FT Issue 22_V.shef.
qxd 7/2/2009 4:31 PM Page 1
H O W A G I L E
INSIDE
HR Roles in Retail
The slowdown asked for a
reshuffle of HR practices. Two
HR heads elucidate
THE UPS OF THE DOWN
Recession in the West
opened new vistas for
various businesses in
India who milked the
golden opportunity
SAHEEM WANI
I
n September 2008, the forecast for glob-
al GDP growth in 2009 was 2.5 percent.
By mid-October, it had slipped to 1.8
percent and in March, global growth
rates were revised to 1.7 percent. As the
global economy contracted into one of its
severe convulsions in modern history, credit was
tightened, production ceased and capital spend-
ing plans postponed. The sheer economic uncer-
tainty affected virtually every domain. From a
sluggish growth rate in IT and slump in automo-
bile sector, to heavy losses borne by export-dom-
inated industries like textile and leather, colossal
monetary and job losses resulted everywhere.
However, despite the number of casualities, a
handful of sectors not only survived but showed
remarkable growth during the slowdown. The
economic meltdown that shook everyone – from
the Wall Street investor to the haberdasher in
Delhi’s walled city – delivered unprecedented
opportunities to these lucky few.
Fasttrack finds out how the slowdown has
been a blessing in disguise for a handful of sec-
tors which reported profits.
The lucky few
As the credit crunch forces an increasing
number of overseas businesses to cut costs, out-
sourcing to cost-effective destinations becomes
inevitable.
While exploring domains where the slow-
down has proven to be beneficial, it is the Legal
Process Outsourcing (LPO) industry and the ani-
mation sector that feature foremost. Both are
predominantly outsourcing units.
Besides these, technology providers, tea deal-
ers, alternative energy sources and the direct-sell-
ing industry have reaped benefits from global
recession due to their affordability.
The LPO industry registered its highest-ever
growth rate in the last one year. Sanjay Kamlani,
Co-CEO of Pangea3, a leading LPO with US
headquarters in New York and the Indian head-
quarters in Mumbai, states: “Recession has trig-
I S Y O U R C O M P A N Y
An Inhospitable Climate
The tourism sector is battling
against the global economic crisis
pg 3 to make India incredible again
pg 4
gered a sizeable growth in the Indian LPO indus-
try owing to the tremendous cost pressure faced
by lawyers in the US, who are also being forced
to comply with new regulations of sticking to a
fixed budget. This, coupled with the fact that
legal services are indispensable in the West and
the cost difference between a US and an out-
sourced firm is about 50 to 90 percent, has
helped Pangea3 in registering more than a 100
percent year-on-year growth from June last year.”
Bartronics India Ltd, a Hyderabad-based
automatic identification and data capture solu-
tions company registered a net profit of Rs 75.11
crore, an increase of 55.26 percent over the last
“Recession has triggered a year. Managing Director Sudhir Rao credits it to
sizeable growth in the Indian the US preferring cheaper destinations for
LPO industry” almost all goods and services. “However, this is
usually balanced by the need to cope up with
Sanjay Kamlani, Co-CEO, Pangea3
unemployment and other socio-economic chal-
lenges. Those able to position themselves during
Continued on Page 2
For an e-zine version for your friends and colleagues, write to us at fasttrack@safexpress.com
ISSUE 22, JULY-SEPTEMBER 2009
The Frayed Indian Fabric
Hit by the exports slump, the
textile industry is struggling to
weave a survival story
pg 6
MESSAGE
LESSONS
LEARNT
If there’s one thing the global economic
crisis has taught, it is that every misfor-
tune opens up many opportunities. In
India, the way in which sectors have
coped with the slowdown has been
mixed.
Our cover story features companies
that have naturally benefited from the
slowdown, such as Mumbai-based LPO
Pangea3, which reported more than 100
percent annual growth. LPOs, or Legal
Process Outsourcing, in India saw much
of the work flow into the country
because US lawyers were facing cost
pressures of having to comply with new
regulations and working within a fixed
budget. Also, outsourcing work to coun-
tries such as India does reduce costs by
more than 50 percent and this has
worked in favour of Indian outsourcing
companies.
But there are other heroes who have
chalked out strategies, thought up
unique ideas and worked hard to fight
the slowdown. The result? Record sales
and inspiring stories to be recorded. Our
Response section features Hero Honda
Motors Ltd which reported a 12 percent
sales growth in the first 11 months of
this fiscal year – the best in its 25 years
of manufacturing history! The company
worked hard on refreshing its products,
expanding its network and building rural
verticals.
And then there are some that have
succumbed to the slowdown. Textile and
tourism companies are struggling to sur-
vive and it may be a while before their
condition improves. Read about them in
SME Watch and Inside Out.
To conclude, I would like to think that
we have the worst behind us. And for
those who are still struggling, it makes
sense to hang on.
PAWAN JAIN
Chairman & MD, Safexpress Pvt Ltd
FT Issue 22_V.shef.qxd 7/2/2009 4:32 PM Page 2

