Indian auto industry in the 60th year of Independence

In India’s sixtieth year of Independence if one were to look back and contrast it with where the Indian automotive industry is today in terms of its maturity and promising future, we would realise that one key factor which has played a very decisive role in its growth is the intellectual fire of its entrepreneurs. Every entrepreneur needs to be enterprising and that is a given. However, every entrepreneur may not necessarily have an intellectual fire burning in his or her belly but in the case of India most entrepreneurs in the earlier years of the industry have possessed that fire and many now as well.

It is this particular kind of intellectual zest which has kept the Indian automotive industry less foreign-dominated which, since the late 1950s, despite looking deeply towards know-how from foreign lands was able to not only absorb know-how fully but even build on what it received. India’s story is unlike that of Thailand or China. An important difference between China and India is that the former is all about a “number’s game or herd mentality” whereas India, despite being the second most populous country in the world and hence a tempting and fulfilling market, possesses an automotive industry which has largely been driven by both its engineering prowess and the Indian capacity to absorb best practices and systems fully.

The seeds of the Indian automotive industry were sown after the Indian Tariff Commission mandated the establishment of an indigenous industry in 1953 and the banning of operations of overseas vehicle makers. The fact that, until recent years, the government did not see the automobile as a necessary product but a luxury item was indeed a setback to the industry and the country as well. Other countries realised much earlier than India that the automotive industry, especially the passenger car segment, would be one of the engines of growth of their economies. But India had more pressing issues to take care of in its socialistic framework than pursue the development of this vehicle segment.

The shape that the country’s automotive industry has taken today is a tribute to industrialists like H.K. Firodia and J.R.D. Tata who tirelessly worked to see that this sector contributed to the making of Nehru’s modern India.

After the country was further opened up in the early 1990s through radical economic reforms and the influx of overseas companies in the automotive sector, it would have been difficult to imagine that a decade or more later Indian companies such as Tata Motors or TVS Motors would have global footprints. And not just vehicle makers but auto component manufacturers like Bharat Forge or RSB Group as well. Today this is a proud reality.

What is now driving the automotive industry in the country is not merely the wish of companies to proliferate the market with newer vehicles, and hence a more pronounced presence, but an amazing twist and refinement in tastes of Indian consumers who want their money’s worth and the best of what the developed world enjoys.

Money’s worth in the Indian context means that the country’s consumers are extremely price sensitive. But yet they are very demanding. These traits, and others, have posed as key challenges but inspirational factors for companies like Tata Motors and Bajaj Auto whose products have tried to meet the requirement for world-class products at affordable prices. Bajaj’s slogan “distinctly ahead” is not just a brash statement but something that has found proof in a product like its Pulsar motorcycle, which with its unique home-developed engine technology and other user-enhancing features, symbolises a proud Indian’s spirit. The Tata Indica on the other hand is another example of determination to make it big by oneself and not by depending on borrowed technology. Yet one has to admit that some of its key components are manufactured with foreign collaborations.

TVS Motors, though currently struggling towards better profitability, is a fine instance of how a company parted amicably with a foreign partner, Suzuki, and resolved to go its own way and create its own space. Today TVS Motors with its operations in Indonesia fits into the category of a transnational company.

Mahindra and Mahindra, through its path-breaking vehicle Scorpio, not only enriched the SUV segment with a product type known to be manufactured at the lowest cost ever from bottom up, but also offered families a mode of transport which would enable safer and more comfortable inter-city travel.

What is also commendable about such companies is that they have had to introduce products in a highly competitive and “unprotected” market scenario where there is already a well-entrenched presence of foreign MNCs or joint-ventures whose vehicles offer the most contemporary technologies and design. Competition being vicious and consumer tastes becoming more demanding, especially in terms of the variety of vehicle models being made available to buyers, Indian companies are also having to vie with foreign MNCs in introducing new models in shorter time periods.

So while sensitivity to price continues to rule, how fast a company can introduce a vehicle to meet a particular taste or trend and which bears the newest and most innovative technology and features have become factors that today determine how well a product will sell.

Indian vehicle makers will therefore have to live in a continuous innovative mode which will have to be combined with a very efficient and productive design, development and manufacturing system. Just having won brownie points for an Indica or a Pulsar will not do.

The other emerging trend which is not dictated by rapidly changing customer tastes but by peculiar market-specific or country-specific needs is where Indian companies, most commendably, are taking the lead. The Tata Ace is a superb example of how a niche waiting to be grabbed was opportunistically taken by Tata Motors in the one-tonne cargo segment. The other niche or “bottom of the pyramid” kind of strategy which Tata has once again taken and may have also inspired others to follow is the pursuit of not what was earlier called a Rs. 1 lakh car but what will be an aspiration to introduce a truly “people’s car”.

