Compendium

Management
Development
Institute
Gurgaon

DELPHIQUE ‘08 National Management Convention
8|9 November ‘08

Research Compendium

Research Compendium

Emerging Business Horizons: Opportunities For Indian Companies

Table of Contents

About MDI....................................................................... 5
About Delphique’08........................................................ 7

Human Research ........................................................... 8
Finance .......................................................................... 14
Marketing ....................................................................... 22
Operations...................................................................... 29
Strategy.......................................................................... 35
Information Management............................................... 43

Credits............................................................................ 49
Partners.......................................................................... 51

About MDI
Management Development Institute, Gurgaon is a premier management school in
India. Having been consistently ranked among the top 5 B-Schools in the country,
today MDI envisions itself as a Global Business School featuring among the top 20
schools among the world. MDI has powerful global linkages with business schools in
North America, Europe, South East Asia, and Australia.

MDI was established in 1973 as an autonomous body by IFCI. Since its founding, the
Institute has striven to meet the needs of the business world and the aspirations of its
students and working managers.

The result is an increasingly professional training with an international focus. MDI is
strongly committed to creating, both at individual and organizational levels, cutting
edge management capability through value-based education, action-centric
research, best global practices, and value-added consulting.

Thus MDI's Mission is to prepare global leaders who create, manage and effectively
lead change across diverse organizations. MDI's focus is to sensitize graduates on
ethical issues thereby developing strength of character.

5

About Delphique
Delphique is the event where the action between the students and the corporate world on
the MDI campus is at its apex. Delphique is the annual National Management Convention
of MDI where renowned people from the industry come for some stimulating discussions
on current issues, across various business functions, with the students of MDI. The topics
span across a wide array of management issues ranging from revival of Indian debt
markets to the HR challenges being faced by the globalizing Indian companies.

Delphique's uniqueness lies in its strong research focus. Students conduct a thorough
research on the topics which are decided in consultation with the industry mentors. The
research work is carried out under the guidance of both the industry as well as the faculty
mentors. The exchange of ideas between the leaders of today and those of tomorrow and
the intense brainstorming between young minds leads to some fresh perspectives. The
team presents its work to a panel of industry speakers and the students during Delphique.

Delphique 08' was centred around the theme: Emerging business horizons: Opportunities
for Indian companies.

In the wake of global markets crashing and world economies in doldrums, the above
theme becomes quite relevant as there are several opportunities lined up for emerging
countries like India.

Continuing the tradition of constant innovation, Delphique '08 touched new heights with
Knowledge Partners across all panels, i.e. Finance, Marketing, Strategy, Operations,
Information Management and HR.

Research Topics for Delphique ’08:

• Finance: Developing Indian Debt Markets

• Human Resource: Globalizing Indian Companies - HR Challenges

• Information Management: Empowering Businesses - Innovation in IT strategies

• Marketing: Merchandising - Current practices in FMCG and what lies ahead

• Operations: Productivity or Supply Chain - Where should Indian Manufacturing firms
focus?

• Strategy: Opportunity Areas and Challenges for Indian automotive component players
given the current market trends and a vision to become a $35-40 billion industry

7

Knowledge Partner

HUMAN
RESOURCES

Globalizing Indian Companies:
The HR Challenges

Delphique ‘08

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HUMAN RESOURCES
Globalizing Indian Companies: The HR Challenges

PANEL SPEAKERS
å Busrai – Director, Human Resources, IBM
Mr.Aquil
India Ltd.

å Srinivasan- Director, Transitions and
Mr. Madan
Employee Engagement at HCL Technologies Ltd.

åRamanamurthy Vice President, Human
Mr. P.V.
Resources ,HCCB(Hindustan Coca Cola
Beverages)

å Jyotsna Bhatnagar - PGHR Chairperson
Prof. (Dr)
MDI, Gurgaon

EXPERT OPINION
HCCB(Hindustan Coca Cola Beverages) told the
The HR Research team, through primary and
audience that talent and not the employee moves
secondary information initially presented their
from one country to other.
research which was appreciated by all the
panelists present for the discussion. Director-HR of Transitions at HCL shared his
personal experience. He was working in ICICI
Mr. Aquil Bursai , stated that there is a total 180
Bank before joining HCL. He was doing a project of
degrees shift from how expatriates are treated
designing an expatriation policy for ICICI. For that
earlier and nowadays.
project, ICICI had hired Mercer as its consultant.
Earlier, it was more like a lottery ticket. He told the audience that before sending
Expatriates were showered with home salary and employees to overseas assignment, the company
huge expatriation bonus. It was financially should be clear of its objective i.e. why the
lucrative. In those times, as numbers of company is sending the employees to overseas
opportunities were very less, the tag of assignments? The company can send the
“Expatriates” had altogether different weightage. employees for the money or for the business or for
But nowadays situation is being changing the development of that employee. When
drastically. Employee goes abroad, the main issue with them is
about their compensation. Company should also
M r. P. V. Ramanamurthy VP-HR of consider hiring local talent.

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Mr Aquil Busrai said there are basically five governance model to retain employees because
important questions that are to be addressed when the attrition is very high. He also shared some of the
talking about governance structure for expatriates. engagement initiatives that are being followed in
HCL technologies to retain talent. The regular
Who decides to send? Why to send? How to select
committee meets, town hall get together and micro
and whom to select? And most importantly how to
site ensures that expatriates remain in close touch
communicate to employees?
with the company plans and vision. Cultural
In answer to next question why the employees sensitization workshops are being regularly
should be send to foreign locations rather than conducted.
hiring local, he said three main factors play
Thus all the three panel' members felt that HR
important role
needs to adopt a facilitative governance model by
It saves costs to the organization. It helps being aligning goals of employees to the goals of
close to customer. Gives initial exposure to vast organization and build a truly competent sensitive
talent pool back home and helps enhancing their global workforce.
talent and upgrading the quality of workforce. The
most important decision is to decide how to select
employees. He opines that decision to select
should be based entirely on skill competencies and
potential rather than any Body Shop option. The
companies must learn from global best HR
practices. The companies should follow a structure
in which they define their core business
architecture, share services at global level and
outsource peripheral activities. Following this, a question was posed to the panel
regarding the competencies in an employee that
would become even more imperative in this day
Mr. Madan Srinivasan from HCL technologies and age of globalization and economic uncertainty.
was when asked to speak on governance structure In response to this, Mr Aquil Busrai stated that
he said that gone are the days of HR being a what has become essential is the ability to be
governance department or policing department, resilient in the face of change and adapt to the
supporting Mr Aquil's point he said that HR now dynamic nature of the business world. Mr. P.V
needs to adopt a facilitator model rather than any Ramanamurthy responded saying that cross
governance model. He shared that these days cultural agility and the ability to think with a truly
organizations need to follow much organized global mindset is something that is crucial to

