The difference is stark. The Roads and Highway ministry is struggling to hold on to private investors who are exiting critical highway projects across the country. Meanwhile, the Ministry of Railways is actively pursuing and engaging private investors to invest in dedicated freight corridors.Railway Minister Pawan Kumar Bansal seems to be getting some traction from investors for the freight corridors. The 434-km-long Mumbai-Ahmedabad high-speed corridor for instance is slated to cost Rs 63,000 crore and will require funds from private investors.At the Road Ministry, the mood is glum. The government’s target of building 20 km of highway every day is nowhere near being met. The current rate is barely 5 kmperday. Recently the GMR Group walked out of the Kishangarh-Udaipur-Ahmedabad NationalHighway project 16 months after it won the project in a bid as it did not get environmental and other clearances in time. The industry is abuzz with news that some other operators are contemplating an exit too as project costs are rising and clearances are not coming through. This is scaring lenders who are either suspending fresh exposure to the sectoror are advising companies to exit delayed projects.As a combination of these factors, the government has been able to award highway contracts of only about 10 per cent of its target of 8000 km for year ending March 2013. Road Minister CP Joshi may be putting up a brave face, but it is clear that attracting fresh investment from private players will be tough now.Issues of land acquisition and environmental clearances are common to road and rail. There are many ways in which government agencies can coordinate to offer ready to utilize land. The proposed National Investment Board is expected to take up this role for all mega infrastructure projects.If the government is wondering which sector to revive after its effort on retail, it has to be roads and transport. Transport policy in India has always been fragmented and uncoordinated. Railways and Road Ministry have made their policies independently. After many years, both the ministries are under the same political party. Also, the ministers in charge are pragmatic, pro-private sector and reformist. This could be the chance for the UPA government to ensure that it creates a coordinated transport policy that makes the most of private sector investment.Any step that shows that government is synchronizing its steps will again enthuse the private contractors and lenders. Most corporate leaders say that lack of funds is not a problem for them. The real issue is lack of bankable projects.Growth momentum can’t be revived only with reduction of interest rates. As industrial activity picks up, it will require an improved infrastructural environment. Consumer demand is growing in middle India. Catering to this market will require immense logistic effort that must ride on efficient rail and road linkages. Such linkages will drive down the cost of these products and contribute to inflation management.Government must now make a fresh push in roads and railways to transport growth to a new level.(Pranjal Sharma is a senior business writer)
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One way to understand a place is through the people you meet there. During the IMD Executive MBA Silicon Valley Discovery Expedition of 2012, the class met approximately 140 individuals, from all walks of life. The vast majority were extraordinarily well-educated, amazingly networked, successful, open-minded, experienced in various domains and wanting to make a difference. Few were simply "doing a job" for a pay check. All had the hope and expectation that they would change the world in some way.Let's start with Guerrino de Luca, former Apple marketing genius and now CEO and Chairman of Logitech, the well-known mouse and PC peripherals company, now extending itself to support tablets and video. Though its roots are in Switzerland, Logitech is very much a product of Silicon Valley, and we saw on stark display the openness and no-nonsense attitude of the region. The firm has not done well recently, and Guerrino gave us a very blunt assessment of the mistakes that he and the company had made, and what they were doing to come back. No punches were pulled. Silicon Valley is a place based on meritocracy, and the visit to Logitech, and the candid talk by Guerrino was a perfect reminder of this.Like our EMBAs, many come to the Bay area to see, feel and touch entrepreneurs. But what are the essential traits of the successful entrepreneurs and what do these entrepreneurs look like?I'd argue that many look like David Lazovsky, founder and CEO of Intermolecular. After 9 years in a large company he saw things happening in the semiconductor industry, and his company was not responding to the opportunity, so he decided to go out on his own and do something about it. He took stock of what he knew and had, and started networking with smart people. He had an idea, not yet a technology or even a business plan. But he found the right people, including a good venture capitalist, put together a great team and then started figuring out how they wanted to change the world. Seven years later, before he himself turned 40, Dave took Intermolecular public and they are well on the path to becoming a profitable billion dollar company.And some of the entrepreneurs look like Paul Towhey. The thirty-three year old, two black belt, computer science geek from Stanford and Berkeley, dropped out of his PhD program to work at Palantir on "big data." He then went on to strike out on his own with his co-founder, Corey Reese, whom he met at a hack-a-thon. Together they created Ness, a beautiful personalised search engine for finding great restaurants. Ness learns your taste, literally… and one day Google or Yahoo! will either buy them or be worried by them.Alex Rampell, co-founder and CEO of TrialPay also looms large as the entrepreneur poster child, though by accident. He fell into being an