LEADERS

Resources Performing
KPO Work
Worldwide Real GDP growth, 2008-2010
HR ROLES IN RETAIL THERAPY
The slowdown was a wake-up call. Sudden cost pressures brought on a barrage of challenges for
HR departments which had to ensure high employee morale, control attrition and build confi-

1.9%
dence. Saheem Wani talks to two HR personnel about how they combated the pressures

2.3%
0.8%
A

1.6%

2.3%
2008 s one of the top destinations for
2009

1.6%
retail investment in the world,

4.4%
-1.7%
India is home to a giant retail
industry which contributes about
10 percent to the GDP and 8 per-
2010
Source: NASSCOM

-2.9%
Financial services 65% cent to total employment.
However, as the economy slowed down, retailers
experienced a drop of almost 30 percent in foot-
fall and sales dived for the first time in six years.

Pharma
3% Legal, IP & Patent
research 6%
this period are the ones who reap the maximum
benefits post-recession,” Rao says.
The global animation industry is projected to
touch the Rs. 1,530 billion mark by 2010. For the
Indian animation industry, which presently
claims Rs. 17.4 billion market size, the recession
in the US has become a means to make even big-
ger profits than estimated.
Jai Natarajan, Honorary Treasurer, The
Animation Society of India (TASI) and Group
Executive Vice President of Business
Development and Marketing, Maya
Entertainment Ltd, says that as pricing pressures
built up in the West, work was increasingly out-
sourced to India. “At Maya, we have delivered an
unprecedented amount of outsourced work in
the H1 this fiscal. Moreover, H2 of last fiscal was
30 percent higher than the pre-recession H1,” he
says.
“We have shown a steady growth despite
recession owing to the fact that unlike other sec-
tors we operate in a market that is minimally sat-
urated; India has less than 1 percent share of
world’s animators,” he adds.
Combating challenges
The beneficiaries have made the most of
the global slowdown, adopting more or less
the same pattern – combated challenges and
extended their global footprint.
Rao says: “We have focused on positioning
ourselves in the minds of our potential cus-
tomers as a lean, responsive company. To
combat the challenges raised by the global
ering to new markets, Rao says, “when oper-
ating in a new market with a new target audi-
Business & Market
Intelligence 26%
“Outsourcing and industries
like ours [animation] in India
will continue to thrive post
recession”
Jai Natarajan, Hon Treasurer,
The Animation Society of India (TASI)
Talking about the challenge faced in deliv-
Source: WorldBank
World High Income
Developing
“Those able to position them-
selves during this period are
the ones who reap maximum
benefits”
Sudhir Rao, Managing Director,
Bartronics India Ltd
nelise their resources and tap the market
potential.
There is no looking back now.
“The size of the US legal service industry
is more than $300 billion of which India holds
[Post recession]
the market share of merely 1 percent. The
country boasts of more than 1 million lawyers global economy
who can cater to the horde of people forced
to seek legal services within constricted budg-
ets,” Kamlani says, adding, “recession has
will realign to
driven the growth of the LPO industry. It gave
us the much needed chance and even if it
deploy resources
From an era of aggressive expansion to the
times of crunch, Nihar Ranjan Ghosh, Senior
Vice President, HR, Spencer’s, RPG Retail
Sector; and Meheriar Patel, Head of IT, HR and
Admin, Globus Stores Pvt Ltd, talk about how
the slowdown called for new HR learnings.
What are the major challenges faced by the retail
sector as far as HR management is concerned?
NG: The first challenge we are facing is
impaired morale due to the slowdown. Secondly,
many people switched to the retail industry from
a non-retail one owing to the boom a few years
back. Now, with the slowdown affecting rational-
isation, they are rethinking their decisions.
Besides this, we are under severe cost pressures
and looking at alternate manning models, which “The first challenge we are facing is impaired morale due to the slowdown ... and severe
means we are expecting higher productivity with cost pressures”
lesser increments than before. To keep employ- Nihar Ranjan Ghosh, Senior VP, HR, Spencer’s, RPG Retail Sector
ees motivated is a constant challenge especially
as these people constitute two-thirds of the total
workforce. How do you administer HR efficiency in the
MP: Imbuing adaptability in the workforce is Supply Chain?
key to successful HR management and also one “I would say the three NG: There are several territories where we
of its biggest challenges. In a dynamic industry, M mantras for HR manage- are effectively managing direct supply to stores.
it is always tough to control attrition, train man- ment are: Mentor, Vendors have corrected and responded swiftly to
power and reallocate human resources. This the Supply Chain needs of delivery to the retail-
requires preparing the employees for change,
Motivator and Mover” ers. As a result, almost 20 percent of the top ven-
enhancing their acceptability to this change and Meheriar Patel, Head of IT and HR, dors who account for 80 percent of our supplies
instilling the spirit to take on new responsibilities. Globus Stores Pvt Ltd have the capability to deliver at the doorstep.
I would say that the three M mantras for HR
management are: Mentor, Motivator and Mover. How have you managed retrenchments during
the slowdown?
How do you combat these and the dearth of
manpower?
NG: Retrenchment was an extremely detailed
process and transparency was high. We ensured
NG: Transparency is the best weapon to fight that individual biases do not come in. In addi-
low morale. It becomes vital to correct percep- tion, we hired an agency to place retrenched
tions. The biggest task is of communicating the manpower which sent strong signals to our pres-
truth realistically, transparently and objectively
to the employees, so he/she is well aware of the
ent employees that should a situation like this
come up, the company would be supportive in
state of the company vis-à-vis the larger industry.
We, at Spencer’s, engage with people one-on-one
helping them find another job.

