Laxmi Lobo the founder of Spring Blossoms, a popular Mumbai-based flower retailer with an online presence that gives her a national footprint says, one has to take many risks to grow the business and succeed. In her case, the risks seem to have paid off well in her journey from Air India to the wholesale flower business to a well-established retail enterprise
After a long stint in Air India, Laxmi Lobo has had an eventful transition to the wholesale flower business and later to Spring Blossoms, a retailer, with a national footprint and strong corporate clientele. Spring Blossoms is able to deliver flowers to all major towns and cities and her corporate clients include HDFC Bank, Cox & Kings and ITC. She works with a small team of 10 and is determined to retain the personal touch, which ensures each floral bouquet or arrangement is unique and perfectly delivered. Laxmi, who has previously trained under Sogetsu school of Ikebana (School of Flower Arrangement in Tokyo) and apprenticed with a florist in Singapore acquired the skills to turn this shop into a full-fledged business with an annual turnover of Rs70-80 lakh.
Excerpts from an interview with Moneylife:
Moneylife (ML): Tell us about your journey to become an entrepreneur?
Laxmi Lobo (LL): I worked in the in-flight services of Air India and enjoyed it. But there were multiple reasons for leaving the aviation industry at the end of 1996. My daughter was five years old and I was keen on spending more time with her. Marriage was not life-changing for me, but having a baby was – I wanted to have flexi-time to be able to be around her. I thought of switching to a ground job in Air India so that I was not out town for 10 days at a stretch. Then an opportunity came along, which allowed me to start my wholesale business of selling export-rejected fresh roses in the local markets.
I weighed my options, Air India had started faltering badly by then, and there were talks of a merger with Indian Airlines, which even I knew would sound the death knell for us. I may have had to resign anyway, since Air India had a retirement age of 35 for women cabin crew in those days. Women cabin crew were discriminated against for a long time those days, so all in all I had made a good decision when I left.
ML: How and when did you transition from wholesale business in flowers to Spring Blossoms?
LL: The wholesaling of roses, in an unorganised flower market, was an eye-opener for a newbie like me, but I survived it and then went on to export too until that opportunity got stymied by horrible bureaucratic regulations. The timing of wholesale flower business was not feasible for a young mother and women entrepreneur. Mornings started at 3.30am and then again in the evening, flowers from various growers would arrive between 7:30pm to 10pm. It was really hard managing the time.
This gave me the idea to shift to a retail business as it had creative appeal and no time constraints. Initially I did weddings and events for corporates and also did two years of full time floral consultation for JW Marriott. But I wanted a steady business so started dreaming of a retail shop, especially after I had helped set up the floral shop at the Marriott.
I believed that good service and getting on to e-commerce in a booming economy of 2004 was a good opportunity. That is when I set up Spring Blossoms and I have never looked back or regretted it. But I do have doubts for the first time this year as our economy has hit a pause button!
ML: What were the main challenges while starting the business? How did you overcome them?
LL: The main challenge was staff training, customer service standards and capital costs.
I started training the ‘karigars’ myself after having learnt how to arrange and care for flowers in Singapore. Similarly, I would train my staff to accommodate customers’ needs and preferences and give proper service. I used to prepare pamphlets in regional languages and would make them read it and do mock selling sessions with them. Delivering fresh and unique floral arrangements is key to the business. There were also issues like not having a cold-chain in India for flowers, which exists all over the world.
ML: The online platform that you created -- I think that helped you to go national, didn’t it? When and how did you decide to set up the website and build a network of affiliates?
LL: I set up the website by the end of 2004, initially just for Mumbai deliveries. The affiliations came, when I travelled and met other flower shop-owners, especially those run by women. Telecommunication was improving and I thought I would be able to reach out to many more customers through the internet. It was an interesting journey and a very interesting learning curve. I still manage most of my online campaigns myself.
ML: I am sure there must be some nail-biting times that were a learning experience and some really satisfying ones too. Would you tell us about those?