entrepreneur, because that's all he has done all his life. When he was young he created a cute software program and posted it online just as the Internet was starting, asking users to send him $5 if they used it. His boarding school post office was inundated with envelopes containing $5 checks. Creating products and a company is a natural thing for him. One thing led to another and today he is running a company that has so far received $75 million in investments, and has 100 million users in 180 countries. Alex has found a niche that pays, one that most of us (any of us?) probably never thought of before: placing advertisements online in unusual but highly trafficked places like bill payments. Today he has 2,000 advertisers using his technology.And I'd also suggest that Hilary Barroga, the programme director at ECH Lifebuilders, is a great example of a Valley entrepreneur. She is helping to run a shelter for the homeless in Santa Clara county. Though she could get a job anywhere, she is using her education and talents to make a difference for those who have fallen by the wayside in one of the richest regions of the world, and she is doing it with the leanest of budgets, like any successful startup founder.But allow me to weave two more threads into the fabric of Silicon Valley: innovation and people motivation.If you get a group of people to talk about innovation, eventually someone will mention IDEO, the industrial product design firm headquartered in Palo Alto. Dave Blakely and Bruce MacGregor embody the firm's unending desire to find better ways to do things. To ask the right questions, get the best team together, and then rapidly brainstorm, prototype and test until you have an amazing solution. Any time spent with the folks at IDEO leaves you wanting to innovate and unsatisfied with the status quo.Some will argue that it is solely money that motivates people in the Valley. Maybe. Others will state that it is the opportunity to work with the sexiest technology. Possibly. But Debra Engel and her band of HR Divas were able to bring much more granularity to this discussion. The Divas are not a startup – they're simply a group of experienced individuals who have helped many companies change the world. Though very much a Human Resource professional, Debra and her friends also bore a striking resemblance to the entrepreneurs that we met: smart, incredibly networked, open-minded, blunt and with a ton of experience. Their simple recipe for motivating people? Hire the best, and they will attract the best. Hire 'A' people, and they will attract other As…. (Or hire Bs, and let them attract Cs, but then don't assume you will change the world).Spend a week in the Valley with a group of inquisitive EMBA participants from around the world and you'll discover hundreds of people stories like these. Are these people inherently different from the rest of us? Not really. Most of us have the education, experience and intellectual breadth and acuity necessary to create and nurture a business. But most of us are caught up in the comfort of our current jobs, and the inertia of life. And perhaps with good reason, as entrepreneurs take enormous risks when they take the leap without the safety net that a job usually provides. But any of us could do this if we wanted to or had to.(Jim Pulcrano is Executive Director of IMD, and a member of the teaching team for IMD's Executive MBA. His doctoral research is on entrepreneurial networking.)
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Forty-four-year-old Anant Gupta has been formally anointed as the new CEO of India's fourth largest software services exporter HCL Technologies. The current incumbent Vineet Nayar who successfully spearheaded the growth of HCL Technologies over the last seven years, will retain the position of vice chairman from July 2013. Gupta's elevation was a foregone conclusion as he was appointed president of the company in 2012. This was the same role to which Nayar was appointed by the billionaire founder of the company Shiv Nadar in 2005. In 2007, Nayar had become CEO of the company and eventually vice chairman and joint managing director. Shiv Nadar, who in the recent past has mainly focused on philanthropic activities, will continue to be the Chairman and the Chief Strategy Officer of HCL Technologies, the company added. Gupta, a two decade veteran of the company, is largely credited with growing the key infrastructure services division of the company from next to nothing to a billion-dollar plus business. A gadgets and gizmo afficianado, Gupta till recently also spearheaded HCL Tech's growth in the key European market, from where HCL gets a larger share of its revenues compared to its peers like TCS, Infosys, Wipro and Cognizant. An MSc in Engineering from Liverpool University, Gupta is seen as a key strategist who helped Nayar turn around HCL Tech's fortunes. Gupta inherits a company that is setting the industry's benchmark for growth, along with Cognizant Technology Solutions albeit on a smaller base. For the latest quarter ending 31 December 2012, which is the second quarter for HCL Tech, it clocked revenues of Rs 6,274 crores and a net profit of Rs 965 crores indicating a quarter on quarter growth of 3 and 9 per cent, respectively. Now that HCL tech has grown its revenues five times and profits four times under Nayar, the challenge to Gupta would be to sustain the pace of growth even as it maintains (or increases) its margins. businessworldonline (at) gmail (dot) com