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HUMAN RESOURCES
success, particularly while working in a foreign This marked the end of a thought-provoking and
location, and he also provided a real-life example to enlightening discussion with our eminent panelists
illustrate his belief. Mr. Madan Srinivasan entered that has greatly broadened our knowledge base
the discussion, stating that in his opinion, in the with respect to the issues that globalization has
near future, employees would require 3 key posed to Indian companies, a topic that has only
competencies – the ability to be politically savvy, so gained in relevance and importance in the current
as to be capable of sensing the surrounding scenario.
environment and take appropriate decisions, the
ability to communicate bad news with sensitivity
and diplomacy and the ability to build up a feeling of
trust and transparency at the workplace.

This was followed by the concluding question from
the audience, regarding the compensation policies
that are/will be followed in the industry, as the
expatriation trend reverses, and more and more
expatriates start looking towards India for
employment. It was interesting to find out whether
this reverse brain drain would result in foreign
employees settling for pay scales that were below
those they were accustomed to in their home
countries or whether Indian companies would have INTRODUCTION
differential scales for local and foreign employees. The intent of the research was to have a closer look
In response, Mr. Aquil Busrai categorically stated at how the Indian companies are fare when they set
that regardless of the economic situation we find up shops abroad. The research focuses on the HR
ourselves in, companies will always primarily be challenges that the Globalizing Indian companies
interested in recruiting and retaining the best talent. face. Specifically speaking the objectives of the
As a result, individuals with the requisite skill sets research were
who are able to deliver the goods, would always be
in demand, and would be able to command their To identify
å key HR challenges currently
price, irrespective of their nationality. confronting globalizing Indian companies

To identify
å initiatives undertaken by India Inc. to
battle these challenges

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To identify
å internationally practiced expatriate HR Ericsson which has a well laid out Recruitment
policies to highlight possible improvement areas Protocol. Locally it employs Employee Referral
for the globalizing Indian companies scheme and internal postings while globally it goes
in for Regional HR offices and Regional
METHODOLOGY: Consultants companies. Also, Intel has a
mechanism wherein it tries to take advantage of
The methodology adopted was
local talent to help build a strong local management
(i) Literature study - Secondary Research was team for future.
done via journals like Emerald and EBSCO
Amongst the Indian companies that we interviewed
(ii) Primary Research – Herein in depth semi- Essar stood out in terms of having a selection
structured interviews were conducted with the criteria to recruit employees depending on the
management personnel of twenty Indian and ability of a person to get acclimatized to the
Foreign MNCs environment as early as possible.

(iii) Objective Questionnaire – This was
constructed with a view to know the Employee
Responses of one Indian and one Foreign
MNC.

FINDINGS:
RECRUITMENT
Herein the emerging trends that we saw indicated
that more often than not, decisions on expatriate
selection are usually taken by line managers who LEARNING AND DEVELOPMENT
ignore the laid-down criteria espoused by the HR
Our findings suggested the inclusion of aspects
department. Preference is to draw from a restricted
such as politics, religion, law, education, values,
pool of candidates about whom they feel confident.
attitudes, etc in the composition of an effective
Also very few companies employ criteria like
Expatriate Training Program.
culture fit, previous global exposure, extraversion,
stress tolerance level, etc. Amongst the Internationally accepted practices,
we came across companies like GM that provides
Amongst the internationally accepted recruitment
180 hours of pre-departure language training to the
practices, the notable one was that of Sony

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HUMAN RESOURCES
expatriates and their families. Then there is Baxter employee has to report to his Functional head
that provides no training at the home country. Host (generally in India), and Administrative superior (in
country handles all training needs. foreign location). At NTPC reporting is done to ED
As regards the Reality Bytes, Aditya Birla Group consulting in India and there is a contract of 3
has Cross-culture training as a part its agenda in years.
ABG Group Learning centre. There's a centre by
the name of Gyanodaya through which training
needs are addressed. Further NTPC has a training
centre in Noida, PMI, where training of language
(especially Arabic), International finance and
management, etc are given.

PERFORMANCE MANAGEMENT
The focus areas that emerged herein were in
relation to subsidiary managers tending to be
assessed according to subsidiary performance.
Also, the nature of the international monetary
system and local accounting differences precludes
an accurate measurement of results. Further
Employees prefer parent-company evaluators
believing that their future career progression may
depend on how the evaluation data is utilized back
at headquarters.

The internationally accepted best practices were
visible in companies like Samsung where there is
a self-setting of the goals and then finalization by
the host country nationals. Appraisal is biannual for COMPENSATION
managerial purposes and annual for The major challenges that companies are facing
developmental purposes. Further Baxter follows a relate to maintaining a similar compensation levels
Matrix structure. for outgoing employees by making adjustments for
As regards the companies we studied, KEC Purchasing Power Parity, Inflation and Currency
International follows a Matrix structure wherein an Fluctuations and motivating employees to accept
relocation for foreign assignments by providing

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monetary and non monetary incentives to place a Globility policy, a Group wide Mobility
employees. policy, which addresses traveling, relocation of
family, support in getting jobs for spouse. KEC-
The internationally accepted practices relate to Tax
RPG provides for reimbursements for family travel
Equalization so that the employees don't bear tax
and accommodation depends on Negotiations.
burden due to difference in tax rates and also not
Further, Hindustan Zinc makes family foreign
placing employees on foreign location's payroll, if
expense reimbursement available only to
unfavorable to employees. Allowing social security
employees serving for greater than 4 years subject
benefits to accrue was also a notable practice as in
to negotiations.
the case of Sony Ericsson.

Amongst the Indian Companies, NTPC and KEC REPATRIATION
provide foreign compensatory allowance of to
Last but not the least, Repatriation poses itself to
expatriate employees plus an allowance for home
be a big challenge, especially with Brain gain
passage. While Hindustan Zinc pays No foreign
gaining importance. However, Apart from some
allowance, it only adjusts differences in PPP and
make shift plans in some of the companies, not
inflation rate.
many Indian companies that we interviewed had a
FAMILY RELATED formal and clearly laid out repatriation plan.

