When you have been in India as long as Scott Bayman has, presumably, seen it all, and the market evolves to a point where you are suddenly looking at opportunities, big ones, it does something to you. And so, it doesn't surprise this writer when the man, now 58, and President & CEO of GE India for the past 12 years, literally bounds into the room, the mandatory can of Diet Coke in his hand (he doesn't drink coffee; then, CEO Jeff Immelt has been known to never sit in on a meeting unless he has one of these handy).

Ask Bayman whether the way he and India are now treated at Fairfield, Connecticut, GE's headquarters, have changed as the country has moved from a market with great potential to a source of knowledge, expertise and backroom shared services (think business process outsourcing; GE India wrote the book on that one) to a market that is beginning to live up to its potential (finally!) and the answer comes back as quickly. "Absolutely", he thumps the table and proceeds to rattle off "anecdotal evidence" to the effect. The number of global heads of GE businesses that have visited India since the beginning of 2005 (significant, and Chairman and CEO Jeff Immelt is scheduled to be here in late-May). And the number of executives of other multinational firms seeking to do business in India that have approached him for a download of what GE knows on the country. "And none of these guys want to speak about GECIS," he smiles referring to GE Capital International Services, the BPO in which the company sold a 60 per cent stake last year to a combine of private equity investors.

That others should approach GE for its take on doing business in India shouldn't surprise anyone. The company has progressed from being just another multinational carried away by the hype surrounding India to a pioneer in outsourcing work, even high-end knowledge-intensive tasks, to the country to a conglomerate looking at significant business deals and opportunities across its businesses.

There's Air-India's $7-billion (Rs 30,800-crore) deal to acquire 50 aircraft from Boeing that GE Commercial Aviation Services (GECAS) may finance. GE Money has recently entered the Rs 66,000-crore mortgages market and will soon either acquire a bank or start one afresh. GE's energy division is looking to do business worth $2 billion (Rs 8,800 crore) by 2009. "We see India as a rising star," says Immelt. "We think we are at the beginning of a growth cycle here." (See "India Is A Rising Star", Page 58) Bayman has thought so too, since November last.

The Third Wave

5 REASONS WHY THINGS ARE COMING TOGETHER FOR GE IN INDIA

THE CONSUMER FINANCE BOOM: GE Money offers a range of retail loan products and is hoping to launch a bank THE AIRLINES BOOM: GE makes aircraft engines; its leasing arm owns 1,300 aircraft; and also finances aircraft purchases by airlines THE AIRPORTS EMPHASIS: Most Indian airports are being upgraded or soon will be; GE offers a variety of solutions, from lighting to security, for airports THE POWER EQUATION: The 2005 crisis may just force state governments to accelerate power sector reforms; GE, a large equipment maker, stands to benefit WATER MANAGEMENT: India is waking up to the need to conserve and manage its water resources, professionally. GE's infrastructure business offers a range of water management solutions

When GE entered India in 1993 (the company has been doing business in India since 1902, Immelt points out), it saw, like other multinationals did at the time, a huge market for the taking. Its commercial finance arm acquired srf Finance, its energy division was an investor and equipment supplier to the Dabhol Power Company (it is currently in the midst of arbitration to recover its investment), and its medical equipment arm entered into a joint venture with Wipro. Soon, however, the company realised that the Indian power sector was mined with regulatory and political snafus, that it wasn't easy for any company that believed in prudent asset quality (GE did) to grow its finance business, and that it wasn't going to be possible for it to reach the target it had set, revenues of $2 billion (Rs 7,200 crore at the then exchange rate) by 2000.

Around the same time, GE's insurance business in the US was facing a manpower problem. GEFA (GE Financial Assurance) was located on the East Coast of the us, it was growing and needed people to handle its call centres, but the low rate of unemployment in that part of the country meant that the going was tough. GE India-there must have been some pressure on it to justify its existence; even companies with as long-term a mindset as GE need to see signs that things are on the right track-realised that the work could be done out of India, that (as Bayman then explained to this magazine), "what was a back-end business for GEFA could become a front-end business for the Indian business", and GECIS was born. It helped that GE India, through the late 1990s, had worked, like other GE businesses in the world had, on Six Sigma initiatives aimed at improving process and product quality. Between 2000 and 2004, outsourcing was GE India's refrain. Design, product development, software and engineering services, everything was being outsourced to India, and the company thrived, even as it waited for the market to turn.