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Ever since its controversial IPO, everyone has been waiting for Facebook to get a strong mobile strategy together. When an announcement was to happen on 16 January, there were hopes that this would be it. Instead, Facebook’s CEO Mark Zuckerberg, announced a “Graph Search”. Graph Search is not as mathematical as it sounds, though the algorithms needed to make it work certainly will be. Graph Search basically is supposed to put together the information you already put out on Facebook and make it relevant to specific questions you might have. For example, I could look for friends who love photography. Or friends living in Delhi who eat pasta at restaurants. Or even friends of friends who like classical music. Before you go up in arms about whether this violates your privacy, Facebook already thought of that, specially given its iffy history with users’ privacy. Your Facebook privacy settings are taken into consideration by the new Graph Search and nothing that has been made completely private will show up in searches publically. This does mean though that you have to pay attention to your privacy settings — not necessarily a bad thing. Graph Search is strictly in beta and not even outside of the US yet. You can ask to be notified when it’s available and rolled out to you, but for not there’s nothing you can do but try a small demo search. Facebook plans to watch how Graph Search is used before letting it loose in the wild. One of the first things that comes to mind is whether this impacts Google adversely. Well, not so far. In fact, it’s Google’s stock that went up. Facebook’s search is not the same thing as a Web search and that’s a point that was clarified. Web search is raw, a big volume of results with the more relevant ones up front. Facebook’s Graph Search is very specific to your network and network’s networks. And it’s highly contextual. You should be able, for example, to search for engineers who like biking — but not all engineers in the world; just those relevant to you. One can’t yet try out the efficacy of this search as it isn’t open, but the idea is certainly interesting and one even wonders why it wasn’t done before, given the data Facebook has on each of us. Another issue is that of whether this new search will help Facebook sell space to advertisers looking to get a really finely targeted (and hence narrower) audience. After all, this audience would be more likely to act on advertisements relevant to them. But it’s too early to say as Facebook seems wary of thinking of Social Graph in revenue terms yet. It’s “only the beginning” so we know that the plan will unfold in good time, but there are no direct revenue implications immediately. mala(at)pobox(dot)com, (at)malabhargava on Twitter
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A believer in "never giving in," Prithvi Shergill, Chief Human Resources Officer, HCL Technologies, decided on HR rather early in his career as more than just a means of earning a wage. The ‘Employee First, Customer Second’ model followed by HR has allowed HCL Technology to have a 13.6 per cent attrition rate, among the lowest in IT industry. Despite a sheet anchor role at HCL, Shergill believes there is always room for improvement as HR practices need to evolve continuously in response to the context and culture in which companies operate and emerge as a stand-alone profession rather than stopping at just being the 'support staff'. Excerpts:What made you choose HR as a profession?I realised early that the work one did for a livelihood had to mean more than just earning a wage. I realised that making the way people work faster, better, easier gave me a sense of purpose as it made their time at work happier. I saw a role in an HR function the best vantage point in an organisation to do this justifiably! What have been the primary traits/qualities that have helped you attain your present position? My school motto was ‘Never Give In’ and it has helped me in good stead at every step. I always believe that when faced with a decision one should take the ‘higher road’ – as the view is always better from here! I have always aimed to say what I will do and do what I said I will. This mindset has ensured my career progresses on the right path to where I have reached today.What has been the biggest achievement of your career?Each day I add to this – each day when I look back and reflect as to how I added value to an individual or a group of people and made their experience at work one to remember positively, I feel a sense of accomplishment.What are the challenges you are facing in your organisation?The challenges ahead for us relate to enabling growth; evolving the EFCS (‘Employee First, Customer Second’) strategic model to be employee led, management embraced (from being management led, employee embraced); sustaining empowered people to add value as we scale. What are the steps a company should take to develop and motivate future leaders?Every employee in an organisation is a leader within the circle of his or her influence that they create for themselves. A company’s processes and way of working needs to enable, engage and empower them to transform organisations and add value. The tenets that shape the ‘Employee First, Customer Second’ strategic model enables individuals to adopt behaviours that help them drive change – with the clients they work with, within the organisation they work in, with the teams they support and within themselves. They do so by being authentic, building trust through transparency, inverting the pyramid to ensure managers are accountable to support their employees and take ownership and responsibility for their own development and the growth of organisational capabilities.What is your rate of attrition? How do you prevent it?Our Rate of attrition is 13.6 per cent, which is amongst lowest in our industry.How do you retain talent in your company?Retention of talent is a result of a clear alignment between intentions, behaviours, promises and actions. This alignment demonstrates itself in organisations which say what they will do and then do what they said they will.By building practices that reflect the tenets of our ‘Employee First, Customer Second’ strategic model, we work to enhance knowledge of our programmes, policies, processes by increasing awareness and understanding. These are co-created by HR Advisory Councils (with line leader representation) and Employee First