Milagrow MSME Blog

Emerging Business Forum – Footwear Industry in Agra

2009-02-04T16:07:00.005+05:30

- Contributed by Kanak Dutta

Zee Business along with Milagrow Business and Knowledge Solutions presents ‘Emerging Business Forum’- an exclusive 10 city initiative that aims to enable and empower SME clusters to achieve sustainable development and growth. A buoyant India today is witness to many successes of small and medium enterprise. Their role in terms of employment creation, upholding the entrepreneurial spirit and innovation has been crucial in fostering competitiveness in the Indian business and economy.
Beginning December 17th 2008 (Agra), this forum is in the format of panel discussion which would be continued across ten important cities which includes Agra, Ahmadabad, Delhi, Jaipur, Indore, Ludhiana, Merrut, Moradabad, Pune and Tirupur. The forum was first initiated in Agra which is known for Taj Mahal world over and has an enormous leather industry. This city is catering to the huge demand of footwear in the country.

From Milagrow, Kavita Joshi(Knowledge Mentor) and myself were appointed to attend the forum. The main objective was to network with SMEs in Agra and spread the awareness about the Milagrow services among the entrepreneurs. We wanted to understand their problems and try to explore how we could contribute to solving them. A short questionnaire was prepared by me to investigate the hindrances companies have been facing with regards to the smooth running of their business (like taxation, export, economic recession, association benefits etc).

The panel members included Kavita Joshi- Knowledge Partner, Milagrow Business and Knowledge Solutions, Gurgaon, S N Ganguly- Director, Central Footwear Training Institute, Agra, Shiraz Ahmad Farooqui- Vice President Marketing, Indiamart.com, Noida, Sharad Sharma- General Manager(Network-2), State Bank of India, New Delhi, Capt A S Rana- President, Agra Footwear Manufacturers and Exporters Chambers, Agra, Opinder Singh Chhatwal, President, President, Agra Shoe Manufacturers Association.

The panel focussed on crystallizing concerns, identifying and addressing local environment as well as eco systems issues, Propose financing strategies for competitiveness in the global economy, Facilitate regional hubs to imbibe quality management processes and IT innovation for business growth, Building a unique setting for engagement and exchange of ideas, Taxation Issues, Availability of Skilled Labour , Use of Internet Marketing.

Attendees of this forum were mainly the manufacturers and exporters of leather in Agra who have already established their business but due to various obstacles, are not satisfied.
Kavita Joshi discussed about the overview of the footwear industry, problems faced by the footwear industry and recent initiatives taken by the government. She also discussed as to how Milagrow can play an important role in enabling and empowering SME clusters to achieve sustainable development and growth.

Agra Footwear cluster is a prime example of a rooted low-tech cluster with predominantly small producers. The cluster has predominantly small scale of operations & the industry thrives on footwear making artisans/skilled workforce available in plenty in the cluster, but suffers from acute shortage of managerial and supervisory staff with technical qualifications. Footwear in Agra is a very labour intensive industry and almost no mechanization exists.

Problems faced by the industry are similar to those faced by many small scale clusters:
• Chinese footwear

• Labour shortage

• Technology

• Current status of Information communication & technology

• Taxation issues

• Weak Dollars

• Spiralling input cost

Now the question arises as to how Milagrow can be of any support?

As “consultants” for Small and Medium Enterprises, Milagrow plays an important role in providing the right solutions (“not just ideas, execution also”). Our mission only clarifies that we partner with aspiring enterprises as a Venture Catalyst and build best-in-class managerial and organizational capabilities in them. There may be various measures by which we can help the SME Cluster in growing their business.
• Understanding the business and working along with the footwear companies as partners in their growth.

• Doing a comprehensive cluster research study on the loopholes present in the system and giving the remedial measures to overcome.

• Milagrow can also help in arranging the funds required by SME in the smooth running of the business.

• Help in screening for the best manpower for managerial and supervisory work with technical qualifications.

• Provide a cost effective and best mailing solutions service.

Before signing off, I would like throw some light on the response which we got after the discussion was over. After Kavita gave a wonderful insight into the world of Milagrow, the audience (entrepreneurs) started approaching us even before the networking session could begin. These entrepreneurs had various questions to ask - for instance, how to market their product, expand their sales across territories etc. At one point of time, there was a queue waiting to be attended by Milagrow team. I am sure that Milagrow has the answers to all their doubts. This was just the beginning and we hope to make a significant impact on the cluster in the near future.

