How I Did It

Vineet Gupta, Parabolic Drugs

As told to Pooja Kothari

In two decades as an entrepreneur, Vineet Gupta has built multiple businesses in manufacturing and services. His second venture, the 650 crore Parabolic Drugs, has been his most successful. It listed on the stock exchange last June. However, nothing excites him as much as education. With 19 centres, Jamboree, his test preparation centre for examinations such as SAT and GMAT, is one of the country's leading coaching businesses.

People go to the Indian Institute of Technology (IIT) to become engineers. However, I got my first taste of entrepreneurship while at IIT, Delhi.

Since I had no real interest in engineering, I started working with AIESEC—eventually becoming the local committee president for IIT, Delhi. That was a highly entrepreneurial stint. Most student organisations are supervised by teachers. But AIESEC is a body of students run by students. It was almost like running a small company—and it sparked my interest in entrepreneurship; so much so that I decided not to go to Yale.

That was a tough decision to make. I am one of three boys, and both my brothers were already studying in the US then. Yet, I chose to be an entrepreneur—and, that too, in 1991, when the very concept was ruled by brick and mortar. Setting up a factory was the most obvious option.

Things were very different then. I neither had the capital, nor a big idea. After evaluating many options, I found a sick plant in Ballabhgarh near Faridabad. It was a decent-sized plant that manufactured styrofoam, and would cost me 9 lakh. I raised that amount from my father and another partner, who put in Rs 3 lakh.

I wasn't scared of taking on a new business. Actually, I was quite confident from day one. It was probably my experiences from college that gave me this confidence.

Despite the difficulties we faced, from labour issues to inspections, we turned that plant around in 13 months. My professional qualifications eased things up for me, and people were willing to give me a break. Within the next few years, we got all large corporates, which were using Styrofoam for packaging, on board as clients. We also moved our plant closer to Delhi.

My brother, Pranav, came back to India in 1995, after doing an MBA and working with Ford Motor Company. He decided to start a garments business with a family friend. However, on the first day itself, they realised that they couldn't really work together. That's when he and I decided to work together. It was a spontaneous decision. We decided to co-own every business we did, no matter what it was. We never discussed money. That decision still stands. We have equal ownership across all our businesses—packaging, real estate, education, pharma, and so on.

So, Pranav joined me in the packaging plant, and we worked together for two years. By 1999, we built a huge plant for this business in Greater Noida, where all big businesses like LG and Samsung were located. With that kind of capacity, we became the second-largest poly producer in India, producing 1,400 tonnes a year.

In 2005, we sold off the Greater Noida plant. The profit margins were quite low in this business; and, large companies kept squeezing us further. I realised that growth would be limited.

That experience taught me an important lesson—as an entrepreneur, I could do my best, and yet, not get the results I expect. It's important to know when to move on and explore other avenues.

For two years before we closed it, the plant was making losses. Despite having the largest Styrofoam capacity in the country, and knowing the business very well, we simply couldn't turn things around. It was a very painful decision—even some of my family members weren't in favour of it. Yet, I took the decision to sell off our plant.

That business still exists though. It's run by our partner and does about 5 crore in turnover a year. It's quite tempting to close down the existing plant, and use the land to build commercial offices there.

Once Pranav and I started working together, we realised that we could do more than one business. So, in 1997, we started looking for fresh opportunities, and began evaluating projects that would give us the maximum return on our investment. A year later, we settled on pharmaceuticals because the Punjab government was offering good incentives to businesspeople. Our due diligence showed it was a sensible business to get into.

Pranav relocated to Panchkula and started the first plant of Parabolic Drugs at Dera Bassi. At that time, our other brother used to run an IT company in the US, called Parabolic Technologies. We used the same name, thinking that eventually, we might need to create a single identity. However, that wasn't to be. My brother sold the company later.

We didn't have the 2.6 crore required to set up the pharma manufacturing business. We took on half of that in debt, and borrowed the rest from family and friends. We brought in five partners, who are still on our board. Some of them have invested in our other ventures as well.