LL: Indeed. One nail-biting episode was when an entire flower consignment of flowers got rejected by a Japanese buyer because of the lack of a proper cold chain in India. It is still the greatest impediment to the fresh flowers business. I lost out on this one.
Flowers typically need to "sleep" at 4°c so that they remain fresh till they are 'awakened by the florist'. That is the norm world over. Here, our flowers come for sale on the tops of public buses and in tempos with loaders sitting on them! Instead of awakening them, the florist has to "resuscitate" them! But seriously, half the shelf life of the flower is gone by then.
Another nail-biting moment was when I had to convince the bride, who felt that her gorgeous wedding plans were coming undone because of the colour of flowers dispatched by the foreign grower from Thailand. I managed to team those lovely white orchids we received (instead of the yellow that were ordered) with our local "gonda" or marigold into lovely cascading balls of flowers and the bride had her hallowed saffron colour. In the end, she was happier than before I think.
One of my worst moments was when I was quite categorically asked to partner with a local if I wanted to remain a wholesaler in the then specifically monopolised market.
ML: What drives you to work everyday?
LL: The passion of work and growth are my biggest motivations. Also, I love interaction with customers, be it online or offline customers, the corporates and individuals. They are my biggest supporters. Their support encourages me to keep moving ahead. After setting up an online presence to deliver flowers across the country, the challenge was to have affiliates who also ensured good designs, excellent quality and prompt service guarantee.
ML: Why is it important to encourage entrepreneurship in India, especially among women?
LL: Women need to be economically independent and flexi timing jobs are difficult to come by in our economy. So entrepreneurship, where a woman chooses her work hours and how much work she wishes to do, is the real way forward.
ML: What were the biggest challenges you faced as a woman entrepreneur?
LL: As mentioned before, timing was a big challenge in my line of business. Other than that I face the usual army of tax officers that are not specific to women, but to general small entrepreneurs. It is a great cost to maintain so many consultants to resolve tax issues that constantly crop up due to harassment from all government agencies.
ML: What are the best ways to connect in your industry?
LL: My Industry is non-organised, so the best way to meet is through social networking and we organise our own small conferences.
ML: What internet apps and tools do you use to run your business efficiently?
LL: Google apps are really my secret weapon, I adapted to Google for the business as soon as I opened my website. I use Google ad words and manage almost all connections through Google and Android tools.
ML: What plans do you have for the future for your company?
LL: My business is well established, so I look for ways to innovate and increase growth through different additions. My real future plan is to have a training center. I have an optimal run of my business, as I want to maintain the personal and creative touch for the client to have a great experience at Spring Blossoms. I do not want to be a faceless corporate. I am a “Click and mortar Biz” and plan to stay that way. Although my business has always been self-financed, I am happy that the government has now started a women’s bank, which I shall approach for a loan for the expansion.
ML: What are the major opportunities for women to start their businesses?
LL: There are plenty of opportunities but less encouragement from the government. I feel it should give added incentives to women entrepreneurs, as we always manage two businesses, viz. the household and the company.
ML: Who is your role model?
LL: My mother is my role model, she never gave up working and she gave us a warm house.
ML: What are your tips for women entrepreneurs trying to make it in a competitive world?
LL: The three most important things are to have immense passion for what you are doing, have faith in yourself and to remain strong. The path will not always be smooth, but do not give up. Understand or make an effort to study accounting and budgeting before you start any entrepreneurship. One cannot be penny wise and pound foolish to run a business. Proper budgeting is most important for any business to be successful and run with a decent profit margin. I feel most entrepreneurs make a mistake here; they have grand plans, which do not always succeed as the market varies constantly. If you have pulled on too much liability, be sure it will pull you down too.
Most speakers at Moneylife Foundation events love the bright bouquet of fresh yellow flowers and roses that has become a part of our events. The flowers come from Spring Blossoms, founded by Laxmi Lobo in March 2004 at Dadar. She has been donating one bouquet every month to Moneylife Foundation for a long time!