There were many entrepreneurs coming from different parts of business. As an SME, I understand the passion and ambition of today's entrepreneurs, and through this initiative we were successful in reaching out to our target audiences. I felt as if our mission was accomplished. Thanks to Kavita Joshi and Milagrow for such a wonderful experience.

New Ways of Hiring - Solutions for the MSME Sector

2009-02-04T15:57:00.005+05:30

- Contributed by Akash Kumar

A recent study done by Milagrow found that one of the major problems faced by SME is managing human capital. Recently, I was having a discussion with one SME. He told me that his company is doing well, his product quality is superior to other MNC’s product, he pays good salaries to his employees even though he is not able to recruit and retain good people in his organization. I went in to depth and found that employee always want to be on safer side. Therefore, they prefer to work the companies which are well established and having sustainability in market. Thus, reaching out to good, loyal and efficient employee remains big task for any SMEs.

Since last few months, we have been getting news that people are getting laid off from their respective companies. Off course, the reason we all know is ‘economic recession’. Companies are giving reasons that their cost are going above their profits. Therefore, they have no other options than lying off their staff. But there are still some companies which are hiring by considering the fact that they will be able to hire the best people and at low cost. Therefore, we have tried to cover all the ways of hiring which these organizations can choose before going to employee search.

Social Networking: Social networking is picking up its momentum in web 2.0 eras. This has opened a new way for HR executive to search out their prospective employee. Linkedin, Reffster and Orkut are becoming popular among HRs. HR manager are finding it more reliable than ordinary search because they are able to reach to those ‘Passive Job Seekers’ who are not searching for job. These kinds of employee are beneficial for organization because they stick to single job and perform their best and view the companies that they work for their own organization.

Reference Hiring: ‘Reference’ has always been a preferred method for hiring among organizations. I personally know a number of organizations which hire only through reference basis. The positive of hiring on reference is employee’s liability. The people who give reference for other employee always remain responsible for the referred employee. The hired employee always performs and maintains the level of confidence and decorum to protect the reputation of the person, who referred him for particular company.

Outsource HR Recruitment: In today’s world where every company is trying to focus on his operation and productivity, these companies always considers HR recruitment as a time consuming process. Therefore, instead of going for campus to campus hiring or numbers of interview rounds, companies prefer to outsource this function to those who are specialized in it. Even the payroll system, appraisal structure is being outsourced now days.

Database Search: Various organizations, which are providing online job facilities, create a database system where any employee can register himself and upload his/her professional details. In this way, these organizations are able to create a reservoir which carries the details of million prospective employees. Then, any interested employer can just purchase database access for certain duration and start exploring the prospective employee. In today’s scenario, it is enjoying the major market share of entire HR recruitment process.

Specialized Executive Search Firms: There are also some organizations which carry out the task of searching prospective employees. These kinds of firms provide services for middle and top management. When it comes to executive search firm, from finding out the executive to finalizing salary structure they take care of everything. For their service charges, they follow 80-20 rule, which means that they charge more than what other charges for normal staffing solution.

Specialized Hiring Support: There are several organizations and associations which are providing specialized hiring support by giving a platform to showcase their requirements from employees. Some organization provides online job posting service for disable people.

A similar initiative has been undertaken by Milagrow in order to help the entire SME community. With the launch of much awaited Milagrow portal, Milagrow is coming up with an HR solution offering. Under HR Solution offering, there will be one section for employees where they can log-in and start applying to the companies of their interest. Also any Small Medium Enterprise, who is looking to hire some people, can upload their openings. Apart from this, Milagrow will be also providing specialized interim management solution for SME. Under Interim management jobs, any senior executive who will be looking to serve challenging SME community can apply these kinds of job by registering himself. Along with this, SMEs, who were not accessible to senior level guidance, can also post their interim management jobs and get access to senior level guidance. In India, Milagrow is the first who will start offering such unique services to entire SME community.

To conclude, I want say that it is not just hiring an employee; it is all about bringing a new member in your family. Therefore, while searching or interviewing any employee, one should check it out whether the prospective employee will be able fit in existing values and culture. This will also be same for employee, who will going for job hunt that his priority should be the right profile than money. In this way, he/she may not be able to earn as much as he wanted in initial stage but after certain period he/she will emerge as an expert or leader which he/she can monetize in his/her later part of career.

