f o r    m a n a g i n g    t o m o r r o w
JANUARY 14, 2007
 Letter From
 Message From
The Prime Minister
 Editor's Letter
 The Great Indian
M iddle Class
 India'S Poor
 The Next 15 Years

Flying High
The Indian aviation industry is growing at a rapid pace, thanks to air transport deregulation, emergence of new operators, lower fares and large untapped demand for air travel. The numbers tell an interesting story: India will require an estimated 1,100 aircraft. The average annual passenger traffic growth in India through 2025 is estimated at 7.7 per cent, well above the world average of 4.8 per cent and China's 7.2 per cent.

Bars Of Gold
The global gold industry is flourishing, largely fuelled by Asian demand and a weak US dollar. The boom is probably only halfway through since prices bottomed out in 2000. Since 1800, the boom and bust cycles have averaged about 10 years. While production is down, the value of gold purchased today is up 47 per cent from a year ago. The super-cycle of high metal prices is seen to be spurred largely by demand from China and India. An analysis.
More Net Specials
Business Today,  December 31, 2006
The Rise Of Indian Entrepreneurs

Economic reforms allowed a thousand entrepreneurs to bloom. It is they who rewrote the India story.

Wind power: Suzlon's Tulsi Tanti epitomises the huge success of post-reforms entrepreneurs but he is not alone; several others have hit the big time as well

Tulsi R. Tanti, 48, took what was a long shot in mid-90s. He was running a problem-ridden textiles business and was looking for a solution to the unreliable and expensive power supply that plagued his unit. Captive power was an option, but Tanti wanted more-he wanted to freeze the cost of power for the next couple of decades. And Eureka, he got his answer-windmills. But there was a snag-there always is; what's a success story without this twist?-an upfront investment of Rs 3 crore for two windmills. Tanti's investment in his textiles business was Rs 2.6 crore. Yet he ventured forth, seeing opportunity where others saw none.

"What could work for the company could work for the entire country and beyond as well," says Tanti of his dream. Today, 13 years later, Suzlon Energy, Tanti's flagship company, has a market capitalisation of Rs 35,298 crore (as on December 21, 2006), waltzing him into the league of India's, and, indeed, the world's, ultra-rich (the 69.75 per cent promoter holding in his flagship was worth Rs 24,620 crore, or $5.47 billion on that day).

Tanti has emerged as one of the poster boys of post-reforms entrepreneurship, but he is not alone. There are scores of other entrepreneurs, many of them first-generation businessmen, who've made it big over the last 15 years.

Jignesh Shah, 39, an unassuming electronic engineering graduate, was hired by the Bombay Stock Exchange (BSE) to launch its online trading platform in 1990. His salary? A handsome Rs 10,000 per month. But Shah had bigger things in mind. He left BSE 5 years later and founded Financial Technologies (India) (FTIL), that later floated the MCX commodity exchange in India and DGCX in Dubai. FTIL today has a market capitalisation of Rs 8,300 crore. Shah holds close to 20 per cent in the company, giving him a personal net worth of at least Rs 1,660 crore. And if MCX and DGCX go public, as is being speculated, FTIL will unlock more value, as it holds 64 per cent in MCX and 40 per cent in DGCX.

So, what is it that prompts well-to-do salaried professionals to do what was unthinkable even some years ago-quit, lose a steady salary and take up the unpredictable life of an entrepreneur?

"Well, it's a bug and it just bit me," says Patu Keswani, 47, promoter Chairman and Managing Director of Lemon Tree Hotels, which is targeted at the value-conscious Indian traveller. The options he gave up: Chief Operating Officer of a business unit of Taj Hotels and a consulting job at Kearney. In the former job, 5,000 people reported to him; in his new set-up: none. Says Future Group CEO Kishore Biyani: "If you dream big, then the world conspires to help you."

Quatrro's Raman Roy (centre): Surging opportunities

Thinking Big

The opportunities being created by the opening up of the Indian economy spurred these entrepreneurs on. FTIL's Shah says: "Liberal government policies allowed Indian entrepreneurs to think big."