ALLOWANCES AND PERKS A notable internationally accepted best practice is
that practiced by Citi Group, wherein there are
Reasons such as - Nine of ten expatriate failures formal discussions between employees and home
family-related, unhappy spouse major reason for country manager, days before employees foreign
early return pointed to the gravity of handling this assignment is about to end, to discuss employee's
issue properly. new role in home country. Parameters considered
Some of the internationally accepted practices that while deciding upon new role consist of experience
we came across were with regard to Education gained by employee on overseas assignment and
Allowances; Insures employees' children receive availability of roles in home country.
education equal to that at home, All in all we managed to touch upon the various
moving and Orientation Allowances, Language & aspects that are a matter of consideration and
Cultural Training, Weekend Travel Expenses deserve utmost importance when an Indian
reimbursements for Employees and their families, company decides to further its prospects by setting
etc up a shop abroad. The above, if duly addressed
would go a long way in ensuring a smooth flow of
Indian companies like Aditya Birla Group have in
affairs for the globalizing Indian company.

Knowledge Partner


Sponsor

Knowledge Partner

FINANCE

Developing Indian Debt Markets

Delphique ‘08

CMYK

Sponsor

FINANCE

PANEL SPEAKERS
Subhomoy
å Bhattacharjee, Deputy Executive
Editor, The Financial Express

Any pic å
Jasmit Singh Chandhok, Dy. Executive Director,
Learning Arc

å Kaul, CGM Treasury, Punjab National
Mr. Arun
Bank

å Bhalla, Treasurer, GE Capital
Mr. Manoj

å Bhatia, AGM (Finance), NTPC
Sangeeta

available to non-banks as Credit Information
EXPERT OPINION
Bureau India Limited (CIBIL) reports the defaults
The research on the topic 'Development of Indian only for banks. Second is the absence of any
debt markets' was very well appreciated by the stringent laws in India on bankruptcy enforcement
panelists who suggested the presentation should and protection. Unlike the US where Chapter 11
be made to the regulators to set the way forward. and other laws ensure high degree of restitution
The discussion began with a comparison of loans and that too before diminution of asset value, in
against bonds and analyzing whether the present India corporate default does not come in the public
system is sustainable. According to Mr. Arun Kaul, domain for up to 10 years.
banks would prefer to give loans rather than Transparency in disclosures, diversity for issuers
investing in bonds because of the direct contact as well as investors, and liquidity dependent on
with the client in case of loans, as compared to market infrastructure and intent of institutions were
communication through merchant bankers. Mr. identified as major criteria for development of debt
Arun Kaul also threw light on how PNB invests market by the panel. Mr. Jasmit Singh Chandhok
money in bonds, highlighting that it does not invest and Mr. Arun Kaul pointed out that retail investors
in private sector bonds as there is no proper do not have enough incentive to invest in bond
secondary market for trading. Two more problems markets where there is doubt about the pricing of
were identified in case of institutional investment in bonds, legal issues are cumbersome, and it is
corporate bonds. One, data on defaults is not difficult to withdraw money back from market. If at

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all an exposure to bonds is required, much better price discovery is not efficient. Moreover, the
options are available to them in the form of platform established by NSE is more of a reporting
undervalued bank equity who in turn have their platform rather than a trading platform as two way
investments in bonds of corporates. Hence, retail live quotes are not available. The restriction on
investor would have to enter indirectly into this foreign investment is also a major factor in this non-
market, which is in line with the worldwide trend of development if we try to benchmark with the
majorly wholesale investors in bond market. markets abroad. A point noted by the panel was
However, such an entry would be preferred as it is that there is a large contribution of foreign
likely to lower the yields in the market. investment in development of Indian equity
markets.
Thereafter the discussion moved on to the role of
credit rating agencies in development of bond
markets. The panel was unanimous on the view
that these agencies had failed to predict a lot of
troublesome situations in the past and hence
excessive reliance on credit rating agencies should
be avoided. In the panel's view these agencies
have good models for current situation but not the
future, and a more sophisticated analysis is
needed from their side. There was also a debate on
the business model of credit rating agencies, but an
important argument was the need to build
accountability for such bodies by bringing in Next issue discussed was that whether due to its
regulation. high dependence on Government bonds to finance
Other major reasons for non-development of debt budgetary deficit, is it the Government that does
markets were also discussed by the panel. In India, not want the development of corporate bond
size of corporate is relatively smaller and they have market. It was concluded by the panel that the
access to project loans and working capital loans attempt by Government is not deliberate, but it is
such as cash credit from banks which lower their extra cautious to prevent scams. The demand for
costs of borrowing to a large extent. In this regard, Government bonds mainly comes from banks that
banks' operations are actually hindering the growth need it for their SLR requirements.
of bond market in India. Institutional investors like Some subtle issues concerning the corporate bond
EPFO and LIC holding their portfolios to maturity market were also touched upon by the panel. While
leaves the market in an illiquid situation and hence the panel agreed when Mr. Manoj Bhalla pointed

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Delphique ‘08 FINANCE

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FINANCE
out that the bond, cash, and derivative market are Government securities market and corporate debt
needed together for an integrated development, market. The corporate debt market can be further
there were apprehensions regarding allowing of classified based on the type of issuer being a Public
Credit Default Swaps for this development, Sector Undertaking (PSU) or a private company.
especially after the recent financial turmoil. It was The Indian debt market is dominated by G-Sec
also concluded that for any scope of a market for bonds with market capitalization of Rs. 13,18,419
municipal bonds, these organizations first need to as compared to corporate bond market
put their houses in order. Mr. Arun Kaul pointed out capitalisation of only Rs. 68,074 crore at end
the need to allow short selling in corporate bond December 2007. Hence, within the realm of
market. development of Indian debt markets, our research
The panel was finally able to identify removal of was directed towards the development of
regulatory ambiguity, funding of stakeholders, and corporate bond market.
improvement of corporate governance as
immediate measures in the direction of
development of corporate bond market. At the
same time, the establishment of reporting platform
and the application of uniform TDS for Corporate
and Government bonds were stated as positive
steps from the Government's side.

Overall the discussion was a healthy one which
brought out varied perspectives on what can bring
about a marked change in Indian financial system.
Queries raised by the students were aptly
answered by the panel.

