दृष्टिकोण – Indra's Viewpoint

The national economy is touching 9% growth rate. Manufacturing is growing at about 12 percent. But it is small and medium-size manufacturers that are growing at about 15 percent and some small-company stars are going for the triple digits.

 Between 2001 and 2006, companies with net turnover of Rs 1 crore-50 crore saw a rise of 701 per cent in net profit, compared to 169 per cent for large companies with turnover of over Rs 1,000 crore.

 Companies with a turnover of Rs 50 crore-100 crore did even better, raking in profit growth of 961 per cent over the five years.

 Smaller companies have also outperformed larger ones in the growth of net sales and operating profits. Operating and net profit margins of smaller companies, too, have expanded more than those of the larger ones. (Although there is no agreement on what constitutes an SME, private and foreign banks define SMEs as companies with turnover between Rs 10 crore and Rs 700 crore.)

 As the Economic Survey points out, “During 2000-01 to 2004-05, the SSI sector registered continuous growth in the number of units, production, employment and even exports. The average annual growth in the number of units was around 4.1 per cent, while employment grew at 4.4 per cent. Further, the average annual growth in production, at current and constant prices, was 10.6 per cent and 7.6 per cent, respectively.” Remarkably, this growth was achieved over a period that has seen a steady dismantling of reservations for the sector.

 SMEs will invest up to $1.2 billion on their Internet infrastructure and solutions this year, about one-sixth of the total IT spend for all companies at $7.7 billion this year.

RSB Transmission of RK Bahera was declared sick in 1979. Behera was not able to repay the Rs 1.65 lakh loan taken from the Bihar State Financial Corporation, and he could not even pay back Rs 10,000 that he had borrowed from his father. However, the company turned around in 1982 when the company became the sole supplier of sheet metal components to Jamshedpur-based Telco (now Tata Motors). The company moved to Pune in 1995. The company grabbed the clientele of other OEMs. The company going for a turnover of Rs 600 crore next year and has also acquired Michigan-based Miller Brothers Manufacturing for $19 million recently. Behera has today eight plants across the country.

Consultants Dun & Bradstreet have identified auto components, textiles, food processing, pharma, engineering and chemicals as sectors in which Indian SMEs could become globally competitive.
According to Dun & Bradstreet, SMEs in the textile sector, for instance, expect an average growth rate of 32 per cent over the next two years.

Nitin Mandhana, managing director, Indus Fila, took his company from a turnover of Rs 14 crore in 2004 to Rs 247 crore in 2006. The company set up a centre of excellence in 2006 in Nelmangala on the outskirts of Bangalore for Rs 60 crore. Here, the best global brands – such as GAP – connected to Indus Fila would be given space to set up design studios and help his team manufacture the latest fashion trends for the US and Europe. “By teaming up with German apparel manufacturers such as Bornemann and Bick in 1992, our reach to foreign markets has been easy. This has tremendously leveraged the way Indus Fila is reaching foreign markets,” says Mandhana.

The auto-component companies studied by Dun & Bradstreet grew at an average 35 per cent over the past two years and expect the momentum to be maintained.

M. Radhakrishnan started his auto-ancillary business, Autolines, in 1996 with turnover of a mere Rs 11 lakh. Bankers wouldn’t even look at their business plan. Somehow, Radhakrishnan managed a working capital loan from a local co-operative bank and pumped in his own money to survive and expand. The company reached a turnover of Rs 50 crore and bankers started beating a path to their doors. Autolines today is an Rs 125-crore company, a tier-1 supplier of sheet metal to the Tatas.

Precision Camshafts is another success story, a company manufacturing at least 3 million camshafts a year today. The Rs 75-crore company has gone on to become the sole supplier of camshafts to firms such as Ford and GM in Europe.

The auto ancillary units in the industrial areas of Chikrapur, Bosri and Alandi around Pune are flourishing. Banks are assisting the entire supply chain, because of the link to the larger OEM. I had written about Involute Technologies, a Rs 70-crore company with many tier-3 suppliers of auto components connected to it. Banks are funding them because of the link to larger OEMs such as John Deere and Tata Motors.

