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From Nobodies To Big Names It was audacity at its very best. In 1983, a 20-something C.K. Ranganathan set out to sell shampoos with Rs 15,000 in his pocket. He took the then 200-brand strong market by storm, selling his Chik shampoo in sachets priced at Re 1. Today, Ranganathan's company, Cavin Kare, is giving FMCG giant Hindustan Lever Ltd (HLL) a run for its money.
What's Cavin Kare got to do with economic reforms? Plenty. Because Ranganathan is proof of the fact that Indian entrepreneurs have it in them to go places, provided they aren't shackled. Post-1991, even as established companies went into a dazed stupor, companies like Cavin Kare moved quickly to use every opportunity that came their way to grow bigger. Ranganathan, for example, used the opening up of the airwaves to his advantage. Advertising first on the regional satellite channels, he consolidated his brands-Chik, Nyle herbal shampoo, Fairever fairness cream-in the southern markets before launching them nationally. Cavin Kare is now a Rs 205-crore group with a personal products division, a polymer division and an export division.
Meet the children of reforms-a select band of first-generation entrepreneurs and savvy professionals who were quick to take positions every time P.V. Narasimha Rao and Manmohan Singh opened a window of opportunity. Whether it is Subhash Chandra in entertainment, Sunil Mittal in telecom, Naresh Goyal in civil aviation, N.R. Narayanamurthy in information technology or Deepak Parekh and K.V. Kamath in the financial sector, each has catapulted his organisation from obscurity to world-wide recognition. Competition, the word that has some of the biggest names in India Inc. running scared, doesn't frighten them in the least. Asserts Sunil Mittal, Chairman and Managing Director of Bharti Enterprises: ''We are the very product of competition.''
But liberalisation alone isn't the reason for their stupendous success. After all, big business houses also ventured into these sectors. Few stayed on. The new kids on the block have combined a clear business focus with a sharp customer focus, spunk, people management skills and a readiness to stand established rules of the game on their head to brew a heady winning formula. How else could Chandra morph from a commodities trader into a media moghul? How else could Deepak Parekh and K.V. Kamath have transformed HDFC, a housing finance company, and ICICI, a term-lending institution, into integrated financial services conglomerates? How else could Murthy have made Infosys a Rs 22,000 crore company? Constraints didn't matter. When, in 1992, Chandra jumped out of nowhere into the fray (along with Bombay Dyeing's Nusli Wadia and the Jains of the Times Group) to lease Star TV's transponder on Asiasat, he didn't have the $5 million that he bid. He won the bid, and then displayed his penchant for raising the money, a skill that would come into ample play in later years. In 1988, when Murthy was strapped for cash, conventional bankers wouldn't lend him money. He even approached ITC Infotech, but in vain. Murthy persevered, even pledging his wife's jewellery. His patience paid off when the capital markets were liberalised. Infosys went public in 1993 and the shares were sold at a premium of Rs 90.
The new breed is a far-sighted lot. One of Goyals' first canny moves was to set up Jet Air general service agents for leading international airlines in 1974. Over the years, this was developed into an enviable network of 70 retail outlets across India. Apart from providing a steady revenue stream, it proved to be a ready-made distribution network once Jet Airways was launched. And they've got the knack of turning adversity into an advantage. When the industrial restructuring in the post-reform years saw many of ICICI's corporate clients sink into the red, Kamath was quick to de-risk its asset portfolio. The share of manufacturing project finance came down from 73 per cent in 1997 to 36 per cent in 2001 while corporate finance increased from 9 per cent to 40 per cent. When nothing moved in the telecom sector for four long years, Mittal quietly took off for Seychelles and set up a network there. Now there are some lessons which the big daddies of Corporate India can learn. -Additional reporting by Roshni
Jayakar, Brian Carvalho, Running Scared The EXIM POLICY for 2001-02 had just announced steep hikes in import duties on completely built-up (CBU) vehicles and a group of Indian auto-makers were exulting. ''We've done it,'' gushed the CEO of an utility vehicle manufacturer, ''we've managed to block them.'' Block them. For many Indian companies, liberalisation and economic reforms translate into that two-word phrase and single-minded objective to resist competition. For obvious reasons. Take the euphoric gentleman we mentioned, for instance. His company cranks out low-cost utility vehicles, many with technologies that haven't changed since the 1950s! Or another renowned two-wheeler manufacturer, which resisted the change-over to engines with lower emission levels till the law forced it to do so. Liberalisation has meant new opportunities for several Indian entrepreneurs. But, for legions of Indian companies it has meant exposure to the threat of competition. For many of India's leading business groups, the decade of reforms has been a period when they had to run scared. Some groups have missed opportunities that stared them in the face. Car-makers like Hindustan Motors (HM), once the biggest player, failed to foresee the rush of global car-makers. Today, HM has been all but marginalised in the car market. Also caught off guard by the reforms were business groups that had diversified wildly into new businesses-either through organic growth like, say, the SPIC group or through mergers and acquisitions like the RPG group. Today, apart from its recent foray into retailing, most of RPG's businesses-from tyres to power generation and distribution-are faring poorly. In SPIC's case, the group is actually having to wind down its portfolio by divesting many of its businesses. Just how adversely the 1991-2001 decade has affected some of India Inc.'s giants is evident from the saga of the Tata group. Back in 1991, two of the group's flagships-Telco and Tisco-were, respectively, the largest and second largest private sector companies in terms of sales. In 2001, they are at the fourth and sixth positions, overtaken by relative newcomers like Reliance Industries and Maruti Udyog. It would not, however, be altogether fair to blame the older Indian companies for their current travails. Growth in the pre-liberalisation days was a function of what you were allowed to do rather than what you wanted to do. Hence, sometimes the only way business groups could grow was by diversifying. That such diversifications were often out of sync with their core skills is another matter. |
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