INTRODUCTION Characteristics of developed
Indian Debt market: Overview debt market
For a market to be developed, presence of three
Debt Market is the market where fixed income
characteristics is very crucial:
securities of various coupons, maturity, options
and other features are issued and traded. The Liquidity:
å For the market to be liquid; there is a
Indian debt market has two segments, viz. need for a secondary market. There has to be
enough number and type of instruments and

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number of participants to have sufficient variety, roles was brought by making primary and
inducing fast trades in the market. secondary trading a responsibility of SEBI while
repo and reverse repo of debt being a responsibility
åSafety: Other than enough types of instruments
of RBI. Also, Corporate Bonds and Securitization
with differing characteristics which could be used
Advisory Committee (CoBoSAC) was set up under
to reduce risk exposure, a key requirement for
chairmanship of Dr. R.H. Patil to look into further
safety is the minimization of counterparty risk.
issues.
åPresence of market maker: A market maker is
From the issuer's perspective, the requirements
required to induce trades in the market by quoting
regarding continuous disclosures by the issuers
two-way quotes.
were rationalized; there was a reduction in Shut
Other than these characteristics, other important Period to align corporate bonds with Government
features for a developed market are efficiency of securities, a reduction in requirement of only one
the market, low transaction costs, and availability credit rating agency instead of multiple ones, and
of free public information. the requirement of investment grade rating of debt
instrument removed. Moreover, Structural
Past initiatives to develop Debt restrictions, such as those on maturity, put / call
markets option, conversion etc. were removed, corporate
debt instruments issued in de-mat form (and listed
The Government in February 2006 accepted
on recognised exchanges) were made exempt
recommendations of the high level expert
from TDS, and moderated SEBI Regulations were
committee formed under Dr. R. H. Patil. These
issued for Issue and Listing of Debt Securities in
recommendations were implemented majorly by
2008. These regulations paved the way for one
February 2007. The recommendations were aimed
listing agreement for public and private issue
at improving the market conditions for all
irrespective of listed or unlisted company, and
stakeholders- from issuers to investors, changes
minimal disclosures for companies with listed
were brought so as to improve the market
equity.
infrastructure and regulatory environment as well.
Reporting platforms were set up by NSE, BSE, and
FIMMDA, and trading platforms from BSE and NSE
became operational. The trade settlement started
happening via exchange or bilaterally.
Standardization was brought for the Actual Day
Count convention for new issues. From the
regulatory viewpoint, a clear understanding of

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To make corporate bonds attractive for the
investors, the reporting of OTC and exchange
transactions was made mandatory, the tradeable
lot was reduced to Rs. 1 lakh for all investors, and
market information on secondary market trades
was made available on SEBI website for price
estimation purpose. Also, press release was made
mandatory for issuers in the case of events like
default of payment, failure to create charge on
assets, or a revision of ratings, other than issuance
of compliance reports in public domain by issuers
being made mandatory. The listing agreements of
debentures were also modified, so that ECS, Direct
After obtaining a basic understanding of the
Credit, NEFT, and RTGS were to be used for
present condition of the debt market and the
interest payments & redemption, and material
associated issues, a benchmarking of Indian
modification in structure of debentures without
corporate bond market with US and European
prior approval of stock exchange where it is listed
corporate bond markets like Eurex was performed.
was restricted.
The relative standing of Indian corporate bond
market and the characteristics lacking in the Indian
RESEARCH APPROACH markets were discovered.
The corporate debt market has several Investors in India prefer to invest in other fixed
stakeholders and the expectations, needs, roles income securities like government bonds,
and opinions of these stakeholders on this market Collateralized borrowing and lending obligation
differ vastly. Hence, through the research an effort (CBLO) ,bank deposits, national savings
was made to look at the corporate bond market certificates, postal savings etc as compared to
from the perspective of all the stakeholders in the bonds. Hence it was imperative to compare these
process and understand their concerns for not instruments as against corporate bonds. After
participating in the corporate bond market. The first plotting the risk-return tradeoff for these
step in the research was the reading of several instruments vis-a-vis corporate bonds, customer
reports on development of Indian corporate bond preferences in fixed income securities and their
market published by companies like Goldman investment needs were also determined.
Sachs etc., other reports by SEBI, RBI etc., in
addition to news and magazine articles. Finally, to obtain the ground-level picture, opinion
was taken from all the stakeholders in the Indian

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corporate bond debt market such as the issuers, At the same time, developed debt market provides
investors, credit rating agencies, regulators and new fund raising avenues to the borrowers, who
exchange. A questionnaire was designed for each otherwise raise capital through loans from banks or
stakeholder, through which the stakeholders were equities generally. Loans in Indian currency and
asked to identify the reasons hindering the equity are expensive sources of capital as
development of the market and their compared to issue of bonds, and hence,
recommendations for removing these barriers. companies can issue bonds to reduce their cost of
They were also requested to do a critique on the capital. Further, interest rate of loans is not
recommendations put forth by the students in the transparent; while bond prices are determined by
research. Through this primary research, gaps in market forces introducing transparency in the
the proposed suggestions by various working borrowing market. Other sources of borrowing like
committees and the need of the market participants ECB's are not accessible to all companies
were uncovered, which provide the justification for especially SME's making corporate bonds even
slow pick-up of bond markets in spite of umpteen more important.
development-focused initiatives and suggest
Regulators prefer a sound debt market as it would
directions for new policy initiatives. The collective
reduce the asset liability mismatch of banks. It
perspectives of different stakeholders presented
would reduce the strain of banking system if
through this research provide a holistic picture and
corporates issue bonds instead of bank loans. This
demarcate the reality from the blame-game being
will also infuse liquidity in the market. Development
played for long between the regulators, the issuers
of credit derivative market is possible only after the
and the investors for failure to develop corporate
development of the underlying instrument i.e bond
bond market.
market.

Payoffs of a developed debt Issues
market The main reason hindering the development of
A developed debt market is preferred by the corporate bond market is the lack of liquidity. It is
investors, the issuers/borrowers and the regulators just like a chicken and egg problem. Issuers do not
of an economy alike. For investors, a developed want to issue bonds because there are not enough
debt markets provides opportunities to diversify buyers in the primary and secondary market. As
their portfolio. During times of bearish equity issuers do not issue bonds, investors do not invest
markets, corporate bonds with assured returns are in the market due to lack of good quality bonds.
a very effective medium to mitigate risk. Another problem faced by issuers is excessive
disclosures for new and successive issues.
At the same time, developed debt market provides

