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ECONOMY: DOWNTURN
"Stick To The Predictable"
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UDAY KOTAK
Vice-Chairman, Kotak Mahindra
CHALLENGE: Volatile capital markets
RESPONSE: Stick to safe businesses
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You are operating
in a landscape littered with the carcasses of crazy deals, audacious ambition
and gratuitous greed. Mergers and acquisitions are rare and leasing perilous
as asset values crash. So, how do you grow? "Focus on what is perceived
to be boring business," says Uday Kotak. "Avoid what swings
like a yo-yo and stick to the predictable. This is not a time be heroic."
So Kotak is focusing on retail finance and insurance. When the economy
takes off, he will be able to juice the boom. He should know. Despite
the downtrend, he managed to milk Rs 200 crore in profits last year.
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PRASHANTH
PRAKASH
CEO, Netkraft
CHALLENGE: Spending cuts by corporates
RESPONSE: Build long-term customers |
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Prashanth Prakash
is spending more time away from home. The reason: "Budgets are cut,
sales cycles have expanded-what took two months to decide now takes six."
The need of the hour: rationalise costs, outsource, evaluate offerings,
conserve cash and combine a short-term sales target with a long-term marketing
strategy. Netkraft, which specialises in e-biz consulting and net-tech
services, is also adding applications management for top line growth,
besides looking at tie-ups in the corporate e-learning space. Prakash's
big idea: build relationships and bet on the long term.
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KUMAR MANGALAM BIRLA
Chairman, Aditya Birla Group
CHALLENGE: Uneven growth across diversified group
RESPONSE: Ride cyclical stress, invest in new economy
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Kumar mangalam Birla
presents a calm, enviable Buddha-like countenance amidst the downtrend.
His dictum: when you are running a group with businesses ranging from
viscose staple fibre to aluminium, cement to apparel, fertilisers to finance
and information technology, it is critical not to balk at cyclical and
structural downturns. "I am not bothered by quarter on quarter numbers.
As of now we are doing okay, are on track. Sure there is pressure to perform
as it should be always, regardless of the externalities." So if the
Aditya Vikram Birla Group is pulling out of Mangalore Refineries and Petrochemical
Ltd, it is also expanding elsewhere. Birla has bought Madura's brands,
set up Planet Fashion and Trouser Towns, consolidated the cement segment
and invested in the knowledge corridor.
Indeed, says Birla, "The downtrend affords
a huge opportunity as it alters perceptions, speeds up the thinking process
and provides an urgency for change and growth." Birla's focus: to
be among the top two dominant players in any market, to be a low-cost
producer of quality solutions. "Knowledge based industries,"
he says, "offer enormous growth, require far less capital and have
the advantage of enhanced value creation in a much shorter time frame."
Birla has been working over the past few years
to put the Aditya Vikram Birla Group on a growth path. "In the past,
our portfolio was focussed heavily on capital-intensive manufacturing-oriented
businesses. The future will see us move increasingly into the knowledge-based
industries, brand-management and service sectors." It would seem
he is well on his way. Over the past few years he has invested over Rs
1,500 crore in new acquisitions. The return: Aditya Vikram Birla group's
turnover has vaulted from Rs 15,000 crore to Rs 28,000 crore since 1996.
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SUNIL ALAGH
Managing Director & CEO, Britannia
CHALLENGE: Increased competition
RESPONSE: Launch new products, improve visibility
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Last month, Managing
Director and CEO Sunil Alagh stirred up a storm at Britannia. He shattered
the hierarchy of ideation, planning and execution. Alagh calls it "internal
insurgence". Any of the 250 managers can walk up to him with an idea.
Once vetted by a core team, the "opportunity manager" will be
given a team of four and six months to execute the idea. Sure, it may
not work. But Alagh is not worried. Risk-taking for him is not a 50:50
exercise but a "part of the journey to success". As he says,
"It is better to be approximately right than precisely wrong."
Obviously he has got it right more often than
wrong. The company's sales were Rs 1,338 crore in 2000-1. Every fourth
Indian is a Britannia consumer. Alagh now wants every third Indian-that
is 350 million of the more than one billion Indians-to buy a Britannia
product. Tough enough? Now juxtapose this ambition with the economic downtrend.
Admits Alagh: "It is a challenging task. You will see more new product
launches, cost reduction and gains in productivity."
So as others balked, given the demand dip, Britannia
launched new bites and the Milkman range of dairy products-from milk to
ghee and Indianised cheese. Alagh feels the "Indian consumer has
money but will not spend. So the challenge is to romance the consumer".
And it takes a lot of maska and chaska to get the consumer to bite the
biscuit. Like the Britannia-Lagaan cricket match for instance. "We
cannot stay and watch things happen. We have to make things happen,"
says Alagh. You could say Alagh is a bit like Lagaan's Bhuvan.
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HARSH GOENKA
Chairman, RPG Enterprises
CHALLENGE: Bogged down by slow sales
RESPONSE: Service and retain customers
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Assume you are heading
a Rs 6,600 crore group with a presence in as diverse a spectrum as tyres,
power, information technology, telecommunications, retail, entertainment
and life sciences. Now juxtapose the impact of the slowdown on each of
these sectors. Then design a strategy-a common theme-to bridge the dip.
Harshvardhan Goenka has one: retain customers. Be it tyres, telecom, food
or music the focus is to service and retain the customer. In Kolkata,
for instance, music lovers can walk into the digital kiosks at MusicWorld
and create their own CDs from a base of 20,000 songs. On the website hamaraCD.com
you can buy customised CDs and have them delivered at your home.
Goenka believes it takes a mix of small and
big ideas to push the top line. Take retailing for instance. The Foodworld
team found that the Man from Mulshi was intimidated by gloss. Goenka seized
on this mindset. The result: India's first hypermarket, which spans 1,20,000
sq ft and offers 20,000 items from vegetables and canned food to household
appliances and furnishings, is cheaper and is open from 7 a.m. to 9 p.m.
Harsh and his brother Sanjiv (who is the vice-chairman) spend much of
their time scripting ideas and strategies along with the group CEOs to
retain the customer. Explains Goenka: "In the cellular business,
it costs five times to acquire a new customer. It's the same with any
other business. Retaining this customer is the critical first step for
success."
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