Ethics for SMEs

2009-02-03T22:01:00.006+05:30

-Contributed by Kanak Dutta, Knowledge Buddy

Business ethics set the standard for how your business is conducted. They define the value system of how you operate in the marketplace and within your business. With legal scandals concerning insider trading and employee theft making the news, it is no wonder that businesses are increasingly giving attention to the ethical basis of their business and how to lead in an ethical way. While the examples above seem to be clear-cut breaches of ethics, many ethical dilemmas that are not so clear-cut are faced on a daily basis in business. In fact, there may not even be a “right” or “wrong” answer to the dilemma, but how you deal with it will says much about you and your business.

These decisions are often referred to as being in the “gray” area. They are not black-or-white, but could be argued appropriately either way.

Importance of Business Ethics in your company
There are definite advantages to owning your own business when you want to establish an ethics policy. Basically ethics come from the top. Without setting an example at the top, it is often difficult, if not impossible, to convince your employees that they too should be ethical in their business dealings. A well-defined ethics policy along with an outline of related standards of conduct provides the framework for ethical, moral behavior within your company.

What is the benefit of developing such a policy, you may be wondering. The benefit is higher employee morale and commitment that in most cases leads to higher profits. But higher profits should not be your motivating factor in defining your ethics policy.

An ethics policy should look at the bigger picture of how we relate to society as a whole and what our responsibility is to the greater good. Of course, in these days of downsizing and increasing change, some may argue that these ideals are unrealistic. However, it is important to note that most of the opponents of good ethics are focusing on short-term versus long-term results.

Many organisations, which have participated in the downsizing mania, are beginning to realise that they have traded long-term employee morale and productivity for short-term profit margins.

The bottom line is “what goes around, comes around”. If you treat your employees with disrespect and distrust, chances are they will do the same toward you. When you are developing your ethics policy, you must decide what it is you want your company to stand for, put it in writing and enforce it.

How to develop an ethics policy for your company
Consider 5 P’s before you draft the ethics policy for your company.

Purpose
Pride
Patience
Persistence
Perspective

Implications of not following ethical policy for your company
To give a live example for this, Satyam scandal raises serious questions about the business ethics. Ramalingam Raju (Chairman, Satyam), being a MBA from Ohio and a course in the Harvard Business School, how it is that people with such elite education are involved in such unethical conduct?

Two things come to mind while answering this question

Unethical practices of auditing and accounting.
Despite of having the above mentioned qualification, this didn’t help him in his transition from the mode of governance suitable for a Small Entrepreneur, which he was before starting satyam, to the kind needed to run a public limited company, where one deals with other people’s money.

As Edward Freeman, who suggested the stakeholder theory, says, “it’s not useful anymore to separate questions of business and questions of ethics.” An integrated way of thinking about business and ethics is via responsibility of action. That is, “businesses and executives are responsible for the effects of their action. They are responsible precisely to those groups and individuals that they can affect or be affected by...”

Importance of ethics for Small and Medium Enterprises

SMEs are characterized by informal understandings and shared expectations among the workforce of how business is done. Any values and ethical principles will usually be implicit rather than formally expressed through ethics policies, codes and programs that are familiar in large companies. The ethics of a small organization is typically influenced by the owner-manager or managing director. Through their very visible presence, their personal attitudes and behaviors will set the tone of the business and have the potential to signal to employees how seriously ethical behavior is to be taken in the organization. SMEs are not typically able to devote as many resources to building an ethical workplace culture as larger organizations.

Ethics in Milagrow
At Milagrow, our values are mainly based on 4 dimensions:
Ethics- Integrity, Honesty and Transparency in what we do

Trust- Believe in people

Respect- For all stakeholders

Commitment- Own everything we do

Rajeev Karwal, Founder, Milagrow Business and Knowledge Solutions strongly believes that “values are something which have to be lived from day one. At Milagrow I have always made sure that we follow ethics and integrity with a 360 approach. You can't be corrupt on one day and then say that you will be ethical the other. We have not only lived a corruption free life ourselves but have made many clients who approached us change their unclean ways. We have never manipulated profits to save taxes or manipulated revenues or costs. We have also adopted sustainability as part of our ethical value system”. He firmly believes long-term success occur only if an organization constantly aligns to/shapes the consumer needs/expectation. In an ethical business the essential thrust is on social values. Business is conducted in consonance with broader social values and the stakeholders' long-term interests. This ranges from concepts of nation-building and trusteeship that are demonstrated in the business practices of the Tatas and Birlas, and new generation enterprises such as Infosys, Wipro, Dr. Reddy's and Ranbaxy, where less emphasis is on minimising negative impacts and more on maximising the positive spill-over effects of corporate development. Thus, it is the need of the hour that business houses become more careful and know their responsibilities towards the society as hurting the sentiments of the consumers can really be hard on their finances, profits, share prices and their mental peace.

