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APRIL 22, 2007
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Mobile Security
Today, it is all about information and how the right information is sent to the right people at the right time and right place. Uncertainty about how to secure mobile phones in the face of increasing threats is slowing individual adoption of mobile applications. There are many facets of mobile security, including network intrusion, mobile viruses, spam and mobile phishing. Analysts expect big telecom companies to develop security solutions on various security platforms.

Rough Ride
These are competitive times for the Indian aviation industry. As salaries zoom, players are scrambling to find profits. Even the state-owned Indian is now seeking young airhostesses to take on the competition. It is planning to introduce a voluntary retirement scheme for airhostesses above 40 years. On an average, they draw a salary of Rs 5 lakh a year. The salaries of pilots, too, are soaring. According to industry estimates, the country needs over 3,000 pilots over the next five years.
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Business Today,  April 8, 2007

Tycoons That Maruti Made
Beginning the 80s, over half-a-dozen local entrepreneurs hitched their stars to a relatively small global car maker with big plans for India. Since then, these vendors of Maruti Udyog (read: Suzuki) have gone on to create sizeable business empires of their own. This is their story.
GROUP: Asahi India Glass
REVENUES: Rs 591 crore (2005-06)
MARUTI'S STAKE: 11.11 per cent in Asahi India Glass
The Giant from Nowhere

Back in 1983, the newly set up public sector car maker Maruti Udyog had a peculiar problem. When it approached Allahabad-based Hindustan Safety Glass (HSG) for supply of automotive glass, it just got rebuffed. The vendor, which used to supply to dominant car makers such as Hindustan Motors and Premier Automobiles and was the largest manufacturer, didn't want to upset its big customers by signing on an upstart. Besides, HSG wasn't prepared to believe that Maruti could actually manufacture 100,000 cars by 1990 as it was promising.

Small but bountiful: Krishna Maruti's Kapur (forefront), JBM's Arya, Asahi India's Labroo, Sona Group's Kapur, Sumi Motherson's Seghal, Subros' Suri, and Lumax's Jain (seated)

Lucky Sanjay Labroo. In 1984, the then 22-year-old had just returned to India after completing his MBA from Wharton, but did not want to join his family's malt business. Shortlisting a clutch of industries-including automotive-Labroo and his father B.M. Labroo paid a visit to V. Krishnamurthy, the then Managing Director of Maruti Udyog, to see if the two could do something together. As it happened, there was. "Asahi wanted to enter India, the Labroos wanted to make glass and we needed a reliable supplier of windscreens. So we put it all together and put some money in so that everybody knew we were serious about supporting the business," recalls R.C. Bhargava, who was Director (Marketing and Sales) under Krishnamurthy, but succeeded him in 1985.

The rest, as they say, is history. In its first full year, which is 1986, Asahi India did Rs 9 crore in revenues. And in the nine months ended December 31, 2006, it clocked Rs 536.68 crore in sales, with a net profit of Rs 53.2 crore. "Maruti has always been tough but fair, and the fillip they gave to smaller manufacturing companies has been tremendous," says Labroo, pointing out how Maruti continues to hold 11.11 per cent (from the original 20 per cent) in the company. Asahi India is now the single-largest supplier of auto-safety glass, with an 80 per cent share. Five years ago, it acquired Float Glass India and ventured into the architectural glass business. If there's one thing Labroo has learnt over the years, he says, it is that "You should never, ever be arrogant". HSG, for instance, was bought over-not by Labroo, but one of his dealers.

Incidental Vendor

Rs 1,500 crore (2005-06)
Jay Bharat Maruti (JBM Auto, Neel Metal Products, JBM Exhaust Systems), JBM Industries
MURUTI'S STAKE: 29.28 per cent in Jay Bharat Maruti

Making sheet metal for cars wasn't even a glimmer in the eye of S.K. Arya when in 1981 he left Mumbai for Delhi and entrepreneurship. Sheet metal parts and LPG cylinders were what the then 24-year-old had set his heart on. But in 1984, the government decided to stop buying LPG cylinders from small-time manufacturers, and Arya, for whom they were his bread and butter, had to figure out something new to do to survive. In a peculiarly fortunate set of circumstances, Maruti, which was looking to localise more of its sheet metal requirements under its Phased Manufacturing Programme (PMP), took out an advertisement for a joint-venture partner in early 1986. Maruti wasn't a completely unknown company to Arya; he had been supplying some sheet metal parts to it, so he decided to apply-and won. "There was considerable handholding in the beginning, not just from Maruti but also from Suzuki," Arya recalls.

