Ask Pratap Gadhvi to name the person he credits with helping to get Valera off the ground almost two decades ago and he doesn’t hesitate to answer: Osamu Toyohara.
Unless you’re overly familiar with Japanese appliance brand Sanyo — one of Valera’s biggest partners — then that name probably won’t mean a great deal, but as we’ll get to shortly it is somebody who Gadhvi will certainly never forget.
Back in 1993, Gadhvi decided to establish Valera after a successful spell at microwave oven specialist Litton, which at that time was going through some major corporate changes.
He spent six years at the company, growing its UK business by 30% in his first year in charge before gaining responsibility for other regions, including Canada and Africa, on his way to becoming a key member of Litton’s global executive team.
It was during a trip to Tokyo one month that the seeds of the Sanyo partnership were first sown. Gadhvi wasn’t to know it at the time, but it was to represent the start of a long and fruitful association.
“I was visiting a trade show to look at all of the competitors in the microwave business and I saw Sanyo, which had an amazing stand,” he recalls. “We knew that Panasonic were big in those days, we knew of Sharp being significant, and we knew Amana in the US. Then I saw Sanyo and realised these guys were big but had hardly any presence in the European market. It turned out that they didn’t just produce and market microwave ovens, they had other commercial catering and refrigeration products. I gathered as much literature as I could get my hands on — all in Japanese which I couldn’t read!”
With circumstances at Litton changing shortly after his return from the Far East, and Gadhvi’s encounter with Sanyo still fresh in his mind, he hatched a plan to approach the brand and request exclusive distribution rights in the UK market.
Gadhvi — who founded Valera with three senior colleagues who also worked at Litton — arranged a meeting with the directors of Sanyo’s UK office, but things didn’t get off to a great start. “The hope was that Sanyo would agree [with the proposal] but in the first meeting they basically said ‘sorry we are thinking of withdrawing from this market because we hardly do anything,’” explains Gadhvi.
After learning that Sanyo was shipping fewer than 350 units a year in the UK — compared with the 5,000 units Litton was selling — Valera asked the directors if they’d reconsider their plans if he and his newly-assembled team could deliver the sort of volumes associated with their former employer.
“I tried all the angles that I could think of but I wasn’t getting very far — these guys were not interested,” remembers Gadhvi. “Then suddenly this Japanese gentleman walked through the back door into the meeting room. I was introduced to him and he happened to be the number two at Sanyo. I thought ‘well, this is my chance’ so I stood up, shook his hand and asked if I could have five minutes of his time.”
After repeating his spiel about wanting UK distributorship for Sanyo, he happened to refer to his achievements at Litton and mentioned Canada. “You managed Canada?” came the reply. “You did a fantastic job — you did not let us get any share of that market.”
The individual in question was the late Osamu Toyohara, deputy managing director of Sanyo at the time, and after learning that Gadhvi had been in charge of Litton’s successful Canadian business he instructed his directors to carry on in the UK and appoint Valera as its distribution partner.
“I owe a lot to this gentleman — he started Valera off,” says Gadhvi. “And fortunately for us we had given him a figure of 3,500 units in three years in the business plan. We went up to 6,000 units and took Sanyo to the top position.”
Fast forward 20 years and the Valera of today is a completely different beast. It now employs 40 people, operates a sales office and HQ in West Thurrock, and boasts a 30,000 square feet warehouse hub in Preston. This year it expects to make a turnover of £10m and will pursue plans to distribute further afield in markets such as India.
As well as its own label products, Valera markets brands such as Jordao Cooling Systems, Vestfrost, KitchenAid and Coreco. 85% of the brands it works with use the company as their sole UK distribution partner.
“Product-wise we have gone from microwave ovens to glass and dishwashers, induction hobs, ice makers, refrigeration, food mixers and fat free fryers,” says Gadhvi. “The product mix at the moment is 60% refrigeration followed by microwave ovens, which are still very strong in the portfolio.”
The need to continually expand its offering has been at the core of Valera’s strategy from the start. In the past month alone it has announced the launch of new refrigeration equipment — which it will distribute in mainland Europe as well as the UK — and a deal with microwave oven brand Daewoo.
“Daewoo came to us — we didn’t go looking for them — and said they wanted to launch this brand and they thought we were the right people to do it,” explains Gadhvi. “The plans are very big in terms of the product range and there is plenty of new innovation, so that is going to be a huge positive for us this year.”