Everest Kanto Cylinder Ltd. has taken less than a decade to become the world’s second largest maker of cylinders for high-pressure, compressed natural gas. Rico is planning to acquire a Thai and a Turkish auto-parts maker. Orient Craft bought a failing Levi’s plant in Spain for $15 million, dismantled it and reassembled it at its Gurgaon plant. Everest Kanto already has a cylinder plant in Dubai and is building a $50 million plant in China. Iran and Pakistan, two of its best customers, are pestering the company to build factories in their countries.

Are these stories that I collected from the various places in media not the great going-ons in Indian manufacturing?

The New Generation
Mistake-proofing
Autoline plans Rs 75 cr initial share sale
Indian entrepreneurs have learnt to think big

Autoline bullish on design capabilities

In seventies power outages in West Bengal was horrible. Hindustan Motors was under very tight financial conditions. However, it had to make its first investment on huge Japanese diesel generators of about 20MW capacity. We really felt bad as we wanted instead to investing on production machinery to de-bottleneck certain operations in its manufacturing process. As I find today the power outages are not that frequent in West Bengal, may be because of the closures of most of the manufacturing companies. But in rest of the country particularly in Delhi and NCR region, it is still the biggest of the worries in manufacturing companies and even for the service providers’ facilities.

For the whole country, the current demand of power exceeds supply by a factor of 1.2 times. However, one may be puzzled to find that manufacturing that is heavily energy intensive sector is fastest growing today at 11.2% to boost the GDP growth to respectable level of 9% or more. It is happening because the manufacturing sector has more than 30,000 MW of captive power generating capacity. It’s costlier but at least keep the production facilities running.

The companies are doing its best to find innovative ways to conserve energy and use it in most efficient way. According to a study by the India Brand Equity Foundation, in five years between 2000 and fiscal 2005, sales grew at an average of 11.5% per year, while power and fuel expenses grew only at 7.3% despite steep increases in the price of both utility- supplied power, as well as in price of fuel for in-house generators.
Even the steel sector that is highly energy intensive, despite the presence of large and inefficient pubic sector units, managed to bring down the sales-to-fuel ratio down by nearly 3% during this period.
The Carbon Sequestration Leadership Forum points out that ‘India’s energy intensity vis-à-vis GDP growth has been falling and is about half what is used to be in early 70s. Energy consumption per unit of GDP in purchasing power parity term is only 0.19-kilogram oil equivalent per dollar as compared to 0.21 of the world average. And this is what that has made India’s manufacturing sector globally competitive even with very poor infrastructure.

However, it doesn’t say that India can keep on doing the expected growth without solving the power shortages and distribution losses. It must build its mega power plants fast. It must go ahead and exploit the potential of hydropower such as the 3,000 MW Lohit hydel project in Arunachal Pradesh from its river in all the northern states. It must cut down its distribution losses. (A whopping 33% of electricity that is generated is lost or stolen during distribution and transmission. On a world scale, even countries like Cameroon and Nicargua lose less electricity. And according to estimates only around 60% of the power produced is billed, while 45-50% of the overall amount is paid. The losses tripled from about 9% in 1971 to nearly 30% in 2003 when even in Bangladesh, for instance,losses fell from 31% in 1971 to 12% in 2003, almost a third of the losses recorded in neighbouring West Bengal.)

However, the good news comes from the result of the recent bids for the two mega- power projects at Sesan and Mundra. Private companies have own both the projects and not the NTPC that repeatedly fails to meet target set. And very soon the private players will enter in the most economic and preferred source of energy, the hydropower. Unfortunately, the share of hydropower in the total power output has declined from about 50 per cent in 1962 to about 26 per cent now. Of the estimated 1,50,000 Mw hydro- power potential, only 33,600 Mw has been developed so far.