For instance, the first time around Suzuki Chairman Osamu Suzuki visited JBM's facility soon after construction started in the mid-80s, he not only spent time with Arya and his team, but also rolled up his sleeves to get involved with plant layout. "We had made a little model layout of the plant for Osamu Suzuki to inspect, he came and he just took a pen and made all sorts of alterations," recalls Arya. "And once we completed the plant and started production, we realised the vision of the man to have made those changes."

As Maruti grew, so did JBM, producing other sheet metal and forged parts, besides complete metal sub-assemblies for several Maruti vehicles. JBM will clock Rs 480 crore in revenues for 2006-07, but Arya's group overall is much bigger at Rs 1,500 crore, since it now supplies to several other vehicle manufacturers. "Honestly, India in 1981-82, who on earth would have bet on it?" Suzuki did. Not just on India, but also a starry-eyed young entrepreneur called Arya.

Maruti's Mr. Interiors

GROUP: Krishna Maruti Group
GROUP REVENUES: Rs 900 crore, auto business (2006-07)
GROUP BUSINESSES: Krishna Maruti, Mark Auto, SKH Auto, Krishna Toyo and Krishna Quinette
SUZUKI + MARUTI'S STAKE: 45 per cent in Krishna Maruti

Osamu Suzuki is the father of the automotive industry in India," declares Ashok Kapur, the Chairman and Managing Director of Krishna Maruti. A mild exaggeration? Certainly not for Kapur. For, it's Suzuki that has made him one of the biggest vendors in north India. In 1993, after a 'family settlement' saw him move out of Sona Koyo Steering Systems, Kapur was itching to get back into the business. As luck would have it, Maruti was having trouble with its seating system supplier, Bharat Seats, and Kapur grabbed the chance to get his foot in the door. In December 1993, the foundation stone was laid for Krishna Maruti's plant near Gurgaon. "The first seats were rolling out within 120 days and in a short while we had a 60 per cent share of the market," recalls Kapur.

In the interim decade, Kapur grew his business beyond seats. "As Maruti grew, it needed new suppliers for several components and we always put our hands up to volunteer," says Kapur, who runs the group along with his son Sunandan (see photo). Today, Krishna makes door-trims, roof-liners, side and rear mirrors, fuel tanks, and front suspensions and axles, making it possibly the most diversified tier-I vendor. Of course, in seats, Krishna is already the biggest player in India, and Kapur expects to do Rs 750-crore worth of business by the close of the current fiscal.

Of all the companies on this list, Krishna is the only one that is not publicly listed and has the largest shareholding by Maruti and Suzuki (together they own 45 per cent of Krishna Maruti). Kapur's manic attention to quality has also helped it win the "Nobel Prize" of manufacturing, the Deming Prize instituted by the Union of Japanese Scientists and Engineers in honour of American quality guru, Edwards Deming.

But what makes Kapur happiest, he says, is his long-standing relationship with the Chairman of Suzuki Motor Corporation, Osamu Suzuki. "I am proud of being privately-held and debt-free," he says, before adding that he is besieged by investment bankers advising him to go public. "I will go public sooner or later, but I do not think the time is right just yet." One possible reason is that Krishna Maruti and other auto-parts companies in his group, which together pull in Rs 900 crore in revenues annually, are still very closely tied to Maruti. "A good 95 per cent of Krishna Maruti's sales come from MUL," says Kapur with pride. Clearly, it's an umbilical cord that has turned a one-time furniture manufacturer into the biggest interiors supplier for Maruti.

