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ECONOMY: DOWNTURN
Still The Leader
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JAGDISH KHATTAR
CMD, Maruti Udyog
CHALLENGE: Spate of launches by competitors
RESPONSE: Cut costs, launch new models
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You wouldn't want
to be in his place. Maruti Udyog Chairman and Managing Director Jagdish
Khattar is up against the best auto majors in the world. Add to this a
7 per cent fall in sales across the car market in this quarter over last
year's. But Khattar is smiling. Despite the worst quarter in three years,
Maruti has done better. What's more it even has a small profit compared
to the Rs 104 crore loss reported in September 2000. Not just that: Maruti's
marketshare in passenger cars has gone up from 54.4 per cent to 60.8 per
cent.
Khattar's strategy: get the eyeballs. "You've
got to create a buzz, generate some excitement in the market to woo the
customer back to the showroom." Ergo last week "we got Amitabh
Bachchan, the star of the millennium to endorse the Versa". Maruti
has also launched variants in every segment. The pay off: marketshare
in the B segment (Zen, Santro, Matiz) has jumped from 34 to 43 per cent.
Plus for the aficionado, Maruti has designed limited editions of the Zen
and the old war-horse, Esteem.
But buzz itself is not enough. Maruti is working
on affordability through cost cuts and better financing. Over the past
six months Maruti has-through internal efficiencies and a voluntary retirement
scheme for 1,050 workers-pruned its costs by 6 per cent. "This will
help us push capacity utilisation from 95 per cent to 120 per cent."
Then there is the pre-owned cars initiative in which Maruti will sell,
fund and service used cars. Clearly Khattar is getting ready for the road
ahead. "The next six months will be tough but we are working hard,"
he says.
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ANIL
& MUKESH AMBANI
Managing Director and Vice-Chairman, Reliance
CHALLENGE: Consumer industries hit by slowdown
RESPONSE: Create new products, leverage competitiveness |
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For a group that
has posted sales of Rs 62,000 crore, made a net profit of Rs 4,400 crore,
generated a cash flow of Rs 6,800 crore on assets worth Rs 55,000 crore
and boasts a net worth of Rs 25,682 crore the phrase slowdown has an entirely
different connotation. The biggest worry then is the health of its customers.
Take Reliance Industries Ltd. Sales at Rs 12,624
crore for the first six months were down 2 per cent over the previous
year. Sure, it is on a large base and operating margin is stable at 19-plus
per cent but is it sustainable? Reliance's customers-FMCG, consumer durables
or automobiles-are all facing a slowdown. In a sense the worry about customers
reflects their concern of growth, margins and thus profits. As Managing
Director Anil Ambani pointed out, "The global petrochemicals industry
is facing the most challenging conditions in history." Can Reliance
Industries be insulated?
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N. HIRANANDANI
MD, Hiranandani Con
CHALLENGE: Falling real estate prices
RESPONSE: Give quality, credit, incentives
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Brothers Mukesh and Anil saw it coming and have
initiated a process. Vice-Chairman Mukesh calls it "integrating knowledge
and complex engineering to deliver value to customers and thus enhance
the value for shareholders". In other words, the Ambanis are leveraging
the intellectual capital of the group to help its customers grow.
Secondly, India consumes barely a fourth of
the volume of petrochemicals that China consumes. So growth has to be
engineered. Consider this: barely a tenth of the milk sold in India is
packaged. Most would see it as a market for polyethelene pouches. Mukesh
sees an opportunity beyond just pouches. "We are working to create
a pouch that will sustain milk without refrigeration. Think of the money
saved on refrigeration." Think of the business opportunity. Not just
in milk but foodgrains and other agri-businesses too. Mukesh says Reliance
Industries is not just in the business of selling commodities. "We
are now a knowledge economy company where systems and complex engineering
form but part of the tools to locate opportunities and achieve objectives."
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BIRINDER
NARULA
Exec Director, Ebony
CHALLENGE: Low consumer spending
RESPONSE: Target niches, smaller towns |
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Mark Twain said
invest in land. Perhaps for the long term. As of now, Niranjan Hiranandani
says, "It's like being pushed into a war." But Hiranandani is
an incurable optimist. His thesis: with stocks and even gold losing glitter
investors are bound to look again at real estate. Hiranandani though is
not living off hope. To woo buyers he has tied up Citibank loans at 6
per cent and to keep customers hooked he offers an alternate roof as theirs
get ready. Its working as of now, but as he says, "I didn't get shot
today, but who knows about tomorrow.It's the final
frontier of the slowdown.
Ebony under Birinder Singh Narula, though, is
looking at the long term. So it is expanding during the lull into Chennai
and Indore this year and to Amritsar and Hyderabad later. "In the
immediate term, our strategy has been to attract consumers with deals
and boost impulse sales. But really speaking we would rather take a long-term
view of our plans, and work accordingly rather than get bogged down by
short-term blips due to the slowdown." Using a war chest of Rs 130
crore, Ebony is looking ahead.
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