Councils (with employee representation from each location). We encourage individual involvement in the way we work by supporting a variety of employee resource groups focused on inclusion of generational, gender and cultural diversity, encouraging community involvement and helping people demonstrate their personal interests and passion. We measure satisfaction with the employment experience at HCL periodically to ensure we understand feedback at each stage and take timely actions. We see office as a place where you can grow your employability with timely coaching and mentoring and engage employees in physical and virtual platforms to contribute (such as our internal social platform, MEME). What sets your company apart from other companies as far as work culture goes?Our culture ensures we put the employee first – but ‘never let the customer feel second’! We know the actual value being created for the customers is at the employee customer interface, which we call the value zone. Our processes encourage transparency, make managers accountable to employees, transfer the responsibility for change and value creation to front-line employees working in the “value zone.” Some of the things we have set up are:Smart Service Desk: It is an automated query resolution mechanism that makes enabling functions accountable to employees. Any employee with a problem can open a trouble ticket, which is assigned to the manager responsible for resolution within a stipulated time.Directions: It is an annual interactive event, where the senior management, including the CEO, meets the employees to discuss company strategy, industry trends and the agenda for the coming year.U&I: This is an online discussion forum where every employee has an opportunity to raise issues, share thoughts and ideas, and, as such, converse directly with the CEO 360-Degree Feedback: This is a review programme that asks employees to share feedback with their managers and the manager’s share this feedback on the internal intranet.Employee Passion Indicative Count (EPIC): This is an annual self-assessment by which employees can identify their “passion drivers,” factors that drive an employee to excel at work. What is the biggest challenge you face when selecting people?The challenge in identifying and hiring the right talent is to attract people who have the right skills, to do the right work, in the right place, at the right time, at the right cost. People who respond to the employee value promise of continuous learning, high quality, flexibility and stretch at work and meaningful reward and recognition are individuals we seek to attract.How do you track employees' satisfaction or dissatisfaction in your company?Our line leaders assume ownership of the employment experience of our people and is the outcome we expect of the processes, programmes, practices and policies we shape. Measures include the 360 Degree Feedback that I have mentioned earlier. Results including the CEO’s are posted online for every employee to see. This process, although confidential, truly inverts the organisational pyramid and makes the managers accountable to the employees. The Employee Passion Indicative Count, introduced in 2009 as a self assessment tool, allows each employee to identify his/her passion drivers so that they can enhance their individual productivity and results. How important is HR to the bottom line of a company?At HCL Technologies, HR is accountable for working with line leaders to do the right work, build the right skill, be at the right place, collaborate with the right people, expect the right value proposition and apply this with the purpose to deliver the right performance. HR Advisory Councils have been set up representing all businesses in the company and in each geographic region. These councils work with HR as People Partners to connect, consult and co-create practices that line leaders assume accountability to support.HR anchors the HCL identity by building the organisational culture and capabilities and jointly owns the role of being a steward to improve the way people work and be a catalyst for growth. That's also how HR is integrated with the core line of business at HCL Technologies. How has the downturn affected HR?Well, HR continues to be challenged in creating engaging organisations, enhancing effectiveness in the way organisations work and ensuring cost efficiency. If you could change three things about HR practices, what would they be?Change is a constant. HR practices need to continue to evolve and respond to the context and culture in which they operate. At this point of time HR teams:Need to focus on ensuring they drive results with the heart that makes an organisation authenticEnsure that the right investments are made in the right organisational capabilities needed for today and the right talent is attracted, developed and deployed in building those needed for tomorrowInvest in sharpening their own functional capabilities – and move from being a support / staff function to being a profession(As told to Poonam Kumar)
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When lakhs of urban Delhi elites took to the streets on the weekend before Christmas 2012 demanding security for women to a standard that any civilized society would take for granted and were then water cannoned for their protest, you had to ask yourself if we inhabited a land of tribal warfare and anarchy. When female protesters were in turn molested by lumpen bazaar riff raff at that same demonstration, you had to ask yourself if you were an observer of a surreal political theatre. When those same protesters were accused of killing a cop who died it appears because he was physically not fit to engage in high adrenalin duties, you had to ask what one could expect from a sovereign who self-servingly converted tragedy to farce. Running like an unspoken thread through all this is this question which urban elites refuse to frame, leave alone answer: We know that the call to revolution