The analysis of the performance over the nine months of FY14 for 3,037 companies by CARE Ratings suggests that net profits decreased by 4.8% in FY14 as against growth of 7.3% during the same period in FY13
A CARE Ratings study of the unaudited financial results of 3,181 companies shows that net sales increased by 7.1% in Q3 FY14 as against 7.5% in Q3 FY13, while net profits grew by 2.7% (9.7% last year). However, the analysis of the performance over the nine months of FY14 for 3,037 companies suggests that net profits decreased by 4.8% in FY14 as against growth of 7.3% during the same period in FY13.
This appears to be largely in line with the overall slowdown in industrial production the country has witnessed in FY14 where the index of industrial production witnessed a decline of 0.1% while manufacturing output declined by 0.6% during this period. Profit margin declined to 7.8% for 9M-FY14 from 8.8% in the corresponding period last fiscal.
Table 1 provides information on the financial performance in Q3 FY14 over Q3 FY13 and cumulative April-December 2013 over April-December 2012 of the entire sample.
Table 2 provides the information regarding the performance of a sub sample of the aggregate excluding banks. Net sales for this sample witnessed growth of 5.8% in Q3 FY14 as against 6.1% in the corresponding quarter of last year. For the period April to December 2013 growth in net sales had slowed down significantly to 6.6% from 7.7% last year. This deterioration can be attributed to the continued slowdown of the Index of Industrial Production (IIP) in the country. Net profits growth was 10% in Q3 FY14 compared with 11.0% in Q3 FY13. The cumulative net profits from April to December 2013 declined by 1.8% against a growth of 4.7% in FY13. Table 2 is given below:
Similarly, Table 4 gives the performance summary of 40 banks and is given below:
The performance of 40 banking companies showed that net sales (interest income) increased by 11.9% in the period from April-December 2013 as against 18.9% in the previous year. Interest expenses, grew at a marginally lower rate of 11.7% (21.4%). The growth in provisions and contingencies, which includes provisions for NPAs rose sharply by 47.6% vis-a-vis a growth of only 4.1% over the corresponding period in 2012. Net profit declined by 14% as against positive growth of 16.9% in the nine month period in FY13. Consequently, net profit margin continued to be under pressure and declined to 8.5% as against 11.1% in the same period last year.
Based on the study CARE Ratings infers that 22 out of 25 public sector banks and 12 out of 15 private sector banks witnessed an increase in their gross NPA ratio. 38 out of 40 banks maintained their capital adequacy ratio above 10%.
From an analysis of the sample of companies by size, CARE Ratings infers that the large companies alone registered positive profit in this period relative to all other companies. Please see table below:
The large companies with sales over Rs1,000 crore each witnessed a positive growth in profits by 3.6%. These companies constituted around 85% of the total sample in terms of sales and also had the highest growth in sales.
CARE Ratings added that companies with sales between Rs250 crore and Rs1,000 crore had positive growth in sales, but negative growth in net profits.
Geodesic has defaulted in repaying its FCCB holders and loans to financial institutions. Sebi, which is trying to continuously make corporate governance norms tougher, is asleep as usual
Geodesic Ltd, the sham internet software and service provider has run up more than Rs1,200 crore of liabilities and defaulted on payment of its Foreign Currency Convertible Bonds (FCCB) and loans. During the June 2013, all the independent directors resigned from the post of directorship and till now the company has not appointed any independent directors on its board, offending the clause 49 of the Listing Agreement. Moreover, its accounting is a mess. Geodesic submitted its year ended June 2013 results, revised year ended June 2012 results with its September and December quarter standalone results to the exchanges altogether on 15 February 2014. This is a scam of large proportions with accounts fudging, siphoning of money and possible hawala transactions involved. And yet, no regulator - the stock exchanges, the ministry of corporate affairs and Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) is bothered.
