exploring new asset classes like real estate through REITs [real estate investment trust] and commodities like gold and silver. Also, we have 5-7% of exposure into global markets through LRS [Liberalised Remittance Scheme].
How can differences within family businesses best be settled?
Darshan Patel:
· Bring all the concerned members on the same table
· Look for the constructive communication
· Listen and understand everyone’s perspective
· Respect everyone’s point of view
· If possible and comfortable, the family can involve a neutral person who has no self-interest in the discussion, by doing this one might get a different unbiased perspective
· Find a win-win situation out of that on which all the concerned members are on the same page
· Keep organising family gatherings over lunch, dinner or cocktail to enhance the family bonding
What is the daily working relationship like between father and son?
Darshan Patel: Very professional while at work. We as father and son have great bonding and understanding, but we believe in maintaining certain decorum when at work. Also as a father, I make sure that I monitor Manan’s progress regularly. Over the last three years, we have a practice to spend two hours every week to get an update on each other’s work and sharing thoughts and discuss what’s happening around the globe.
Also, where needed, I make sure Manan accompanies me in various meetings as he is still in the early days of his career and learning phase, so I believe the more people he meets and interacts with, it will be better for him as he can learn from their experiences.
Darshan, how did you engage Manan in the family business and what kind of goals did you set your son before you began to transfer responsibilities?
Darshan Patel: I believe that one tree cannot grow beneath another tree. So, once he was back from London after doing his masters, we mutually decided that he should work outside the family business to enhance his skillset and most importantly to understand the employee-employer relationship.
Manan, currently is in charge of our family office and manages assets worth ₹ 20 billion [$272 million]. I have taken a thoughtful decision not to get involved in family office affairs on a day-to-day basis as I want my son to be at the helm of decision making; because its Manan’s canvas and I would love him to paint it in the way he wants.
Manan, what lessons from your succession experience would you apply when it comes time to transferring control to your own next generation?
Manan Patel: The best thing which I learned from my father at a very young age is to stay grounded, treat everyone with humility and give your 100% with full honesty, dedication and sincerity in whatever you are doing. I still fondly remember when I was 13 he told me people should remember you as a good human being, the rest is secondary.