Regardless of who instigated the partnership with Daewoo, the alliance couldn’t have come at a better time given Sanyo is now owned by Panasonic. Its new parent has already announced a rebranding exercise in several product categories, so regardless of what happens on the catering side the partnership with Daewoo would appear to shore up Valera’s heritage in the commercial microwave sector.
Gadhvi believes the confidence is returning to the market — something he says first became apparent back at HOST in Milan last year — and he is optimistic that sales of fast-moving items, coupled with growing interest in budding categories such as counters and wine libraries will help deliver further growth in 2012.
He says: “We are seeing that the quotation rate has doubled this month compared to this time last year and we are also finding that the ability of SMEs to raise finance has improved from a couple of years ago. We are getting asked for more lease finance, as we offer that as part of our package as well.”
For Gadhvi, one of the key elements of Valera’s durability in the market is its approach to the dealer channel. While he says many suppliers continue to sell directly — an issue that he suggests always increases when economic conditions are tougher — he insists Valera has always maintained a dealer-centric strategy.
“We have been very loyal to our dealership and to be very fair that has been reciprocated — the distributors and dealers have been very loyal to us. Right from the start, working in partnership with dealers was a very important part of the strategy. If there is one ethos I repeat to my people it is that there is no compromise — we work with the distributors. When we go and present our products to any key accounts, we are very upfront with the fact that we don’t compete with our distributors. If the customer has a design house or distributor they work with then we’ll go along with that and if they don’t we will recommend one.”
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Gadhvi says Valera’s immediate dealer engagement priorities include increasing its marketing activities, reinforcing its stockholding capabilities and developing tools to understand operator needs so that it can guide distributors towards new opportunities.
If Gadhvi could have one wish though it’s that the market wasn’t quite so erratic. “If you go back to 1993, you knew what your monthly sales were going to be in the first week of the month,” he says. “Today every day is very unpredictable. You have months where you’d traditionally be quiet and it goes mad, and then the next month when you would normally expect it to be busy, it might turn out to be the opposite.”
Whatever direction the catering equipment distribution market takes in the next 12 months, Gadhvi’s hands-on approach to business would appear to be just the style of leadership Valera needs as it embarks on a new era of growth.
And no matter what happens in the future, you can be certain the company will never forget how it all started.
£2.5m bank funding eases the cashflow crunch
A £2.5 million funding package, secured from Lloyds TSB towards the second half of last year, has boosted West Thurrock-based Valera’s hopes of capitalising on what it regards as an improving market.
Valera imports equipment from the USA, Europe and Asia and when the recession hit in the UK, it found its cashflow affected by a drop in the euro’s exchange rate with stock that had been purchased in advance left unsold.
To boost liquidity and ensure the business was in a strong position to grow and prosper when market conditions stabilised, the company asked Lloyds TSB to put together a funding package to ease cashflow restrictions and provide day-to-day support.
Lloyds TSB Commercial Finance, the bank’s asset based finance arm, supplied a £1.6m cash flow facility, which is based on the firm’s issued invoices and grows in line with sales to increase liquidity when it is needed most.
Meanwhile, the bank’s SME lending division provided Valera with a £400,000 loan plus International Trade facilities, carefully structured to meet the company’s requirements.
That financial support is already paying dividends by allowing it to bring new products to market and extend its already widespread customer base.
Managing director, Pratap Gadhvi, says: “In 2008, we suffered as a result of the international economic crisis, seeing a warehouse full of unsold stock and a strained cashflow due to extended payment times caused by overseas trading conditions. Since that time, the residual issues have hampered the growth of the business. Our banking partner was largely unsupportive of our situation, so our advisers Steve Talbot and Mark Standish of Mazars LLP approached Lloyds TSB, knowing they have the appetite to support businesses with the range of funding solutions that we required.”
Gadhvi says the team worked closely with Valera to establish a finance package to bridge the gap between buying stock from abroad and meeting other payment commitments, before payment is received from customers. “Over 60% of our business is done between April and September, so it was also important to ensure cashflow was boosted all year round,” he concludes.
Pratap Gadhvi CV
Managing Director, Valera Limited
Managing Director, Menumaster (Litton) EMEA & India
Executive Vice President, MHI Holdings
Managing Director, Microwave Products UK & Canada
General Manager, Litton Microwave Company