For
a moment, Mohan Ghanshyam Tarla couldn't even believe he was spending
time on this. At 35, he was king of a commodity empire with sales
of Rs 5 lakh every minute, and he was conscious of maximising the
value of every second of thought.
It wasn't often that he allowed his linear
time-schedule to be warped by an intrusion. "Where there's
passion, there's money-c'mon, you know that, Mohan," K.K.,
a B-school batchmate, was telling him, having dropped by to 'catch
up'. "And passion's all catharsis. Squeeze those tears out,
for joy, anguish, whatever. Hit that 326th run, die for love...
and the show's all yours."
"Brands don't do that," objected
Tarla, who only got every tenth rupee from consumer brands, the
rest of his turnover coming from cement, aluminium and the like.
"Maybe not," said K.K., who'd quit
the corporate 'rat race' recently, "but brands are also about
mass relationships. They keep millions hooked."
Tarla didn't bat an eyelid. The young inheritor
was content with his first major 'brand play' with the acquisition
of Shatranj Garments, a marketer of shirt brands with sharp personalities.
As for other 'new economy' bets, he'd taken a stake in a software
house. But even the turnover of these businesses was less than his
profits from commodities.
Putting up huge capacities in basic economy-builders,
after all, was the vision by which Tarla's grandfather had created
the business group. His father had pursued even bigger economies-of-scale
while making it clear that cost-efficiency was the group's operating
principle. The competence? Mastery of production processes.
"For such a big group, your share of
voice is rather pathetic"
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Acquisition decisions occupied most of Tarla's
time. These, plus restructuring decisions. Such as recasting the
group's debt. Now, if overall demand conditions were to improve,
Tarla was in a position to get a return-on-capital that his rivals
would envy.
K.K. had barely begun speaking again, that
Tarla's mobile phone buzzed. It was Srinivasan Reddy, coordinator,
group strategy, with a highway construction update. "No, can't
they accelerate?" asked Tarla, of his handset. "Logistics
can't really be the problem-get to the other reason. We're geared
for optimal cement production only if this supply deal is assured,
and we can't afford any pile-ups, okay? Inventory targets will not
be reset," he said, switching off. "It's never ending,"
he sighed, at K.K. "For half those clowns, good roads are an
end in itself, something they think is needed to show off to the
rich countries, not a means to get there. Take attitudes to broadband..."
The phone buzzed again. This time, it was Prakash
Rastogi, the chief of the aluminium firm, with a word on the business'
cost-revaluation report. "Oh," said Tarla, with an air
of irritation, "But they said that could be managed... no,
we can't wait that long. Without gas assurance we can't even begin
the revamp. Nobody can be globally competitive if the local environment
is going to remain self-defeating." K.K. watched, grinning.
He had some idea of what the hitch was. Electrolysis to make aluminium
was an energy-devouring process, and gas turbines were the cheapest
power source, if natural gas could be piped to the location cheaply.
But this wasn't easy, with populism reigning steady.
Tarla returned to K.K: "Resource scarcity.
We've internalised it. And it won't go away so long as it's giving
somebody a halo. 'Come hither all you needy people, my reserves
are small but my heart is big.'"
"Need an 'upright shirt' to rid us of
our national illusions?" quipped K.K, referring to Jack Inland,
a mid-priced brand in Shatranj's portfolio. "Hah," Tarla
smiled, "maybe we should all loosen up a bit, and rethink our
priorities, Cherry Garcy style." A reference to the casualwear
brand that had been instrumental in reforming Corporate India's
attitudes to office decorum.
"I'm serious, Mohan," said K.K, glancing
at a crowned portrait on the wall. "I know you've got Ashim
as a group brand. Nice art work in the TV spot. And Tarla Cement's
getting a premium. But don't you want to be a 'new economy' guy?"
"Listen K.K.," replied Tarla, "My
chief strategist Reddy is on the mission already. We're buying intellectual
assets. Even without this, we're not exactly pre-historic, you know.
Commodities will always be needed, and we're also into e-this and
e-that in our processes. Besides, I don't buy all this 'old' and
'new' bunk. Value delivery is value delivery, period."
"Yeah, value-but to how many consumers?"
"Numbers is not the issue. To the consumer,
we stand for a consistent set of values in whatever we do. The lines
between commodities, brands and services are getting blurred anyway,
and people want Ashim and Tarla by name. That's pricing power, alright?"
"No, no, no," said K.K. "That's
all fine. I'm saying you need to become big on the brand scene.
You don't have a single consumer brand with a four-figure turnover.
For media impact, a group your size should have the concentrated
firepower of an ad budget of at least Rs 100 crore, on one single
brand, which is 1 per cent of the Indian ad pie. Your rival group
Wawa now has a car on the roads, and its brand score has shot up.
The colas run a big part of the show, and HHL owns a tenth of the
whole pie. Tarla's share of voice is rather pathetic."
"Raise adspend? Big deal, even our ad
agency wants us to do that," Tarla responded, narrowing his
eyebrows in mock suspicion.
"Any spend has to pay for itself. I'm
saying restructure the group. Sell off some smokestacks and go brand
shopping-make it 25 per cent of your turnover, and then go for at
least one Rs 1,000-crore consumer brand with a Rs 100-crore budget."
Tarla paused, glancing at his watch. Minutes
were ticking away, but maybe this meeting wasn't to be classified
under 'friend indulgence', after all. The word 'impact' resounded
in his head, as he spoke, "I think I see exactly what you're
trying to say, K.K. It's just like you, from your guitaring days,
the hydraulic engineer singing odes to relevance instead of reverence."
They both laughed, in recollection. "But
brand-building and consumer engagement are specialised skills,"
argued Tarla, "which could take years to generate."
"I didn't come for a job," clarified
K.K., "I just see Tarla bags of cement being lugged around
by labourers-and I think, 'hey, these guys should hear your solution
to the backward bending labour supply curve', remember that?"
Laughter, again. "I mean," continued K.K., "you're
into simplifying things. They'd be blown. But they're not thinking
cement, they're thinking food. So why not sell them food? Anything.
Just get through."
This was getting fun. But Tarla had a strategy
meeting, so he walked K.K to the door, saying, "Maybe you're
the only one who wants to hear my mind."
"Good," his friend replied, "I'm
just an ordinary guy. Perfect sample. You've got me tuned in. Get
the rest." And K.K. clicked the door behind him.
Should Tarla accept K.K.'s suggestions?
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