slowdown such as abnormal costs, higher
inventories, depreciation of assets earlier con-
sidered to be good, higher discounts to cus-
tomers and, thereby, reduction in margins, we
have drawn out a detailed plan of action and
constituted groups which focus on debtor
positions, re-negotiation with our lenders,
etc.”
According to Kamlani, LPOs are capitalis-
ing on this opportunity, training resources and
building infrastructure to handle the increased
work. “We have about 12 lawyers based in the
US to handle transactions with clients,” he
informs.
Natarajan says that “the non-entertain-
ment sector of the animation industry is tak-
ing steps to reach out to verticals.”
ence, it’s vital to understand customer psyche
and strategise accordingly rather than adopt
a tested approach. When Bartronics decided
to expand its geographical presence in South
Asia and the US, we rejected the plan of
action that we follow here as it would have
taken a decade to create a brand name there.
Instead, we adopted an acquisition strategy,
whereby we acquired firms with an existing
customer base and companies which had
patents to their name and did a business of
about $40 million in the first year in the US.”
The discovery of India
The opportunity that the recession in the
West has brought to some industries in India
has made it feasible for companies to chan-
ceases, our growth curve won’t stoop”.
However, Natarajan points out that out-
sourcing in itself is incapable of generating
a huge economic shift from the West to the
East but it is the evolution of a market that
brings about a change. “Outsourcing and
industries like ours will continue to thrive
post recession. The simple reason being that
global economy will realign to deploy
resources to areas which have shown
resilience and maintained high quality of
goods and services,” he says.
The clouds hovering over the global econ-
omy look dark but the silver lining of oppor-
tunities is unmistakable, as businesses work
through financial and competitive challenges
to shine bright.„
in group meetings every weekend in order to
to areas which avoid confusion brought about by an overload of
information which is sometimes incorrect.
have shown Right now, manpower shortage is not as big a
challenge as about a year back. Compared with
resilience and last year’s 80-100 percent growth, it is 25-30 per-
cent this year, which is very moderate. Also, key
players in the industry have shut down about 40
maintained high percent of their forming slot and, as a result of
massive rationalisation, there is excessive man-
quality of goods power available.
MP: One of the major challenge is shortage
and services of trained manpower – a speedy training pro-
gramme for freshers becomes obligatory. In addi-
tion to the basics of the work that they have to
do, the training also imparts awareness about the
company’s policies, rules and regulations.
How do you manage communication, training
and employee motivation?
NG: An elaborate communication plan is
rolled out across the organisation at various lev-
els. The management community, geography
business manager and area operations manager
hold closely-monitored meetings. Open-house
meetings and small group meetings are also held.
Spencer’s is now spending 50 percent more
than last year on training. Ours is an action-
research based model and e-learning is used as a
major tool. Of the 1,000 management employ-
ees, almost 500 have been given access to the
basket of e-learning module for the entire year.
This conveys that the organisation is concerned
about growth and development of the employee.
MP: At Globus, we execute periodic training
programmes. Our ‘Train the Trainer’ approach
has shown positive results. Another has been to
provide training material in multilingual voice
recordings. Etching a career path for our employ-
ees, grooming and motivating them to better
themselves and a smart incentive system have
helped us produce an enthused workforce.
Besides regular meetings, we take care to balance
work with fun to keep the staff motivated.
How well prepared will the companies be in case
of a similar recurrence?
NG: From 2006 up to mid 2008, Spencer’s
witnessed a 700-800 percent growth till slow-
down hit the economy. The entire industry relied
too much on stories of 10 percent plus GDP
annual growth till 2015. In future, we need to
look at the economic indicators more carefully.
The downturn has taught us that whether good
times or bad, you need to keep your operational
expenditure (OPEX) under control.
MP: The slowdown was a wake-up call. It
forced businesses to rethink their strategies and
pushed them to focus on performance which is
what differentiated successful companies from
others. Multitasking and adaptability were the
lessons learnt.„