Moneylife reader and investor, Krishna Raj has filed two complaints with Securities and Exchange Board of India (SEBI) about non-disclosure of its financial results and subsidiary accounts along with non-disclosure of material information on FCCB repayment. SEBI failed to give him satisfactory reply and said that, company is taking necessary steps regarding FCCB repayment issues and company in its annual report 2011-2012 has stated that Ministry of Corporate Affairs (MCA) has granted general exemption to attach various documents in respect of subsidiaries as per section 212(8) of The Companies Act, 1956. Hence the subsidiary companies account is not attached with balance sheet. Investor may ask the company for the full annual report.
Geodesic had raised funds through FCCB during the year 2008, which was due for repayment in January 2013. However the company has not been able to discharge this liability. The FCCB holders through their Trustees; Citibank London, filed a winding up petition against the company for defaulting on the dues. Recently during February 2014, the London Court has given a summary judgment and directed Geodesic to pay Citibank, a sum of US$157 million and US$14.88 million in respect of unpaid default interest upto 07 February 2014. It includes penalty of US$39,266 per day of default interest from 08 February 2014 to the date of payment. It also ordered that the company would also have to pay the cost £1,22,500 of the proceedings excluding Value Added tax (VAT).
The MCA website index of charges shows ICICI bank have Rs130 crore, while Axis Bank have Rs25 crore of charge amount secured against Geodesic. The company has defaulted in repayment of loans to banks to the tune of Rs80.05 crore during the year and some have filed winding up petitions against the company. Barclays and Standard Charted demanded financial charges of Rs35.28 crores towards interest and loss on hedging contracts on a conservative basis. However, company has made counterclaims against both the above banks for excess charges on hedging contracts of Rs93 crore. The company has also disputed amounts claimed by ICICI Bank and HDFC Bank against the hedging contracts.
Geodesic has delayed submitting its year ended June quarter as well as September and December quarter results with the exchanges. During December quarter, company in its regulatory filing said, “The delay in announcing the audited annual results was due to the company’s sales and purchase registers being taken in custody by regulatory authorities in India for inspection. However, these books have been returned to the company during September and October 2013.” Geodesic said it is expected to announce its results by 9 January 2014 which it announced a month later on 15 February 2014. It further mentions that, “The audit and recasting of accounts of the company and foreign subsidiary took a longer time than anticipated because of the cross border regulations and accounting guidelines.”
The Geodesic has done ‘sales returns’ in its accounts and make many other changes in its balance sheet and published revised year ending June 2012 results. The company said in its regulatory filing, “In April 2011, the company has developed a new version of one of their product using current technologies and coding languages with additional features to keep up with the latest changes in technology but the revised version developed certain problems with all the customers. Hence, the company restored the earlier version of the product temporarily so that the business loss to the customers was minimized. However, in spite of all its efforts the company was unable to offer a permanent solution to the problems faced by the customers. In July 2013, the company agreed to reverse all sales made to the customers of the said product from April 2011 to avoid further legal action from the customers. This has been booked as ‘sales returns’ in the respective years in which the sales had taken place. An appropriate part thereof was reversed in the revised accounts for the financial Year ended June 30, 2012 and the balance impact of the said sales returns on the financials for July 2012 to June 2013.”
Geodesic results announcement said that it is facing difficulty in arranging working capital finances, delay in receivables as well as higher debts. During its December 2013 quarter, its net loss increased to Rs37.58 crore from net loss of Rs18.96 crore while its sales stood at Rs8.13 crore compared with Rs100.42 crore a year ago period. In its year ended June 2013, it made net loss of Rs43.13 crore despite sales of Rs172.77 crore. Geodesic share was trading around Rs100 on BSE, during January 2011, which is now trading near Rs3. Its share prices plunged 77% in last one year from Rs12.85 to Rs3.05 as on 25 February 2014.
Mr Krishnaraj alleged, “Lack of enforcement of timely disclosures of material events cripples investor interest, not to mention losses. A foreign investor when asked to consider investing in India told me, what has your regulator done to stop another Satyam? SEBI just needs to look around the level of regulation that even much smaller exchanges like Stock Exchange of Thailand (SET) enforce, to know where we stand.” Moneylife has reported numerous cases of price rigging and accounting shenanigans but the SEBI sees no evil, hears no evil.