India Inc.'s Asia Strategy Ventures - I
THE A.V. BIRLA GROUP

East Asia is not new to the Rs 15,000-crore Kumar Mangalam Birla Group. It was in 1974 that Aditya Birla, the founder of the Kumar Mangalam Birla empire, set up his first overseas plant in Thailand-followed by units in The Philippines, Indonesia, and Malaysia-manufacturing a diverse range of products: from viscose staple fibres to carbon black. Its overseas gameplan is an extension of its domestic strategy: achieve cost-competitiveness through economies of scale. In Thailand, for instance, it boasts a capacity of 1.20 lakh tonnes per annum of carbon black, which makes it the largest producer in South East Asia. The financial crisis in Asia-which has made acquisitions cheaper-has come in handy for CEO Kumar Mangalam Birla's strategy to spread across markets. Even as he plants his feet in North America-where he has a joint venture with the $1.40-billion Canadian wood products-manufacturer Tembec-he is consolidating his presence in Asia. Now, Birla is on the lookout for cheap assets in Indonesia and Thailand in the paper, textiles, and synthetic yarn businesses. Low-priced acquisitions will not only enhance his cost competitiveness, they also fit in with his overall objective of expanding his fibre and yarn business in Asia by 15 per cent per annum. Exports from the region, particularly Thailand and Indonesia, are booming because of the devaluation of their currencies. Points out the 30-year-old Birla: ''We are keen on expanding in South East Asia, which accounts for a quarter of our turnover.'' More important, the group has managerial capabilities to expand through M&A. Asianisation is obviously paying off for the group.

India Inc.'s Asia Ventures - II
THE GODREJ GROUP

If there is one Indian giant that is confident of an Asian resurgence, it is the Rs 3,090-crore Godrej Group. Sure, the currency crisis has severely hit the Rs 745.39-crore Godrej & Boyce (G&B), which manufactures office equipment, furniture, and safety equipment. But by leveraging its strengths in steel furniture, G&B-which has a subsidiary each in Malaysia and Singapore-hopes to make a dent in Asia. Today, 90 per cent of the Malaysian venture's products are exported to neighbouring countries while the Singapore company sells to the domestic market.

Of course, G&B's ambitions of emerging as a regional player have received a setback for now. While the currency crisis has made exports by those operations cheaper, it has made imports costlier. The main raw material, steel, has eroded G&B's subsidiaries' reserves. In fact, the crash of the Malaysian ringgit and of the Singapore dollar has eaten away 30 per cent of the net worth of its Malaysian business, and 15 per cent of the Singapore company. Yet, it is stepping up its investment in the region, counting on a resurgence. Its third manufacturing base, which will market office furniture in Asia as well as in the local Vietnamese market, is coming up in Hanoi at an investment of $60 million (Rs 240 crore). The group is also scouting for manufacturing opportunities in Malaysia and Singapore. Its reasoning: only by increasing scale through cheap acquisitions can it hope to neutralise the sting of devaluation. Indeed, despite its setback, the group is confident that its financial standing will allow it to raise funds for such acquisitions. In fact, the 46-year-old CEO of Godrej & Boyce, Jamshyd Godrej, still has faith in the region. Asia is, undoubtedly, an integral component of Godrej's long-term strategy.

