Empee Group is among the most diversified business houses in Tamil Nadu, with interests in hotels, liquor and sugar. The Rs 300-crores group is among the few which ventured out of the state to set up a sugar mill in Nayudupet in Andhra Pradesh.

Empee's Grand Orient holds a pride of place in Chennai's Anna Salai. In an exclusive interview to Sify.com, Group chairman M P Purushothaman, a first-generation entrepreneur, spells out his expansion plans and charts the history of the group.

You were among the first to explore the concept of a budget-cum-business hotel in Chennai. Has the low occupancy rate hit the industry?
The Grand Orient in Chennai is now doing well. The occupancy rate had gone down to as low as 30 per cent. But has gone up to 55 per cent and we are confident that it will do well. There was a good demand but the hitch was the recession in the industry. Our other property, Victoria Hotel in Egmore, is doing well. However, plans to market Grand Orient in a better way are ready.

Any new diversification in the hotel industry?
We are setting up a new four-star hotel in the city. It will be a five-star hotel with four-star tariff. We did a market study and found that five-star hotels are not doing well in Chennai, and have opted for a four-star hotel. It would have 110 rooms and will include a mutiplex, apart from 50 service apartments. Our research has shown that service apartments favoured by executives for short stay are a craze. The multiplex would also have five theatres and an upmarket shopping complex.

Your efforts in the sugar industry has not been very fruitful, though you were among the few to venture out of the state for setting up a plant. How are you facing the new regulations?
Our sugar plant in Nayudupet, in Andhra Pradesh, is doing well. Earlier, there were problems with regard to low prices of sugar and government regulations. Now there is some deregulation and prices are 30 per cent higher. The release mechanism announced by the government is fair to the industry. And with the demand looking up, sugar is the right place to be in. We are also setting up a co-generation power plant at a cost of Rs 75 crores in Nayudupet. We would benefit from this plant which has a capacity to generate 20 mw of power. We also have an ethanol plant. Since the new regulation permits an increase in use of ethanol in motor fuel, we can increase production of ethanol as there would be a good demand.

You have sold your liquor brand Marco Polo to UB group? Is it tough running a brewery?
There are some problems with running a brewery. Add to that the high costs of refrigeration and power, among other things. Moreover, we expanded our capacities hoping for an increase in sales, but there was a delay in the process. We did not want to be saddled with huge capacities and we decided to exit the brewery business.

What is going to be your flagship brand in liquor? And what's your strategy for the market?
We are now building up a new brand in Old Secret rum. We have been successful in making a foray into the closed club of rum drinkers. Just two months into its launch in Tamil Nadu, we have a 12 -15 per cent market share of the category in Tamil Nadu. We are going to move to other states with this brand.

What's your vision for the company?
We are launching a set of brands in the premium liquor segment. We are now on the verge of launching Club Royal whisky and Napolean brandy and we are concentrating on capturing the dry gin market in Tamil Nadu. We were the leaders once and now we are launching Club Polo. A lot of research has gone into the building of these brands, exhaustive surveys have been undertaken and we hope to make a dent in the south.
Our vision is to be the number three in the liquor business in South India in the next three years. As of now, we are among the top three in Tamil Nadu, among the top three in Kerala, and we are entering Andhra Pradesh and Karnataka with new products.
As a part of our expansion plans, we have acquired a distillery in Karnataka and taken another one on long lease near Vijayawada--these are going to be our beachheads for growth in these two states.
We are also setting up a new consumer marketing company, which will look after the brand building activities of the group. We hope to build a world class marketing outfit which we think will take the group ahead towards our vision.