Turn it did, late in 2004. Symbolically, that was around the time the company divested 60 per cent of its stake in GECIS to General Atlantic Partners and Oak Hill Capital Partners. Bayman insists that this was a coincidence, that the divestment wasn't one of those there-we've-divested-in-our-BPO-and-moved-on kind of things. "We are a big company," he says.

"Resources wouldn't have been a constraint." The divestment, he adds, was largely motivated by the desire to do the right thing by GECIS, to help it draw third-party business, which wouldn't have been easy had it still been part of GE. Coincidental the divestment may have been, but that done, GE seems to have got down to business.

THE BUSINESSES THAT MATTER Why GE is bullish on India

AVIATION SERVICES MARKET OPPORTUNITY: India has 175 commercial aircraft currently; set to increase to 400-500 over next 15-20 years. In some ways, GE Commercial Aviation Services (GECAS) is the world's largest airline. It has a fleet of 1,600 aircraft (1,300 owned, and 300 that it manages) that it leases out to over 200 airlines around the world. Besides leasing aircraft and engines, the company, with assets of $37 billion (Rs 1,62,800 crore), also finances the fleet expansion and modernisation initiatives of various airlines, provides software solutions for fleet management, and runs GE Commercial Aviation Training, one of the world's largest pilot training academies. GECAS, which is a division of the company's commercial finance business globally, operates independently in India, where the fleet expansion programmes of state-owned airlines Air-India and Indian Airlines, and the emergence of a clutch of low-cost domestic carriers could help its cause. "India currently has a fleet of 175 commercial planes and we expect this to increase to about 400-500 over the next 15-20 years," says T.P. Chopra, Vice President, Marketing & Structured Finance, GECAS, India. He rattles off the various factors that will contribute to this: GDP growth, the entry of low-cost airlines, the open skies policy and the growing number of fliers. Inadequate airport infrastructure, he warns, could hinder growth. Then, India has plans for its airports and GE could well benefit from them too. INFRASTRUCTURE SERVICES MARKET OPPORTUNITY: $1.13 billion (Rs 4,972 crore) currently; set to grow at 20 per cent a year. One GE business that will benefit from India's efforts to upgrade its airports and build new ones is GE Infrastructure Services, a company that provides a range of security solutions targeting, among other segments, airports. However, it is water management, a $1-billion (Rs 4,400-crore) opportunity, that excites Dhruv Agarwala, Business Leader, GE Infrastructure Services, the most. "The demand for desalination equipment and desalination machinery will grow exponentially," says Agarwala, pointing out that per-capita availability of water in India has plunged from 5,000 cubic metres in 1950 to 1,600 cubic metres today. With the government, too, keen on water management, this business could well be GE's surprise package. AIRCRAFT ENGINES MARKET OPPORTUNITY: The same as aviation services; India has 175 commercial aircraft currently; set to increase to 400-500 over the next 15-20 years. GE's aircraft engines business develops and manufactures engines for commercial aircraft such as ones manufactured by Boeing, Airbus, Embraer and Bombardier. It spends around $1 billion (Rs 4,400 crore), on R&D every year. The company isn't looking to start manufacturing engines in India (it is a low volume business and capacity isn't really an issue) or even source components from here, but as Aashish Sonawala, Sales Director (South Asia Pacific), GE Transportation, says, its design centre in Bangalore is "involved in the design of the GE90, the largest high-thrust engine in the world". Then, there are opportunities arising from the service side of the business. Some airlines prefer to maintain the engines themselves and GE works with them to train their people and supplies materials. Others outsource the entire maintenance to GE. ENERGY MARKET OPPORTUNITY: From $200 million (Rs 880 crore) last year, GE's energy division hopes to grow its business to $2 billion (Rs 8,800 crore) by 2009. Last year, GE's energy business did business worth $200 million (Rs 880 crore) in India. This year, it is targeting a figure of $350-400 million (Rs 1,540 crore to Rs 1,760 crore). And by 2009, Nandkumar