Check out the speed. After charting out a high-octane growth curve, India Inc is changing gears and getting into a diversification mode, spotting the booming business domains. In fact, in an aggressive hunt for growth areas, many Indian companies of various sizes and scales have made a serious attempt to join the bandwagon and branch out to new businesses.
THE MUCH AWAITED BANDRA WORLI SEA LINK PROJECT HAS TRIUMPHED DESPITE FACING MANY HURDLES. THE SEA LINK WILL BE OPENED TO PUBLIC TODAY, REPORTS RAHUL KHILNANI
Mahim Causeway was the only link connecting the island to the western suburbs till date. It is estimated that almost 1, 40,000 vehicles use this route every single day during peak hours, crossing over 23 signals to reach Worli, causing incessant traffic jams. This, however, is all set to change as the much awaited Bandra Worli Sea Link (BWSL) will open to public today. This link aims at alleviation of traffic congestion in Mahim-Dadar-Worli areas besides providing relief at Mahim Causeway. The construction of this link, which was conceived in the Wilbur Smith study in 1962 and subsequently recommended by traffic studies carried out by the Central Road Research Institute (CRRI) and Mumbai Metropolitan Region Development Authority, forms the first phase of the Western Freeway extending from Bandra to Nariman point. The project was finally implemented by the Maharashtra State Road Development Corporation. BWSL begins at the Mahim Interchange and joins the Khan Abdul Gaffar Khan road. The link connects Bandra to Worli sea face by a 4 km long bridge in the sea and an approach road about 1.6 km long on the Bandra side. The bridge includes two cable stayed bridges of lengths 500 m at Bandra with its pylons rising to a height of 128 m above sea level and a 350 m bridge on the Worli side. Apart from this the link also boasts of a modern toll plaza of 16 lanes. This colossal project costs around Rs 1,634 crores and aims to save fuel to the tune of Rs 260 crore annually. SALIENT FEATURES First such sea link in India First Cable Stayed Bridge of 500 mtr length in India 5.6 km long bridge Four lanes on each side Modern toll plaza Separate lane for BEST buses in each direction Height of the main pylon is 130 mtr, which is equivalent to a 60 storied building Weight of the bridge is equivalent to 50,000 African elephants, each weighing at least 5 tones each. 20,00,000 cement bags were used for this bridge The total length of the bridge is approximately equivalent to the circumference of Earth, around 40,000 km 35,000 M tonnes of steel was used in the project It is noted as one of the miracles out of ten by American Journal Business Week The bridge will be extended from Worli to Haji Ali and then to Nariman point. Constructed by contractor M/s Hindustan Construction Co for MSRDC The Hercules, one of the largest water cranes in the world, was used during the final phase of this project.
We have worked on the sea link in such a way that it will be benificial to one an all even in the future - Er T Raman Executive Engineer, MSRDC
NO MATTER how dramatic the opening ceremony for the Bandra-Worli Sealink, it's unlikely to match the drama that surrounded the opening of the Sydney Harbour Bridge in 1932. The physical prominence of bridges and their (usual) utility make their opening ceremonies irresistible for grandstanding politicians, but on this occasion their glory was stolen. Just as Jack Lang, the premier (chief minister) of New South Wales, was about to cut the ribbon, a man in military uniform charged on a horse and cut the ribbon and declared the bridge open in the name of the people of Australia. Immediately arrested, he confessed to being the member of an ultra right-wing paramilitary group that was opposed to Lang's leftist policies, and was also angry that the King of England had not been called to open the bridge. One can imagine sundry local chauvinists kicking themselves for not thinking of doing the same. Such theatrics should not be surprising; the symbolism offered by bridges is too tempting to be ignored. Mythology is replete with symbolic bridges to be crossed, like the Zoroastrian bridge over boiling metal that all souls must cross, with the crossing becoming harder or easier according to their load of sins. The European Union made full use of bridges when the euro was launched; the first images on the notes were of bridges, partly as rhetoric about bridges between countries, but perhaps also to emphasise them as images of stability over the rough water of financial turmoil. Occasionally, the symbolism can be charming, like the folk tradition of Ram thanking the squirrel that helped build his bridge to Lanka by stroking it, and forever leaving the mark of his fingers on its back. More often though, the symbolism of bridge openings is sinister. The water spirits, which must submit to the bridge being built, demand a sacrifice, and these have been made. When an ancient bridge in Germany was demolished, the skeleton of a child was found in its piers. The nursery rhyme 'London Bridge is Falling Down' is conjectured to be an echo of this, an unsettling thought as we watch our children catch the last one through their bridge of arms. Bridges stand over the untamed forces of the natural world, and these are prone to demand their tribute, either as the bridge is being built (they are notoriously dangerous for workmen), or after in the form of suicides that are always drawn to bridges. Rudyard Kipling used this idea to powerful effect in his story 'The Bridge