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Wednesday, February 1, 2012

Finding the best drinking water — by accident

This story first appeared in DNA Money edition on Wednesday, February 1, 2012.

In early 1990, Naveen Luthra, then just over 30, and his friend Deepak Mohan, who was the captain of an oil tanker, drove down through the sylvan, thickly forested Sahyadiri ghats towards Mulshi, about 100 km from Lonavala.

It was to be a fateful trip.

“He had made his pot of money and wanted to invest in land in India,” Luthra recalls.

They arrived in Luthra’s Maruti Gypsy at a site where they met some landowners, but the captain found the land valuations very high and soon gave up on the idea of investing.

“Deepak went back to the sea and unfortunately died two years later. However, I quite liked the place and ended up buying 100 acres as an investment with the idea of doing something when I would retire from my Customs clearance business,” said Luthra.

Later, during the monsoon sometime in 1996, Luthra took another trip and was completely mesmerised by Mulshi’s ethereal beauty. He started accumulating more land between 1996 and 2000.

“It’s a little over 1,500 acre now. I initially bought at Rs5,000 an acre but at the end of the entire exercise, my average buying price was about Rs10,000 per acre. While land prices were reasonably cheap then, my buying price would still be termed expensive in those days,” he said.

Luthra wanted to do something related to tourism and planned to develop a one-of-its-kind-in-Asia ‘cave-room’ hotel project at the site.

He had absolutely no idea how to source water for the project — as also for his personal bungalow being built there.

“I realised I will need huge supplies especially for the hotel project and started looking around. I even approached the Tatas to buy water from the Mulshi lake which they have a lease on, but they turned my request down. Digging borewells was very expensive in those days, especially because my requirement was 3 lakh litres per day, and I didn’t know how many borewells would have been needed for that.”

One day, a local familiar with Luthra’s land informed him about a natural spring on the property as the solution to his water problem.

An excited Luthra got two pumps installed and started drawing it out, just to assess the quantity available.

“It was May and we were pumping out over 3-4 lakh litres from the spring and the water level refused to drop any further. We realised there was enough, so we ran a test to see if it was also potable. We got the tests done from 3-4 different places and on the day the report came to my office, I showed it to my friend who was in the business of importing filtration equipment and exporting water treatment plants. On reading the reports, my friend inquired about the source saying the water was of very high quality. Another unique aspect was that the water was pesticide free,” he said.

What Luthra had drilled into was a biological hotspot, or “biologically richest and most endangered ecoregions”.
British environmentalist Norman Myers, who pioneered the concept, said a region must meet two strict criteria to qualify as a hotspot: it must contain at least 0.5% or 1,500 species of vascular plants as endemics, and it has to have lost at least 70% of its primary vegetation.

To put in perspective, India has 2,800 water brands of which only two are free of pesticides — Mulshi, and Aava from Sheelpe Enterprise, a Gujarat-based firm.

Luthra then spent another four years trying to identify the best way and means to bottle the water without disturbing its natural qualities. He launched the Mulshi Springs water brand briefly in 2008 but stopped to fine-tune it, and made the product ready for launch in 2009.

Immediately after the launch, a friend sampled Mulshi spring water with Oberoi Group chairman P R S or ‘Biki’ Oberoi,who personally visited the Mulshi spring, inspected the treatment and bottling plant and approved its use across his Oberoi and Trident hotels under their private label L’Quila.

Today the Oberoi group buys 17,000 bottles of Mulshi spring water every day. The pinnacle of acceptance for Luthra has been at Colette, one of the finest water bars in the world based in Paris.

“We consciously chose to be in Colette because gaining acceptance there would mean getting accepted globally. The thought was since I have one of the finest waters in the world, there is no reason why it should not be available at Colette,” Luthra said.

“Besides, it didn’t take me too much of a sales effort to convince them. The deal was concluded in a 30-minute conversation with the Colette management, of which 25 minutes was taken by them just to digest the fact that this water was coming from India especially because they didn’t think very highly about Indian quality and hygiene standards. We were able to change that perception and are now the only Indian water brand available in Colette. We may look at commercial exports in 2013-14,” he said.

Apart from Oberoi, private-label deals are on the cards with The Leela Group and ITC Hotels.

If you feel like taking a sip in Mumbai, it’s also available at BIG Cinemas, fine dine restaurants such as Hakkasan and Yauatcha and world food store dolce*vita at the Palladium Mall at Phoenix Mills.

RPG’s Spencer Retail is also likely to create a private label water brand to be sold in its retail stores across the country.

Today, Luthra Water Systems has a capacity for 25,000 glass bottles of and 40,000 PET bottles of water — which is not enough to meet the growing demand.

Another bottling plan with a capacity of 150,000 bottles is underway and will be operational by Diwali this year.

“Together the plants will have a capacity of 215,000 bottles daily. Work on the new plant will start immediately after 80% funding is cleared from Oriental Bank of Commerce. Total capex for the plant is around Rs25 crore,” he said.

A 750ml bottle of Mulshi Springs is priced at Rs50 in Maharashtra and Rs55 outside the state.

The 52-year-old Luthra said when the capacity expansion is completed; the company could be doing business of Rs30 lakh a day.

Not a bad rate of return from a parcel of land bought at Rs10,000 per acre.

Whoever invented the phrase money flows like water clearly had Luthra in mind.

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