is heeded by illiterate underclasses and steered to fruition by educated urban elites: when urban elites behave like illiterate underclasses, who will lead India to the dawn of a new era of liberal freedom and true democracy?More’s the pity because this same question has been blowing in the wind for the last eighteen months and we are no closer to an answer. Fifteen months back, when lakhs took to the streets to demand the promulgation of a Lokpal law led by a team of ostensibly well-meant political novices, I said in Melas with Missions, “Perhaps, when it all comes down to dust, you will concluded that while we Indians have always loved our melas, we have now progressed to organising melas which have an ostensible mission even though in the long run, its only so much redundant drama, symbolism and emotional purgation.” What was the ruckus on Rajpath but a Bob Geldof typehead bangers ball with the ostensible mission to save Indian women instead of Ethiopian stomachs? As a lawyer of 33 years vintage, I am appalled of the extent to which our urban educated elites extoll the employment of illegal means to achieve the promulgation of just laws. I am equally appalled at the extent to which we ask for the promulgation of patently illegal laws to achieve legally laudable ends. We hang jihaad indoctrinated youth with lacerated minds so that we may protect our plural democracy. We want to castrate rapists to usher in a peaceable society. How do you achieve good by doing bad? Violating men who violate women only begets a nation of the violated, especially when we know that crimes against women are not ‘law and order’ problems? Or don’t we know it? Let me explain.First and foremost, the terrifying violation of a young girl in a bus while trying to get a ride home on a dark winter Delhi evening is a horrific and unforgivable crime perpetrated by damaged minds. This is no ‘sex crime’ by more or less ‘normal’ males with a bad attitude to women who are going to get reformed by closer policing and the promulgation of even more laws carrying even harsher penalties. We don’t live in a medieval central Asian khanate with bazaar’s overrun by legless, armless, castrated beggars without noses and ears in some Zia-ul-Huq type martial law regime turned nightmare. We have all seen enough satellite TV to know that no society is able to prevent such crimes anywhere in the world, especially through the promulgation of law alone and without addressing their underlying causes. Second, we need to recognize that violence against women on the street is only an extension of violence against women in our homes. You can't fix one without fixing the other. In a world where rich brothers are doing their sisters out of a share of the ancestral home, where boys are educated better and fed better and clothed better than girls, where parents turn their backs on their own daughters after they are ‘married off’ leaving girls with no choice but to terminate their lives under the incessant pressure of dowry demands, to expect society generally not to carry this terrifying contempt of women from the home to the street is perverse. Third, there are far too many credible studies of the socio-economic basis for crimes for us to assume that tighter laws mean a more civilized society. We know that disempowered members of any gender inevitably pray upon those weaker than them. The inherent violence of and extreme inequities in our society encourage many men to do terrible things to weaker women. Class conflict, powerlessness and extreme frustration run like a sub-stream through our society with consequences that we need to ponder with an honest heart. We urban elites who sit on top of the ‘power’ heap are part of the problem, for our own predation on the weak is equally culpable, regardless of gender.Allow me an aside here. Our attitude to such crime is also highly class contextualised. When the victim of these disempowered men is ‘one of us’, we take to the streets and talk about hanging and castration. When one of us does something to one of ‘their’ women, then it’s a blackmailing maid making a fast buck because the guy was alone at home. And when ‘one of them’ does something to one of ‘their’ women, then who gives a pig’s poke?Four, superior policing never hurts but in contemporary India, better policing is impossible when so few policemen are expected to make themselves available to so many members of the political classes who need so many policeman to protect them from so few of us who may harbour violent intentions towards them! For educated Indians to target too few overworked underpaid policemen for crimes that lie deep in the Indian psyche is disgusting and distressing.Five, agitation politics is the very antithesis of the role that urban educated elites should be playing in our society. We are expected to be thought leaders, steering our country to go to a better, more civilized place. We know that between our lumpen polity and our opportunist political classes (of which I am very sure I wish to specifically include Kejriwal and Ramdev), every genuine protest runs the very real risk of getting hijacked. Educated urban elites need to become leaders, not case studies of anger management gone berserk. We need to have a clear sense of what is wrong, what the fix is and what we need to do to implement the fix.But then you may ask: what am I doing discussing violent street crime in the legal column of a business magazine? I am doing it because this issue is more important than anything else that this column can conceivably say about India today. When half the population of this country is treated as children of a lesser God and live under clear and present threat of eminent violence without warning for no reason except their gender, for me to sit around pontificating about corporate governance and equal protection of business laws and better regulation is to avoid thinking about India’s biggest developmental challenge. Yeah, sure, you may say, but what