INDIA’S THE growth engine

Unilever, Philips, Nestle, PepsiCo, Coke, GM, VW & Microsoft bet big on country

John Sarkar & Mansi Tiwari NEW DELHI

A FEW weeks ago, a senior Hindustan Unilever (HUL) executive sat hunched over his computer screen, poring over an e-mail from Paul Polman, CEO of consumer goods major Unilever. "None of us should underestimate how tough the next year will be," Polman had written. "We need to think growth in everything we do," he urged. And if the HUL executive is to be believed, Polman's words weren't exactly generalisations.
    Developing markets, a major chunk of which is India, make up almost half of Unilever's group sales. And hit by the global economic recession, demand for consumer goods in the US and European markets are unlikely to bounce back anytime soon. The same applies to other sectors as well. Consider this: In the appliance category, industry estimates revealed that the US market has declined by around 25-30% and demand has also fallen by 20-35% in main European markets. As a result, most companies — from auto makers to shampoo sellers — are resorting to scrapping targets and cutting costs. For instance, South Korean consumer durable firm LG Electronics has recently proposed to cut costs by $2.2 billion globally. And Unilever just scrapped its targets. Big decisions these, but where do they lead the MNCs?
    India is the likely answer. And here's why: Both Polman and LG's CEO Nam Yong told reporters recently that despite the slowdown their developing markets are still growing. And closer home if hints from these MNCs are anything to go by, the domestic market still offers plenty of opportunities. Moon B Shin, LG Electronics India's MD said: "Compared to other markets India is not much affected by recession and its projected growth rate is quite positive. India is a very strategic market for
    LG globally and I personally believe that if a company is strong in India and is a market leader, it will be able to do well globally as well because India is a mix of various countries due to its diversity." And Shin, who expects a growth of 15% this year, isn't the only one to believe that India can deliver. Senior officials in MNCs such as, Philips Electronics, Nestle, PepsiCo, The Coca-Cola Company, Wrigley, General Motors, Volkswagen, Microsoft, Perot Systems, Nokia, Dell and Samsung are also on the believer's list.
    Murali Sivaraman, CEO & MD of Philips India, told SundayET that he has been briefed by his Netherlands-based headquarters to drive growth for his company. "My brief is to drive growth, quarter by quarter," Sivaraman emphasised.
INVESTMENTS FOR INDIA
Rs200Cr WRIGLEY
Rs600Cr NESTLE
Rs2,500Cr PEPSICO Indian market to fuel growth for MNCs
WE will be hiring more people and branching out into new areas soon." Similarly, a senior official with confectionery firm Wrigley India held up Sivaraman's point. "This is among the top four focus countries for Wrigley," he said. "The companies that have been in India for a long time are now looking at this market to drive growth for the parent. And this is not because India is a stable economy, but because other economies are not doing well."
    So how important is India for these MNCs? Says Rajan Anandan, MD, Microsoft India: "The economy has a healthier outlook in India than in many economies around the world — as segments like the public sector and telecom continue growing, as do areas like education. And given that India is key to Microsoft both from a talent and market perspective, the company will continue to invest in long-term growth and innovation in the country."
    Talking about investments, here is a quick glimpse: Chicago-based Wrigley plans to invest close to Rs 200 crore in the Indian market in the coming year. Nestle has plans of investing close to Rs 600 crore in another 2-3 years.
    PepsiCo on the other hand plans to invest a much larger Rs 2,500 crore over the next three years. Even consumer durable firm Samsung is ready with Rs 100 cr this year with close competitor LG planning an infusion of Rs 200 crore.
    And even in the automobile sector, certain MNCs are busy ramping up operations here while Detroit and the rest of the world bleed. "Carmakers such as Hyundai, Volkswagen (VW), General Motors (GM) and Fiat are likely to up the ante in India," says Ian Fletcher, a UK-based auto analyst with IHS Global Insight.
    "Many global automakers still have a largely limited exposure to the Indian vehicle market, so there are still chances for them to grab market share from more established local competitors," he adds. General Motors, for instance, is looking to launch a cheaper model than its current popular Spark model. It is also not hesitating to invest, which will eventually see it turn its operations in to an engine and transmission hub for the Asian region. When contacted Karl Slym, president & MD of GM India agreed. "We are ramping up assertively and all our plans for India such as, opening new plants and launch of new models are on track," said Slym.
    Fletcher also forecasts that Korean carmaker Hyundai will benefit locally and in the export market from the i20 as it has done with the i10 already. And that due to some automakers toning down their planned investments (Nissan/Renault), or pushing their completion dates further into the future (Toyota, Honda) — auto firms such as, Volkswagen (which should be opening its new plant in the next few months) and Fiat (which has also ratcheted up its investment with Tata) will get room to find their feet as they expand their own market share in the country.
    And the others are not too badly off either. Sample this: Muhtar Kent, the president & CEO of cola major Coca-Cola Company, wants India to be one of the top five markets for his company. Close competitor PepsiCo is pushing its local arm to triple its business here in the next five years. Points out a PepsiCo India official: "A testimony to India's growing significance is the recent visit by the 26-member PepsiCo executive committee to India. And our recent elevation to a 'region' status also shows the increasing importance of the India business in the global context."
    Sameer Garde, country GM, Dell India has no qualms in saying that India is among the most important commitments for the PC maker. Says Garde, "India has been among the fastest growing Dell markets. We believe that the next one billion users to come online will mainly be from the emerging countries such as China and India. Dell has more employees in India than any other location outside of the US. We have seen tremendous growth here and will continue with significant initiatives."
    And Garde is bang on target, feels Anurag Jain, MD for APAC, Perot Systems, a US-based IT solutions provider. "The financial epicenter of the world is moving eastward," he says. "There has been approximately 50-60% jump in the Indian revenues."
    And this is just the tip of the iceberg, feel experts. And who better to sum it up than Unilever's Polman, who says that in 20 years' time the BRIC countries along with Mexico, Indonesia and Turkey will constitute a population of 6 billion plus — equal to today's global population, with most likely a significantly higher level of wealth. Well, now with all these plans on the anvil, the slowdown doesn't seem all that slow anymore, does it?

