India Inc early 60s

1
India Inc(early 60s)

• Challenges that early Indian Business faced
• Overcome cultural inertia
• Conventional wisdom

2
India Inc.(70s early 80s)

• Family run business dominated - 95
• Majority of Industry owned by Public Sector
• License and Red Tape bureaucracy
• Weak or nil project financing opportunities
• Absence of Domestic market
• Brain-drain

3
Changes in 90s

• Progressive Liberalization and Privatization
  reforms
• Reduced reserved list of businesses for PSU
• Industrialization of economy
• Huge growth of Domestic Industrial base
• Govt. incentives to SSI (small scale industry)
• Export orientation with incentives
• Economic reforms opened up to foreign trade
• Less restrictive rules for a low cost finance
• More resources deployed for technology learning

4
Then and today

• Till 1995 India borrowed from IMF
• Today India loans to many countries US
• India foreign currency reserve US150 bn
• Small is not beautiful, think medium / large
  scale.
• India Inc. MA in Eastern Europe, Latin America,
  South East Asia, African countries, Russia, China
  US
• Example of growth
• India inc ordered 200 Aircraft (18 months) v/s 50
  in 90s
• Stock market index crossed 12,800 v/s 2900 in
  91
• IT, Gems, Textile, Automobile industries grew at
  35

5
Indian Inc. Scenario2005-2006

• SSIs - with 18 month order on hand
• US 620 ml invested in m/f facility by industry
• US 15 bn worth equipments ordered by corporate
• New recruitments (all segments) -
• 9,000 new middle level managers
• 35,000 Fresh MBAs
• 375,000 Fresh engineers
• 775,000 Fresh graduates
• Reverse brain drain
• 335,000 people from various countries expressed
  their desire to work in India ( source-
  monster.com)

6
Other industryA business model

• Product innovation
• Use of technology for higher total factor
  productivity (in 91? 1.38 to 1.66 in 06)
• Process innovation
• Return on cost of capital deployed in technology
  (relative ROI in 91 ? 0.008 v/s 0.22 in 06)
• Increased economy of scale by getting flexibility
  of industries

7
Successful Practices

• One product at a time
• Use of wider supplier base network
• Push responsibility and authority downwards for
  prompt action
• Stay lean with low overheads

8
Successful Strategies

• Business model innovation
• New technology
• Create urgency
• Visionary leaders and closed loop to share
  knowledge
• Institute open learning for all
• More synergy and collaborations
• Seed innovation and harvest

9
Investment Castings Scenario

• 2 million SSIs (90 are profit making)
• Over 1500 foundries
• 390 Investment casting units ( 12000 MT)
• 12-18 large size foundries
• Grown _at_ 30 in last 3 years
• 210 IC units with export orientation
• Product profile
• Valves Pumps (50)
• Automobiles (30)
• Armaments (10)
• Industrial Deco. Hardware (5)
• Elect., Orthopedic, Machine tools, Turbine,
  Railway, Textile, Material Handling Eq.

10
Geographical segments

• West
• Rajkot, Ahmedabad
• Mumbai, Pune, Nagpur, Solapur
• North
• Faridabad, Jallandhar
• South
• Banglore, Trichi, Kadloor, Coimbatore
• East
• Durgapur

11
Options for Investment Casting business in
changed scenario

• Follow the success stories of
• IT, Textile, Gems, Automobiles
• OR
• Redefine our own methods as
• Capture value by moving down stream
• Growth through strategic outsourcing
• Use disruptive technology to leapfrog others
• Target growth at 15 when overall India's
  economy growth of 7 - 8 in coming years

12
Advantage India

• Large base of domestic customers for field
  testing before exporting
• Customer-market segment model
• Geographical segment market model
• English - a common language for communication
• Efficient proven manufacturing processes
• SSIs Low overheads, fixed one time cost
• Lower tariffs have already exposed Indian
  companies to international competition
• Raw material easily available locally easily
• Availability of expertise at affordable cost

13
India Inc.The challenge

• It is not the ability to predict the future that
  holds the key to business model innovation, but
  an ability to redefine the present !