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Retail Investors are not well educated about bond or the regulator should provide incentives to
pricing and on the corporate bond market market makers. One of the incentives could be
structure. The minimum market lot size for lower transaction cost.
investing in corporate bond market is Rs. 1 lakh.
However,
å due to high bid-ask spread market
This is a huge amount in comparison to minimum
making is very expensive. Hence, repos in
amount in equities or bank deposits. Also, the retail
corporate bond market should be introduced to
investors believe that since everybody is investing
increase secondary market trading.
in equity markets, it must be the best option- a
testimony of a social proof phenomenon. As a The current
å lot size of Rs. 1 lakh deters retail
result, they are hesitant to invest in the debt investors. To tackle this, the market lot size
markets. Information on live trading of corporate should be reduced to as low as Rs. 10000.
bonds is not freely available on the internet. It is difficult
å to get free public information about
Institutional investors have no incentive to trade in bonds. People are not aware about government
exchanges as their needs for corporate bonds is initiatives like indiabondwatch.com. it is
met by the Over the counter (OTC) market. Banks imperative to educate the investors especially
prefer to give loans as they are treated on cost the retail investors.
basis in the balance sheet as compared to bonds There is
å no benchmark to measure the
which are valued on mark-to-market basis. performance of bonds. There should be a
Moreover, the bankruptcy and default laws are not benchmark or a index for corporate bonds similar
very stringent in India. The investor is exposed to to the US and the European market.
credit risk and at the same time the market does not
The main
å investors in the bond market are
have sufficient hedging instruments.
institutional investors. So, a bond market
For the regulators, the main concern is the lack of managed by consortium of institutions like Eurex
development in the market despite the initiatives bond market will give the institutions to design a
taken recently. Also, the investors are not aware of trading and settlement system as per their needs.
the initiatives taken by the regulator or the
exchange.

Recommendations
The corporate
å bond market cannot develop
without increasing liquidity in the market. In every
market, the market makers are sources of
liquidity. To enable market-making, the exchange

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List of companies where executives were contacted
for primary research

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MARKETING

Merchandising:
Current practices in FMCG
and what lies ahead

Delphique ‘08

CMYK

MARKETING
Merchandising:Current practices in FMCG and what lies ahead

PANEL SPEAKERS
Mr. Davinder
å Singh- Director, New Product
Commercialization, CocaCola India

Any pic å Mittal- Regional Sales Manager, ITC
Mr.Vishal

Adrain
å Stray- Category Management Head,
Hindustan Coca Cola Beverages Pvt Ltd.

Sai Ramana
å Ponugoti- Global High Frequency
Stores Innovation Center Leader At Procter &
Gamble

PROF. A.P. ARORA –MDI Gurgaon
å

perceives & shops. The customer is willing to
EXPERT OPINION
spend more time inside a store to take back items
The Marketing Research team, through primary of his preference.
and secondary information initially presented their
He said that before taking a decision the customer
research which was appreciated by all the
prefers to:-
panelists present for the discussion.
º the product.
Touch and see
Professor Arora started the discussion by telling
about the drastic changes in the retailing sector º prices for that product across the
Know all the
over the last few decades. The shopkeeper and world.
retailer were on the opposite side of the shop and º
Should have complete information available
shopper could not see what was inside the shop. regarding the features of a product.
He also discussed that India is very different from
Then the panelists gave their opinions pertaining to
most other countries as we have the highest
some of the issues:-
number of shops and also highest shop density. So
a change in retailing here can be regarded as a What would be the differences in kind and
revolution that has taken place. Retailing in India is degree of merchandising employed according
like an elephant that has become huge in size. The to sector?
major change in the retailing has come about
Mr. Vishal Mittal said that the company and retailer
because of the change in the way customer
should understand the difference between a

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MARKETING Delphique ‘08

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customer and a consumer. A shopper or a impact is least on prescription products such as
customer tries to look for value in a product medicines and 25-30% on products such as
whereas for a consumer the experience of trying chocolates and soft drinks. Visibility in general
that product is important. He added that the buyer helps increase sales up to 25-30%. The
is different from consumer and it is important to effectiveness of the medium is also important.
target the buyer through merchandising. Mediums like POSM help increase sales by about
20-30%.
Mr. Singh added that a retailer needs to meet the
requirements of a customer by developing an He emphasized that the advertising and
understanding of how the product will be merchandising may be different but the message
consumed. He also said that different pictures and should be consistent. The customer should be able
themes must be used for advertising and to recall the advertisement on seeing the
merchandising. For example, Coca-Cola merchandising and the two should be in line with
advertises for 300 ml bottle while it sells 2L bottle each other.
also. The reason is that it targets youth during
In case of high end retail stores, shopping
advertising but the buyer is often the mother who is
experience is very important. In a high end retail
price conscious and prefers the larger pack.
store the customer gets to see a 3-D view of the
product whereas in a traditional store the products
are so much stacked up that a customer can get
only a 2-D view of the product.

Mr. Davinder said that Coca-Cola manages the
brand and is responsible for creating demand
through marketing activities. On the other hand,
HCCB is responsible for production, distribution
and merchandising of the product. The soft drink
industry, therefore, provides bottlers the
opportunity for merchandising and handling point
of purchase issues.

Mr. Adrian said that by providing fridge, HCCB
ensures that the consumer is more likely to drink
the soft drink now rather than carry it along. This
helps to push sales through merchandising. He
Mr. Ponugoti said that the impact of
said that Coca-Cola is looking to start selling in
merchandising varies from product to product. The

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Delphique ‘08 MARKETING 23

CMYK

MARKETING

stores with 'Permanent Beverage Section’.

What are the new horizons in the field of
Visual Merchandising and its execution?

Mr. Ponugoti disagreed on the use of roof for
advertising. Mr. Adrian added that the line of vision
of humans is between few feet above and below
the eye level and hence it is futile to place anything
above or below that.

Mr. Vishal said that in case of products such as
cigarettes where advertising is banned, POSM
becomes all the more important. It is the only
source of communication with the consumer.

He added that the company used merchandising
actively and aggressively for Bingo as it needed to å
Visibility
beat Lays, the market leader in snacks. It used rack å
Freshness
and rack header to display the product outside the
å
Availability
shop. The purpose of rack header was to highlight
the latest entries in that category. It's the responsibility of the merchandiser to take
Mr. Ponugoti added that it is important to provide care of visibility and freshness.
retailer with ready to display solutions such as Mr. Ponugoti added that the strategy needs to be
Gillette rack. The rack makes it convenient for the very simple as the merchandiser and retailers are
retailer and improves display also. He also generally not very well educated in India. The
explained how P&G pushed the sales of Whisper design and implementation needs to be very
by pushing it in front rack as the consumers were simple and straightforward.
shy to ask for it otherwise. Therefore, it is one Mr. Davinder said that merchandise such as rack
product where visibility matters a lot. and fridge is valued by all retailers. In case of these
What can be the improved measures to products, the merchandiser and the retailer, both of
gauge the merchandising efficiency and them benefit and it is easier to convince retailer for
effectiveness? displaying these merchandises. It is important to
convince the retailer in terms of profit/sales
Mr. Vishal said that the basic strategy for
increase by displaying the company's
merchandising needs to ensure the following:
merchandise.