Ironically, these opportunities-and the consequent success stories-are rooted in the economic crisis of 1990-91 that forced the government to abandon its disastrous tryst with socialism. This led, in turn, to the deregulation of a host of sectors across the economy and unleashed Indian entrepreneurial talent like never before. Telecom was one of the biggest sectors to be liberalised and it spawned one of post-liberalisation India's fairy tale success stories-Sunil Mittal of Bharti Enterprises (see Poster Boys of Liberalisation). Similarly, Shah owes his success to the opening up of commodities trading and the setting up of privately-owned commodities exchanges. And the GMR and GVK groups emerged as a result of the infrastructure sector (power, roads, airports, etc) being opened up. "Reforms in the infrastructure sector encouraged us to enter into big businesses like power, roads and airports," says G.M. Rao, Founder Chairman of his eponymous group.

Capital Constraints

Contrast this with the Licence Raj era, when entrepreneurial success depended on the ability to win, and leverage, industrial licences. All financial institutions were government-controlled; this meant one needed political "connections" to raise money for projects; and the capital markets were still at a fairly under-developed stage. That changed as the macro-economic business environment changed. The early days of liberalisation were, however, difficult for most entrepreneurs. "Financial markets, both debt and equity markets, became more sophisticated and risk-averse. And there was no venture capital or private equity then," says Rajiv Memani, CEO and Country Managing Partner, India, Ernst & Young. Future Group's Biyani remembers how bankers clubbed his retail venture with textiles. "There was no services sector then and a retail venture was classified under textiles, a low priority sector for bank finance," says Biyani.

The situation changed for the better as venture capital funds and private equity players entered India; also, private sector banks such as ICICI Bank and HDFC Bank started building services sector portfolios. "Funds were never as easily available," says Deep Kalra, 37, Founder CEO,, one of India's largest travel portals.

Miles ahead: Lemon Tree's Keswani sees the right path

Indian entrepreneurs also benefited from fortuitous timing. Growth in the developed world was tapering off in the mid-to-late 90s; and countries like China and India, among others, were increasingly emerging as alternatives. "It is hard to generate entrepreneurs in economies which are growing in low single digits," says Gautam Kumra, Partner, McKinsey & Company, India, referring to the saturating internal markets in the developed world. Not so for India. "Finally we have internal markets that are switched on," says Vijay Chandru, Chairman, Co-founder and CEO of Strand LifeSciences, who reckons that over the next 15 years, a lot more of product companies will emerge as companies innovate for the emerging internal market in India. FTIL's Shah agrees. "The evolution of our internal markets gave us a huge advantage, and success here has opened up massive opportunities overseas."

'Professional' Entrepreneurs

Though several successful entrepreneurs came from traditional business families, the rise of the services sector spawned a different breed of entrepreneurs as well. Taking advantage of the many opportunities and niches being created in the economy, many professional managers have successfully turned entrepreneurs. "This breed of entrepreneurs wants to either create serious wealth or unleash themselves fully and, hence, it is a much stronger breed," says Memani of Ernst & Young. Raman Roy, often called the father of the BPO industry in India, recalls how he started out. "There was this opportunity for providing third party BPO services, but GE (his employer then) wanted its BPO unit to remain captive." Backed by venture funding, Roy decided to take the entrepreneurial plunge and set up Spectramind. And the rest is history. He has recently floated Quatrro, his fourth start-up.'s Kalra: It's easy to access funds now

The Road Ahead

"If we believe that entrepreneurship is a critical growth engine, then we will have to create an environment that fosters it," says's Kalra, who mentors budding entrepreneurs as part of The Indus Entrepreneurs network.

As a society, India also has to change its cultural attitude towards failure. Says Suzlon's Tanti: "Every entrepreneur has failed sometime or the other." However, there is a huge stigma attached to failure in India, and this often acts as a disincentive for entrepreneurship.

"The building blocks are now there. But to move forward from here, we need new things. We need more thought leadership," says Future Group's Biyani. Looking at the speed with which new entrepreneurs are emerging out of the woodwork, the country seems to have few worries on that count.




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