JULY-SEPTEMBER 2009 JULY-SEPTEMBER 2009

2 3
FT Issue 22_V.shef.qxd 7/2/2009 4:34 PM Page 4
INSIDE OUT
SAHEEM WANI
A
flight: India’s foreign tourist
arrivals (FTA) increased from 3.46
million in 2004 to 5.08 million in
2007, a whopping growth rate of
46.82 percent. Foreign Exchange
Earnings (FEE) via tourism rose
from $6.17 billion in 2004 to an approximate
$11.96 billion in 2007. Domestic tourism grew
phenomenally from 366.23 million tourists in
2004 to 526.57 million in 2007.
A slide: The double-digit growth rate of FTAs
– 13.3 percent in 2005, 13.5 in 2006 and a record
14.3 in 2007 – plunged to 5.6 percent in 2008.
The first quarter of 2009 saw 14.61 lakh FTAs
compared with 16.94 lakh the previous year – a
drop of 13.75 percent. Furthermore, the FEE for
the same period dropped to Rs.13,582 crores
from Rs.15,655 crores in 2008, lower by 13.24
percent.
The Indian tourism industry is hurting. Not
only did the travel bug not bite people around the
globe as pockets shrank, the Mumbai terror
attacks led many to drop India out of their travel
itinerary.
According to Priya Paul, President of the
Hotel Association of India (HAI) and
Chairperson of The Park Hotels, the meltdown
had an adverse effect on travel and tourism.
“The fact that India receives a majority of visi-
tors from the US and Europe – countries whose
AN INHOSPITABLE CLIMATE
The Indian tourism and hospitality sector battles multiple challenges as the economic slowdown staggers growth
“The crisis took us completely
off guard and we’d be lucky if
we managed to stay afloat”
Himmat Anand, Co-chairman, FICCI; and
MD, Diethelm Travel India Pvt Ltd
economies have been hampered the most – made
things worse. Moreover, the terror attacks in
Mumbai dealt a severe blow to the industry.
Arrivals in November and December 2008
dropped to 10.43 lakh from 11.29 lakh the pre-
vious year,” Paul says.
JULY-SEPTEMBER 2009
4 5
“CCIC has recorded negative
growth; exports as well as
domestic sales have declined”
Dr. M. A. Ibrahimi, MD, Central Cottage
Industries Corporation of India (CCIC)
Himmat Anand, Co-chairman of the
Tourism Committee, Federation of Indian
Chambers of Commerce and Industry (FICCI);
and Managing Director, Diethelm Travel India
Pvt Ltd, says, “The recession in the US and
Mumbai blasts resulted in leisure arrival figures
dropping by 40 percent in the last five months.”
Sister sectors, like hospitality and cottage indus-
tries have also been naturally affected. The drop
in hotel occupancies has intensified the agony of
high tax rates, high import duty and shortage of
manpower.
Dr. M. A. Ibrahimi, Managing Director,
Central Cottage Industries Corporation of India
feels that “there has been a considerable impact
on the cottage industries due to the slowdown in
tourism. CCIC has recorded negative growth,
exports as well as domestic sales have declined”.
The woes are endless. A.L. Quadros,
President of the Taximen’s Union, Mumbai,
which comprises more than 45,000 members,
says there has been a 40 percent decline in busi-
ness since last July as a result of the drop in
tourism.
Challenges confronted
However, with government support, the
Tourism industry is wrestling the slowdown
giant. This year has been declared as the ‘Visit
India Year’ and the ‘Incredible India’ campaign
is being promoted vigorously. Paul says: “Under
the leadership of the Ministry of Tourism, the
industry stakeholders’ association has collaborat-
ed to launch attractive tourist packages. Free air
tickets for the accompanying person, free hotel
nights, free rural holidays, to mention a few.”
Exploring fresh avenues like medical and eco-
tourism has been an ongoing process. “The
demand for medical tourism is more inelastic
compared with leisure travel which gets easily
affected by unfavourable conditions. Therefore,
promotion of ‘wellness tourism’, the extended
version of medical tourism, can reap quicker and
better dividends,” Paul says.
“Aggressive promotions in the form of tours
and road shows are being undertaken to famil-
iarise potential consumers in newer and short-
haul markets of China, Korea, Japan, Dubai, etc.
Shows are being held in the source markets of
the US, UK and Europe to instil confidence in
travel traders and media,” she adds.
Adding to the same, Ibrahimi talks about the
defence tactics adopted by the Cottage industry.
“CCIC has explored new avenues for marketing
Indian handicrafts; a newly opened franchise
showroom in Denmark reaches out to the
Scandinavian market,” he says.
Besides the promise of reviving business,
these measures also help accentuate the range of
lesser-known options like regional, youth and
domestic tourism that India has to offer. But how
far these measures are actually converting to
business is hard to say. “The crisis took us com-
pletely off guard and we’d be lucky if we man-
aged to stay afloat till the tough period is over,”
Anand says.
Talking about the emergence of future trends,
Anand adds: “In the coming years, short-haul