Builders'. In it, a British engineer of a bridge over the Ganges is caught in a flood that threatens to demolish his work. In an opium-fuelled daze he imagines Ganga, in the shape of a great river crocodile, demanding the bridge fall, and the great Indian gods — Shiva, Indra, Kali, Hanuman — debating it, before Krishna comes to tell them that they can't halt progress and that the bridge will stand. Sealink set to change the lives of local fishermen IT IS typical Kipling, combining a positive imperial message, with a visionary understanding of the eternal forces that underlie the vision of order that the bridge represents. Not surprisingly, most bridge opening ceremonies extol order. Some elements are common: long speeches, the presence of presidents, kings and queens, musical tributes. Flotillas of boats, usually accompany openings, to underline how their element, water, is being superseded by the earth which the bridge represents. Sometimes people are allowed special permission to cross on foot, but the Sealink's makers seem adamant about never allowing walkers on the bridge. Runners might be different, since apparently, there's a plan to take the Mumbai marathon over the bridge. This was done for the opening of the Oresund Bridge which connects Sweden and Denmark, the longest border bridge crossing in the world. A special half-marathon was held to include the bridge's 7,845 metres, the longest road-rail bridge in Europe. An ever more testing crossing was done on the Brooklyn Bridge, not exactly at its opening, but a week after, when rumours spread that it was about to collapse, causing a stampede in which 12 people were killed. To reassure the people, the great circus impresario PT Barnum led a parade of 21 of his elephants across the bridge! Fireworks are common for the practical reason that bridge spans provide particularly good platforms for fireworks that can be seen by people on the shore. Some bridges are known for their fireworks, like the Sydney display, which traditionally ushers in the first big chronological New Year celebration of the year, seen on TV screens around the world, as other places prepare for midnight. But there also seems to be an elemental appropriateness of using such a tremendous display of fire to consecrate a symbol that pits two other elements, earth and water, against each other. What would have been appropriate for the Sealink, other than the standard laser and firework display that took place? Perhaps, a moment of triumph should have been allowed for the most unlikely victors in its building — the small fishing community of Worli. Thanks to their objections, the whole structure was radically changed, to raise the bridge enough to let their boats through. And rather than landing at the logical place, at the Worli end of Mahim Bay, in the middle of their village, the bridge now shoots past, at immense added expense, to jut into the sea, and then turn abruptly to meet the road on Worli Seaface. The actual benefit to the fishermen is somewhat ambiguous. The bridge's piers have probably ruined their fishing, and their lands will probably soon be overrun by entrepreneurs eager to cash in on the bridge view with hoardings or sea-facing restaurants. Whether their lives will benefit or not from this is debatable, but it's unlikely ever to be the same again. Perhaps after Mrs Gandhi opened the bridge, the fisherfolk could have been allowed one special trip across to savour this peculiarly Mumbai solution, muddled and costly, replete with murky monetary schemes, and yet somehow impressive in the end. vikram.doctor@timesgroup.com
FMCG, electricity & coal grow in April; Budget to give a boost
POSITIVE growth numbers in a few key sectors coupled with fresh FII and FDI inflow may place the India story on a faster track. Both the government and industry, which are now betting on non-export driven sectors thanks to the renewed domestic demand, are hopeful that India would be able to tide over the current slowdown faster than anticipated earlier. And a little boost from the forthcoming Budget may make the case even stronger. Whereas industrial output surged 1.4% in April, 2009, what has really made the government confident is unexpectedly good numbers in a few sectors of the economy. The growth in food and beverages segment was as high as 21.7% in April as compared to the same month last year. Similarly, FMCG registered 19% rise in April and for electricity, the growth was 7.3%. The growth in the coal sector was 13.2%. Explaining the numbers, department of industrial policy and promotion (DIPP) secretary Ajay Shankar told SundayET that the government was hopeful of a faster economic recovery because of very good numbers of some sectors during April. "Even electricity numbers which were so disappointing for earlier months strengthened in April. FMCG and F&B were, however, the two major strengths in industrial output numbers," he said. He added that those numbers coupled with $8.5-bn FDI during the first four months of the calendar year brought fresh hope to the economy. Looking at development as a holistic picture IN FACT, India attracted foreign direct investment (FII) of $5.3 bn during April and May. The positive FII numbers in these months were recorded after the net FII outflow for eight consecutive months. Dr Rajiv Kumar, director of Indian Council for Research on International Economic Relations (ICRIER), however, gave a counter-view saying that these good numbers could not be seen in isolation. "A few sectors might have done