Neha Paul woke up with a start to the urgent beeps of the bedside alarm clock. It was only half-past-five on a Monday morning, but the country manager of InstaCam had a busy day ahead. First, she had to make the six o'clock conference call with her regional head in Singapore. Then, she had a meeting with distributors, followed by a presentation at a big insurance company.

At five to six, Paul sat down at the table in her home-office and dialled Stan Choo's number. Her boss answered the phone on the third ring.

"Morning, Stan," Paul said, hearing his voice on the other end. "Did you get the Start of the Week Report I e-mailed you last evening?"

"Yes, I did. It looks good to me," said InstaCam's Asia-Pac head.

"The new distributor is performing well," Paul said. "There are a couple of big deals that I am chasing this week. One's from a large private insurer, and the other is a government agency."

"Just make sure we get the orders," Choo said. "I'll back you with whatever help you need."

"Thanks, Stan. By the way, I have reason to believe that our next quarter revenues will be slightly higher than what I had projected. Instead of a 20 per cent growth, we may deliver a 30 per cent jump."

"I'll believe it when I see it,'' quipped Paul's boss.

"Does anything make you happy, Stan?" Paul pretended to complain.

"Of course. A 100 per cent jump in the bottomline, for example," Choo said, without missing a beat. "Seriously, Neha, you are doing a good job. Keep it up."

"I thought I'd never hear that from you," Paul laughed along with her boss, said bye and hung up.

Choo wasn't being polite. Ever since Paul had taken over InstaCam's Indian subsidiary, things had only gotten better and better. InstaCam-the world's biggest instant photograph company-had been in India for almost a decade, but its growth had been painfully slow. In fact, what Paul inherited at InstaCam two years ago was a business in disarray. The previous country manager, an expat, had built up a big team, with senior executives at fancy designations and salaries. For instance, there even was a director administration, apart from directors for marketing and finance.

The more serious problem was of strategy. With InstaCam on a roll in other parts of the world, India was not really a priority. The company had tied up with a local partner to set up an export-oriented unit for its cameras. The distribution was also handled by the same partner. But since little effort had been made to grow the market for instant photography, InstaCam's India plant was perennially operating below capacity. The EOU had a capacity to manufacture 4 lakh cameras per annum, but the output because of market demand never crossed a lakh. If the $100-million EOU stayed afloat, it was because of the buy-back agreement with the parent in the US. Still, InstaCam India's revenues, until 1999, had never crossed Rs 30 crore.

Neha, who had earned her spurs turning around a loss-making division of a small polyester company, had been brought in with a very specific brief: cut the losses, and grow the market. InstaCam wasn't willing to give her much time. In fact, they wanted some signs of improvements in her very first quarter. That meant Paul had to make some tough decisions. One of her first decisions was to shut down the production of an old line of consumer camera called Spiffy, and focus on the model that catered to businesses, primarily studios. Until Paul joined, InstaCam also used to share distribution costs with its Indian partner. That was ended, too.

Simultaneously, she roped in another distributor for two new models, aimed at the family and children. In the studio segment, Paul launched a high-end model and placed some 5,000 of them free of cost. If nobody raised an eyebrow at giving away cameras free of cost, it was because InstaCam, even globally, never made money on its cameras. Rather, it were its proprietary films that made the money. To appease the Indian manufacturing partner, however, Paul decided to reward its sales team with generous incentives. For example, apart from a good rebate plan for the manufacturer, InstaCam offered its partner's salespeople bonuses and free foreign trips as incentives for meeting their sales targets.

In the following year, Paul expanded into newer markets such as Bangladesh, Nepal and Bhutan. Distribution was further streamlined. Except Bangladesh, the new foreign markets were serviced by the Indian manufacturing partner (Bangladesh had a strong distributor who sourced directly from the plant in India). Within India, there were now three distributors. One focussed on West and South, another on North and East, and the third focused on Mumbai alone and handled the two new consumer cameras that InstaCam had launched, plus the relaunched Spiffy.

The results were impressive: sales of films zoomed, and revenues soared from Rs 35 crore to Rs 50 crore. More importantly, profits jumped from Rs 15 lakh to Rs 1 crore. In the current fiscal, Paul was projecting a bigger jump: of sales touching Rs 80 crore and profits quadrupling. Not surprisingly, Choo liked the pace at which Paul had managed to move things. But he knew that her hands were still constrained by what was happening at InstaCam's headquarters in the US.

