Diversifying beyond the Initial Tobacco Business, Story of DS Group - Next Big Brand

Diversifying beyond the Initial Tobacco Business, Story of DS Group

Written by Sourav
[email protected] | | Published on: April-30-2019 06:01 AM

You might be hearing the name DS Group for the first time, but we bet you must have consumed or used one or many of their products.

The Dharampal Satyapal Group (DS Group) is a rapidly growing multi-diversified conglomerate, with a turnover of more than Rs. 7,700 crores (in FY 2015-16). Founded in the year 1929, The Group has strong presence in F&B, Hospitality, Mouth Fresheners, Tobacco, Packaging and Agro forestry. The Group has strengthened its presence in F&B category by entering in Dairy and Confectionary segment. DS Group has produced some premium quality products & credited with several innovations for nearly nine decades.

The DS Group has 19 manufacturing units, 7 agri sites and 19  depots spread across Delhi, NOIDA, Haryana, Rajasthan, Himachal Pradesh, Assam and Tripura.

Image Source: Outlook Business

The company, which started as a tobacco products company in, has since diversified into spices (Catch brand), foods & beverages and dairy. DS Group is eyeing new growth drivers in the FMCG space to dwarf its core tobacco and mouth freshener businesses. The diversification has largely been driven by Satyapal’s two sons, group chairman Ravinder Kumar and Rajiv Kumar, who is the face of the group.

The diversification is meant for a reason. Tobacco companies the world over try to break free from the negative image associated with tobacco and their dependence on tobacco products. The group, too, has spread its business with this aim. The constant focus on reducing dependence on tobacco has meant that it today contributes only 25% to its overall revenue.

Apart from Tobacco, Catch Spices, Catch Spring water, Catch flavoured water, Chingles-the mini chewing gums, Ksheer, Dairymax, Tulsi, Pass Pass, Rajnigandha, Rajnigandha Pearls, The Manu Maharani and Namah are some of the leading brands the Group proudly owns today.

The Group ventured into the hard-boiled candy segment with Pulse in 2015 with the Kachcha Aam flavored candy with a tangy twist, followed by Pulse Guava and Orange.

Image Source: Pixr8

How Pulse candy captured the market – DS Group’s Identity

In February 2015, DS Group – manufacturer of brands such as Rajnigandha (Pan Masala), Baba (Tobacco) and Catch (spices) — entered the candy segment with Pass Pass ‘Pulse’. Today, the Kaccha Aam-flavoured hard-boiled candy with a tangy twist, which fans also call the ‘magical core’ or the ‘masala bomb’, is a Rs Multi-crore brand (as of January 2016)

In 2017, the Re 1 candy clocked Rs 300 crore in sales, beating MNC blue chip munchie brands such as Oreo (Rs 283 crore in sales, launched in 2011) and Mars bars (Rs 270 crore in sales, launched in 2011).

DS Group senior vice-president (new product development) Shashank Surana said: “Pulse is a highly scalebale brand and it has resonated exceptionally well with consumers. The brand has huge potential.” DS is starting to sell Pulse in stores in Singapore, the UK and the US, and may also consider patenting its formulation, Surana said.

Industry and retail officials said the market disruption that Pulse candy caused is riding on taste, which worked despite deep-pocketed competition from Parle.

Revenue Distribution

However, more than 40 per cent of the DS Group’s revenue comes from its traditional business of chewing tobacco and mouth fresheners.

“The revenue coming from our traditional business is significant. To our total turnover of ₹4,800 crore, the mouth-fresheners business is contributing over ₹2,000 crore and another 25 per cent is being added by the tobacco business,” he added.

However, the Group is expecting faster growth in the new areas it has diversified into. For instance, the dairy business. The DS Group’s Dairy Plant spread over an area of 10.2 acres has a capacity to handle approximately 6 lakh liters of milk per day. A second plant was acquired and made operational in Udaipur Rajasthan. This plant has a capacity to process up to 2 lakh litres of milk per day.  Sold under the brand ‘Ksheer’, the current product basket contains UHT Milk, Cow & Desi Ghee, Fresh Milk, Chaach, Dahi, Paneer, Khoya, Flavoured milk, Dairy Whitener & Creamer.

In order to gain efficiency and higher growth, the group is planning to hive off various businesses into smaller independent companies.

The spices division has already become an independent company from last year. The objective is also to bring strategic partners into specific businesses.

“We would get strategic partners on board if our business requires. But in case after two or three years we require, we cannot bring them all to Dharampal Satyapal Ltd. Therefore, having these smaller companies will help,” Kumar said.

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