We need to think growth in everything we do. None of us should underestimate how tough next year will be
Paul Polman,
CEO, Unilever

We are ramping up our operations assertively and all our plans for India are right on track
Karl Slym,
President & MD, GM India

My brief is to drive growth quarter by quarter. We'll be hiring more people & branching out into new areas
M Sivaraman,
CEO & MD, Philips India

Compared to other mkts, India is not much affected by recession & its projected growth rate is positive
Moon B Shin,
MD, LG India

We want India to be one of the top five markets for our company in the future
Muhtar Kent,
President & CEO, Coca-Cola Co

India set to beat China in growth rate

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NEW DELHI : All it the brighter side of the current downturn. India may pip export-dependent China in the last quarter of FY09 and emerge as the Global crisis sparks unrest in Europe Jobless rolls at record high fastest growing nation among all large economies. As China's GDP growth rate dropped to 6.8% during the October-December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China. If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories. Already, government officials in India have been highlighting reports of a few investment analysts who doubted China's official GDP numbers and claimed that it could just be in the positive territory in the last quarter. Also Read  → S&Ps sees India's economy improving by mid-July  → Inflation declines to 5.07% on cheaper food & metals  → World economy in unprecedented crisis: RBI  → Forex reserves rise $990 m A secretary in the government of India confirmed to SundayET that India has a brighter chance of overtaking China in the last quarter of FY09, or Q1 in case of China which follows the calendar year. "China is heavily dependent on exports and the way things are unfolding China's GDP for January-March quarter would be quite low. We have so far achieved 7.9% and 7.6% growth in the first two quarters, according to the provisional numbers. Though our Q3 number, to be announced by month end, is expected to be less than the comparable number in China (6.8% in Oct-Dec, 08), the softening of interest rates will stimulate demand and ensure a faster growth rate than China in Q4," he said. Though the Chinese economy grew at 9% during 2008, down from the revised 13% growth rate in 2007, the last quarter number (6.8%) has made the Indian authorities hopeful that India might be able to pip China in GDP growth. As China's export constitutes 37% of its economy against 13% in the case of India, the recession in the developed world will make China suffer the most. PM's economic advisory council (EAC) member Satish C Jha said he won't be surprised if India grew faster than China. "The situation in China is worse than us. Exports are drastically coming down and China is hit hard. Our economy is driven more by domestic demand and our rural economy is much more resilient than that of China. If our stimulus packages are implemented properly, I won't be surprised if India pips China in GDP growth," Mr Jha said.

India set to beat the Dragon in growth rate

Export-dependent China posts lower GDP rise at 6.8%

Shantanu Nandan Sharma NEW DELHI

CALL it the brighter side of the current downturn. India may pip export-dependent China in the last quarter of FY09 and emerge as the fastest growing nation among all large economies. As China's GDP growth rate dropped to 6.8% during the October-December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China.
    If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories. Already, government officials in India have been highlighting reports of a few investment analysts who doubted China's official GDP numbers and claimed that it could just be in the positive territory in the last quarter.
    A secretary in the government of India confirmed to SundayET that India has a brighter chance of overtaking China in the last quarter of FY09, or Q1 in case of China which follows the calendar year. "China is heavily dependent on exports and the way things are unfolding China's GDP for January-March quarter would be quite low. We have so far achieved 7.9% and 7.6% growth in the first two quarters, according to the provisional numbers. Though our Q3 number, to be announced by month end, is expected to be less than the comparable number in China (6.8% in Oct-Dec, 08), the softening of interest rates will stimulate demand and ensure a faster growth rate than China in Q4," he said.
    Though the Chinese economy grew at 9% during 2008, down from the revised 13% growth rate in 2007, the last quarter number (6.8%) has made the Indian authorities hopeful that India might be able to pip China in GDP growth. As China's export constitutes 37% of its economy against 13% in the case of India, the recession in the developed world will make China suffer the most.
    PM's economic advisory council (EAC) member Satish C Jha said he won't be surprised if India grew faster than China. "The situation in China is worse than us. Exports are drastically coming down and China is hit hard. Our economy is driven more by domestic demand and our rural economy is much more resilient than that of China. If our stimulus packages are implemented properly, I won't be surprised if India pips China in GDP growth," Mr Jha said.
    shantanu.sharma@timesgroup.com 

Vision India 2014

Elections are a good time to look back and look ahead. It has been that both the last two governments have completed their terms. So, India 1999 is what we can remember, as also India 2004. And now we are at India 2009. Looking ahead, what do we want India 2014 to be like? Five years is a long time for change to happen.

As a tech entrepreneur, for me, one of the disappointments of the past 5 (perhaps, even 10) years has been the slow penetration of the wireline Internet and broadband in our lives. That's one thing I'd like to see change in the next five years. On the flip side, the amazing growth in mobiles has been a great success story - even though we keep playing with the telecom policy every so often. But what we have seen so far is only the voice revolution. The data revolution (powered by 3G, 4G and broadband) is yet to arrive in India.

Three questions for you to think and answer:

• What do you think is the biggest change from India 2004 to India 2009?
• What has been the biggest disappointment of the past five years?
• What is the Big Change you'd like to see from India 2009 to India 2014?