“The fact that India receives a
majority of visitors from the US
and Europe made things worse”
Priya Paul, President of the Hotel Association
of India (HAI) and Chairperson of
The Park Hotels
travel might take precedence over the long one.
This would be bad for us, as inbound business in
India is dependent on long-haul source markets
like the US and Europe which will take a long
time to recover.”
As an aftermath of the meltdown, I foresee
last-minute bookings from people who make
travel plans at short notice. Again, this would
prove detrimental for India, where it takes ages
for an overseas tourist to obtain visa,” he adds.
Nevertheless, all is not gloomy for a nation
where the booming IT and outsourcing indus-
tries ensure rising FTAs, who generally spend
JULY-SEPTEMBER 2009
more than an average tourist. There have been
aggressive efforts to tap the immense potential of
global MICE (meetings, incentives, conferences
and exhibitions) market. The Incredible India
Bed & Breakfast (B&B) Establishment is offered
to increase the size of the middle market which
is one of the biggest challenge the industry faces
in a tighter market.
Talking about medical tourism, Anand says:
“Though we have a well-developed infrastruc-
ture, yet India will probably continue getting
patients from lesser developed countries like
Bangladesh, Pakistan, Africa, Afghanistan, etc.,
as developed nations have a poor perception of
our facilities. That will take time to correct.”
Anand also feels not much has been done for
adventure and ecotourism. “The Ministry and
industry need to develop a good infrastructure
and, thereafter, promote it aggressively.”
Reduced participation
The year 2010, when India hosts the
Commonwealth Games, “will be a big boost for
the Tourism industry,” Paul says. However, she
adds: “Owing to the slowdown, we are expecting
reduced participation by the Commonwealth
nations in terms of number of players, technical
teams, media persons and, of course, spectators.”
Safety, she says, is the greatest concern. “The
fact that IPL was shifted outside India on that
account is disgraceful.”
Anand adds: “Involvement of citizens is low
and the infrastructure is far from ready. With just
18 months left for the games, we better gear up.”
On the list of the world’s 130 most attractive
destinations, India ranks 62. With the slowdown-
hammering the globe, figures have dipped fur-
ther. Tourism associations, with the support of
the Tourism Ministry, are striving hard to bail out
the industry at this critical juncture and reduce
the host of taxes imposed upon it. A joint effort
on all fronts could once again reinstate the indus-
try’s double-digit growth. And India could be
incredible again.„
FT Issue 22_V.shef.qxd 7/2/2009 4:35 PM Page 6
SME WATCH
THE FRAYED INDIAN FABRIC
Hit by the exports slump, SMEs in the Indian textile industry struggle to weave a survival story
SAHEEM WANI
W
ith more than half a mil-
lion people laid off in less
than a year as a result of
the global financial crisis,
the Indian Textile indus-
try – the country’s leading
employment provider and forex earner – has
been stripped off its precious fibre.
Appreciation of the rupee and slashed export
orders resulted in a fall in export sales from
$22.13 billion (FY’08) to $15.25 billion in the
first three quarters last fiscal.
Despite figures picking up in the last quarter,
the $50 billion target set for 2010 seems like a
distant dream. With big players brooding over a
10-20 percent dip in exports, the SMEs – consti-
tuting over 90 percent of the industry – are in a
much worse situation.
The fall trajectory
The Indian Textile industry is worth a whop-
ping $52.5 billion and contributes about 12 per-
cent to the country’s total export earnings. Of
this, about $20.5 billion is generated by the
exports market. With such heavy dependence on
exports, the repercussions of the economic
downturn become obvious. In October, exports
dropped to $12.8 billion – a drop of 12.3 percent
over the previous year.
Shaju Mangalam, Joint Secretary,
Confederation of Indian Textile Industry (CITI)
says: “With most of our products being exported
to the West, developments in the global econo-
my affect us deeply. Also, labour-intensive issues
make it all the more difficult to adjust production
with a fall in demand.”
A sharp rise in cotton prices and the rise of
the rupee by 13-15 percent last year further dete-
riorated demand. Exports to the US – the largest
buyer of Indian textiles, with a 20.54 percent
share (Apr-Sept, 2008-09) – fell by 7.9 percent
for woven apparel. Moreover, buyers started
turning their attention to countries like
Bangladesh and Vietnam which sell at lower
S haju Mangalam and Rajkumar Agarwal suggest some initiatives govern-
ment should take to help resurrect the Textile industry.
SM: The repayment period for Technology Upgradation Fund Scheme
(TUFS) loans should be extended from 10 to 12 years and draw bank rates