exceptionally well, but there must be huge negatives in export-dependent sectors such as gems and jewellery and textiles. One needs to look at the picture in a more holistic manner," Mr Kumar said. Videocon group chairman Venugopal Dhoot agreed that export-driven sectors were a matter of concern as India had not aggressively bailed out the sector the way China did. He, however, said that two major stimulus packages of the government succeeded in putting money into the pockets of those living in the bottom of the pyramid. "People in rural and semi urban areas are spending heavily, and that's where the growth now is coming from. The sectors which are dependent on domestic consumption are bound to grow better in coming months," he said. He further said the formation of a stable government has also contributed to the level of confidence. The real estate sector in India, severely hit by the global economic tsunami, is seeing growth and it could make a comeback much faster than expected. Niranjan Hiranandani, MD of Hiranandani Developers, argued that the resurgence of construction and real estate were imminent which would push growth for other industries as well. He talked about construction sector's potential to create a cascading effect as it would boost demand in sectors such as cement, steel, bricks, aluminium and labour to name a few. According to Motilal Oswal, chairman & MD of Motilal Oswal Financial Services, the growth in the manufacturing sector is a good indication of the economic revival but the bigger pie will come from services sector as it constitute about 60% of the GDP. In terms of the market performance, sectors such as FMCG, food & beverages, electricity would continue to do well. The World Bank, in a report released a few days ago, projected an 8% growth for India in 2010, ahead of China's projected growth 7.7% thereby forecasting India to be the fastest growing country among all large economies of the world. In fact, the Indian economy had grown by 6.7% in FY09 though the country was also hit by the global economic turmoil. (With inputs from Neha Dewan & Anand Rawani) shantanu.sharma@timesgroup.com
THE World Bank has projected an 8% growth for India in 2010, which will make it the fastest-growing economy for the first time, overtaking China's expected 7.7% growth. The multilateral lender has revised upwards the growth rate for the Indian economy this year to 5.1% from an earlier projection of 4%, according to its Global Development Finance Report released on Monday. India has consistently outperformed growth forecasts by the World Bank in the past. The prospects for the global economy remain 'unusually uncertain' despite recent signs of improvement in some parts of the world, the report points out. Barring a few countries, including India and China, the bank has cut 2009 growth projections for all other economies and expects the world economy to contract by 2.9% this year. "Developing countries are expected to grow by only 1.2% this year, after 8.1% growth in 2007 and 5.9% growth in 2008. "When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6%, causing continued job losses and throwing more people into poverty," the report said. The report calls on governments around the world to be vigilant when drawing up strategies to reverse the recent expansionary monetary and fiscal policies once the world economy takes off. The bank has urged rich countries to boost the flow of credit to developing nations to help speed up economic recovery. "Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit," said Justin Lin, chief economist at World Bank. Despite the gloomy picture for this year, the bank says growth in developing countries, led by India and China, could reach 4.4% in 2010 and 5.7% by 2011. Since global growth will only return to its full potential by 2011, the gap between actual and potential output, unemployment and disinflationary pressures continue to build, the report adds. This World Bank report compares with a more upbeat assessment by the International Monetary Fund, which said last week the decline in global output has moderated and it may raise its 2010 growth forecast for the world economy. World Bank growth forecast for 2009 5.1% INDIA 7.2% CHINA -3% US -6.8% JAPAN -4.5% EU
In late May, when India's GDP numbers were released, many were happily surprised. In the fourth quarter of the fiscal year (January-March 2009), the economy grew 5.8% against expectations of less than 5%. For the year, growth was 6.7%, less than the 9% recorded in 2007-2008, but still very respectable during a global downturn. Multinational banks and brokerage houses rushed back to their spreadsheets to raise their growth forecasts for 2009-2010.
But why were the estimates so pessimistic in the first place? A possible explanation is that most analysts work in cities, and their views are colored by what is happening around them and in the corporate world. That picture has been bleak: During the last quarter of 2008-2009, manufacturing shrank 1.4%. In contrast, agriculture grew 2.7%. The feel-good factor in urban India is returning only now with a new, stable government and a sharp jump in the Bombay Stock Exchange Sensitive Index (Sensex).
In the villages and small towns, it has been a very different picture. "The rural market is insulated from the global meltdown," says Harish Bijoor, CEO of brand and business strategy consultants Harish Bijoor Consults. "The rural part of our economy has been untouched by credit cards and mortgages as known in the West."