The Early Believer

GROUP: Lumax Group
GROUP REVENUES: Rs 550 crore (2005-06)
GROUP BUSINESSES: Lumax Industries, Lumax Auto Technologies

Lumax Industries is the oddball company on this list. Unlike the others, it was already an established player when it jumped onto the Maruti bandwagon, and unlike Hindustan Safety Glass (see Asahi India: The Giant from Nowhere), it didn't laugh when the new car maker said it would transform the Indian market. In fact, Lumax Chairman D.K. Jain's belief in the company is so intense that even today he sits in an office building that abuts the Maruti facility in Gurgaon. "I've never built a rear wall here, the Maruti wall is strong enough," he jokes.

It was Lumax's dominant market position that, Jain says, caught Sanjay Gandhi's attention for the initial 'pre-Emergency' Maruti project. However, it was five years later that the first influx of Japanese companies came into India, starting with Maruti in 1982, and Jain readily admits that Maruti changed Lumax forever. "Working with Indian companies was fine, but things used to take time to get done. You had to spend days dealing with someone in engineering and another from production and a third from finance, and it was you who had to go there," Jain sighs. "But when Maruti came, their people came to our factory, worked with our people, skipped their meals if the situation demanded it, and signed off things in minutes rather than days."

Jain wasn't without his moments of doubt, though. In the early 90s, when he visited Japan as part of a vendor delegation, he was shocked when he heard the pricing of new tooling and dies, and he told the then MD R.C. Bhargava so. "Unless you pay, you will never learn quality," is what Bhargava told him in return. "We bought the tooling and the jigs after paying a small fortune, but we also brought the most advanced lighting system to India, and we have never looked back," says Jain. In the first nine months of 2006-07, Lumax Industries logged Rs 382 crore in revenues. With Maruti/Suzuki set to turn India into a small car hub, Jain knows that he can only grow with Maruti.

Hands on the Wheel

GROUP: Sona Group
PROMOTER: Surinder Kapur
GROUP REVENUES: Rs 841 crore (2005-06)
GROUP BUSINESSES: Sona Koyo, Sona Somic Lemforder, Sona Cold Forgings, Sona Okegawa and Mahindra Sona
MARUTI'S STAKE: 7.47 per cent in Sona Koyo Steering Systems

One of the things that Surinder Kapur did when he returned from the Michigan State University College of Engineering with a PhD in the early 1970s, was to help his father-in-law, the late Raunaq Singh (of Apollo Tyres), set up Bharat Gears. He spent the next 16 years with it, rising to become its Vice Chairman and Managing Director. "But I wanted to do my own thing-something in core engineering product, but not gears. After all, family is family," he says with a laugh.

He ended up zeroing in on steering systems because that was something Maruti hadn't yet localised in the mid-80s. But getting Suzuki's vendor Koyo to part with technology proved to be tough initially because the Japanese supplier had had a bad experience in India with another company. But with some help from Maruti and approaching Koyo Autotech through Mitsubishi, Kapur was able to convince Koyo to transfer technology (but not take a stake). To put Koyo at ease, Maruti picked up a 10 per cent stake in Sona Koyo Steering Systems (now it's down to 7.5 per cent). Production started in 1987 and the company went public (and Kapur formally joined) in 1988. Today, Koyo (which has since merged with Toyoda Machine Works) holds 20.1 per cent stake in Sona and even reports the Indian partner's figures in its consolidated balance sheet.

Over the years, Kapur has branched out into different businesses, including ball-bearings and electronic steering systems. "We don't remain a 100 per cent supplier, but, yes, Maruti is still our largest customer by far," says Kapur. "Not just of Sona Koyo but also Sona Group." The Sona Group had consolidated revenues of Rs 841 crore in 2005-06, and hopes to close 2006-07 with a topline of Rs 950 crore. And like Krishna Maruti, a company owned by his younger brother Ashok Kapur, Sona is also a Deming Prize winner. Of late, Kapur has been making forays abroad (essentially for customer support in countries like the US and France), and he says Sona intends to get more aggressive. Yet, he knows who he owes his success to. "Let's make no bones about it, Maruti changed the face of India," he says. That's something he tells himself every day. And not just because his eighth-floor office in Gurgaon overlooks the Maruti facility.