should be restored.
RA: Working capital interest rates have to be lowered to bring them in line
with other countries which compete with us.
“The biggest challenge is to be
able to meet long-term obliga-
tions and retain manpower”
Rajkumar Agarwal, Managing Director,
SVG Fashion Ltd
prices; a pair of trousers for $6 in India are avail-
able for $5.20 there.
“The 176 textiles and clothing companies
listed in the Bombay Stock Exchange, a majority
of these being SMEs, showed profits in FY’07
and ‘08. However, since the last quarter of 2007-
08, they dipped into red. In the third quarter
alone, the net losses amounted to Rs. 649 crore,
equivalent to 4 percent of total sales turnover.”
Mangalam says.
The growth rate of the textile industry in
FY’04, ‘05 and ‘06 was an impressive 8.4, 9.7
and 10.9 percent respectively, according to
JULY-SEPTEMBER 2009
6 7
GOVERNMENT SUPPORT
SM: Owing to an acute shortage of working capital, a two-year moratorium
on repayment of term loans should be given.
RA: Labour reforms are immediately required so that the industry is not
afraid to expand if there is extra demand.
SM: The reductions in interest rates by the RBI to 15 percent of the net sac-
rifice should be fully implemented by banks. Margin money should be reduced
to 10 percent and interest on cotton to 7 percent.
“With most of our products
being exported to the West,
developments in the global
economy affect us deeply”
Shaju Mangalam, Jt Sec, CITI
Mangalam. However, it slipped to 4.3 percent in
2007. Last year, the industry put all its energy to
show a bare 0.12 percent growth in April-
December 2008. Competitive pricing, focus on
newer markets, reduction in bank rates and a
depreciating rupee are some of the major factors
that improved productivity.
Lowering the price
Over the past few months, apparel companies
have cut costs and enhanced efficiency and pro-
ductivity. The focus has shifted from high-value
clothing, for which demand has dropped. “In
current times, the biggest challenge is to be able
to meet long-term obligations and retain man-
power,” says Rajkumar Agarwal, Managing
Director of SVG Fashion Limited, a Mumbai-
based SME.
Lowering prices is the key to survive the eco-
nomic crisis. Products and services are being
offered at discount. “Credit flow has improved
but needs to improve further. Raw material cost
was stable with a downward bias till February.
Since then, there has been an upswing which, in
my opinion, is temporary,” Agarwal says.
SMEs are also stepping forward to investigate
new, dollar-free markets. Agarwal explains:
“Exploring newer markets, including the domes-
tic market, is the key to create demand which, in
turn, helps counter unemployment.” Asia, Latin
America and Africa are being targeted. Some
Indian manufacturers are even setting up facto-
ries in China.
The export promotion councils have been
proactive in organising trade fairs in newer mar-
kets. For example, Synthetic and Rayon Textiles
Export Promotion Council (SRTEPC) is organ-
ising displays in untapped markets like Australia.
Similar efforts have been made for Sri Lanka,
Russia, South America, etc.
Mangalam concludes: “Several measures
have been taken by the industry to reduce the
cost escalation. The textile industry has the
advantage of high operational efficiencies and
low-cost, skilled labour, yet, infrastructural bot-
tlenecks like the transaction time at ports and
transportation time hamper growth.”„
RESPONSE
A GOOD TIME TO BE HERO
Hero Honda implements unique strategies to zoom ahead with record sales
SHEFALI THAPLIYAL
B
attered by the slowdown, many com-
panies got sucked into the bottom of
economic depression. However, there
are some that not only defied the vor-
tex but sailed ahead with record sales.
Or, let’s say zoomed ahead.
With a 12 percent increase in sales in the first 11
months of this fiscal year – the best in its 25 years of
manufacturing history – Hero Honda Motors Ltd
(HHML) is one such company that overtook the
slowdown on speedy two wheels.
Its profit margins for the December 2008 quar-
ter were the highest ever in the past three years with
net profits rising by 9.24 percent and the total
turnover increasing by 5 percent.
In October, the two-wheeler industry reported a
downfall with Bajaj announcing a 34 percent drop
with 1.65 lakh units of sales while TVS Motor
Company showed a downfall of 10 percent with
1.17 lakh units. Hero Honda, on the other hand,
reported that its retail sales grew by 3.5 percent com-
pared to corresponding quarter in FY’ 07-08.
Unique ideas
The company used the slowdown to rethink its
business strategies and came up with unique ideas
that not only made the company slowdown-proof
but post enviable profit figures.
According to Anil Dua, Senior Vice President
(Marketing, Sales & Customer Care), HHML, it was
the strategic building blocks that the company put in
place that was key to its consistent growth.
“Consistent product refreshes, aggressive net-
