Thursday, July 28, 2011

A fairy-tale like journey to self-made millionaire in less than a decade

A child of an Indian middle-class parentage, Hilur Sainudeen counted himself lucky when he was sent after high school to read medicine in Lugansk, Ukraine, in mid-1990s. However, three things happened to change his parents’ future vision of a lucrative profession in medicine for their son. First of all, after completing the mandatory one-year Russian language course, Sainudeen decided to switch the rural Ukrainian city for a more vibrant location. Normal logic would have dictated a move to Kiev, the Ukrainian capital, but instead he moved to Moscow, which, as he put it during a recent conversation with TRCW editor-in-chief, has always been ‘a place with the best opportunities in the post-Soviet region.’

The second and third life-course-changing events happened while he was studying in Russia, first of all, at the renowned Moscow Medical Academy, and later at the Second Medical Institute, where he finally graduated as a medical doctor. “During this time, my family’s hitherto thriving business in the rubber industry got a double-edge hit as the rupee nosedived against the dollar, while the cost of one kilo of raw rubber fell dramatically from 100 rupees to 16 rupees,” he said. “This put a serious financial strain on my parents; as a result, it became extremely difficult for them to meet my educational expenditures. As an exit from this financial hardship, I decided to seek part time jobs in Moscow.”

The beginning of a life-and-destiny-changing journey

This was the turning point both in his private life and professional career as his searches for part time work were successful, having landed a job at one of Moscow restaurants on Prospekt Mira with a monthly wage of $100. “From here I moved to a multinational transportation company as a manager and later to a pharmaceutical firm. It was in these firms that I learnt the basics of entrepreneurship and business management, expertise that will later guide me into building a multinational corporation with offices in several countries within five years’ time,” Sainudeen said, recounting his first experience in the business world. After acquiring the basic knowledge, he decided to go into business as a sole proprietor, starting with helping students to get cheap air tickets to and from India and provision of other related services at equally beat-down prices. “It was the sparkling success from this entrepreneurship that encouraged me to incorporate a real company, and this was how STP Global, the initials standing for ‘study, tourism and placement,’ was set up in Russia.”

Initially, the company’s main specialization was business services, such as providing support for foreign individuals and companies trying to incorporate companies, secure required official licenses for licensable services and helping Indian students gain admissions into universities in Russia and other CIS states, etc. “Initially, I was everything in my company, as there were no secretary, no office, in fact, all I had then was just a laptop. But despite these shortcomings, I was able to raise serious capital within a few weeks that enabled me to rent my first office on Prospekt Mira, the street, where I began my business career,” he said. “However, by the end of the year I was able to hire six employees. My business strategy was simple: provision of top quality services at a fraction of competitors’ prices for the same quality of services. The logic was that by keeping prices lower than competitors,’ more clients would prefer to use my services. This policy, along with the ‘word of mouth’ about the quality of my services at competitively affordable rates, enabled me to generate more revenues.”

“Initially, I was everything in my company, as there were no secretary, no office, in fact, all I had at the beginning was just an ordinary laptop.”

A real breakthrough came when some enterprising Russian partners approached him to help organize tours to Kerala, a pulsating tourist destination in South India, a business proposal that he readily agreed to. “However, the first batch of tourists encountered lots of problems, and to avoid a repeat of similar problems in the future, I decided to set up a company, STP India, with three offices in the region, to help our Russian tourists,” he recounted. “This proved successful, thanks to our personalized service approach to each client, meeting all their needs 24 hours a day,” he added. “Today, STP India plans to open more offices in such huge Indian metropolitan cities as Calcutta, Delhi, Bangalore and Mumbai by the end of this year.”

Another chance for a new business venture came, when flying from Moscow via Dubai to India; Sainudeen met an Australian business executive running a tourism-related business in the United Arab Emirates’ largest metropolis. The end result of the chance encounter was the incorporation of STP Dubai. “This enabled me to send tourists from Russia and CIS to the UAE and India. Initially, I treated these tourist routes as two distinct destinations, but later decided to offer them as a single tourist product for our Russian travelers. For instance, a 10-day tour on this program would include a five-day stay in India and another five-day stay in UAE,” he said. “But when you take into consideration that shopping is much cheaper in Dubai, then this opportunity to simultaneously visit, stay over and shop at Dubai en-route from India to Russia made our offer unique and highly attractive to clients.”

Diversification of business ventures

Though tourism and related businesses and services in STP Global’s portfolios were flourishing, their marked seasonality, as Sainudeen put it, was an acceptable fundamental barrier to high-speed expansion of company’s growth and its capacity for rapid capital generation. “It was the need to eliminate these flaws that prompted the diversification of my business portfolios. First of all, I decided to move into retail, starting with shops in India, as this really offers a sure and regular cash flow.”