"The slowdown experienced by India on account of the IT (information technology), real estate, financial services and automobile sectors was an urban phenomenon," says Ajay Gupta, founder and CEO of ruralnaukri.com, which focuses on jobs in the rural sector. (See "ruralnaukri.com's Ajay Gupta: 'Rural Jobs Can Provide Momentum to the Wheel of the Economy'"). "However, the negative impact of all this on urban India has been more than offset by encouraging performance in rural areas. The rural economy has provided a cushion. Overall sentiment in the country was different from other parts of the world where each household had at least one person with a pink slip."
"Several factors have led to an increase in rural purchasing power," says Pankaj Gupta, practice head, consumer & retail, Tata Strategic Management Group. "The increase in procurement prices [the government sets the minimum support price -- MSP -- for many farm products] has contributed to a rise in rural demand. A series of good harvests on the back of several good monsoons boosted rural employment in agricultural and allied activities. Government schemes like NREGS [National Rural Employment Guarantee Scheme, which guarantees 100 days of employment to one member of every rural household] reduced rural underemployment and raised wages. Also, farmers benefited from loan waivers [introduced in the last Union Budget]. The increase in rural purchasing power is reflected in rural growth across a number of categories. For example, in the financial year 2009 [April-March], FMCG [fast moving consumer goods] rural volume growth is estimated to be 5% to 12% higher than urban growth across a number of categories."
A Short-lived Renaissance?
Some academics agree with these upbeat views of a rural resurgence. "Policy measures like the waiver of agricultural loans to the tune of US$13.9 billion and the NREGS have really put cheer into the rural economy," says Devi Singh, director of the Indian institute of Management Lucknow (IIML). "The Bharat Nirman program with an outlay of US$34.84 billion for improving rural infrastructure is another step that has helped the rural economy. To some extent, the growth of organized retail can also be held responsible for the rural economy's growth, as this has ensured that farmers get a better price for agricultural produce. The MSP set by the government has been rising further, fuelling rural growth by putting more money into the hands of the rural population."
Singh adds a caveat, however. "While the statement that the Indian economy has been saved from the slowdown due to rural growth is true to a certain extent, this is not the only factor," he says. "India's growth has been fuelled more by domestic demand than exports. Also Indian spending and saving habits differ from other parts of the world. Indians by their very nature always save for their future and this holds them in good stead during times of crisis. The Indian buyer is more finance conscious than his global peer. The Indian banking system, due to the so-called non-reforms, is actually more resilient and the level of delinquencies is far lower than in other parts of the world."
Some observers are skeptical about the durability of rural demand. "There is a worrying groundswell of optimism that rural consumers will come to the rescue of an Indian economy which is in the midst of a sharp slowdown. This optimism may be misplaced," suggest consumer behavior expert Rama Bijapurkar and Rajesh Shukla, a senior fellow at the National Council for Applied Economic Research. Writing in business daily Mint, they continue: "Hearing phrases such as 'rural renaissance' or 'rural India to the rescue' makes us nervous. Such talk bears overtones of the 'Great Indian Middle Class' story of the 1990s, where we declared victory at least a decade before we should have." Their question: How sustainable, stable and volatility-free is the growth in income and consumption?
Bijapurkar and Shukla note that "periodically, India has seen a consumption spurt because of a one-time burst of a combination of events. This recent spurt seems no different. Over the past four years, the monsoon has been good; the support prices for crops have grown at 10% to 15% CAGR [compounded annual growth rate] in 2005-2008 compared with 2.5% to 4% in 2002-2005. In addition to a healthy flow of farm credit, there has been a one-time loan write-off of US$13.9 billion as well as a sizeable cash outlay from the NREGS. This doesn't show intrinsic growth in rural India: This growth is, instead, owing to a combination of acts of God and acts of government. What we must never do is make the same mistake with rural India that Western multinationals make with India as a whole -- assume that it will evolve the same way with a 10-year lag. The rural Indian market and consumer call for sophisticated new marketing strategies and paradigms, not a transplant of old ideas."
What Rural Means
Even as this debate continues, the term "rural" is being re-defined. "'Rural' is difficult to define any more," says Bijoor of Bijoor Consults. "Typically, from an Indian census point of view, rural has been defined with a 'deprivation' orientation, rural being a landmass without access to continuous electricity, water, the stock market. There has been a correction in this view, however. Marketers today define rural as people living a different lifestyle as opposed to that of those who have settled in the bigger cities and towns. Rural is defined as pastoral in nature and as a mass of people who relate their income closely to the lands they till or use to raise their cattle and livestock. I, personally, define rural differently. I believe rural is a mindset. Those who possess it are rural and those who do not are urban. To that extent, in Bangalore city, just off the old airport road, are a whole set of people who live by farming on their lands. If you visit their homes, their lifestyles are totally rural. Similarly, there are people who live in villages, who have access to the best of it all. These are urban folk. Rural is not a geography; it is a mindset."