do you want business to do about any of this? What is a corporate manager supposed to do about street crime or dowry deaths? Everything, says I.If we want a society in which business can flourish – and bear in mind that we are always only a couple of Bharatbandhs away from operating losses - we have to work towards a stable relatively peaceful society where civilized norms are valued and street violence – whether led by criminals or by very angry protesters – is condemned. At the heart of the current protest is a social problem: the problem of the empowerment of women. You cannot legislate out of a social problem by increasing the punishment, police it out of existence or combat it through harsh violent legal or administrative measures. You can and should legislate out of a social problem through affirmative action and gender specific empowerment. It has been shown time and again, in society after society, regardless of culture or geography, that the quickest and most efficient way to address a multitude of developmental challenges including notably the inherent instability of the third world is to empower its women. Many political thinkers in India recognize this, which is why we have reserved seats for women in local self-government bodies and are trying to replicate it at the national legislative level.For the average corporate guy, this has two implications. First, we are all duty bound in the corporate world to do whatever it takes to empower women in the corporate environment so that they are the equal of men in their ability to deliver value to their companies. We simply cannot have women as victims of their biology. If this means appropriate working conditions, so be it. It also means that if affirmative action is necessary, we need to adopt it. If that means sufficient representation on boards, as head of departments or whatever, so be it. I am not on the topic of this but nor that. When the destination is clear, the route is frequently pretty obvious. What doesn’t work for me is to have hyper ventilating hotshots breast beating about rape while simultaneously condemning equal opportunity laws that give women half a shot at the hotshot’s spot.Second, we can’t have empowered women at work who go home to transform magically into second rate citizens. We cannot conceive of a man who treats women as equal at work but treats women at home as unequal. Male attitudes must be consistent, across work and home environments, across class distinctions of master and servant, and across economic classes of rich and poor. I am unconvinced that either corporate India or educated westernized urban elites see the inherent contradictions in our attitudes which aggregate the violence of our society which we then rage against. Women’s empowerment begins by specifying the working hours of the live-in maid at home.At the end of the day, we need to ask ourselves a basic question: do we want a new India or are we double speaking demagogues paying lip service to one set of values while living by another? Do we want to protect our women by empowering them or do we want others not to ravish them just so long we are able to mistreat them? In the ultimately analysis, do we want to drive change in India through a very clear vision of the society we want to create or are we drug crazed headbangers in heavy metal concerts in search of catharsis when clearly the sickness is within?(The author is managing partner of the Gurgaon-based corporate law firm N South. He is the author of “Winning Legal Wars” and “Bullshit Quotient: Decoding India’s corporate, social and legal Fine Print”. He can be contacted at rcd@nsouthlaw.com).
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The turnstile is not something that a regular traveler on a metro rail system will give a second look. But, there is engineering, technology and security systems built into it. That is one of the security products that Gothenberg, Sweden-based Gunnebo AB makes. India is currently the third largest market after France and the US for the $ 1 billion Gunnebo. Per Borgvall, President and CEO of Gunnebo AB was in India as the company looks to focus on acquisitions as a growth strategy in the country to maintain an annual growth rate of 25-30 per cent. He spoke to BW's Anup Jayaram on how the company looks to expand its presence in India. Excerpts: Your India business has gone up very sharply…Yes. Over the last 2-3 years there has been very rapid growth. Due to the fact that we are predominantly in the financial sector, it has been very strong growth. India was for us 2 years ago the fifth biggest market. Just a few months ago, India became number 2. Then we made an acquisition in the US a few weeks ago. So, India is number 3, but with a good chance to come back. You have been acquiring a lot of companies over the years…Over the last three years we have not made too many acquisitions. We have been focused on getting our act together. This group was established by making over 40 acquisitions during 1995-2005. Then we went into a phase of consolidation. Now we are into a new phase-it is all about growth. One way to grow is of course through consolidation. And we have a global agenda-we have decided to be strong in major world markets. We are looking for positions that would give us that geographical expansion, to strengthen our core business and to develop new business lines. How do you see your India business plans over the next few years?Growth is the key word for all large corporations. When we started our strategic platform we are working on today, about 3-4 years ago, we had a very strong foothold into India which is now eight years old. But we haven't for a long time invested in India. I saw the opportunity in India. We started with people, since business is about people. It doesn't matter if you have the best strategy if you do not have the right people. Then we started to invest in the marketplace. As a consequence we invested in the factory and the capacity