India Inc.'s Asia Ventures - III
THE MAHINDRA & MAHINDRA GROUP

For the Rs 3,456.35-crore Mahindra & Mahindra (M&M) Group, an auto-manufacturer that is building its strengths in auto parts, technology infusion is critical. It will help M&M graduate from low-tech components to high value-added products, making it a tier-I supplier. Asia, particularly Thailand, which has distinguished itself as an Original Equipment Manufacturer-supplier, never seemed as tempting to M&M as it is now. Indeed, it is crucial to the company's future strategy. Until now, M&M had limited business linkages with South East Asia as most of its exports were targeted at Europe, Africa, and the US. It is only in the past 2 years that the group has realised the potential of Asia, and, consequently, stepped up export of utility vehicles to Malaysia and The Philippines. Now, Anand Mahindra, 41, CEO, M&M, plans to use Asia as a sourcing base. For, his farm equipment and utility vehicles businesses will benefit from cheaper imports from South Korea and Thailand, which have well-developed ancillary bases. The second prong of M&M's Asia strategy is increased penetration, to be achieved by acquiring a stake in a distribution network in countries like Thailand and Indonesia. The rationale: it takes at least 5 years to set up a distribution network in a new country. Mahindra knows the downsides only too well. ''Indian business scouting for acquisitions need to remind themselves that although sticker prices are low, an overseas venture in Asia still poses all the risks and rewards that it did earlier. Affordable price is no guarantee for long-term success.'' Sure. But if M&M is risking it nevertheless, it's because it expects to reap richer rewards.

India Inc.'s Asia Venture - IV
THE ESSAR GROUP

If the Rs 3,261-crore Essar Group had stuck to steel instead of diversifying into a host of areas like power, refineries, shipping, telecom, and banking, it would have not only become a domestic giant, but also managed to Asianise early. Surprisingly, however, the conglomerate, which seized every other opportunity that came its way, decided to go slow on entering one of the fastest-growing economic regions in the world. It was only a year ago that the owners-the Ruias-began to factor Asia into their business strategy. But Essar chose steel to forge its links with Asia, when its Indonesian venture, pt Essar Indonesia, commissioned a 2-lakh tonnes per annum hot-rolled coils plant. The choice was logical: Essar is already India's lowest-cost producer of steel. Half of the Indonesian operations' output was meant for the local market, and the rest for exports. Unfortunately, the Ruias' timing was horribly wrong: their plant went on stream when Asia was melting. Essar had to change its strategy or get buried under the economic debris. Demand was drying up in the Indonesian market. So, Essar had to shift its focus entirely on the export market. Fortunately, as the rupiah headed southwards, steel exports from Indonesia became even more competitive. In May, 1998, PT Essar Indonesia exported nearly 5,000 tonnes of hot-rolled coils, and plans to end the year with a total of 80,000 tonnes. That is well short its total output, but the Ruias hope that exports will rise and pull them out of the crisis. Explains Prashant Ruia, 27, Director, Essar Power and Essar Projects: ''We are using Indonesia as an export platform.'' By converting a problem into an opportunity, Essar has proved how India Inc. can leverage Asia in more ways than one.

India Inc.'s Asia Ventures - V
THE INDO RAMA GROUP

Both its beliefs-that manufacturing should be expanded across markets and that exports are crucial for survival-led the Lohia family-owned Rs 3,138.17-crore Indo Rama Group to Asia. Its vehicles: the Thailand-based Indo Rama Chemicals and the Indonesia-based pt Indo Rama. A business that was founded in 1962 in Jakarta is now a regional empire. While the global ethos pervades the group's operations in Asia, its sharp focus on synthetic yarn has allowed it to invest in both scale and vertical scope. Its capacities in synthetic fibres in Indonesia and India are 2,12,000 tonnes per annum (tpa) and 2,37,300 tpa, respectively. Vertical scope shields the company from fluctuations in raw material prices while economies of scale make it cost-competitive. In India, the group is integrating backwards into the manufacture of Purified Terephthalic Acid-a crucial polyester input-and forward integrating into textiles. The Indonesian and Thailand operations have already forward-integrated into textiles. The group's strategy was put to an acid test by the Asian financial crisis. Faced by declining domestic demand, pt Indo Rama pushed its overseas sales of synthetic yarn and fibre to 80 per cent of turnover, up from 58 per cent. True, a sliding currency made exports cheaper. But cost and quality management were crucial, too. Avers Chairman Mohan Lal Lohia, 67: ''Our global competitiveness does not stem from currency devaluation, but from investments in economies of scale and our endeavour to be globally competitive.'' And Asia was the route he chose. The lesson: Asianisation can obviously lead to global cost-ompetitiveness.

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