While Indian-owned automotive companies are doing what it takes to meet competition headlong and sustain or strengthen their market share, they are also taking bold steps in changing the management structures of their automotive enterprises. In the vehicle segment a recent instance is how Bajaj Auto’s managing director Rajiv Bajaj has recast the company into five divisions each to be headed by well-qualified, high performing and loyal colleagues. A company cannot continue to be managed in a particular manner endlessly for years but has to be flexible and dynamic according to changing business scenarios and times. This is not just being realised within Indian-owned companies in the vehicle sector but is more visible in the largely family-owned companies in other segments such as the auto component sector.

Nearly 80 per cent of auto component companies are family-owned enterprises where management batons are being gradually acceded to young sons, daughters, nephews, nieces and even to daughters-in-laws. These young business scions face multiple challenges be it generation gap related or even management-style related -- many of which are spurred by ideas picked up from overseas education programmes or internships at leading companies abroad. How they are mentored and prepared is a very vital and sensitive issue as they will be the future leaders of the automotive industry. Many of these young people are already in frontline, hands-on positions in their enterprises and most are performing admirably well.

The writing is clear on the wall that however good an enterprise may be in what it manufactures and how it manufactures, it will first have to give the utmost importance to the people it employs in the varied facets of human resource management. Getting and retaining or nurturing talent which can walk the talk and also walk along the trajectory of a company’s growth is a critical challenge that the young entrepreneurial generation within Indian-owned companies will have to cope with and better in years to come.

As is often misunderstood or perceived, the automotive industry is not just vehicles and auto components. There are vibrant smaller but equally important segments such as those of tyres and batteries which have their own indigenous success stories that make India proud in its sixtieth year of independence. The respectability that companies such as Amron in batteries and Apollo and JK in tyres have gained cannot be ignored. The same drive that Indian vehicle makers felt while developing products such as the Indica and Pulsar has also been the fuelling factor for companies in such segments as well.

There are therefore many reasons for the country to hold its head high. However there is much to be done still. While Indian auto components are now being supplied not just to aftermarkets overseas but to OEMs and Tier-1 companies worldwide, we still get to read reports of companies like Man Force Truck running into problems of localisation of components and Hyundai Motors turning to its principal’s vendors in South Korea because of issues of quality.

Unlike a small country like Thailand where there are very few of what can be called “Pure Thai” companies, the Indian automotive industry possesses a huge number of Indian-owned companies largely in the auto component sector and belonging to the small and medium scale.

One of the most important challenges that they face is how to produce quality products consistently and deliver them reliably. The other of course being that of ownership of technology – either developed by oneself or bought from an external source. If these companies wish to survive in an environment where free trade agreements or the world harmonisation of automotive standards will further diminish barriers to imports, they will need to focus particularly on these challenges and find paths which will keep them ahead of emerging competition. Life is in constant flux and this axiom is also applicable to the manufacturing sector and its enterprises. The customers that a company was able to hold in its basket for several years may not continue to be there for many competitive reasons and this is unashamedly being made clear by most vehicle makers, Indian-owned included. At the end of the day what matters is consistent quality, reliable delivery and lower costs.

The dire need first is to be aware of developments taking place, either market-driven or government-driven, in the country and outside it. Second, companies should realistically and honestly assess where they stand among their peers and third they will have to aspire to be best-in-class even if they are manufacturing one product. It is perhaps this aspiration which will not only begin their journey on improvement in myriad aspects of their enterprise but will enable them to absorb hungrily all key ingredients of best practices in not only manufacturing but all other areas of their business.

Over the years several automotive companies have been acquired, merged with others or have had to close down. This trend is definitely going to continue and even accelerate. If people think it will indefinitely continue to be business as usual then they are mistaken. Times are going to only get tougher and the sooner companies take honest views about their future the better it would be from what could eventually be embarrassing moments for many. However, what entrepreneurs can take recourse to if they decide to remain and give it their best are the inspiring stories of many people in the automotive industry who made a difference and lent their efforts to what is today a rich heritage.

(Published as lead article in India's 60th Independence Day special edition of Autocar Professional magazine.)

My own quotes

“You need to get VISIBLE today, to be RECOGNISED tomorrow!”

- (06/06/08)

"Luck (read karma)...stars...and a godfather (and the absence of one) can make a donkey into an Einstein and an Einstein into a donkey."

- (10/04/08)

"However rich or poor you are, the most important truth of life is that you came into this world naked and will leave it naked."

- (14/03/08)

"The easiest way of getting a thousand steps closer to Salvation is to do one single supreme act of kindness or goodness."

- (24/05/07)

"The sign of India's poverty is that every Indian knows on which side his/her bread is buttered."

- (24/03/04)

"What you do gets noticed, what you show gets seen."

