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High Tide For Entrepreneurs
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So even though the Marwaris and their southern brethren showcased their dexterity in the one profession that runs in their bloodstream — business — it's the indomitable spirit of entrepreneurship in a throbbing democracy amidst a general environment of slowing growth, global uncertainties and slackening morale that stands out in this study. Their individual stories carry inspiring lessons of leadership and enterprise because they have toiled through four of the most traumatic financial years in the global economic history following the US recession. Even if the domestic industrial growth threatened to abate, most of these leaders did not give in. India's corporate sector may prosper as long as first-generation entrepreneurs, who account for 60 per cent of this year's top 20, continue to repose their faith in the wonders of capitalism.
ICSA's G. Bala Reddy, Bliss GVS Pharma's S.N. Kamath, Orbit Corp's Ravi Kiran and Pujit Aggarwal and Shree Ganesh Jewellery's Parekh brothers are just some of the first-generation entrepreneurs who overcame teething problems to kickstart their dreams.
Their businesses may not be the largest in terms of geographical presence or revenues, but they are an agile bunch of fiercely competitive leaders. What's common is smartness, innovation and, to a large extent, simplicity. Some only have a few years of experience, while others have been around for decades. But most of them have carved out niches that no one else was smart enough to spot or quick enough to pounce on. Take, for example, the Hyderabad-based ICSA, a transmission distribution losses management company. The company sniffed growth in the business of smart meters and smart grids, a technology that is in its nascence in India but is widely accepted all over the world.
Similarly, Mumbai's Bliss GVS Pharma, which specialises in drugs that are delivered through non-oral routes. It has made its presence felt in a segment that hardly has any strong competitors. Large-diameter steel pipe maker Welspun Corp rode on the back of increasing oil and gas exploration, and managed to snap some of the most popular projects even in the face of cut-throat competition through backward integration and local presence in different countries.
These players, like many others included in this week's issue, are those who either have operations in niche or uncommon markets or are into common markets with uncommon business ideas. But the list is by and large a true reflection of what's going on in the Indian economy. What is driving corporate growth? Which sector is buoyant? In a nutshell — what's hot and what's not! No prizes for guessing this one. As many as 13 companies from among the top 20 (five each under four categories) are from the infrastructure, metals or power sectors leveraging the huge uptick these sectors have seen in the past five years as the Centre accelerated spending on infrastructure.
The Super Heavyweights
1. Idea Cellular
2. Punj Lloyd
3. Coromandel International
5. Welspun Corporation
1. Shree Ganesh Jewellery House
2. ICSA (India)
3. ARSS Infrastructure Projects
4. Essar Logistics
5. BGR Energy Systems
1. J Kumar Infraprojects
2. Zee News
3. Carrier Airconditioning & Refrigeration
4. Leadage Alloys India
5. Educomp Solutions
1. Orbit Corporation
2. Arshiya International
3. Action Ispat & Power
4. Gallantt Metal
5. Bliss GVS Pharma
Super Heavyweights: FY 2009-10 sales >Rs 5,000 crore Heavyweights: FY 2009-10 sales Rs 1,000-4,999 crore Middleweights: FY 2009-10 sales Rs 500-999 crore Welterweights: FY 2009-10 sales <Rs 500 crore
And the future looks equally rosy for them. In the 2011 budget alone, the government allocated Rs 2.14 lakh crore for infrastructure projects — 48.5 per cent of the total planned allocation. Over the next few years, this money will be invested in development of infrastructure from roads, flyovers and railways to urban construction. The 12th Five-year Plan has also proposed a $1.02 trillion or Rs 40.99 lakh crore investment in infrastructure, representing about 9.95 per cent of India's GDP.
Separately, in order to boost infrastructure development, the government announced tax-free bonds of Rs 30,000 crore, which are proposed to be issued by government undertakings during 2011-12. The corpus of Rural Infrastructure Development Fund was also raised from Rs 16,000 crore to Rs 18,000 crore.
The Other Rangers
Other sectors that had a healthy representation among the top 20 in each of the four categories are pharma, telecom, real estate and media companies. Old favourites such as IT had little representation in the top 20 as the industry struggles to maintain its growth. Sectors such as pharma and entertainment and media are also seen as potentially high-growth sectors. According to a McKinsey report, the Indian pharma market is expected to grow from $12.26 billion or Rs 55,170 crore currently to $20 billion or Rs 90,000 crore by 2015.
The entertainment and media sector, meanwhile — fuelled by rising incomes of youth in India — is expected to grow at 14 per cent CAGR to Rs 1.27 lakh crore or $28 billion, from its current size of Rs 65,200 crore or $14.48 billion in 2010, says a Ficci-KPMG report. Growth in sectors such as real estate, media or consumer electronics is still to accelerate to return to growth levels of 2007-08.
Another striking fact that emerges from this study is that India is still not a homogeneous market. It is a collage of interconnected regional markets, each one with its own set of investment climate and challenges. Many among these companies have managed to understand the local flavour so well that they have practically turned into regional barons by leveraging the geographical opportunities better than their peers.
A closer look at these companies will reflect that they cluster not only in metropolises such as Delhi and Mumbai, but also small towns in Andhra Pradesh or Maharashtra where costs are still low, competition not that intense and which are still considered ‘business friendly' in terms of land availability and cost-effective workforce.
Their stronghold over regional opportunities, sometimes driven by proximity to politicians and bureaucrats; understanding of local laws and incentives; and their ability to mobilise local workforce have so far worked to their advantage. However, as they dream of a national footprint, their challenges would grow manifold. While some will overcome these to become national players, others may slink back to their dens. At the same time, there are others such as Arshiya International — which provides end-to-end logistics and supply chain services — that are looking at a pan-India presence right from the start.
But even if these peculiarities settle down, India's future lies in consistently providing as enabling an environment as possible to keep churning more Agarwals, Mittals and Reddys.
(This story was published in Businessworld Issue Dated 23-05-2011)