Two years after Paul joined InstaCam, its parent filed for bankruptcy. The company had allowed its debts to soar, with the result that interest costs had eaten into its net worth. The borrowings were made in a bid to thwart a takeover attempt several years ago. Besides, InstaCam had been facing a threat from digital photography, and the company had been slow to react. Fortunately, it had a strong brand and had been able to find an investor, who'd help it emerge from bankruptcy. However, the final sale of assets-the current deal would go through only if no other investor bid higher-was still to happen.

Meanwhile, whatever profits that the Indian subsidiary made were being shovelled into the bankrupt parent. All expenditure needed approval of courts in the US. In fact, even new employees could not be hired without the courts' nod. But Paul needed money to consolidate the turnaround. She had to step up marketing and advertising expenditure to build the InstaCam brand in India to sustain the growth. The question, however, was how? It was clear to her that the parent had to let the India office keep a bigger share of the profits. It would be a hard battle to fight, but Paul would get an opportunity next week when Choo visited India.

Until then, Paul decided to focus on the two deals she had on hand. The meeting at the insurance company went off well. It was a new entrant in the insurance business in India, and had ambitious plans for growth. It seemed that InstaCam may be able to sell 1,000 packs of film to this company alone over the next 12 months. By the end of the week, Paul also managed to make some headway at a government agency, whose requirements ran into thousands of films. If the order came through, it would be a windfall for InstaCam. The only hitch was that Paul couldn't set a time-frame for it. Like the dealing officer said, getting approvals could take two months or even two years.

Late evening the following Sunday, Choo landed in Delhi. And at 9:30 am on Monday morning, the meeting started. Seated around the table were Aditya Singh, a director from the Indian partner; Prem Sharma, General Manager (Marketing), InstaCam, and Suniti Pillai, its CFO, besides Paul and Choo.

Some routine issues done with, Paul moved on to the topic she'd been dying to bring up. "Stan, as you've seen, this company is poised for a big leap. But I can't do that without a big advertising budget."

"Neha, you know why I can't-even if I wanted to-sanction a higher spend here," Choo replied.

"Look at my competition. Sure, nobody else sells instant photo films in the country, but I see the market from the consumer's point of view," said Paul. "For every negative that is sold, I've lost a potential customer for instant photography."

"I agree with Neha," said Sharma. "Even in the studio segment, we need customer pull to increase the consumption of our films."

"This is not the US, China, or even Philippines," Paul added. "The per capita consumption of film rolls in India is just 0.6 compared to 10 or more in the US. And it is a price sensitive market. If I increase the film price even by a few rupees, consumption is affected. That's not the case in other markets like the US."

"You have little to complain about,'' Choo said. "We've been supporting you with subsidised rates.''

That was a fact, and Paul couldn't deny it. "Yes, but how am I expected to deliver the kind of growth that you want without an advertising budget?" Paul questioned.

"I think we need to do more of what we are doing," said Singh, who looked after distribution at InstaCam's partner company. "We need to seed the market with more of our instant cameras. We should pick up strategic spots like tourist centres, museums, colleges, banks, and even photocopy shops."

"Yes, and we are even giving cameras free at some of these places," said Paul. "But creating such a network would take time. Besides, maintaining it would be difficult. I suggest we look at new segments like wedding photography. According to our market research, nearly 80 per cent of an average consumer's spend on photography is on wedding photographs."

"It's a great idea," agreed Choo.

"And we should also strengthen our presence in the professional photography segment, where our margins are higher," said Pillai.

"Indeed," noted Paul. "My worry is this: if we don't rapidly consolidate our gains, then we will be edged out of the market. Look at our competitors. They have bigger revenues, they are more profitable, and at least one of them is positioning itself as a complete photographic company. It is even launching low-priced digital cameras and scanners. As you all know, the Japanese have priced themselves very competitively. If a price war breaks out, we'll be the first to be knocked out. Everybody else has healthy parents."

"Forget a price war," added Pillai, "if the rupee continues to depreciate, then our margins will automatically get squeezed if we don't pass on the hike to our customers."

"I don't think we can do that," said Paul. "We just have to grow volumes here so that Stan continues to give us films at competitive rates."

"You've got it," said Choo.

"So, all of us agree on one thing," noted Paul, summing up. "We need to grow. I think if we grow fast enough-and there's plenty of potential for that-we could even be instrumental in the headquarter's ride out of bankruptcy. But the question is: how do we grow without advertising support?"

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