I was highly involved in Parabolic initially. The first three years were tough. Manufacturing bulk drugs is highly capital intensive, and our pockets weren't deep enough. The business made losses, and by 2001, we had wiped out our capital. We had absolutely no idea what to do with the business. We were in such a crisis that we were willing to give the business away for free as long as the buyer took the debt on. We didn't want to be paid anything.

Chandigarh was a hub for pharma then. We got in touch with Ranbaxy and Max; and started doing contract manufacturing work for them. We didn't have to buy any material on our own. We converted the raw material they gave us into the final drug. That helped turn things around—and, really made us learn the ropes of the pharma industry. Our clients audited our plants, and rejected our material. They made us implement changes in our production processes, and improve efficiencies. They taught us what right yields meant. We realised that we had been losing money on that—and had really low yields by industry standards. We were not monitoring the reactions properly.

We were also hiring the wrong people. Because we had started small, with four workers, we were apprehensive of hiring high-salaried people. However, the business needed a high-quality person. Back then, we didn't think like that, and didn't want to pay as much. We came out of that, and started hiring better people.

Twelve years later, we've built it into a 650-crore business with four plants and more than a thousand employees. We have one of the biggest research and development facilities in north India. Last June, Parabolic went public and raised 200 crore. Since then, a lot of my time's spent interacting with investors. I feel it's our moral obligation to keep the investors updated with the progress we're making.

I went through many lows while building these two businesses. Thankfully, I have always had my brother for counsel. In critical decisions, entrepreneurs are usually alone, but I never felt that.

Both of us think alike. We've never been driven by personal wealth. Problems occur when you start thinking only about individual benefit.

My brother and I take decisions in seconds; people wonder how we do that. We go a lot by raw instinct, even for important issues. Speed and execution are critical to success in business. Ideas don't excite me as much.

We've sailed through the downturns together. Not just Pranav and I, but even my partner, Bansal, from my first venture, who later invested in our pharma business as well. We've been partners for 19 years.

Then, in the last decade, came the next phase of my journey. My wife, Akrita, had started Jamboree, centres that prepared students for foreign education and examinations, out of a garage in her parents' house in 1993. She was running two centres in Delhi for nearly a decade, when she started feeling burnt out. In 2005, she decided to give up that business.

I had to increase my involvement to keep things running. I liked the fact that our work was making a real difference to the lives of our students.

I had to figure out how to keep the brand alive without my wife, around whom it had been built. I managed to scale up the business. Jamboree is one of the largest coaching businesses (for exams students need to take for education abroad) in India with 17 centres across the country, including one in Dubai. We are opening two more shortly, and are also planning to take our courses online.

We've grown with partners and franchisees in this business. We have five franchise centres and two in partnership. It made sense to take on a partner while entering a new country like Dubai, where people didn't know us. They've helped us in hiring locally and fire fighting on a day-to-day basis. It's been a good decision.

Jamboree's a profitable business. I am satisfied with how it's growing. It allows us to add two to four centres a year, but I don't have plans to scale it up hugely. We've explored other coaching courses but I'm not sure if we can replicate the "wow" factor there. Till I am sure we can, I don't want to enter new fields.

In my two decades as an entrepreneur, I've worked in both the manufacturing and services industries. People are the backbone of a service business. At Jamboree, I've had to build the team, train them right, and standardise delivery at all our centres. We've got more than a hundred people in this business.

Even after all this time, I'm still learning. Each of my ventures has given me a thrill especially when the results have been directly proportional to the effort put in. As an entrepreneur, you have no choice but to work hard. But, it's not necessary the hard work will translate into success. You start believing in destiny along the way.

You also realise how important it is to go through downturns. They really humble you, and give you a reality check, just in case you start thinking you made things happen.

My stint with Jamboree has helped me see my future lies in higher education. I am motivated by the thought of making a difference. One of the milestones I've set is starting a university in the north—in either Punjab, or Haryana.

I am already a founder and donor of Ashoka University, a not-for-profit venture that recently announced scholarships under the Young India Fellowships brand. I feel I can create easier access to high-quality education. Today, Indians head to the US for quality education. There's no reason why we cannot reverse this in the next two decades.

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