- (02/09/01)

"A book is the mind given the garb of print."

- Undated

"Sometimes the things we do, seems to rob us of whatever sense we have."

- Undated

"An easy way in life, may also be the most destructive."

- Undated

"Inter-religious marriage is possible only if the couple responding to this need, have both wisdom and great love. If they lack in these, then either they discard their religions or their hopes to marry."

- Undated

"We are free to opinions, but opinions are not free to us."

- Undated

"It is easy to live a life of an animal, but difficult to live the life of a human."

- Undated

"There is no excuse for honesty, but there is no dearth of it for dishonesty."

- Undated

"Just like the foetus needs the solitude of its mother's womb to grow, so does each individual need solitude to grow mentally, morally and spiritually."

- Undated

"There are four kinds of people who help: Those who are asked to help; those who help because of a sense of obligation; those who help seeking favours at a later date; and those who cannot help being helpful."

- Undated

"My sense of a relationship is not one which says hello today and goodbye tomorrow."

- Undated

Copyright:Taarun Dalaya

An essay on tolerance in religion

Ours is an age that provides great skepticism to religion. It is no more an age of the crusades, the inquisition or others like these, which curtailed man's free inquiry or examination. It is an age that has seen tremendous growth in science, when man uses his capacity to think to the utmost. His intelligence makes him prone to the process of reasoning and opposes acceptance of things that require complete faith. In other words, man is today more a thinking being than he ever was.

Society is the endeavour of man to live harmoniously irrespective of thinking, religious belief, sex, race, etc. It is a state of living, which strives to adhere to the principle of `unity in diversity'. Religion is that concept which accepts the existence of a single Godhead and is seen in various forms because of different faiths that strive to realise God differently -- owing to different proponents and geographical and historical factors. Religion and society are closely linked to each other. We find religion in society and society in religion.

Religion today is more a matter of faith because of the lapse of time when it was first propounded by its prophets and religious teachers, to now when man is not a witness to the writing of the scriptures or the presence of its first proponents. Since man is a thinking being capable of rationality and reason, he is bound to question things. In fact the wisdom of questioning has become the wisdom of knowing. This questioning will also pertain to religious scriptures, beliefs and their validity.

Religion is not an attribute like breathing and seeing. A child after its birth will breathe, see, cry, but will not show signs of being religious. Thus, an infant is devoid of religion and is therefore introduced to it in his family life as a conception, a faith.

The transition from a child to an adult brings about a change in his mind, which now becomes a mature and thinking one. This transition in mind will bring changes in his acceptance of the concept of religion or scriptures, as he now becomes a being of free will, exercising his thought power. This becomes a situation where one can give free will to faith, but not faith to free will. It is here that religion cannot become a compulsion and must be acceptable on consent. When religion (the realisation of God) becomes a compulsion, it contradicts the free will of man (given by God).

This change in the man makes him form his own opinions, ideas and convictions. These he would like to share with others through the natural tendency of communication, be it through writing or through speech. Since his thoughts may not conform to the scriptures or beliefs in totality, it may come in conflict with one who conforms (a person, A) to a great extent, if not wholly. This non-conformity may be seen as blasphemous by A, who then thinks it his duty to defend his faith by rendering to the non-conformist a punishment, in this case, death.

It is here that A should realise the utter unreasonableness of his thinking, because it must be known that just as one is free to conform, the other is free to differ. We cannot condemn a non-believer or examiner, as faith normally has subjective proof and not objective proof.

Religion is a medium for helping one attain the realisation of the perfect state of being and to attain this perfection, imperfection has to be experienced invariably. But to defend itself, religion cannot employ the imperfect means of baseness, but those that rise above it.

Death may result out of a physical necessity. Thoughts and their expression cannot be subject to the physical act of killing. Killing cannot be used as a means to defend against blasphemy, since blasphemy arises out of thinking, it is this blasphemous way of thinking that should be done away with through the means of discussion, objection and persuasion, and not the person who thinks that way. We cannot end a man's life for being blasphemous, but we can try to change the person's thinking.

Since religion is a concept on faith, a concept which appeals most to subjectivity and less to objectivity, a thinking man will very naturally differ in this manner of faith. The need for religion to be tolerant is greater today than it ever was. Tolerance must be based on the consideration that a subjective experience must be compatible with objectivity.

(This essay was written while at college and at the time when a fatwa of death was declared against the author of Satanic Verses, Salman Rushdie.)

Copyright © Taarun Dalaya

Trehan v/s Shivinder Singh

Dear Reshmi and Khomba:

I read with great interest your story in the May 21 edition of The Economic Times titled "Doc's in, for now, but Escorts awaits cure for malady".