"Definitions for rural India abound while the most convenient remains, 'anything that is not urban'," says Gupta of ruralnaukri.com. Singh of IIML adds: "Rural India comprises all places that are not urban." This definition by exclusion for what is the much larger part of the country has its roots in the government's own approach. "The Census of India defines urban India," says Gupta of TSMG. "Urban India constitutes places with a population of more than 5,000, a population density above 400 per square kilometer, all statutory towns, that is, all places with a municipal corporation, municipal board, cantonment board, notified area council, etc. and with 75% of the male working population engaged in non-agricultural employment. All non-urban is rural."
Such definitions leave marketers cold. "The traditional definition of rural may be of little use to marketers in terms of providing consumer insights," says S. Ramesh Kumar, professor of marketing at the Indian Institute of Management, Bangalore (IIMB). "Given the diversity of culture and lifestyle/aspirational changes that are taking place across non-metro consumers, the non-metro areas need to be segmented into tiers of varying urban orientation using psychographic and lifestyle analysis along with demographics. The digital 1 or 0 type of urban and rural definitions is unlikely to yield consumer behavior nuances. For example, district headquarters [towns] in Tamil Nadu are likely to be significantly different from those in Karnataka or Maharashtra."
Many others agree that census-style definitions are no longer enough. "My understanding of rural India is a less developed countryside where the infrastructure is primitive, houses are of mud or brick but rarely painted well, the primary source of livelihood is agriculture, employment opportunities in the organized sector are negligible, eating choices are restricted to home-cooked, simple food, schools are far away, health facilities are rudimentary and -- importantly -- the youth, while energetic and ambitious, are to be seen playing cards the whole day," says Gupta of ruralnaukri.com.
"We recognize rural India by certain characteristics," says B.N. Garudachar, general manager, corporate communication and investor relations at Voltas, a Tata group company in air-conditioning and engineering services. "These are: low population numbers, low median income, poor infrastructure [roads, electricity, communications], and agrarian rather than industrial activity. Such rural areas are within the sphere of influence of neighboring cities and metros. This influence determines their aspiration levels and their viability as markets."
Massive Market
View it as you may, few people dispute that the rural market is massive. According to Singh, 12.2% of the world's consumers live in India. "Rural households form 72% of the total households. This puts the rural market at roughly 720 million customers." Gupta of TSMG extrapolates the Census 2001 numbers and comes up with an estimate of 790 million. "Total income in rural India (about 43% of total national income) is expected to increase from around US$220 billion in 2004-2005 to US$425 billion by 2010-2011, a CAGR of 12%," he says.
Bijoor explains that this is entirely disposable income unlike what it would be in urban India. "If a farmer in rural Holenarsipura earns US$1, all of it is his to dispose off as he pleases. The same income in the hands of an urban person, who is possibly a tech worker, is actually not US$1 of disposable income. It is most likely 67 cents; the rest goes as tax. The farm economy, with zero-tax on farm income, creates far more disposable income. Buying power in the hands of the rural rich is higher than the buying power of the urban rich."
Gupta of ruralnaukri.com provides some telling statistics. "The purchasing power of rural India is more than half for fast moving consumer goods [US$17 billion]," he says. "The durables and automobile sectors contribute US$2.5 billion each, and agri-inputs (including tractors) about US$1 billion. Some 42 million rural households [use] banking services against 27 million urban households. There are 41 million Kisan credit cardholders [credit cards issued to farmers for purchase of agricultural goods] against some 22 million card users in urban markets. Be it automobile, telecom, insurance, retail, real estate or banking, the future drivers of growth are rural. No marketer can afford to ignore the possibilities of rural India."
Bijoor adds some growth numbers. "Our rural folk have bought a lot more of FMCG; this part of the market has grown at a robust rate of 23% [last year]," he says. "As durables shrink in urban India, the rural market is witnessing a 15% growth rate. Some 60% of the durables market lies in rural India. Telecom in rural India is growing at 31%." It depends on the product, of course. "Just the sheer population numbers don't mean very much from a marketing point of view," says Garudachar of Voltas.
Across product categories, however, there seems to be a lot of action. Media -- particularly TV -- has been a great leveler. Even in small villages, people who have seen the urban lifestyle on television seem to want similar goods and services. Companies have realized this and are going all out to tap this latent demand.
