“Agar baccha bigad jaye, usko theek karne mein bhi thoda time toh lagta hi hai (If a kid goes wayward, it takes time to reform him),” says Jayaram Banan, the 64-year-old founder of Delhi-NCR’s favourite south Indian food chain, Sagar Ratna. Banan’s journey is a quintessential rags-to-riches story of a 13-year-old who ran away from his village in Karnataka, after flunking an exam; worked as a waiter in Mumbai and then finally in 1986 set up Sagar Ratna in Delhi. Over the next two decades, the restaurant found a fan following across Delhi — a market where people had limited options for authentic south Indian food.
In 2011, when he was clocking over Rs.70 crore in revenue, Banan sold a 77% stake in Sagar Ratna Hotels, to India Equity Partners (IEP), a private equity fund, for Rs.132 crore. Suresh Kandachar, CFO, Sagar Ratna recalls, “Banan was reluctant at first, but at the same time he wanted Sagar Ratna to grow and become a national chain, which required capital infusion.” While that could have been the case, the chain had also raked up Rs.37 crore in debt. At the time of the acquisition, IEP created a special purpose vehicle to run the chain and Banan was retained as the honorary chairman.
However, things did not go as per plan. Disputes emerged between Banan and the private equity investor over the running of the establishment and things got nastier with both parties filing civil suits against each other. Finally, Banan stepped down in 2014 and IEP, which was running Sagar Ratna took over in 2011. The private equity fund finally decided to put its stake on the block in 2016. But there were no takers at its asking price. That’s when Banan — who refused to divulge details — bought back the entire stake in early 2017 through Ocean Pearl Hotels, to restore the chain to its previous glory. Media reports quote that the stake was bought at 25-30% discount to the initial valuation.
Banan sums up the current state of affairs at Sagar Ratna, “Quality, hygiene, and service have taken a serious beating but, I am trying to revive that.” Banan’s strategy over the past 10 months has been to do away with most of the new practices and run the c