work expansion, exploring new markets, clutter-
breaking communication and ground activation
have been the hallmark of this strategy,” Dua
explains.
“We keep investing in brand building through marketing initiatives”
Anil Dua, Senior Vice President (Marketing, Sales and Customer Care), HHML
Hero Honda has been consistently building on its
strong 58 percent share in the domestic motorcycle
market in the country even as the uncertainty over
interest rates and an overall credit squeeze continues
to impact the industry adversely.
The refreshed model launches helped keep mar-
ket interest alive. Dua says: “Most of the new
launches such as the Passion Pro, Splendor NXG
self-start, the special edition Hunk, the new Pleasure,
in addition to Splendor+ and Passion Plus, have
been share-and-volume drivers for the company.
Hunk and CBZ X-treme continue to help build on
Our strategy is to
keep refreshing the
product range and
maintain a
balanced portfolio
across segments
Hero Honda’s steadily growing share in the premi-
um segment.”
Hero Honda reportedly plans to launch 12 mod-
els in a span of 18 months, eight of which have
already been launched. “Our strategy is to keep
refreshing the product range and maintain a bal-
anced portfolio across segments,” Dua adds.
A crucial strategy the company adopted was
building a dedicated ‘rural vertical’ to explore
untapped rural and semi-urban areas. “The primary
JULY-SEPTEMBER 2009
PRIORITY
objective is to reach out to as many potential cus-
tomers in the rural areas as possible.
As part of this strategy, we are mapping the
demographic and psychographic landscape of rural
India. It is helping us in formulating region-specific
modules to reach out to potential customers at a very
local level,” he says.
Rural reach
Dua adds that HHML is reaching out to “opin-
ion leaders (sarpanch, pradhans) in the rural areas
and leveraging rural festivals. Local markets such as
village haats and mandis are also being tapped into
in order to reach potential customers.”
Gulshan Ahuja, Secretary General of the
Federation of Automobile Dealers Associations
(FADA) said this could be the biggest reason why
Hero Honda did so well during the slowdown.
“Hero Honda has a strong presence in the rural
market where the customer goes for cash purchase.
This did not impact credit availability which was a
problem as banks tightened their norms for lending
for two-wheeler purchases,” Ahuja says.
HHML is aggressively expanding its network
which Dua says paid off too. “We have grown our
network by over 50 percent over the last two years,
from 2000 to over 3500 touch-points across the
country, to significantly expand our reach. This
includes authorised dealerships, service and spare
parts outlets and dealer-appointed outlets across the
country, which will now be taken up to 4000 by the
end of this year,” Dua says.
A conscious attempt to build its brand image has
also kept the company in the public eye. “We keep
investing in brand building through marketing ini-
tiatives revolving around cricket (IPL), World Cup
T20, entertainment (MTV Roadies, Campus Rock
Idol, Saregama Pa) and ground activations,” Dua
concludes.„
LEADER IN
LOGISTICS
L eading the Supply Chain and
logistics industry for many
years, Safexpress has now ven-
tured into establishing state-of-
the-art Warehousing set-ups
across the country.
It kickstarted an unprecedent-
ed Warehousing Revolution in
India by successfully launching four
Logistics Parks in Gurgaon,
Nagpur, Ahmedabad and Kolkata
this year.
These Logistics Parks boast of
innovation, excellence and quality
in the field of infrastructure, IT,
warehousing, fleet and offer seam-
less Supply Chain and Logistics
services. They are equipped with
automated material handling
machinery, customised racking sys-
tems for product storage, IT and
networking infrastructure, power
back-up system, as well as office
and utilities space.
Phase one of the expansion
plan saw the launch of Gurgaon
Logistics Park on April 7.
Developed over an area of
195,000 sq ft, this park has a
capacity spanning five floors.
This was followed by the inau-
guration of Nagpur Logistics Park
on April 11. Located on NH-6, this
park has been developed over an
area of 1,190,000 sq ft with the
capacity to load/unload over 100
vehicles simultaneously. It also has
the first cross-docking facility in the
region.
The Ahmedabad Logistics Park
was inaugurated on April 18.
Located on NH-8A and developed
over 274,000 sq ft, it can load/
unload over 50 vehicles at a time.
The Kolkata Logistics Park was
inaugurated on May 23. Spread
over 184,000 sq ft, it is capable of
handling over 75 vehicles.
On May 22, Safexpress part-
nered with CII to organise an
“Interactive Seminar on Logistics
Parks” at the India Habitat Centre,
New Delhi. Top industry leaders
came together to discuss the impact
of Logistics Parks on Supply Chain
and Logistics industry in India.
FT Issue 22_V.shef.qxd 7/2/2009 4:35 PM Page 8