Consider some examples:
The State Bank of India (SBI) has started a zero-balance bank account program for villagers. Called the SBI Tiny account, there are no physical branches or officials, just a paid volunteer who is equipped with a small box and a cellphone. The box enables biometric measurements (fingerprints), at the time of opening the account to confirm the account holder's identity. The cellphone enables communication with the zonal office to check on available balance. Payments under programs such as the NREGS and pensions are made directly to these accounts. The advantage for the villagers is that they can withdraw money from their accounts at any time of the day or night. (Withdrawals are never more than a few dollars.) SBI hopes to cover 100,000 villages by 2012. The bank has tied up with India Post for some services.
India Post, the public sector postal network, has its own plans. It has been hard hit in urban areas because of the more efficient (though more expensive) private sector courier services. Now it is looking at consolidating its hold on the rural areas. Project Arrow has been launched to IT-enable post offices in the hinterland. A pilot project involving 500 post offices -- the country has more than 150,000 -- has been kicked off. It will focus on banking, money remittance, and transmission and delivery of information.
Products for Rural Markets
Maruti Suzuki, India's leading automobile manufacturer, today sells 5% of its vehicles in the rural markets. The company expects this number to rise to 15% in the next two years. "This is not just our wish, but reflects market demand," says director (marketing & sales) Shuji Oishi.
In telecom, service providers are making a beeline for the villages. That's where the growth in what is now the world's fastest growing mobile market lies. According to industry estimates, 70% of all new subscribers will come from rural areas. (See NTT DoCoMo's Tata Deal: Why Global Telecom Firms Want to Dial India.)
Mobile device manufacturers are also tailoring their products to this market. Nokia had earlier launched a basic handset with a torch (large parts of rural India don't have electricity) and an alarm clock. (see How Did Nokia Succeed in the Indian Mobile Market, While Its Rivals Got Hung Up?) In December 2008, it went one step further with the launch of Nokia Life Tools. "Nokia Life Tools is a range of agriculture, education and entertainment services designed especially for the consumers in small towns and rural areas of emerging markets," says the company. "Aimed at providing timely and relevant information customized to the user's location and personal preferences directly on their mobile devices, Nokia Life Tools is the first step towards bridging the digital divide."
The mobile phone is a new-age product; gold jewelry is as old as the hills. Here, too, there has been a rural move. According to World Gold Council figures, 60% of India's US$15 billion annual consumption of gold and gold jewelry is from rural and semi-urban areas. The Tatas have launched a mass-market jewelry brand -- GoldPlus. The Tatas train unemployed youth and send them to the villages as brand ambassadors. The problem with gold in India is that it is often adulterated. In rural areas, gold jewelry is not for ornamentation; it is a safety net for emergency situations. Thus, the Tata seal of good housekeeping is taking the brand places. "GoldPlus is an interesting example of the brand addressing the non-metro jewelry culture with its ethnic touch with regard to its designs and retailing," says Ramesh Kumar of IIMB.
"There is substantial scope to create products that are oriented towards non-urban sectors," notes Kumar. "These can be in terms of functional appeal or cultural aspects or both. Chik shampoo created the jasmine variant [in tune with the culture of women using jasmine flowers to style their hair in a few parts of the country]. TVS mopeds created functional value in tune with the 'all purpose' vehicle culture existing in several parts of the non-metro areas. Philips is moving forward with the creation of gas stoves and lanterns that will be useful to such markets."
Singh of IIML talks about pricing successes: The Chik shampoo sachets sells for 2 cents, the Parle G Tikki biscuit packs at 4 cents and the Coca-Cola 200 ml glass bottle for 10 cents. Singh notes that successes in rural areas can be transplanted to urban areas also. "The shampoo in sachets created a new product segment," he says. "All shampoo manufacturers today retail in sachets, and the demand from urban India for this category is very strong."
The sachet is as much a packaging (product) strategy as a price strategy. But, asks Garudachar of Voltas, have companies done enough about the core product? The shampoo sachet is a case in point. "Villages in India have hard water," he says. "But the shampoo that you get in sachets sold in villages is the same that you get in towns. Manufacturers should have tailored the products to suit the environment."
It doesn't apply across the board, of course, particularly as manufacturers have moved away from the mindset that along with cutting price, you can cut quality. "Product re-engineering was an issue five years ago," says Bijoor. "I do not believe this is an issue at all today. The quality on offer needs to be the same all over. One company tried to pass off inferior quality tea leaves in rural markets and superior quality grades for urban markets under the same brandname. This fell flat."
