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AUTO ANCILLARIES Geared for a Spin Global benchmarks in the automotive industry will force a consolidation, says a new sector review.
It has all the components of a shakeout. Or so says a recent CRISIL report on the Indian auto ancillaries industry. Growing de-integration among vehicle manufacturers, increasing pressure on component prices and quality, and the shift towards modular supply will, the report says, see a number of smaller manufacturers in the 5,000-strong industry fall by the wayside. But with the overall vehicle market expanding, the big, tier-one vendors will get bigger. Not surprising, considering that the industry is falling in line with the global trend. Says V.K. Mehta, 59, President, Automotive Component Manufacturers Association: ''This is a time of great opportunity in the components market. In the near future, we might witness more mergers and acquisitions. It's going to be a battle for survival.'' Most new auto majors have brought their global vendors in tow. Take, for instance, Ford's Visteon, or General Motors' Delphi. At the moment, foreign car-makers source most of their components from Indian vendors, a majority of whom have either financial or technical tie-ups with the vehicle manufacturers' global suppliers. The report says that the growing competitive pressure on vendors could lead to Indian joint-venture partners selling out to their foreign collaborators. Overall, the industry is all set to grow. But its weaker constituents will have to reassemble their future. -Deepa Joshi HUMAN
RESOURCES Performance pays. And in future only that will pay. Increasingly, compensation in corporate India is being determined not so much by seniority as skills. Not so long ago, the emphasis on a manager's basket of skills was limited to a handful of hi-tech industries. But global competitive forces are causing the corporates to send traditional yardsticks of compensation flying out of the window. Therefore, it's not just the ice (information, communications, and entertainment) sector which is paying top dollar for talent. Even in the so-called Old Economy industries such as manufacturing, automobiles, consumer durables, and cement, performance-linked pay is fast becoming the norm. Take software. Here, skills like e-Commerce expertise are valued very highly by potential recruiters. Likewise with the expertise in Web-banking and other revenue-linked service models in the banking and financial sector. The proliferation of skill-based pay is in part, also a result of the increasingly seamless nature of the talent market. Job postings on the Net, usage of global talent databases by international search firms, and Web-based hiring, mean access to desired baskets of skills, across industries and across borders, for appropriation. Predicts Santrupt Mishra, 38, Group Vice-President (hr), A.V. Birla Group: ''Market parity and industry comparators will soon cease to have any meaning in an increasingly seamless talent market, which is already driven by skills.'' Truly, it's the age of the intrapreneur. -Paroma Roy Chowdhury INTERNATIONAL
MARKETING It may not be the stitch in time it is expected to be. Last year, the Ministry of Textiles commissioned the Delhi-based research agency, Indica Research, to assess the ''Potential for Promoting Indian Apparel Brands in International Markets''. Indica has tabled its report, and what it has to say is not heart-warming. For one, exporters were not aware of the India Brand Equity Fund (IBEF)-a first-of-its-kind attempt to promote Indian brands abroad-and 70 per cent of the exporters surveyed by Indica said that they were not interested in overseas branding. Yet, it seems they have little choice. Points out Darlie O. Koshy, 44, Chairperson (Apparel Merchandising & Marketing Department), National Institute of Fashion Technology: ''The only way to survive is by building brands.'' The study recommends a Rs 2,000-crore brand-building fund, but is silent on its source. For, although the Indian domestic apparel market is valued at Rs 10,000-crore, it is fragmented. The biggest brand-Raymond's Park Avenue-accounts for sales of a mere Rs 100 crore. And building a brand abroad takes as much as $75 million. Notes Arvind Singhal, 41, Managing Director, KSA Technopak, an industry consultancy: ''The exercise looks more than ambitious.'' Small wonder, then, that exporters are not putting their shirt on going global. -Naagesh Ayyagary CONVERGENCE They are plugging into a short-cut. Clogged telephone exchanges and high access rates are encouraging a clutch of Internet Service Providers (ISPs) to piggy-back on the extensive network of satellite television cables. This March, the Chennai-based ISP Satyam Infoway, launched Cable Web-Internet-over-cable-in Jamshedpur at a flat rate of Rs 1,500 per month. Mantra Online, the ISP of Bharti BT, plans a similar service in Delhi, Mumbai, and Bangalore. And Zee Telefilms' cable service company, Siti Cables, has just finished test marketing its service in Bangalore. Unlike Internet-over-television, which requires a set-top-box for interface, Net-over-cable allows pc users to access the Internet via their TV cable, using a cable modem. And since the user doesn't have to dial-up, he saves on phone bills. What lies behind this rush? For one, there are 23 million cable homes in India, compared to a much smaller number of families with telephones. And if cable modem price of Rs 15,000 halves-as expected-in six months, the ISPs say they will be able to tap a third of cable homes. But given the cable operator's limitations in terms of signal amplification, the ISPs had better not make a song and dance over cable. -Arundhati Bakshi INFOTECH It's proving to be a pyrrhic victory. Software piracy in India is on the wane, but with the industry growing at an estimated 50 per cent a year, the absolute loss to the industry is vaulting. Consider this: from a high of 89 per cent in 1993, the proportion of illegal software in overall software sales (volumes), slipped to 68 per cent over the next four years, and last year touched a low of 60 per cent. However, the total loss to the industry in the same period soared from Rs 210 crore to Rs 900 crore. Notes Rajeev Nair, 36, President, Microsoft India: ''The actual loss has risen because of the growth in pc usage.'' The duty on software has come down from 112 per cent to 0, but companies find it hard to compete against something which is free. Despite the high piracy rate in India, it seems to be less of a thieving nation than the US, where a quarter of the software in use is illegal. The loss to the industry? Around $2.5 billion. Worldwide, the industry lost a staggering $11 billion in revenue last year, a slight improvement over 1998's $11.4 billion. In India, the per capita loss due to piracy works out to Rs 9 versus Rs 400 in the US. Pramod Mahajan, the information technology and parliamentary affairs minister, launched the first toll-free anti-piracy hotline in association with the NASSCOM, recently . But it will be a long while before a call here rings up the cash register at Microsoft or Novell. -Pooja Garg |
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