Dhekne, Region Director (India), GE Energy, hopes that the company will do business worth $2 billion (Rs 8,800 crore) in India. "We are very excited by the Electricity Act, 2003," says Dhekne. It also helps that the company makes all kinds of turbines, gas, hydro and wind. CONSUMER FINANCE MARKET OPPORTUNITY: The retail credit market in India is worth $29 billion (Rs 12,27,600 crore) currently. GE Money is just getting serious about the business. In the hullabaloo over GE's divestment of a 60 per cent stake in its BPO last year, one thing that almost went unnoticed was the rebranding of GE Consumer Finance as GE Money. From housing finance to credit cards to auto- and consumer-finance, GE Money spans a range of businesses-some are through wholly-owned subsidiaries like GE Housing Finance and GE Countrywide; others are through joint ventures with Maruti, SBI, and HDFC-and the company is looking to enter the banking space as well. "Our model is to be present in both the banking and non-banking segments of the financial services business," says Vishal Pandit, President & CEO, GE Money, India. With a presence across 63 Indian cities, GE Money is well placed to tap the booming consumer finance and mortgages market although it will face tough competition from companies such as ICICI Bank. COMMERCIAL FINANCE MARKET OPPORTUNITY: The company is looking at sectors such as telecom, media, energy, construction and commercial vehicles to fuel growth. GE Commercial Finance is one of those rare businesses where GE is doing better in India than in China. "India is one of GE Commercial Finance's success stories," says Sunil Gulati, Managing Director, GE Commercial Finance, India. Internationally, the company is a big player in the vendor-financing business (it counts the likes of Nissan, Xerox and HP among its clients) and, according to Gulati, is "in the process of developing similar relationships with commercial vehicle and two-wheeler manufacturers in India". Gulati is convinced that sectors such as infrastructure (he expects it to grow by 25-40 per cent a year) and manufacturing (9-11 per cent a year), which are seeing an upswing with companies making fresh (and large) new investments, will "be key growth drivers". TRANSPORTATION MARKET OPPORTUNITY: GE's railways business hopes to be at least $50-million (Rs 220-crore) big by 2010, and sees huge opportunities in Indian Railways' recently launched safety initiative. GE launched its railways business in India only in 2004, but Kenneth Pierson, Director (International Sales & Marketing), GE Transportation, India, is already very excited about the safety initiative launched by Indian Railways. Reason: he sees an opportunity in this for the company's signalling business. The company has been pushing its microprocessor-based engine control systems to Indian Railways. These, says Pierson, "will keep trains safe and help Indian Railways operate them more efficiently". HEALTHCARE MARKET OPPORTUNITY: $350 million (Rs 1,540 crore) currently, with a 20 per cent a year growth in the future. India has a population of around 1.2 billion of which 33 million are diabetic. Then, much like in software services, the low-cost high-quality healthcare model (as compared to almost anywhere else in the world) is rapidly making the country a healthcare hub, especially for complex surgical procedures. Today, GE Healthcare (an umbrella brand that spans joint ventures with companies such as Wipro and Bharat Electronics, and wholly-owned subsidiaries such as Amersham India) has around a third share of the $350 million (Rs 1,540 crore) market. Cost has been one reason why the company's healthcare business has not really flourished in India, and V. Raja, President and CEO, GE Healthcare Technologies, says, "We will soon deploy full-time resources to enhance value-products for developing markets since getting into smaller cities is a key part of our growth strategy." ADVANCED MATERIALS MARKET OPPORTUNITY: The boom in the mobile phone and vehicle markets will benefit GE's advanced materials' business. GE's plastics can be found in cars (most plastic ancillaries) and mobile phones. "Overall we see our business growing by 30 per cent in the next few years," says K. Venugopal, President and CEO, GE Advanced Materials, India. Much of that growth will come from the boom in the vehicles and mobile telephones (the country will have 200 mobile telephone connections by 2007 or 2008) market.