The solution is known. Indian project managers are to act. India needs many more effective project managers such as Sreedharan in Delhi Metro. It must create a world record in completion of power and distribution projects to leave the power problems behind in next five years.

Read “The road ahead”
News ‘Increase in power generation pushes up infrastructure performance’

But let me share with you all the reasons of my happiness today that our great President wished to all the Indians in his greeting for the New Year. I was really happy to find Sushmita as the first to send us an-email greeting from New York. And then I got my usual stuff of happiness from coverage in ‘Newsweek’. The door bell giving the message that Jai has come as promised yesterday to help Yamuna in household works, made me dance It assured that on the first day of the year I shall not be wasting my time on some thing that I don’t relish though I never show it. But the sight of the decorated Shakti Temple gave me an excitement. I first enquired if today happened to be some auspicious day as per Hindu calendar. No, it is only the first day of the year 2007. It is the flexibility that is coming because of globalisation. We are participating in the festivals and enjoying for all and every reason. I wish people keep their faith very personal and don’t be rigid in following the rituals or manifestations. The milk counter of mother Dairy was closed. The attendants had gone to join Bakr-eid prayer. But they were smart enough to outsource the task. I could get my milk from the bread vendor there. Are these not the reasons for great happiness, when right in the morning we faced power outage and a dense depressing fog?

And now my wish list for the year!
 

Noida becomes cleaner, and by some magical power, Mr. Sreedharan gets the metro link of Noida with New Delhi completed in a year breaking ell records.

Golden Quadrilateral and major portions of NSEW Corridors of NHAI get operative and I drive up to my village home on the metalled road promised under Bharat Nirman.

A tough and missionary regulator takes over power sector, cuts down the distribution losses by putting every one behind that by persuasion or the imprisonment, expedites the capacity building through fast track execution of power plants, mega or hydro, and doubles the subsidy to those using alternative power sources of biomass, solar, and wind.

IITs and IIMs open extension centers in capitals of the rest of the states including that of Bihar till new ones are established. Each district headquarter of Bihar establishes an education Hub or SEZ with at least one engineering and medical college, 10 Industrial training Institutes, and 20 good Higher Secondary Schools.

My village gets a healthcare center, and so do the other villages of the country.

India attains 12% GDP growth rate.

India, Pakistan, and China get into a no war treaty, and form an economic block

USA gives up its Dadagiri. Peace returns to Iraq. Let Sadam soul rest in peace.

News: South Korean Ban Ki-moon, the new U.N. secretary-general on Monday, announced his first two appointments.Vijay Nambiar of India, a special adviser to Ban’s predecessor, Kofi Annan, will be his chief of staff

Jayant Narlikar, astrophysicist has written in ‘Truth Imitates Fiction’ how the good fiction writers predicts the things to come in future:

“Fred Hoyle, well known for daring ideas in astrophysics, once proposed that the space between stars is not empty but contains vast clouds of chemical molecules. His research papers on this topic, sent to reputed scientific journals, were rejected. In the 1950s, most astronomers believed that the interstellar space contains hydrogen atoms only.

They could not reconcile their beliefs to the idea that molecular structures can survive in space. Hoyle, faced with a blackout of his ideas, wrote a science fiction novel called The Black Cloud, in which he proposed the concept of vast clouds of molecules occupying interstellar spaces. The novel was immensely successful. Through the 1950s, however, technology had advanced to a level where astronomers could probe the interstellar space with millimetre wavelength radiation received by suitably designed dish antennas.

Analysis of the radiation revealed that it had been emitted by specific molecules in the interstellar clouds, precisely as Hoyle had anticipated in The Black Cloud. Today, the existence of giant molecular clouds is taken for granted. This was a case of sci-fi anticipating real science.

There are other instances of science fiction anticipating real situations, if not contemporarily, at a later stage. Jules Verne’s novel, From Earth to the Moon, anticipated by a century, the reality of Apollo 11 Mission of 1969. Writings of H G Wells, and later by Arthur C Clarke, Isaac Asimov and Ray Bradbury contain perceptive references to situations that developed later.