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KYMC

Mr. Davinder said that in order to improve that tend to provide a great shopping experience to
merchandising, the companies need to have a the shopper.
separate team for merchandising and advertising
Tier 2 or visible distribution: - These are the ones
as the advertisers have a different way of thinking.
which focus mainly on the visibility of the products.
Coca-Cola has also implemented this strategy. He
also said that in order to improve the efficiency it Tier 3 or Distribution stores:- These are stores
becomes important for a company to convince the where products are just brought from the factory in
retailer that he is going to loose his sales without a displayable format and kept in the stores.
the products form that company i.e. having an At this point Mr. Vishal brought in the concept of
upper edge over the retailer is very important for a permanent selling unit (PSU) which is especially
company to have good visibility in a store. Instead used in the restrictive category. He also said that
of taking permission from the retailer for space it is today it is important to focus on in-store
important to make him realize the value adds that advertisement instead of creating a new connect
the products of that company would do to his sales. with the customer as in-store advertisement could
This would help a company gain an upper edge help a customer to recall the brand. Also the
over its competitors. POSMs that are used for a particular product
Mr. Ponugoti added that it is more efficient to use should be consistent across all the stores and
merchandising that lasts long as there is execution should also be consistent with the advertisements
costs associated with it. It is good to have POSM of the product so that a customer is able to easily
that lasts 3-4 years compared to a few months. Mr. recall the product at the time of purchase.
Vishal however added that the purpose of POSM The panelists also discussed the concepts of core
varies from product to product. For a category like creative idea and core creative and how they are
biscuits ITC would prefer to have an expensive related to the concept of merchandising.
POSM whereas for a category like Hatke Jhatke
The panelists later went on to discuss different
the company may not prefer spending huge
means of merchandising and issues related to it.
amounts on the POSMs.
Some companies use in house merchandising
What are the new horizons in the field of
while others use third party for the same purpose.
Visual Merchandising and its execution?
Sometimes there are issues such that the retailer
In answer to this question Mr. Singh said that in promises to provide some space to the salesman.
today's scenario stores could be divided into three However, when the merchandiser goes to the shop
tiers:- the retailer disagrees. Another problem with using
Tier1 or premium stores: - These are the ones internal merchandising is that it cannot be audited.
However, in case of third party merchandisers, it is

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MARKETING

difficult to take any action even if it is known that the å
To evaluate the strengths, weaknesses and
execution is not proper. opportunities of various FMCG companies in the
This marked the end of an enlightening discussion merchandising strategy.
with our eminent panelists that greatly enhanced å
To study the performance of merchandisers and
our knowledge with respect to the issues that the difficulty in tracking the implementation and
merchandising issues. benefits of merchandising.

INTRODUCTION METHODOLOGY
The intent of the research was understand the The methodology adopted was
current practices that exist in the FMCG sector
(a) Literature study - Secondary Research was
especially in the unorganized sector and to study
done via journals and various websites.
the possible future trends related to visual
merchandising. The main objectives of the (b) Primary Research –Primary research was done
research were:- mainly by visiting FMCG stores and gathering
data about the merchandising policies followed
å pros and cons of merchandising were
To identify
by FMCG majors.
discussed from the viewpoint of all stakeholders.

å
To identify key issues and concerns in FINDINGS
merchandising were discussed next.
STAKEHOLDERS:
åthe performance of merchandisers and
To study
The major stakeholders in merchandising are
the difficulty in tracking the implementation and
classified as:
benefits of merchandising.
å
Company

å
Distributor

å
Retailer

å
Buyer

With Respect to the company the major players
involved are the marketing division and the sales
division. The major role of the marketing division is
the designing of the communication strategy while
the main role of the sales division is designing and

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KYMC

implementing the execution strategy. major players involved are distributor, sales force
and merchandiser. The distributor is responsible
The benefits sought by a company in doing
for stocking and warehousing of merchandise. The
merchandising are:-
role of the sales force is handling the distribution
å
Communication and execution of the merchandise. The
å
Brand Building merchandisers are the third party who is the visual
experts responsible for checking out the visibility of
å
Relationship building
their products.
With respect to the retailer the major players
The benefits sought by the merchandiser are:-
involved are owner of the shop and the shop
worker. The shop owner is mainly concerned with å sales
Increased
issues related to modern and traditional retailing å and schemes
Incentives
whereas the main role of the shop worker relates to
å
Relationship
execution and maintenance.
å
Relation and soft skills
The benefits sought by a retailer are:-

å benefits
Monetary

å kind
Benefits in

å benefits
Intangible

With respect to the buyer the major players
involved are buyer, the influencer and the decision
maker. The role of the buyer is to make the final
purchase, the influencer is the one who influences
the decision of the buyer with respect to the
purchase and the decision maker decides various
parameters related to the purchase.

The benefits sought by a buyer are:-

å
Aids recall

å buying process
Facilitates MERCHANDISING EFFICIENCY:
å
Convenience and utility The merchandising efficiency can be categorized
in to two types:-
å
With respect distributor and merchandising the

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MARKETING

å
Communication efficiency å
The ceilings of the stores can also be used for
å efficiency
Execution advertising as that space is mostly unutilized and
can act as a good means for in-store advertising.
Communication efficiency relates to visibility,
attractiveness and message delivery. Visibility can åportion of the shelves which are mostly
The front
be brought about proper POSM placement left unutilized can be brought into use for
whereas attractiveness can be brought about by a merchandising purposes.
good POSM design. A good stock placement can All in all we managed to touch upon the various
ensure good message delivery. aspects related to the current practices of
Execution efficiency is again of two different types:- merchandising and also some of the future trends.

å parameters
Operation

å
Post-execution parameters

The various operation parameters that are
responsible of execution efficiency are:-

å by the merchandiser in the outlet
Time spent

å
Relationship of the merchandiser with the sales
man

å schemes and benefits given to the
Payment
retailers

å
Overcoming the space constraint

FUTURE TRENDS:
Some of the future and upcoming trends in
merchandising are:-

å and glass windows in the stores may
The walls
be utilized more efficiently for merchandising.
There exist transparent windows wherein it is
possible to use the outer side of the pane for
advertising and from inside the window is just like
any other transparent window.