Surviving the Heat

GROUP: Subros Limited
GROUP REVENUES: Rs 650 crore (2005-06)
SUZUKI'S STAKE: 13 per cent in Subros

When in 1982, Suzuki chairman Osamu Suzuki said that his people's car would also offer air-conditioning as an option, many were sceptical. Back then, few had air-conditioners at home, forget cars. But Lalit Suri wasn't one of the cynics. "My brother thought this would be a fast-growing business, so we managed to get a licence to import air-conditioners," recalls Ramesh Suri, Managing Director, Subros and Suri's elder brother. But in the first few years, it seemed both Suzuki and Suri were wrong. There were few takers for the air-conditioned 'deluxe' Maruti 800s, and Subros continued to have a capacity far in excess of the demand. "Forget customer demand, in 1986-87, when we started production, Maruti's annual production was less than 50,000, and the smallest manufacturing equipment available in Japan those days would churn out that many every year," says Suri.

It wasn't until 1992-93 that Subros began running its plant in Noida at full capacity and decided to increase production to 200,000. What brought about the happy turn of events? Maruti's decision to launch the Zen with factory-fitted air-conditioning as a standard feature. Coupled with liberalisation and growing affluence of middle class Indians, the ac Zens began flying off showrooms. "All thanks to Maruti because they were able to keep their costs down, and working with us, they were able to develop cost-efficient air-conditioning systems that people could afford," says Suri.

With the result, what started as an air-conditioner assembly shop, has turned into a thriving Rs 650-crore business that not just designs its own ac units but also supplies to other vehicle manufacturers such as Tata Motors and Mahindra & Mahindra. In fact, Subros has just invested Rs 350 crore in expanding its manufacturing capacity and in R&D. The idea: Get into air-conditioning for tractors, trucks and buses. It seems Suzuki and the late Lalit Suri (he died in October 2006) will have the last laugh.

Wired for Success

GROUP: Sumi Motherson
GROUP REVENUES: 1,900 crore (2005-06)
GROUP BUSINESSES: Sumi Motherson Innovative Engineering Ltd, Motherson Automotive Technologies, Motherson Sumi Wiring Systems, Motherson Sumi Systems Ltd, etc.

When Vivek Chaand Sehgal struck his first deal with Maruti in 1983, it was worth all of Rs 15 lakh. End of March this year, Sumi Motherson would have done business with Maruti worth Rs 300 crore for 2006-07 alone. "When I would go for vendor conferences abroad, people would come up to me and ask, 'why are you working with a car manufacturer when there are no proper roads in India?'," recalls Sehgal, Chairman, Sumi Motherson Group, which has total revenues (including non-Maruti business) of Rs 1,900 crore. "And I would tell them, 'let the cars come, the roads will follow'."

It was a fairly simple logic, but Sehgal, 50, has proved right. "I don't think that back then, there would have been a single person who would have said that Maruti would one day cross the million-car mark. But it did it-and so did we," says Sehgal, who has turned his mom-and-son (ergo, Motherson) telecom wiring harness company into a diversified manufacturer, with interests in polymers, tooling, software, and design, among others.

For the first three years following the deal with Maruti, Sumi Motherson (Sumi is for partner Sumitomo Wiring Systems, which, along with Nissho Iwai, has a 37.4 per cent stake in the company) made huge losses, and even between 1986 and 1991, it was barely managing to break even. But that didn't deter Sehgal from investing in the company. While Motherson had started manufacturing wiring harness for Maruti from its existing facility in Noida in 1984, Sehgal invested in a dedicated facility for the car maker. "Due to Maruti's phased manufacturing programme (which stipulated localisation of components), we grew rapidly in late eighties," says Sehgal.

After wiring harness (which still constitutes two-thirds of the company's total sales), other components (like connectors and terminals) and customers (Hyundai, which accounts for 11 per cent of its revenues) followed. Today, Sumi Motherson supplies to every vehicle manufacturer except Mitsubishi, which has a tie-up with Hindustan Motors.

Like all the other "Maruti millionaires" featured in this story, Sehgal has the highest regard for the company that made him: Maruti. "It not only gave birth to the people's car, but two industries simultaneously-automobiles and components," he says.

Not to mention a handful of auto-parts tycoons.

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