In a futuristic essay written in 1945, Clarke looked at the possibility of geostationary satellites playing a role in communications technology. This became a reality some three decades later, when man created rockets that could launch satellites in such orbits.”

And it’s heartening when I found Sashi Taroor writing in his lead article ‘Looking to the future with Brand IIT’ about the contribution of Vedas in the scientific endeavour of our ancestors. “After all, the roots of Indian science and technology go far deeper than Nehru. The Rig Veda asserted that gravitation held the universe together 24 centuries before the apple fell on Newton’s head. The Vedic civilisation subscribed to the idea of a spherical earth at a time when everyone else, even the Greeks, assumed the earth was flat.”

Should we not consider our ancient sages who wrote about the ‘Puspak Viman’ and sophisticated weaponry in ‘Maha Bharat’ in the same manner and give credit to their foresights? Why are our leftists intellectuals shy of talking with due respect to those great ancestors as if they only belonged to the families of a particular political party?

Indians must take pride to prove the supremacy in knowledge sector and must never get into trap to be complacent.

With no one at home in evening I switched on TV, as usual the news channel. Footage of Saddam Hussain, the former head of Iraq getting executed was just depressing for any sensible person. He refused to put the hood. His facial expression was calm. It is difficult to imagine what must be going in his mind. A ruler for years, a leader of the nation must not get executed like this. It reminded me of Bhutto’s execution. What an end!

Mob violence over serial killings
Hunted, Hanged
Saddam buried in his hometown: Tribe, family
Hussein Video Grips Iraq; Attacks Go On
On the Gallows, Curses for U.S. and ‘Traitors’
Around the World, Unease and Criticism of Penalty
In Hussein’s Last Minutes, Jeers and a Cry for Calm
Vengeance of the Victors<

Wish you the happiest New Year

Move ahead without fear

Keep open eye and ear

Look all aroud for queer

Enthralling mantras to hear

Use the best of gear

Avoid being at rear

You will find many your near

Enjoy all thr’ the year

A year of hope, loss and triumph</A very very happy new year

58% Indians work in the agricultural sector.
21% is agriculture’s contribution to GDP.
60% farmers own less than 2.5 acres of land.
1.8% is the growth rate of food grain production.
45% marginal farmers are indebted.
40% agri-subsidies go to fertilizer sector.

A Planning Commission approach paper for the 11th Five Year Plan concedes deceleration in agricultural growth from 3.2% between 1980 and 1996-97 to 1.5% subsequently.

The National Sample Survey Organisation estimates that 40% farmers would like to quit farming if they have the option to do so.

Government investment in agriculture has fallen from 14.9% in the earlier Five Year Plans to 5.2% in the current plan.

A Reserve Bank of India report says that bank lending for agriculture has declined from 15.9% in 1990 to 9.8% in 2003.

A Food and Agriculture Organisation study states that if 10 hectares of land are irrigated, employment increases from 8 to 24 persons.

From 1970 to 1999, the average size of holdings declined from 2.28 to 1.55 hectares and the proportion of landless farmers increased from 20% to 35%.

According to a 1999 report of the International Food Policy Research Institute (IFPRI), an additional Rs100 billion invested in agricultural R&D would increase productivity growth by 6.98%. And every extra million spent on R&D would raise 91 poor people above the poverty line,

A 2005-06 Department of agricultural Research and Education report found a shortfall of 1819 scientists, and 1966 administrative, technical and supportive personnels.

India spends 0.31 % of its GDP on R&D, which is far below industrialized countries spending which ranges from 2.45 to 4.02%. Overall public research funding grew at 3.16% in the 1970s and 7.03% in 1980s, slowing to 4.61% in the 1990s, and further declining with the shift in public expenditure priorities in the post-liberalisation period.