But re-engineering is necessary in a different sense. According to Bijoor, "Companies are realizing that the urban and rural want is largely the same. However, the rural person is savvier and demands real value for money. To offer this, marketers are re-engineering products. Look at the auto segment. The urban man wants a car as does the rural man. Both have the same amount of money. The rural person, however, believes spending US$12,000 on a car is a sin. He wants it at US$3,000. The Nano is a solution. Every category needs to operate on the Nano paradigm. The needs are all the same, across rural and urban. The solutions have to be different."
Distribution and promotional channels also need to be different for rural markets. Companies are getting their act together here, too. Private sector companies like ITC have set up the IT-enabled eChoupal network, and Hindustan Unilever has project Shakti, under which women's self-help groups act as the last link of the retail chain. (See Marketing to Rural India: Making the Ends Meet.) As mentioned earlier, India Post wants to convert itself into a retail chain for a variety of products. Even fair-price shops, which form part of the government's rationing system, are trying to expand beyond supplying just basic foods like rice and wheat.
In the area of promotion, television has invaded rural India. TV reaches even very small villages through community sets. But advertising on national channels is wasteful if you are trying to target rural areas. Garudachar of Voltas says his company is trying to sell air conditioners to the rural rich. "Difficulties in penetration are due to the widespread and scattered nature of the territory," he says. "At one time, basic conservatism and diehard thrift would also have been factors, but exposure to TV has changed all that, and created aspirations where once there was resistance to change."
From Four P's to Four A's
Gupta of TSMG notes that the traditional four P's of marketing -- product, price, place and promotion, as outlined above -- have been replaced by a different framework for analysis. "A number of companies have worked on various elements of the marketing mix to improve the four A's -- affordability, awareness, availability and acceptability -- for rural markets," he says. "FMCG companies innovated on package sizes to introduce low price points. They have customized promotional strategies for rural markets using local language and talent. Some FMCG players continue to expand rural penetration [HUL's Project Shakti, Tata Tea's Gaon Chalo]. Coca-Cola's Parivartan program has trained more than 6,000 retailers to display and stock products. Dabur has created a training module ASTRA [advanced sales training for retail ascendance] in several regional languages. A number of auto companies have launched rural-specific campaigns."
Affordability -- Godrej introduced three brands of Cinthol, Fair Glow and Godrej (soap) in 50-gram packs, priced at 10 cents; Adidas and Reebok increased their sales by 50% in rural markets by reducing prices.
Size and design changes -- Videocon introduced a washing machine without a drier for US$60; Philips launched a low-cost smokeless chulha (stove); DCM Shriram developed a low-cost water purifier especially for rural areas.
Improving product acceptance -- LG Electronics developed a customized TV (cheap and capable of picking up low-intensity signals) for the rural markets and christened it Sampoorna. It sold 100,000 sets in the first year; Coca-Cola provided low-cost iceboxes as regular power outages meant families could not depend on refrigerators.
Perhaps the ultimate sign that rural India has arrived is in the allocation of talent. "In the old days, the weakest people in organizations, the ones without a star career path, held the reins of the rural marketing divisions," says Bijoor. "Today, things have changed. Sharper and sharper brains from within the organization are being diverted to rural strategy formulation." When the whiz kids go to villages, you know the cows have come home.
Undisputedly, IT industry is one of the fastest growing industries among whole world. Indian IT industry has placed itself in the third position due to domestic as well as international market demand. Though ‘IT’, a small word but it converts the entire world into a global village. The intensification of IT still lies in phenomenon and fantasy. From the last decade India has became one of the most important offshore destinations amongst the Asia-Pacific region. During 4 to 5 years it increases up to 3 fold and captured the leadership position in the world market. Indian IT sector acquires 3% of the total global market and it is expected to increase its volume in the next few years. IT and ITES has recorded $ 39.6 billion revenue in the year of 2006-07 that register a growth of 30.7% beating the projected growth of 27% as per NASSCOM estimation. Over times, India has become ‘IT’ hub.  The total revenue earned by IT USD 48.1billion in 2007 and expected to cross 64 bn in 2008 out of which export amounted to 40.8 bn and domestic 23.2 bn and by 2010, IT revenue is anticipated   73-75 bn.
