The New Boom

Better Off Than Dad

Services Sector: Growth Engine

Faces: Adventure Capitalists

Adapters: Tradition Meets Technology

Industry: Being Indian

Careers: Techies Line Up For Jobs Online

The Scindias: Will Power
The contentious will of Rajmata Vijayaraje Scindia virtually disinherits her only son Madhavrao Scindia. This controversy threatens to mar the reputation and respectability of one of India's best- known and highly regarded royal families.

Gujarat: Shaky Regime
Confronted with a monumental disaster, the Gujarat Government is at the centre of relief operations. Was its reaction timely and efficient? Could more lives have been saved?

And Greed Hits Home
More than anything, it was corruption that killed people in Gujarat as buildings constructed by getting around norms came crashing down.

Public Sector: Shotgun Exit
First large PSU where workers agreed to leave the company.

THE NEW ECONOMY: INDUSTRY

Being Indian

So, Indian industry is no LONGER only OWNED BY INDIANS. What does that mean for markets, SHAREHOLDERS and customers?

By Malini Goyal

They came, they invested, they conquered. Reebok for North Star. Samsung for Weston. Kit-Kat for Five Star. Coke for Thums Up ... a whole host of foreign names have changed the brandscape around our homes and lives. No more is Indian industry synonymous with Indian-owned industry. In the new globalised world of business, ownership is an extinct issue.

Rama Bijapurkar Marketing Consultant "It isn't MNCs Vs Indian but new ones against entrenched players."

What has the changing ownership pattern of Indian industry meant for the companies and the customer? Has it been a mere change of hands with no change in business practices? Or is it beginning to redefine the way Indian companies are run, finances are raised, products are promoted and, most importantly, customers are treated?

Let's put some facts into the hypothesis first. A study of marketshares of major brands across select consumer products through the 1990s shows some definitive pointers. In the refrigerator market, the share of home-grown companies like Voltas and Godrej slipped from 18.5 per cent and 49 per cent in 1993-94 to 13.5 per cent and 32.6 per cent in 1998-99. During the same period, the share of Electrolux rose from 0.9 per cent to 14.1 per cent. Expectedly, the picture is even clearer in the car market. The share of Hindustan Motors (makers of Ambassador) dipped from 12.5 per cent in 1991-92 to just 6.7 per cent in 1998-99. Premier Padmini had an even more catastrophic fall in market share (see charts).

"Today, the definition of Indian industry cannot be Indian-owned companies. GE may not be an Indian-owned company but it is very much a part of India and has a growing presence," says Tarun Das, director-general of the Confederation of Indian Industry. "We should not waste our time trying to distinguish the ownership. I would think more of consumers than ownership," he adds.

The expert opinion points to three major operational outcomes of the increased foreign equity participation in Indian industry:

• Creation of new markets or expansion of the existing market.
• Long-term vision.
• Premium on efficiency.

These changes encompass all other outcomes of a more open economic environment like dispersion of equity, greater customer orientation and more exposure to the capital market.

Breakfast-cereal maker Kellogg's entry into India is a case of market expansion. In many ways, even the dominant Indian player Mohan Meakins benefited from Kellogg's entry. Though its sales of breakfast cereals grew modestly (from Rs 7.66 crore in 1996-97 to Rs 8.14 crore in 1997-98), the competition from the MNC galvanised the marketing and packaging of Mohan Meakins' products. Ditto for many other Indian companies which were forced to reinvent themselves in the face of foreign competition. "Competitive pressures and access to products and services on a global scale have driven Indian industry to improve operational performance," says Xerxes Desai, vice-chairman and managing director of Titan Industries.

Investing in market development automatically entails a long-term strategy. That's another lesson from the advent of foreign-owned, India-based companies. Points out Gita Piramal, co-author of Managing Radical Change: "Many MNCs in India like Coca-Cola and Pepsi are not making money, but are willing to make investments for returns in the long term." For many Indian companies too, the focus has shifted from making profits to garnering marketshare.

The recently opened insurance sector is one business where planning for the long term would help Indian businesses. The lessons of the past, points out Das, is that tie ups with foreign companies do not last for various reasons. Yet most Indian businesses are entering insurance with foreign partners. The probability is that once restrictions on the foreign equity go, most partnerships will become foreign owned. Instead of forming unequal partnerships, Indian businesses may be better off by entering alone, but with enough staying capacity to go for the long haul.

Shunu Sen Chairman, Quadra "Reasons for the failure of a company are internal, not external."

Many believe that the issue of Indian-owned versus foreign-owned Indian industry is actually an argument for efficiency. "The reasons for failure are internal not external," says Shunu Sen, chairman of marketing consultancy firm Quadra Advisory. The debate is not about Indian companies vs MNCs, but efficient vs inefficient, competitive vs uncompetitive players. In this battle, efficient and professionally managed companies like Infosys Technologies, Asian Paints and Ranbaxy Laboratories will score over inefficient and uncompetitive players, irrespective of whether they are run by Indians or foreigners. "What we are implicitly thinking about is existing entrenched companies versus the new challengers," says marketing consultant Rama Bijapurkar. The new challengers can come from within the country like Tata Indica or from overseas like Hyundai's Santro. LG, Samsung, Daewoo, Sony may be classified as the new challengers whereas Philips, well entrenched in India but still an MNC, could be the defender.

Eventually, it is the value created that counts. Piramal says, "We should not be worried about the colour of money. Any company that creates job in India and is doing value addition out of India is Indian industry. It is not heritage or parentage or age in India or any such demographic variable that determines winners today. It is the extent of the value delivered to customers and shareholders."

Nearly a century ago the Swadeshi Movement was launched in India to battle the onslaught of British goods. The liberalisation that swept through the Indian market in the past 10 years has helped it get rid of ideological baggage and acquire an attitude that is more in tune with the new millennium.

MetroScape
Random Readings
Arvind Krishna Mehrotra would rather be "accurate" in his latest undertaking, a book of Kabir's poetry in English, even if he says "Kabir's greatest hits may not have been written by him at all".
more...

Looking Glass

Kolkata: Restaurant

Bangalore:
Art Exhibition

New Delhi: Play

Who says Indian theatre is dying? Playwrights--both veteran and budding--in the country had a chance to interact with those from the Royal Court Theatre, London, at its first residency workshop in Bangalore recently.
It was a fortnight
of enrichment, concludes Principal Correspondent Stephen David in Despatches.

"I was very much against the idea of India," says William Dalrymple, author, The City of Djinns: A Year in Delhi. In conversation with INDIA TODAY's Sonia Faleiro, he talks about his old girlfriend, Delhi and his "enormously exciting" next book, The White Moghuls in Interviews.