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OPERATIONS

Productivity or Supply Chain -
Where should Indian
Manufacturing firms focus?

Delphique ‘08

CMYK

OPERATIONS
“Productivity or Supply Chain” - Where should
Indian manufacturing firms focus more?
PANEL SPEAKERS
Mr. Venkata
å Reddy, Vice President, Supply Chain,
Spencer's Retail Ltd.

Mr. Gaurav Gupta, Deloitte Touche Tohmatsu India
å

Private Limited.

Mr. Alok
å Srivastava, Managing Director, APAC
Sourcing Solutions Ltd.

Ms. Venu
å Vashista, Department Manager,
Logistics, P&G

Mr. Girish
å V Aivalli, Procurement head of Cargill
India Pvt. Ltd

supply chain system especially with the vendors
EXPERT OPINION
which would help in having a good SCM and
After the student's research team presentation of increase in productivity. According to him,
their research findings and posed few questions in productivity is impacted by structural issues and
front of the panel, the moderator, Mr. Girish V lack of understanding about the benefits of
Aivalli, took over the proceedings and moderated increased productivity. He advocated easing of
the whole course of discussion between the norms for global firms to invest in India. He
eminent panelists. supported supply chain over productivity because
Mr. Venkat Reddy of Spencer's Retail spoke about a better supply chain mechanism automatically
the high growth rate of Indian economy and its leads to a higher efficiency and higher productivity.
huge potential because of the unmet demand. However, it is difficult to segregate the two. One of
However, one of the problems faced by India is the the techniques to increase productivity could be
scale of production. Citing his experiences at ASN i.e. advanced shipment notification. He
PepsiCo India, he quoted problems of strongly believed in balancing short term and long
implementing automation at a large scale. term goals.
Speaking primarily from the view of retail industry To add dimensions from other sectors of the
he gave stress to concentrate initially on improving manufacturing industry, Mr. Girish put up a

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29 OPERATIONS Delphique ‘08

KYMC

question that retail may be a special case; but the shortcomings of the Indian manufacturing sector.
labour productivity plays a major role in most Capital scarcity is leading to problems in
sectors of the manufacturing industry. implementing automation. He advocated
government involvement in such situation. Poor
Mr. Gaurav Gupta from Deloitte Touche Tohmatsu
infrastructure and stringent labor laws are
India Private Limited, who also mentored the
practically hindering the productivity. He suggested
student's panel, pushed the importance of
the use of effective BoT (Build operate transfer)
benchmarking. He believes that benchmarking
system, women empowerment and respect for the
becomes a critical factor for improving the
system to increase productivity. He felt that the
productivity in the long run especially when we are
organizational structure of the firms should be
competing with global firms. According to him,
more transparent so that there is better co-
awareness about the quantum of benefits that can
ordination between the firm and their suppliers. He
be derived by benchmarking is very important. He
believed in replenishment model rather than
laid stress on high investment in technology and
forecasting and he also shared the 3C's i.e. co-
automation and stated such steps very critical for
operation, communication & co-ordination for
the manufacturing industry as a whole. He too
achieving long term gain in productivity.
supported the fact that when we are in the initial
face of growth i.e. 5- 10 years of operations it
becomes very important to look for efficient supply
chain mechanism as a toll for reducing costs. Later
productivity plays a very important role in
generating profits.

Mr. Alok Shrivastava, MD of APAC Sourcing
Solutions and former MD Ranbaxy and Honeywell,
who has had vast international exposure,
discussed the topic from a macroscopic point of
view. He compared India and China and talked
about the special economic zones (SEZ's). Even
though India started early in constructing SEZ's, it
was only when China started constructing huge
SEZ's, India followed the suite. China focuses
Ms. Venu Vashishtha shared her experiences from
more on process innovation which is very low in
P&G and focused on 2 critical factors for supply
some of the Indian industries like chemicals. He
chain management- people and better supplier
quoted capital scarcity as one of the major
collaboration. People which involve employees,

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30
Delphique ‘08 OPERATIONS

CMYK

OPERATIONS
vendors, transporters, customers etc. should base amongst the emerging economies
develop a positive attitude. Also, better accounting for 70% of India's exports. The
collaboration with people can be achieved by the incremental capital output ratio for the industry has
organizational design and it would result in lower improved from 0.62 to 0.59. Mckinsey global has
predicted the Indian consumer market to grow to
the world's fifth largest by 2025, thus highlighting
the bright prospects for products manufactured in
India. The manufacturing growth rate, however,
has decreased from 12.3% in 2006-07 to 8.8% in
2007-08. It is mainly due to poor infrastructure,
bureaucratic red tape, restrictive labor laws, and
outdated technology. Between 1990 and 2007,
industry's contribution to the economy has
remained stagnant, crawling from 25% to 27%.
logistics cost. She said that to improve productivity
education system needs to be made strong. She Key issues ailing the sector
believed that employees learn in 1st year and start
contributing in consecutive years. She strongly Supply Chain management:
believed that it is not possible to isolate Against a world average share of 15-20% of the
manufacturing from supply chain and therefore total manufacturing supply chain expenses
there is great need for collaborative measures and contributed by the logistics component, India is an
participative methods between the inbound underperformer with logistics contributing to 30%
activities i.e. manufacturing and outbound activity of the supply chain costs. Two major issues as
i.e. the supply chain. For achieving this she found from the research were
suggested using the following measures:
Poor inventory management: Currently, the total
åTPM: Total Productivity management inventory holding costs account for about 20-40%
åIWS: Integrated Work Systems of the inventory tied-up costs, which in turn,
åCBD: Customer Business Development in place of account for 40% of the manufacturing GDP. This
sales accounts to a figure of US dollars of 1.2 to 1.6
billion. The research showed that Indian firms
åSBD: Suppliers Business Development
particularly lack in areas like product design and on
Indian Manufacturing Industry time delivery. Also, poor inventory management
put a majority of the Indian players into a vicious
The Indian manufacturing industry is the 4th

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OPERATIONS Delphique ‘08

KYMC

circle. Poor inventory management leads to poor å
Create an information flow with business
replenishment and poor supply leading to partners
increased inventory holdings which in turn leads to
å
Employ Vendor Managed Inventory (VMI)
late orders which drives up the logistics cost. This
puts Indian players into precarious situations. å the inventory from forecast
Decouple