A few years ago, in India and especially the metro cities, there were fewer hospitals than there were patients and doctors and the latter, unless they were grey-haired with experience or top notch, were not well paid. Business houses that stepped into healthcare realising its lucrative potential in India, due to a growing middle-class and nouveau riche which rose with myriad heath problems due to the complexity of life and lifestyles and had bundles of cash in hand, changed this scenario.

I am sure that there are many well-known doctors, and I have closely observed one to whom I had shown my parents last year, who have moved from one hospital to another privately-promoted one assuring the owners of good business and hence negotiating a great emolument package with the surety of the doctor's large number of patients moving where he or she goes.

The biggest malaise today is that healthcare and many of the doctors who provide that have become highly commercial. One small indicator is the time that a doctor gives to a patient in a first time meeting or successive ones. Let us not pass the buck on to the explanation of there being too many people to see. An observation from a person who writes on the manufacturing sector makes one find an amazing similarity between how a quick throughput time is maintained to ensure that more material gets processed on the shopfloor for greater profit and the number of patients one sees in a day.

Dr.Trehan is very good in what he does but there is no doubt in my mind that he is as astute as any businessman like Shivinder Singh.

It's very rare that two business people, in the same business can get along. The only difference being that Dr. Trehan also wears the hat of a doctor, a profession that is driving healthcare passionately as a business as much as business people are steering their hospitals.

Sincerely,

Taarun Dalaya

Pitfalls in the NCR

The National Capital Region (NCR) of India which includes the entire National Capital Territory of Delhi as well as the neighbouring satellite towns of Faridabad and Gurgaon in Haryana; and Noida, Greater Noida and Ghaziabad in Uttar Pradesh; have over a few decades seen a large number of investments taking place in the region as a result of manufacturing facilities being established by a variety of vehicle makers.

In passenger cars Maruti Udyog and in two-wheelers Hero Honda have been the most dominant companies in terms of their large volume production. Their scale of operations have enabled them to draw sizeable investments from downstream industries including automotive ancillaries and companies not wholly dedicated to automotive business.

There are roughly 180 companies in the National Capital Region of India engaged in the manufacture of automotive components – some totally Indian-owned, some joint-ventures between Indian and foreign partners and some that are wholly-owned subsidiaries of foreign transnational companies.

If one were to map the way investments have been moving in other regions of India, it would be very evident that automotive investments in the NCR have somewhat reached the brim. Most preferred destinations are in Maharashtra and Tamil Nadu and lately in the State of Uttarakhand.

The NCR is other words has reached a stagnation point which continues to be coupled with nerve-wracking infrastructure problems -- the biggest being power to run enterprises. As a result, most forward looking and practical enterprises create their own power generation units without taking grid power or utilise both. Those who do not wish to take grid power for the simple reason that it will be absent most of the time, find their project investment costs as well as operating costs shooting up. Generating one’s own power, costs nearly double if not more than what it would if one were to use grid power.

The urbanisation that has taken place in some of the areas which have seen industrialization, such as Gurgaon, are bereft of any proper public transportation system or even good roads! For a senior executive of a company living somewhere in the South of Delhi and having an office in one of the industrial areas in Gurgaon, commuting would take up about three hours of the day as the network of flyovers on the connecting National Highway 8 has been taking over four or more years to get completed. Besides this, there are other choked points on the way to work. Innocuous as this may sound, this small example is indeed a problem for many professionals which favours a decision of working in an automotive enterprise elsewhere than somewhere in the NCR.

Locations that have been recently industrialised and with a large automotive presence as well, have not seen an urbanisation plan develop in tandem which would not only provide decent housing to workers and professionals but basic amenities such as education for children, hospitals and places for recreation. This makes it harder for people to opt to work in companies located in such areas or face terrible commuting problems even if they did agree to work. On the other hand places such as Faridabad are in chaos with industrial and residential areas rubbing shoulder to shoulder.

Though the NCR does have several industrial training institutes and polytechnics from which companies draw their manpower requirements, what many enterprises are facing these days is not necessarily a lack of skilled workers but a situation of having to pay a worker much more to retain him or her. Demand is there due to the large mushrooming of manufacturing companies in the NCR which vie with each other to entice people to move for higher emoluments. As one senior manager put it, to employ an engineer with six to eight years experience, his company now needs to pay a 30 per cent premium compared to what was being paid some years ago. Attrition among youngsters is higher.

Though companies like Maruti Udyog revolutionised the passenger car industry in India as well as the development of the NCR in several ways, the NCR still has many pitfalls which definitely is turning investment away into other locations. The other reason that is perceived is that there is now a dearth of land for further investments in the region.

A distraught CEO of an auto component company says, “Any further investments in NCR should be banned! Even substantial expansion of companies should not be allowed for the simple reason that it is already hell!”

(Published in Autocar Professional Magazine)