The strategic review by NASSCOM, 2008 also pointed out as the proportion of national GDP Indian IT sector revenue has grown from 1.2% in FY 1998 to a predictable 5.5% in 2008. Net value added by this sector to the economy is estimated at 3.3% to 3.9%. According to NASSCOM, about 3 million people can be employed in indirect and induced employment like telecom, power, facility management, IT transportation, catering and other services. To facilitate the penetration of IT and ITES in rural areas, the Indian Government has formulated a proposal to establish 100000 Common Service Center (CSC) in rural areas. Indian Government takes the initiative to execute the scheme through PPP (Private Public Partnership) to connect rural people to World Wide Web and the sanctioned amount is 57.42 billion for such proposal. Indian Companies are enhancing the global services delivery capabilities through a combination of Greenfield initiatives, cross border mergers and acquisitions, partnership and alliances with local players. This enabling them to execute end-to-end delivery of new services. The reasons behind the super normal growth of IT industry in India attributed to abundant youth talent ages less than 25 years, skilled English speaking man pool, comparative cost advantages, emphasis on quality and information security, flexible govt. policies, regularity environment etc. Right now India possesses a chunk of youth talent who want to become tech people. This demographic profile is unique and inherent. British colonization also helps to generate an English speaking expert human resources pool. Above all comparative cost advantage has placed India in a very good position. Aboard client mostly from U.S.A and U.K, they can save 25%-50% over original cost base in outsourcing business. It is shown that 10-15% wage inflation in India amounts to a lower dollar value increase in the payroll compared to the 3-4% average wage inflation in the developed countries. Previously 69.4% outsourcing job was coming from U.S.A and 22.6% from U.K. Now at present this proportion has changed outsourced job from U.S.A and U.K are respectively 61.4% and 30.1%. Technology diffusion helps to pull down the telecom cost.
Most of the Indian tech companies have obtained ISO, CMMI, Six-Sigma certificates to provide the service at international standard and it is expected that in near future India will have the status of having highest number of ISO 9000 companies in the world. 82 Indian companies certified at SEI CMM Level 5, which is higher than any other country in the world, possess. India based companies and MNCs constitute the largest number of quality certification achieved by any single country. Indian Govt. has played a very crucial role in IT sector. Minimal regulation and policy restrictions by Central as well as state government. has facilitated in its growth. More over STPI (Software Technology Park of India) scheme has played a pivotal role in catalyzing the growth of this sector and rapid rise across the country. Government of India has placed IT sector in SEZ (Special Economic Zone) hence it enjoyed 10 years tax holiday. To boost the overall growth of IT sector Indian Govt has withdrawn the constraints in location selection, complicated license policy etc. SEZ become huge success in attracting Foreign Direct Investment. Apart from these initiatives proper infrastructure development is also very crucial for IT growth. Proper infrastructure development in all over country may place India at a prime position in global IT map. Indian IT industry is purely export oriented. Most of its revenue comes from IT-BPO services known as Business Process Outsourcing, divided into two sections â€" i) back office sourcing including internal business functions, ii) Front office sourcing including external business function like customer related services such as marketing , technology support etc. Indian IT sector largely depend on outsourcing job. However, the whole world is affected by U.S growth recession and India is no exception that is alarming to this sector. This fiscal IT and BPO sector will grow at 23-24% as against last year’s 29%. NASSCOM assumed that Indian IT and BPO sector may slow down to 3-4% in the current year as against that of last year due to uncertainty in global economy, frequent fluctuation in the value of dollar, growing competition from neighbor countries like Chiana, Philipines etc and manpower crisis which may become more difficult in coming days. NASSCOM has estimated shortage of five lakhs manpower in this sector by 2010. The BPO sector is seeking for tier-II and tier-III cities to expand the business of BPO despite of concentrating of seven cities. As US, market response is not so good India is trying to explore new market in Australia, European Union, and Japan. IT sector gets 40% of revenues from new deals and 605 from the existing one. India IT sector directly or indirectly hugely depends on U.S.A and U.K for outsourcing. Recently the recession in U.S economy adversely affect Indian economy. If Indian BPO does not have any new clients from these countries then business will follow the decline trend. Currently the financial turmoil largely affects the global economy and its result is reflected into Indian economy. India already experience pinch of it. It is foolish to think that there will be no recession in the business world but the consequence of it depends on its duration.
The Indian IT remains a success story till now. However, Indian Government must also be very concerned about this industry. To overcome such critical situation Government should increase the time span of SEZ, which is likely to be ended by 2009, decrease amount of MAT (Minimum Alternative Tax) chargeable to this sector, which is pulling down the robust profit earned by this sector, simplifying the license policy to attract more companies in this industry. Indian IT industry is a flourishing industry and the liberalized policies of Government help this sector to grow gradually. IT services and information technology enabled services have shown unprecedented growth. The demand for such services has grown substantially. The growth of the Indian IT industry is likely to be very good in future. The future trend of Indian IT industry appears to be very bright, promising and prosperous.
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