Making karmic connections
Over dim sums and soup, Rai retraces his career — from biotech to logistics to manufacturing mobile phones — with Karan Choudhury
My guest for lunch at R.E.D, in Radisson Blu in Noida, is reluctant to look at the oriental menu of the restaurant. Uncomfortable with the idea of someone almost 20 years his junior footing the bill for the afternoon, he keeps on asking me why I wanted to do such a thing.
For the next five minutes, I try and explain to him that’s the way “Lunch with BS” works. Still unconvinced, Hari Om Rai, chairman and managing director of Lava International, one of the fastest growing mobile handset companies in India, reluctantly picks up the menu and glances through it. “Do you like dim sums? I keep it light in the afternoon,” he says.
Dressed in a business suit minus a tie, Rai is busy on the phone, a high-end Lava phone of course, fixing meetings for the rest of the day. He has an entourage of employees, corporate communications team members surrounding him. Is it always like this, I ask him. Embarrassed, he says he had a few other meetings at Radisson and that is the reason his team is there with him. “It is completely the opposite of what you are seeing. Usually, I am alone. In office, too, when I enter, people barely notice me,” he says a tad defensively.
We order a non-vegetarian dim sum basket as well as a vegetarian one, along with a lemon coriander soup and start the conversation right away. We are among the first few at the restaurant, and as we sit in a quiet corner awaiting the food, I ask Rai about his career and the reason for moving from biotech to logistics to manufacturing mobile phones.
“It is the leader in me and the hunger for growth that pushed me,” Rai says.“People love me. That has been always been the case. That is why they follow me. My time as a college president in College of Vocational Studies (under Delhi University) in 1988 shaped me into the person I am today. I won with a record margin of votes.”
As we enjoy the soup, Rai tells me he was born in a middle-class family, and his first job in a small studio called the Cine India International paid him a salary of ~4,000. “In four months, I managed to get two salary raises and was managing the studio. After that I left to start my own thing,” he said.
His diverse entrepreneurial ventures began with Biogentek, a biotechnology enterprise, in 1992. In three years, he cofounded Perfect Handling, a logistics company providing a spectrum of services such as shipping, warehousing and distribution. “Hungry for growth, I stumbled into the logistics industry as a matter of chance, and in this also, we grew. We became number one in northern India.”
Rai forayed into telecommunication in 2003, when he founded Pacetel Communications, a company that supplied fixed-line wireless phones to major telecom operators such as Airtel, Vodafone, Tata and Reliance. Lava is an offshoot of Pacetel.
By the time the dim sums arrive we are discussing fate, karma, cosmic phenomena — Rai is a staunch believer in all this. “It is all linked to fate and karma. I think things have been pretty easy for me, god has been kind, it was never tough I would say,” he says with a smile.
Not only his career, Rai believes that everything — from the appointment of Narendra Modi as the country’s prime minister to the onset of the digital revolution in India — has “a cosmic connect”. I direct the conversation towards Make In India and Digital India.
I ask him about the changes he has seen in the last few years. He connects it all to karma.
“I have a very abstract view on this. More than the government or people, I think the whole cosmos works towards certain things. India, as a country, has been left behind in the digital revolution and after the current PM came to power, he was able to market India really well. Everything has started to fall in place: China is losing momentum, India is emerging, the great part is that the right kind of people are at the right places. The speed is slow but change has started,” he says.
The chilli in the Szechuan vegetable dumpling is strong and gets stuck in his throat. “This is hot, very dangerous. I do not eat spicy food much,” he says as he pushes the dumpling to one side of the plate.
We talk about funding. Rai says his company would get its first round of funding this quarter.
“We are looking at $100 million in total; about $50 million would come in this quarter and the remaining in the next quarter. It would be a strategic investment, not a financial one,” he says. The money would be used for product development, he adds.
What about profitability? Rai says Lava has been profitable — just like his other businesses — from the beginning. “I do not understand this business of non-profit. Profits are needed to build a company. We are improving and growing each passing year,” he says. The company earned $1.2 billion in revenues last year.
Rai believes there isn’t space for a host of cellphone companies and after consolidation only a handful of them would remain. He hopes an Indian company would be one them.
“We are an inward-focused company. Eventually only seven to 10 companies will remain in the whole world in this space,” he says.
“I think Oppo and Vivo are very good companies” he says. “I think these companies have been preparing themselves for the last 26 years, so they are really strong companies. What we bring to the table in India is the knowledge of the country. As a company we are the only ones, who have control on the product end to end. But it is still the beginning of our journey. I think the company has a big potential. The market is large and we are going to find our space in this market. For us, it is a process of evolution. We will also see a few good companies emerge.”
The company says it would command 20 per cent of the smartphone market in India by the end of 2018 — up from the current 10.5 per cent. It is present in 10 countries, including Bangladesh, Nepal, Sri Lanka, Thailand and Indonesia. In the next seven years it hopes to enter West Asia, Mexico, Latin America.
“Eventually we would love to sell in China — that is my target. What the Chinese have done here, if in 10 years we can do that there, that would be great. The Koreans and Japanese have not been successful in China, I think Indians would be,” say Rai.
As we polish off three baskets of dumplings, Rai says: “Other companies in the space would have, maybe, 10 per cent of the manpower we have — they have outsourced many operations. Our cost is higher than others but our company is getting built every day. We are building an enterprise and that is why we are different from others.”