A 2006 IFPRI publication ‘Agricultural R&D in the developing World: Too Little, Too Late’ finds that private research funding has grown at 7.5%, compared with 5.1% in the public sector over the same period accounting for 11% of total spent on agricultural research in 2000.

The FICCI Food and Beverage Study of 2006 estimates that 30% of the farm produce is being wasted every year due to the lack of infrastructure such as cold storages and refrigerated vans for procurement to reduce wastages and ensure freshness.

The yield per hectare for wheat and pulses is 2,600 kg and 600 kg respectively and has fallen from a high of 2,780 kg and 635 kg in FY2000.

India’s population has been rising at 1.6% per annum, which means that the growth in wheat and pulses production must also increase at this minimum rate to ensure that there are no supply bottlenecks.

Production of wheat in FY2005 and FY2006 was 68.4 million tonnes and 69.6 million tonnes, with a peak being attained in FY2000 at 76.4 million tonnes.

At a conservative level, if the post peak production base of FY01 is used as a benchmark when production was 69.7 million tonnes and a growth rate of 1.6% per annum is extrapolated forward, the total production should have been in the vicinity of 75 million tonnes.

At the current level of 68-69 million there is a deficit of around 5.5 million tones ( based on desired growth rate of 1.6%). Stocks had depleted from a high of over 26 million tonnes in March 2002 to 2 million tonnes in March 2006. (So import)

In case of pulses, the production has come down from a peak of 14.9 million tonnes in FY99 and FY04 to just 13.1 million tonnes in FY05 and FY06. Production based on an annual growth rate of 1.6% should be in the region of at least 14.8 million tones, based on a base of 13.4 million tonnes in FY00. (Is not the reason of higher prices?).

Solutions are obvious. India must invest in the agriculture sector, in R&D, in irrigation, intermediary-less sales of produce and effective information centers to provide answers to farmers’ queries. At least, the pending irrigation projects must get priority and get completed. We shall come back on some.

‘Focus on small farmers’<

The Right Act Arvind Kejriwal

IIT engineer turned-bureaucrat-turned-information activist Arvind Kejriwal is one of the heroes among the activists across the country that are engaged in propagating Right to Information law against all resistance from a hierarchy of custodians of information. And the pioneering efforts gained international recognition when Arvind got honoured with Ramon Magsaysay award. But within a year of its enactment, the government attempted to amend the RTI law to deny access to sensitive file notings. Kejriwal played a vital role in mobilising public pressure to drop the proposed amendment. Kejriwal’s latest initiative is to help the Bihar government set up a call centre to enable illiterate villagers to access information. I keep on following media report on Arvind, as he is known to my eldest son from his IIT days.

Pistachio King Lajpat Rai Munger

Lajpat Rai Munger got caught while taking a bribe of Rs 500, when he was head constable in Punjab Police in 50s. And then happened the transformation. He left Punjab Police in 1954 and managed to reach America, the land of opportunities, in 1966. And the metamorphosis and resounding success as a businessman followed. From an ordinary menial worker, he switched to a small business. Today, Munger owns 8,000 acres of land in California and is the largest grower of pistachios in the world. He is also the biggest blueberries baron in California too. The 90-year-old Lajpatji came back from the US early this year to donate a whopping Rs 20 crore to set up an engineering college in Hoshiarpur, that to him is his “penance”. Here is one example that many can emulate.

Abhayanand- A Police Officer, A Teacher Too

Abhayanand, a 1977 batch IPS officer currently posted as ADG (HQ), is back in active life of a policeman making a difference in Bihar. He is one of the key persons behind the 5,000-odd convictions in 2006 in Bihar. Even high and mighty MLAs and MPs in Bihar are scared, as the cases against them have been suddenly reopened. Besides being an officer, Abhayanand ji is a teacher too and the founder of Super30 Institute. Along with Anand Kumar the maths wizard, Abhayanandji provides coaching to 30 IIT-aspirants of whom 28 cracked the IIT-JEE this time. And the students are the poor ones, including Dalits who cannot afford tuitions of the professional coaching institutes. Abhayanand is an example of double role, and one doing both with excellent success rates.</POS

We could decorate our Christmas tree in a fairly decent manner. And surprisingly, I found many of the shops in all the small and big markets sell items relating to Christmas. Is it the universalisation of all major festivities without any link to any religious faiths in India? Naturally the media have been playing the biggest role. And from Prayag to Puri, you see this happening everywhere.

