Wipro sells soaps and perfumes…

Having read the following piece (http://publication.samachar.com/pub_article.php?id=6362247) I was reminded that many of the firms that we see in the top rankings of India’s business pages actually started life as something totally different.

Understanding their evolution helps, at least in my opinion, to understand the Indian business landscape a lot better.

There are some notable examples:

For example, as the article states, Wipro actually started off as a consumer goods firm that sold cooking oil and soap to Indians, it was only in 1980 that Azim Premji had his eureka moment and decided to change tack and add an IT business to his group. Subsequently – as we all know – that’s what Wipro’s become known for, but it still stands true that Wipro has a thriving consumer goods business, also.

The other is KV Kamath, who turned a boring development finance agency into a juggernaut in the banking sector. Whilst this doesn’t doesn’t seem to be a major divergence today, in those days it was a huge leap he had to take to make the transition.

My final example is that of Sunil Mittal’s Bharti group, which today is best known for its mobile phone business, but I have no doubt that in a decade or so, we’ll be wondering how he made the leap from telecoms czar to retail guru, with thousands of supermarkets scattered all over India, selling groceries, vegetables and all kinds of stuff that the discerning Indian shopper wishes to buy. Let’s not forget he’s done this before, after all he had a successful venture selling bicycle parts in the 70s and then electricity generators in the 80s.

Of course, we could go into the TATA story just as well, but the point of writing this piece was simply to highlight the fact that these companies have incredible histories, which if you read into and factor into your dealings, makes doing business with them a lot more meaningful.

Are foreign banks interested in the 1 Rupee loan?

Now that the dust from the Indian election has settled and portfolios have been allocated, with the Finance Minister going to Pranab Mukherjee, the question on everyone’s mind concerns whether we’re actually going to see reforms in various industry sectors. In particular, the one that interests me is the financial services industry.

In her joint address of the Indian Parliament last Thursday, President Pratibha Patil spoke of (a) the need to create a new pensions regulator, (b) easing foreign direct investment for international banks, and (c) the disinvestment of various public sector undertakings.

Whilst some of the largest international banks and insurance companies are already there, will the existing stakeholders – including the Indian banking fraternity allow this to happen? Lack of progress, only, holds back plans to make Mumbai an international centre for financial services.

It may be true that British insurers like Aviva, the Pru, Standard Life, Royal & Sun Alliance, and Legal and General have successful partnerships with Indian firms like Dabur, ICICI etc, but they’re held back from further expansion mainly as a result of the 26% cap on foreign ownership. Mr. Chidambaram, former Finance Minister, even commented that insurance penetration in India as being “pathetically low”. And that India must “move along with the rest of the world”.

With critical reforms not taking place, the insurance markets are dominated by inefficiency; stifling innovation and competition; and limiting expansion of life and health insurance to rural areas.

In the banking sector too, foreign banks have earned a good reputation . HSBC, Barclays, Standard Chartered all have a significant presence in India but the expansion of these and other international players is held back by high capital requirements, equity caps on foreign ownerships, restrictive limitations on new branch licenses, and burdensome licensing procedures.

With a population in excess of 1 billion, India allows only 12 new banking licences per year!

Indeed the need for further reform of the Indian banking sector is highlighted by the fact that only ten of the 27 publicly owned banks are fully computerised!

Whilst HMG will continue to push for change, I believe that the Indian financial services community also stands to benefit from reforms and should push for it.

Not so long ago, KV Kamath, ICICI Bank’s Chairman made a point to me that made me think. He argued that the Indian banking environment and opportunity is limited for international banks for the reason that he didn’t believe that a HSBC would be interested in providing a 1 Rupee Loan to a villager living in the remotest part of India.

In defence of globalisation, wouldn’t it be great if the option existed? They may not want to participate in the growing micro-finance opportunity, but surely that’s a commercial decision for them.

Indian Entrepreneurship – Lakshmi Mittal, the trailblazer

Was invited to the Emerging India awards yesterday evening with global icon Lakshmi Mittal in attendance and Trade Ministers from India and the UK -Kamal Nath and John Hutton playing second fiddle to an audience comprising some of India’s best SME’s, who had flown all the way to this prestigious awards ceremony that celebrates India’s talent in nurturing entrepreneurs.

Lakshmi Mittal, in his keynote address, spoke of his challenges when he was first starting out in the steel business. He recollected how the production of his first tonne of steel brought a profound sense of satisfaction that even his 110 million tonne Arcelor Mittal doesn’t match.

In his address, Kamal Nath highlighted: “…with the internet and a Fed-ex account, SME’s are able to compete with some of the world’s biggest companies.” As the promoter of a SME myself, I couldn’t agree more.

India’s banker – KV Kamath, CEO of ICICI Bank paid a tribute to Indian entrepreneurship and highlighted that the number of SME’s applying for an award had gone through the roof. With 20,000 applications made in the first year, this year, a staggering 300,000 Indian SME’s had applied in 10 categories!!

We’ve all heard key statistics that make Indians tick – for example, India has a population of over 1 billion, a middle class bigger than the entire population of America, or more engineering graduates than all European countries put together etc, but the one fact about India that knocks me off my feet everytime is that India is a young country. Simply put, there are more young people in India than China and almost everywhere else.

I’ve posted a blog previously in which I explain that certain traits are built into our DNA. I believe that entrepreneurship is exactly one of those traits that is built into Indian people. I can confidently predict that the trend of Indian entrepreneurs taking on and winning global boardroom battles, like Lakshmi Mittal, has only just begun.