This summer Sainudeen opened his first four-level shopping center named ‘Banaraz’ in Venjaramoodu, one of the oldest and fastest-growing cities in Southern India. “Indeed, at the red-ribbon cutting ceremony during the official opening of the Banaraz shopping mall all high-profile politicians such as state minister, Bollywood actors and celebrities, etc., were in attendance,” he added. “The strategic plan now is to expand the retail portfolio to such trendy locations as Dubai, Riyadh and Dammam in the Kingdom of Saudi Arabia, Doha in Qatar and Singapore. As you know, these countries are very business-friendly and have lots of investment-enhancement polices to attract foreign capital.”

Sainudeen said his strategy in the retail industry is not to open shops in well-established cities where competition is already at a cutthroat level, but rather in less developed regions with huge growth potential. “The advantages of this approach include the possibility to stamp one’s hegemony on the local markets, pay relatively lower wages to employees and also offer lower prices than those in bigger cities,” he said. “These advantages will enable me to have monopolist powers in these areas, and when I will have consolidated my positions and generated enough capital, I shall be in stronger position to challenge and compete with the biggest retailers on the more established locations on an equal footing.”

Apart from retail, STP Global has also turned its focus to the energy sector, with multimillion-dollar projects in pipeline in Saudi Arabia. “I’m currently at the final stage of launching a company, Rus Arabian, scheduled for March 2011, which will specialize in automation of business processes in this oil-rich Arab state’s petrochemical industry,” he said. “Here, we are offering the Arabs the best of Russian automation technologies and are currently translating the manuals for operating these tools into Arabic. I must note that this venture has the full backing of the Saudi Royal government.”

Sainudeen said that one of the reasons behind his comprehensive business diversification strategy is never to be dependent on one product, a single service, industry or country. “For instance, we have STP Infra, handling our businesses in the infrastructure development sector, STP Media in the entertainment sector, STP Education, STP Holidays, STP Alliance and other STP-branded companies offering different services in different sectors,” he said.

“By operating a highly diversified multinational corporation with business interests in different industries and countries, I’m insuring my businesses against any downturn in a single industry or a country.”

As parts of his future diversification strategy, he plans to move into the jewelry and textile industries by launching Banaraz-branded gold products and garments such as suits, traditional Indian clothes, saris, jeans, etc. “The future goals here include shipping these goods to our shops abroad, including Russia,” he said. “By operating a highly diversified multinational corporation with business interests in different industries and offices in several countries, I’m insuring my businesses against any downturn in a single industry or in a country or even a region.”

Reviving family business in the rubber industry

Sainudeen noted that now with most of his local and international business operations intact and running smoothly that his next target is to revive the family’s business in the latex industry. “It was the hard times in this industry in mid-1990s that forced me to look for part time jobs in Moscow during my studies. Now, almost a decade later, and in a much better financial position, the time has come for me to tackle this problem once and for all,” he said. “I will need lots of investments, and there are currently three international investors that have indicated their intents in this venture. Here, we are talking about $25mln-$30mln, a figure that can give a general impression of the scale of the project.”

“Today, my one-man firm has grown into a big multinational corporation with almost 500 employees on its payroll in offices in three countries. My long-term strategic objective is to have up to 15,000 employees by 2020.”

Commenting on his parents’ reactions to his sudden professional career change, Sainudeen said his relatives, especially his father, was initially not very happy because he always said he had sent his son to read medicine to become a doctor and not a businessman. “But all these initial disappointments have disappeared as things have changed with all the achievements, including making regular huge financial contributions to the family’s social obligations in our society, building the biggest villa in the region with all the modern amenities and also undertaking some vital charity programs, such as helping to subsidize wedding expenditures for the ‘less fortunate’ in our immediate community.”

Sainudeen said when he started on this ‘adventurous journey into the business world’ almost 10 years ago as one-man firm in Moscow he was confident that he would eventually succeed, but never in his widest dreams would he have imagined the magnitude of his current achievements and definitely not within such a short timespan. “I’ve got several awards, including the Youngest Entrepreneur Award in 2009, and another one is also in the pipeline, to be officially awarded in January 2011,” he said. “All these are in recognition of my successes. Today, my one-man firm has grown into a big trans-border multinational corporation with almost 500 employees on its payroll in offices in three countries,” he said. “My long-term strategic expansion objective is to employ a minimum of 10,000-15,000 people by 2020,” he noted. “And given the scale of intended projects in the pipelines, with the expansion of the retail business in India alone over the next couple years expected to attract a minimum of 1,000 additional employees, this goal is more than feasible within the stipulated deadline.” He said he likes running a multinational company because it is more challenging, but at the same time, is also very rewarding, if appropriately managed. “Today, I’m in Moscow, next week I’m in India, and from there I fly to Dubai, and so for a whole year.”

Asked to characterize his success story, Sainudeen said his life journey is a bit different from the traditional stories of ‘typical self-made millionaires’ because all the investments into all business projects were from his private capital made in Russia. “I’ve never taken loans or sought outside investments for projects,” he said. “Now local and foreign strategic investors are approaching me for investment and joint-venture business opportunities. For instance, an investor, who came recently to see one my showrooms in India, has indicated his readiness to invest in my company. This means that I have built an internationally recognized brand that is worthy of such investments.”


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