India has nearly 200 national research laboratories, an equal number of research establishments in the central sectors, another 1300-odd recognized R&D units in the industrial sector, besides the R&D facilities with India’s university system that constitutes of 237 universities, 39 ‘deemed’ universities and 10 institutes of national importance. DRDO and CSIR have established its reputations.

India’s institutions add around 200,000 people to the science and technology pool every year that is already the world’s largest. What are all these institutes and its manpower engaged in? Are the facilities available being utilizing to the optimum? Can it be made more efficient and productive to add more revenue or to create more employment?

NASSCOM estimated the global KPO market to reach $17 billion by 2010, and is confidant that India will bag about 70% of this business.

However, the NASSCOM scope of KPO considers only the traditional areas such as financial processes, legal work, human resources, in which India is already doing pretty good business. Why can’t India leverage its scientific establishments to pitch in the task and join KPO providers group that can multiply the Nasscom revenue estimates many a times?

As reported, India can’t compete with China that invest $136 billion on R&D. But how do the majority of the Indian scientists compare with their Chinese counterparts in output of researches and its quality? And how can they be made more motivated in their work? Why can’t the scientists community improve their performance to match that of Chinese?

A recent research on the world’s top 1,000 R&D spenders, consulting firm Booz Allen Hamilton identified smart spenders, who spent a smaller percentage of revenues on R&D than industry peers (over a five-year period), but still performed better. There was one Indian company in that list of 94 – Tata Motors. “Indian engineers, with an unbeatable combination of skill and frugality, may show the way ahead. Indian companies are spending less, but are getting more research done per dollar spent.” But is it true for the scientists and research workers in government institutions?

Over 500 of India’s largest listed companies put together spent less than a seventh of what Ford Motor. Though a loss-making automaker, Ford spent last year on its R&D $8 billion that happens to be the world’s largest. These 500-plus companies put together would rank 75 in the list of the world’s largest R&D spenders (put out by the Financial Times in its annual R&D Scoreboard). It’s a poor show. Ranbaxy Laboratories, the India’s largest spender, would not make in the global top 300. India must spend more, and it is happening too. While only three companies spent more than Rs 100 crore on research four years ago, today there are 14. Research investments have grown from Rs 2,405 crore to Rs 5,333 crore in that period. And now, 16 companies have the guts to pour over 10 per cent of revenues into research.

And interestingly, the centre of gravity in research is shifting to India and China. According to Booz Allen Hamilton, growth of corporate R&D in the two countries (17 per cent) outpaced North America (5.2 per cent) and Europe (2.3 per cent) with more and more of MNCs establishing its R&D centres in India and China.

In the past four years, the automotive industry’s (excluding component makers) spending on R&D has increased from Rs 243 crore to Rs 954 crore. The industry also invests 1.5 per cent of revenues in R&D that was just 0.68 per cent four years ago.And one can see that in new platforms on Indian roads like Tata Motors’ Indica and Ace, and the forthcoming Rs 1-lakh car, and Mahindra & Mahindra’s (M&M) Scorpio.

However, it is unfortunate that the huge facilities of R&D is neither used for BPO nor for developing some real useful products that can revolutionise the quality of life of the majority of Indians.

But more surprising is the indifference of our media that hardly covers even the excellent success stories of our scientists.

The Economist published ‘Carmaking in India-A different route’ on Dec 13th 2006. While China’s carmakers copy, India’s are inventing.

China, R&D Superpower?
Designing for India’s Consumers
Spare the good professor such agony
Crisis in science