The Elements Of Growth

Jack Welch, the former CEO of GE, often mentioned that there were four pillars on which he had built GE into a global powerhouse: globalisation (which meant not just viewing countries as markets but as resource and manufacturing centres), Six Sigma (the quality thing), services (as opposed to merely products) and e-business (not just e-commerce, but using the power of the internet to increase efficiencies. Immelt, an MBA from Harvard University who previously managed the conglomerate's medical systems business, has a simpler theme that he calls One GE, "a platform", he explains, "to realise the power and value of several GE businesses and technologies in a single value proposition".

That's exactly what Bayman is hoping to do. For instance, the emergence of a clutch of low-cost airlines presents opportunities in areas such as the manufacture of aircraft engines, maintenance services, and leasing (GE owns 1,300 aircraft, more than any commercial carrier, that it leases out to airlines) or pure financing. The related airport-upgradation-and-construction boom presents opportunities in infrastructure, lighting and security. The company operates in all these markets. Similar opportunities exist in the passenger car market where the company's lighting arm can sell headlight components to car- or component-makers, its materials arm, plastics to the same, with its commercial finance arm financing the supply chain and its retail finance arm, the eventual purchase of a car by a customer.

That could explain why GE India is suddenly bullish on the country (see The Businesses That Matter). For instance, K. Venugopal, President and CEO, GE Advanced Materials, India, (the company grew by 50 per cent, on a $60-million, Rs 270-crore base, last year) sees the explosion in the number of vehicles and mobile phones (plastics are used in both) as a growth driver. "The big non-automotive growth market for us will be when Nokia and other phone makers begin manufacturing in India," he says. That is happening: Nokia, for instance, is investing Rs 625 crore in a manufacturing facility near Chennai.

T.P. Chopra, Vice President (Marketing & Structured Finance), GE Commercial Aviation Services, India, (the aircraft-leasing and financing arm) sees the number of commercial aircraft in India growing from 175 currently to between 400 and 500 over the next 15 years. "That's a huge opportunity and we are talking to all the players to see how we can participate in this expansion," he says. And Nandkumar Dhekne, Region Director (India), GE Energy, is sure the Electricity Act of 2003 (which introduced several critical power sector reforms) and other policy initiatives of the government will help the company, which makes all kinds of turbines apart from offering energy management solutions, do business worth $2 billion (Rs 8,800 crore) by 2009. "China is a larger market, but the future belongs to India," says Dhekne. Other GE executives, across other businesses express similar sentiments. GE, says an executive at the Indian arm of one of the world's best-known executive search firms, has embarked on a drive to recruit people. "Internally, the number that is spoken of is $5-6 billion (Rs 22,000-26,400 crore) of revenues by 2010," he says. Throw that number at Bayman and he smiles. "$5 billion (Rs 22,000 crore) is a nice target," he says. Then, after a moment, "We can achieve that if there is growth in new aircraft orders, power sector reforms (happen) and there is an expansion of generating capacity." Today, GE India does business of $800 million or Rs 3,520 crore (excluding the BPO business) in India. Bayman adds that he won't be putting that $5 billion-in-five-years target in his plans. The company plans only three years ahead. "In our financial plans, we will target to treble our revenues in the next three years."

The Conservative Approach

If Bayman is a trifle conservative, blame it on the company's experience in India. Not that he is worried something like that could happen now. The way he sees it, if Air-India's Boeing deal falls through for some reason, and GE gets nothing out of it, another airline will probably step in to fulfil the market demand that is so obviously there. And GE will try and get a piece of that business.

Bayman, who repeatedly stresses the fact that he has seen six prime ministers come and go with almost no change in the country's overall economic direction ("I tell people back at headquarters that the political risk in India is zero," he says) rattles off three reasons why he thinks the company is on to a good thing now. The telecommunications revolution is the first, he says, because "it has proved the benefits of an open, competitive economic system". The "evolution of a younger, affluent working class " is the second and it has "triggered a consumer boom that is fuelling much of the economic growth of the country." The third is that "India now has a huge base of world-class companies, especially in steel, cement, auto components and a few other sectors." The man is right, which is why this could well be GE's Indian summer.

-additional reporting by Rahul Sachitanand