Lack of supplier collaboration: Indian supplier å
Do inventory profiling
collaboration at 9% overall seems pretty low å
Reduce pilferage and improve physical handling
compared to 36% for USA and 33% for Germany.
å
Clear visibility of warehousing
Research done for different manufacturing
industries show that supplier's involvement and Productivity:
customer involvement is poor in most sectors of the
industries. In automobiles, 40% respondents Studies have shown that a 1% increase in labour
indicate low level of involvement, but 60% is productivity and a 1% decrease in both cost of
equally divided in all the other 3 segments. capital & capital intensity will lead to an increase in
Demand management (64%) and order fulfillment annual investment growth by about 14.5%
(54%) have higher involvement but in case of
inventory management the customer involvement
(50%) is lower. In FMCG two-third respondents
indicate low involvement for both supplier and
customer. Customer is more involved in distribution
management (60%) and product development
(64%) and no involvement in import-export. In
Consumer durables, either very low or very high
participation was observed. In Engineering, 26%
The current position of India with respect to China
respondents indicate that there is high customer
(graph shown above) in terms of manufacturing
involvement in different processes. Also the
Sector GDP in Rs at constant price per 1000
supplier involvement was found to be low in
workers employed shows that both India and China
demand management.
were almost comparable back in 1980s whereas
Recommendations now India stands at 44.95 compared to China at
351.7524 and USA way ahead at 4783.59. Two
The following recommendations were proposed major issues found from research were:

Lack of on the job employee training: Low skill
levels were identified as major hindrance to

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Delphique ‘08 OPERATIONS 32

CMYK

OPERATIONS
productivity. Findings of the research showed that employers, 'employability' refers to possession of
only about 15% of manufacturing firms in India the skills, knowledge, attitudes and commercial
provide on-the- job training, which raises their understanding that will enable new employee to
productivity by a 25% above those that do not make productive contributions to organizational
provide training. An estimated 80 million young objectives soon after commencing employment.
workers need up to 2 years of training for even Therefore vocational institutes should do the
basic skills. The possible reasons for firms to not following
provide training were low levels of education,
å
Modifications to existing course content in
limited resources for training, imperfect information
consult with the employer. Introduce new courses
with the employer about the benefits of training and
and teaching methods and expand provision of
poaching of trained workers. The possible effects
opportunities for work experience
of such deficiency were increasing business costs,
job retention rates drops, less global investment å
Embedding the desired skill sets within the
and high relocation cost. courses

Inefficient work environment for the labour: India is å'stand-alone' skill courses which are
Offering
infamous for its stringent labor laws that very much effectively 'bolted on' to traditional academic
hamper the productivity. Some of the road blocks programs
are

å and strikes: According to their study”
Disputes
manufacturing sector accounted for the highest
number of disputes (i.e. 63.60% of the total
industrial disputes ) with a time lost of close to
14million man-days.

åLabour Laws: Laws are again stringent
Inflexible
and inflexible.

å
Poor incentive structure.

å
Low expenditure on R&D (only 15% of total
sales)

Recommendations
Following recommendations were suggested

Enhancing employability: Rather than providing

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33 OPERATIONS Delphique ‘08

KYMC

New Institutional Arrangements: commitment, lower absenteeism and lower labour
turnover.
å end manpower through collaborative
Create high
efforts: By pooling resources of a large number of Collaboration with Labour Unions:
institutions a critical mass can be built and high-
In introducing all schemes relating to productivity,
end manpower can b produced in sufficient
such as, system of payment by results, individual
numbers
and group incentive schemes, norms of staffing
å
Embedding the desired skill sets within the and workload, changes in organisation and
courses methods, rationalization, mechanization etc.;
agreement with concerned unions must be
å'stand-alone' skill courses which are
Offering
established.
effectively 'bolted on' to traditional academic
programs Effective Labour Legislation:
New Institutional Arrangements: Firms should work with Government Organizations
like FICCI to bring about labour reforms.
å end manpower through collaborative
Create high
efforts: By pooling resources of a large number of
institutions a critical mass can be built and high-
end manpower can b produced in sufficient
numbers

å
Skill development networks: For engagement of
higher education institutions with industry and
employers, sector-specific membership based
networks could be created. These networks
would also compile and collate high quality labour
market intelligence and make it generally
available to all for making informed decisions.

Labourization: (Financial Participation of Labour)
Distribution of Gains from Productivity:
It means moving from the Master-Servant
relationship through a better deal, joint The gains of productivity should be distributed
consultation, joint management, auto- between shareholders, workers, consumers and
management, and participation in ownership to plough-back effect. The formula evolved by NPC
Worker's Ownership .It is a means of improving and Dandekar to allocate the gains of productivity
motivation and productivity. It leads to greater between the shareholders and others was stated.

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Delphique ‘08 OPERATIONS 34

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STRATEGY

Opportunities For The
Auto Component Industry

Delphique ‘08

CMYK

STRATEGY
Opportunity Areas and Challenges for Indian
Automotive Component Players
PANEL SPEAKERS
Mr. Gaurav Gupta, Senior Manager, Deloitte
å

Mr. Puneet Kalra, Senior Principal, Monitor Group
å

Mr. Kiran
å Deshmukh, Deputy MD, Sona Koyo
Steering Systems Ltd.

Mr. D. M.
å Mani, General Manager (R & D), Subros
Ltd.

å Raina, Strategy Management Area, MDI
Prof. S N

the discussion by emphasizing the need for
EXPERT OPINION
initiatives at three levels – firm, industry and
An insightful presentation by the research team government level to ensure that ambitious targets
was followed by an invigorating panel discussion set for the Auto component sector are achieved. He
which basically covered the following key points felt ACMA needs to play a major role to help the
Further
å initiatives that need to be taken at firm, government meet the expectations of the firms and
industry and government level the industry as whole.

Possible
å impact of the launch of cars like the Tata According to Mr. Gaurav Gupta unlike the ITES
Nano sector there is no cost advantage to India in the
Auto components sector. In fact India stands at an
Preparedness
å of Indian Auto Component 8-10% cost disadvantage in comparison with
Industry to handle the competition competing nations like China and Thailand. This
Current
å and Future trends that will impact the was mainly due to the poor infrastructure mainly
Auto Component Industry roads and power supply and the high cost of
capital. Micro interventions by the government in
Firm, Industry and Government not just infrastructure but also areas like consumer
finance, R&D will be required to ensure the vitality
level initiatives
of the industry.
Prof. S N Raina, the panel moderator triggered off
Mr. Deshmukh was optimistic that GOIs initiatives

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STRATEGY Delphique ‘08

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