in the factory. We have invested over 3 million euro last year to expand our capacity for manufacturing. We will invest more. On a global perspective, we see that there is a slowdown in growth everywhere. However, everything is relative. The slowdown in Europe-particularly in southern Europe-is much stronger than in India. Then you have to look into specific segments of the marketplace. In India we see two sectors that are very interesting. The financial sector in India is growing much faster than the GDP. And we are averaging a growth of 30 per cent over the past several years since we are a major supplier to Indian banks. The second one is infrastructure, where in many markets we have a strong position. There is a security need for airports, metro systems, the railways, power plants and important buildings. I see both these sectors to grow over the next few years in India. I travelled on the expressway between Noida and Agra and saw a fantastic investment in infrastructure. If all the new projects around the metros and new airports come to reality, there will be a fantastic opportunity for our business. These are the two sectors where security and system needs will be huge. That's exactly where we have positioned ourselves. Also Read: Gunnebo Plans To Diversify Into Infra In IndiaDo you see your company restricting itself to these two sectors or are you looking at other opportunities?In financial services, we follow the cash. We work with the national banks, the retail banks, the cash in transit companies and the big retailers. That's where the cash loop is. The other is infrastructure in the form of access control and building protection. However, if take India as an example, we are predominantly a physical security provider to the banks. That's where we have our stronghold. However, what we currently are doing is to expand the scope of business, because we know the marketplace and the segment we want to be in. So, for instance we are looking at electronic security, services and system integration. From a group perspective, the things that we are doing in other markets are relatively new for the Indian market. So we will extend in our strategic focus and broaden our presence in the market.So are you looking to invest more in India? I am just coming from our plant at Halol. I just inaugurated the latest expansion of that plant that increased our capacity by 75 per cent. And we have invested over 3 million euro over the last 12 months. And, interesting enough, we are thinking about the next phase already. There are no final decisions, but we already have the plan on the drawing board. So what do we need to do? First, we need to keep up with demand in the market place. Second, with this expanded scope of business, there will be a demand for other products, historically not produced in India. So, therefore, we will have to look carefully for what kind of investment we need to do to have a 'Made in India' stamp for core products that are made for the sector. No final decisions on that, but that is what we have currently on the drawing board. Generally speaking, we are very happy to invest, because we have a very good payoff, and a very healthy business in India. Are you looking to use the Indian manufacturing base for exports?There are two things about manufacturing platforms in India. The first is expanding capacity, because we have to keep up with the demand. Over the last three years, we have had out hands full keeping up with the demand in the domestic market. However, in future we are looking to extend that business as a global exporting base. But, over the last three years our hands are full with domestic business. We would very much like to have a manufacturing base in India to cater to the global business. With the current demand in India, our hands are full meeting domestic demand. We have a large manufacturing facility at Halol, with room for expansion. There are benefits to consolidate at one big place. However, we will look to set up an alternative platform if that is beneficial for the business. The government has opened up FDI in retail. Do you see that as a huge business opportunity in the future?In a way, yes. As I said, we are focused on following the cash. We operate in the landscape of the retail banks, cash-in-transit companies and retailers. And that is exactly where the cash is looping and of course if lots of international retailers will enter the market, they will have to have systems to protect their assets and money in the loop. Many of them are already customers of ours in other markets. Having said that, I think there are at least a couple of years of work for all of them before they are able to establish themselves. Will you be dealing in following the cash here too?All markets are different. It all starts with the central bank and we are dealing with the central banks on a global arena. Then the retail branches need equipment for their branches. Then in many markets the cash logistics is outsourced to the cash in transit companies. However, that is not the case in India, because the central bank is still dealing with it. In many markets there is another play in the form of cash in transit companies. We are already in that business in India as we are with the big banks and helping them with opening new branches. The gold loan banks which have grown significantly over the last couple of years are another sector which is unique for India. Are you looking to get into sectors like defence and government security too?There are two types of security for high demand buildings. Defence and government are two important sectors for us. If you look at the business in this sector, there are two issues-one is perimeter and access security equipment. The other is the security demand within the building. Then of course there is electronic security. This is exactly where we invest currently in India to try to extend our business to this traditional perimeter security and access control systems.
