Business Environment

INDIA POISED…

Presented By

Sameer Khair 83Kunal Kurani 85Aditya Shah 106

Indian Industry

Public Sector Unit Private Sector Enterprise

SmallScale

Industries

Small &MediumBusiness

FamilyManagedBusiness

LargeCompanies

SSI

An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms or lease or on hire purchase does not exceed Rs 10 million

SSI in India Contributes 40% of gross manufacture

Small-scale units has increased from 0.87 million 1981 to approx. 3 million in 2000

After agriculture, 2nd largest in creating job opportunities

Contributes 45% - 50% of the Indian Exports

Dominates in exports of sports goods, readymade garments, plastic products, processed foods & leather goods

SSIs in India

o Estimated No. of units 3.57 Million

Employment 19.96 Million

Share in Industrial Value Added 39%

Share in Total Exports 34%

Total No. of Items Produced Over 8000

No. of Reserved Items 675

(Figures for 2002-2003)

Measures

Industrial extension services Institutional support in respect of

credit Provision of training facilities Supply of machinery on hire

purchase terms Special incentive for setting up

enterprises in backward areas Technical consultancy & financial

assistance for technological upgradation

Opportunities

Less Capital Intensive Extensive Promotion & Support by

Government Reservation for Exclusive

Manufacture by small scale sector Reservation for Exclusive Purchase

by Government Export Promotion Increasing Export Potential for Indian

products

Major Issues

Technology obsolescence Managerial inadequacies Delayed Payments Poor Quality Incidence of Sickness Lack of Appropriate Infrastructure

and Lack of Marketing Network

All firms with an investment of over Rs 5cr but less than Rs 10cr in plant and machinery are called Small and Medium Enterprises.

But private and foreign banks have their own definitions of SME’s, which can be a turnover of anything between Rs 10cr and Rs 700cr.

Huge contribution to the economy

Employment – more than 28 million people

Contributes 40 % of gross industrial value addition

Accounts for 50 % of direct and indirect exports

SME’s are generally more labour intensive than large firms and therefore have lower capital costs associated with job creation.

Indian SME’s have become globally competitive in sectors like Auto components, textiles, food processing, pharma, engineering and chemicals and it is expected average growth rate of 32% over the next two years.

SMALL AND MEDIUM ENTERPRISES

SMALL AND MEDIUM ENTERPRISES (SMEs)

It was said that the sectors under capitalized, technology-deficient, skill starved companies would drop like flies in the face of global competition.

Small and Medium enterprises have become the darlings of corporate India.

Today SME’s are a different breed, they have acquired companies abroad become part and parcel of global supply chains and are even convincing foreign manufacturers to outsource patented design work to them.

SMEs With Turnover Of

Net Sales Operating Profit

Net Profit

Rs 10cr – 50cr 175 301.6 701.8

Rs 50cr – 100cr 125 101 961.1

Rs 100cr – 200cr 102.5 115.5 713.7

Rs 200cr – 300cr 79.6 90.8 365.9

Rs 300cr – 400cr 86.6 97.9 153.7

Rs 400cr – 500cr 89.2 89.7 559.0

Rs 500cr – 1000cr 63.1 61.1 143.8

> Rs 1000cr 86.4 92.4 169.9

Figures are growth in percentage between 2001 and 2006

Auto Components Sector

Current trends indicate a smooth run for the auto component industry. In fact, since 2000, this is one sector which has made a global mark and has been identified as a sunrise industry. The industry is transforming from being highly domestic-centric, to a force ready to face global competition.

Reasons for Hindrances to Growth

A global slowdown can derail the prospects of the industry.

Volatility in the prices of metals and other inputs could erode the industry’s cost competitiveness. Further, global OEMs expect a commitment of 5 – 10% reduction in prices every year.

Intense competition from counterparts in other emerging economies may add pressure on margins of manufacturers.

Family Business

A family business is a company owned, controlled, and operated by members of one or several families

Some Facts

Family business contributes 60-70 percent of GDP of most developed & developing countries – India is no exception

Business families face unique management challenges because of differences in the attitude & aspirations of family members

It has been observed that 13% survive the 3rd generation & 4% go beyond

Attributes Core competence

Familiarity with the ever changing environment

Formation of relevant Joint Ventures for its corporate excellence

Level of Competitiveness & Professionalism

Level of Transparency & Stability

INVESTORFRIENDLINESS

OPERATIONALEFFICIENCY

VALUE ADDED

FINANCIALS ADAPTABILITY

LEADERSHIP

STABILITY

PORTFOLIO

STRATEGY

FamilyBusiness

Parameters For Evaluation

Understanding of environment

Political Savvy Mutual trust among

members Distribution

Capabilities Goodwill

Splits Succession

Planning Takeovers Transnational

organization Lack of focus

• Strengths • Threats

Areas of Improvement

Family owned business are the least preferred employers

Career development is uncertain in family owned business

Business families strategize by lobbying for protection

•Customer inputs drives priorities•Nimble in execution to end goals

•Growth & scale are priorities•Control outweighs flexibility

•Execute across core competencies•Compete on customer satisfaction

•Leverage developed competencies•Selectively entrepreneurial in nature

ENTREPRENEURIAL

FUNCTIONALLY – SPECIALIZED

PROCESS DRIVEN

MARKET DRIVEN

1900 2048

The Priorities of family

Nature of Business

Evolution of Family Business

LIST OF FAMILY MANAGED

BUSINESSES

Global Scenario… WALMART HYUNDAI FORD LG SAMSUNG HUTCHISON WHAMPOA FIAT GROUP MARRIOT INTERNATIONAL NOVARTIS GROUP

Indian Scenario… RELIANCE GROUP WADIA NANDA BIRLA PIRAMAL SINGHANIA MALLYA TATA BAJAJ

The list is Endless………

ONE CAN ALWAYS ANALYSE THE PAST BUT WHAT IS NEEDED IS A BLUEPRINT FOR THE FUTURE