Small Ideas Big Changes

Idea
Lalit Sheth had a simple strategy to break into the travel business: construct premium tours and don't be afraid to charge for them. He charged almost double the going market rate. He never believed in snatching business from others. But, he did not want to be run-of-the mill even.

Sheth's business had humble beginnings. He started with a table in a shared office in Masjid Bunder, in south Mumbai, and Rs 2,200 to his name. But after the first tour, his customer base grew via word-of-mouth and regular small newspaper advertisements.
In 1979, he organised his first overseas tour to the Far East after studying the mountains of brochures he asked tourist offices of various countries of that region to send him. Until 1985, he ran the business without borrowing money, but that year, he applied for a bank loan to open new branches, the first one at Ahmedabad. Since then, he has kept borrowing to expand. The second branch opened in Chennai and the third in Srinagar.
In 1984, he moved out of a shared office and into the diamond merchants' hub because most of his clients were based there.
To counteract the industry's high staff attrition rates, he offers generous incentives. Senior staff can earn more than Rs 2 lakh a month, while sales agents can get Rs 500 for each passenger they book onto a tour. Most get to travel for free as they also double up as tour guides.
InnovationsIn 1981, his company pioneered the idea of sending Indian chefs to Europe. Now it has got them stationed at all the hotels it uses there. Although these chefs originally served Gujarati cuisine, now they dish up anything from Jain vegetarian to south Indian fare to Thai curries.

Six thousand customers travel on Sheth's coaches each day, bringing in a annual turnover of Rs 52 crore. Nearly 100 per cent of their visas were successfully processed, Sheth said, because their name was respected, and they did not sell to people who looked dubious. The company boasts 60 per cent repeat customers and is, according to Sheth, the largest package tour operator in India focusing on overseas trips.

Margins are becoming thinner while advertising costs are ballooning. "Year-on-year we have been growing at 45 per cent, but this year already there has been a slowdown, so we have put a more conservative estimate of 25 per cent," Sheth admitted. "This is because people have less money to spend."

Now he is looking at a major expansion. Convinced that travel by road is the future in India, he plans to increase his fleet of Raj National Express coaches to 10,000 and to become the first in India to offer wi-fi and live TV.A new 44,000-square-feet office is coming up in Ahmedabad in two years and a 24/7 call centre will open up within days, just yards away from his office, and will employ 150 staff.
The trick, he said, was to have one's finger in many pies and offer a buffet, including corporate incentive trips.