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Never has the world witnessed a large market emerge so quickly as China has. As the economy grows it is also changing. China is fast climbing the value curve, transitioning from low-cost manufacturing to innovation-led growth. In telecommunications, supercomputing, life sciences, non-fuel energy sources and “green-tech” in general, there is already a vibrant innovation/research and development (R&D) scene in China.Over the past 20 years, investment in R&D has more than doubled in percentage terms, rising from 0.73 per cent of GDP in 1991 to 1.77 per cent in 2011. The plan is to reach 2.5 per cent — today’s average for the countries of the European Union -- by 2020. In absolute terms, given the rapid growth of China’s GDP, the numbers are even more impressive. Between 2000 and 2010, the volume of R&D investment expanded 6.6 times, reaching RMB 700 billion in 2010 (EUR 84 billion). At this rate, China could soon go from being the world’s biggest factory to becoming a main laboratory for the planet.Ever since the founding of the People’s Republic of China in 1949, the ruling Communist Party has seen science and technical innovation as crucial for growth and jobcreation, and few countries have worked so diligently to translate a policy priority into reality. China produces more than 700,000 engineering graduates each year. Nevertheless, in some areas, appropriate personnel are scarce. In a massive programme, China is encouraging students to go abroad to study. In 2010, there were more than 360,000 Chinese students in universities outside China. Marc LaperrouzaPatents & Other Evidence Of InnovationPatent applications, a pointer to the pace of innovation in an economy, are growing at 20 per cent per year and totaled 500,000 in 2010. Many institutions offer monetary rewards to staff filing patent applications, which probably accounts for part of the surge. And, of course, when it comes to patents, quality counts more than mere numbers. Nevertheless, they are impressive figures. There has also been a jump in patent litigation between Chinese concerns. Gradually, the courts are getting tougher in applying intellectual property (IP) laws introduced after China joined the World Trade Organization (WTO) in 2001. As Chinese technology firms, such as Huawei, ZTE, Lenovo and Haier, go global, they are pushing for a more rigorous application of IP laws by Chinese courts.China counts close to 700 high-tech ‘incubators’, which provide financing, facilities and advice for business start-ups. About 10 per cent of these incubators, which are often linked to major universities, form part of the government’s Torch program for promoting high-tech industries. Launched in 1988, the latter was especially designed to boost the R&D efforts of start-ups and small and medium-sized enterprises (SMEs). The largest such incubator is the 232-sq km Zhongguancun Science Park in Beijing. It has several specialised ‘sub-parks’, including Electronics City and Changping Park, which specialises in medical technology and biotech engineering, along with several universities.Attracted by such developments, some 800 non-Chinese companies have established R&D laboratories in China, including such companies as Nokia, Orange, Alcatel and Motorola, as well as a number of pharma giants. It is no surprise that international telecommunications companies figure prominently because China has already shown significant capacity for innovation in this area: for example, it has created its own standard for 3G mobile technology, TD SCDMA. One of the most important companies in the sector is equipment-maker Huawei, which devotes 20% of its sales volume to R&D. The company, with a workforce of 140,000, has rapidly developed a strong international presence. In their quest for global markets, Chinese multinational companies have already begun to establish R&D centers in Europe.Computing is another area of remarkable innovation. In October 2010, China’s Tianke 1A supercomputer broke the world record for computing power. With its massive investments in nanotechnologies, China aims to overtake the United States in this field by 2020.In life sciences as well, significant research progress is being made in many universities, with Guanzhou, Shanghai/Suzhou, and Beijing all vying to become world centers. In non-fuel energy sources and ‘green-tech’ in general, China shows sustained commitment. Chinese producers of voltaic solar panels already have 40 per cent of the world market. Actors in this sector include Suntech, Yingli and JASolar. It is a similar story in wind power, with companies Goldwind and Sinovel ranking among the world’s top five.Watch Out Silicon ValleyAny ‘Western’ firm interested in innovation, and which does not yet have an R&D presence in China, must be asking itself whether the time has not come to have one. The ongoing collaborative project ‘Innovation in China’, in which IMD is a key actor, looks at questions around forming effective partnerships between China and ‘Western’ firms for mutual benefit, with particular reference to medium-size companies. These questions include the following: what path will China follow and at what pace? Does the rate at which the value curve is climbed vary from industry to industry? Can China turn itself into a hub of innovation for the world, and how soon?On the last question, a recent survey of managers saw China displacing the celebrated and glamorous Silicon Valley in California as early as 2016 (www.inside-it.ch/articles/29509) This may seem somewhat rapid, but in China, everything is moving fast.(Dr Georges Haour is Professor of Technology & Innovation Management at IMD. Marc Laperrouza is Senior Advisor to the Evian Group@IMD and lecturer at the University of Lausanne (HEC) and Swiss Federal Institute of Technology (EPFL).
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