OFFBEAT

COMING HOME TO CHARITY

Compared with Western philanthropists, the affluent Indians – despite figuring on the world’s
ultra-rich list – seem to be just warming up to the concept of humanitarianism
SAHEEM WANI are Indians (Forbes 2008), not even a tributions which supplement the gov- Mahindra and Bharti Airtel. Others, munities surrounding Ambuja
single name features on the list. ernment, voluntary organisations, whose donations have doubled in the Cement’s manufacturing sites.
“I resolved to stop accumulating and Over the past few years, the boom NGOs and religious and charitable past few years up to Rs 10 crore plus, We are also exploring private-pri-
begin the infinitely more serious and in the economy fattened the bank bal- institutions across the country. were Ambuja Cements, Grasim, vate philanthropic partnerships. In
difficult task of wise distribution.” ances of many Indians, making them When compared to their western Pidilite, Omaxe, Jindal Stainless, JSW collaboration with Apollo Tyres, we
— Andrew Carnegie, rank among the world’s ultra-rich. counterparts like Buffet and Gates, Steel, Sundaram Finance and recently launched an HIV/AIDS
Father of modern philanthropy. The pre recession figures rank Laxmi Indian billionaires seem lesser inclined Cummins India, to name a few. awareness programme. Furthermore,

M
oney can do so
much good. Over
the centuries and
across nations,
the rich have
parted with their
millions for the betterment of
mankind.
In a survey published in 2008,
Business Week listed the 50 most gen-
erous philanthropists of the last five
years. Warren Buffet, CEO of
Berkshire Hathaway and the second
richest man in the world, tops the list.
Of his $52 billion earnings, he has
pledged a massive sum of $40 billion
– 78 percent of his net worth – to
charity. The estimated lifetime giving
of Bill Gates, the richest man in the
world, seconds Buffet at $28 billion.
However, despite the fact that four
out of 10 of the world’ s richest men
Mittal as the world’s fourth richest and
richest Indian, with a net worth of $45
billion, right after Bill Gates who was
at number three then.
He was closely followed by Mukesh
Ambani ($43 billion) as fifth, Anil
Ambani ($42 billion) as sixth and K. P.
Singh ($30 billion) as the eighth rich-
est man in the world. In all, India
boasted an aggregate of 53 billionaires
last year.
Despite the overflowing moolah,
Indian economy constitutes barely 5
percent of the global economy. That is
because, of the 1.1 billion people in
the world living on less than $1 a day,
Indians make a significant percentage.
In a country with about 300 mil-
lion people living below the poverty
line on less than Rs.10 a day, the
demand for philanthropic initiatives is
aghast and the scope, enormous.
Ironically, it is mostly foreign con-
to part with their green notes. This
might be because of the humble back-
ground most of them hail from or, per-
haps, they lack the calling for humani-
tarian work.
The givers
The highest donation from an
Indian comes from Anil Agarwal,
Chairman of the mining outfit
Vedanta Resources in Malaysia, who
pledged $1 billion to build a new uni-
versity in the eastern state of Orissa.
Next to him is Sunil Mittal of Bharti
Enterprises who has donated $22 mil-
lion for education.
Apart from individual contribu-
tions, a number of corporates are
jointly evolving a new pattern of “cor-
porate philanthropy” in India.
Leading the cause are Tata, Birla and
Reliance industries followed by
Shobha Developers, Suzlon, Tech
Pearl Tiwari, Vice President,
Corporate Social Responsibility
(CSR), Ambuja Cements Ltd; and
Director, Ambuja Cement
Foundation, says: “Corporate philan-
thropy refers to giving or donating
money by a profit-making organisa-
tion to another organisation or indi-
viduals to extend help or improve their
lives. It refers to grant making.
I think philanthropy in the tradi-
tional sense is beginning to get outdat-
ed. In India, we are seeing a shift from
‘donating’ to ‘engaging’. Ambuja has
set up its own implementing founda-
tion and other corporates are doing
the same now.”
Tiwari talks about the nature of
the work undertaken. “Ambuja
Cement Foundation works on a gamut
of rural development issues. The pri-
mary mandate of the foundation is to
engage extensively with the rural com-
we are conducting Social Impact
Assessments at all proposed sites of
Ambuja Cements.”
Collective commitment
Talking about the challenges that
corporate philanthropy faces, Tiwari
remarks: “Effective corporate philan-
thropy/corporate social responsibility
(CSR) requires commitment to a clear
vision from the management as well as
the team. If a company has these
things in place, all challenges can be
surmounted.
We have learnt from our experi-
ence that it is extremely effective to
work in partnerships with NGOs or
the government to create a platform
where good business and social devel-
opment go hand in hand.”
With a platform to reach out, it is
hoped the rich Indians will step up to
their philanthropic expectations.„

Fasttrack is a quarterly magazine on management, with a special emphasis on Supply Chain issues, brought to you by Safexpress Private Limited. The
magazine is committed to promoting business agility. Fasttrack reaches out to CEOs, finance heads and logistics heads of companies. We would be
A MINDWORKS MEDIA PRODUCT FOR SAFEXPRESS PVT LTD
happy to take on-board issues related to Supply Chain that you might be facing.
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JULY-SEPTEMBER 2009
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