References:

http://www.smallbusinessjourney.com/

http://www.bitc.org.uk/

http://www.smallbusinessnotes.com/operating/leadership/ethics.html

http://www.goodcorporation.com/

White paper from Institute of Business Ethics

Why is it difficult to approach Government

2009-02-02T13:14:00.003+05:30

- Contributed by Tapan Bhatnagar

As a Senior Minister recently stated during an International conference, “Approaching the Government is for help is like asking for a Kiss of Death”, but what I fail to understand is Why is it that the Government which is Of the People, By the People and For The People portrayed in such a Mafioso style.

Though there can be many reason for this the two reasons I can attribute to this is Corruption and Red Tape. Let me talk from a personal perspective for each of the reasons I have stated.

Talking about corruption, it is definitely not news for most of you who are reading this, corruption is like a cancer gripping the country. It is no surprise that we come so low down in any ranking for honesty in comparison to almost the entire world. Corruption is prevalent in almost all levels in the country, the DDA housing scam can be the most recent example for this. But, speaking from the personal front, let me tell you about a visit to a Government office. One approaches the reception desk which is manned by two low level clerks, the job of these clerks at the reception is well, to issue slips and direct the visitors to the correct office/officer. One will think so how can there be corruption at this level. Right? Wrong! The first thing they ask when you approach them for a pass will be and I quote, “Sirji, Abhi toh hamari dosti kachhi hai, kuch chai paani ka intazam kar do toh dosti pucci ho jayegi!” (Sir, right now we are just acquaintances, give us something for tea/coffee so that we can become friends) And the worst part is, that the statement remains more or less the same in most Government offices almost as if they have been trained at a central place. It seems they have a central training institute for this like the others around. Keep this in mind that this is at the lowest level in the Government; I cannot get to the higher levels without raising heckles of everyone in this ecosystem but I am sure you get the hint of what I am talking about. Surprisingly in a recent study carried out by Milagrow almost 98% of all the respondents directly or indirectly agreed that Corruption existed in the system. The sad part is that it has now become an accepted practice within the ecosystem.

Getting to the next point which as per me is the next culprit due to which it becomes virtually impossible to approach Government, Red Tape or the excessive bureaucracy in the government. It must be noted here that the policies and schemes that the Government implements from time to time can lead to India beating China in development or at least the rate of growth, but unfortunately most of the time the schemes are known only to a select few and even if the scheme is known the paperwork involved in getting a sanction from the Government can make any person who is an expert in documentation and enjoys it lose the sanity. Please do not think this is just a ranting against the government. No, not at all, I have been fortunate enough to have been supported in almost all endeavors, agreed I am yet to receive any kind of assistance but I can safely say it is in the pipeline. But, saying this, let me also run you through a simple process of applying for a scheme for financial assistance to entrepreneurs for attending and exhibiting at International trade shows. The scheme which has been recently updated (for the better, I may say) has so many different forms to fill and such complicated filling instructions that most of the entrepreneurs will not understand what needs to be filled and which form does not need filling, this is also compounded by the fact that the scheme has four sub schemes. So effectively if you have to apply under the said scheme, you have to find the sub scheme you want to apply for, based on the required sub scheme one needs to fill the first form but not the second, but you may have to fill the second part of the second form but you will have to submit it after the visit, Confused!! Well most probably you would have either missed the trade show or cancelled the plan by now.

Having said this and this is just the tip of the Ice berg I am sure you can come up with many other reasons for inability to approach the Government, but the Government is evolving and at a fast pace. There are many enlightened officers which are taking the necessary steps for this evolution. As Confucius says, “The journey of a thousand miles begins with a single step” I hope the government has taken the step in the right direction.

Frugal Marketing for SMEs

2009-01-21T10:54:00.005+05:30

- Contributed by Ankush Garg

When recession hits hard, consultants are the first ones to be shown the door. The next are the marketing teams.
Organizations worldwide slash marketing budgets in difficult times. While the some purists contend that recession is the best time to strengthen the brand and get a competitive edge, the question is how? The funds are scarce and they need to be channeled into the essentials of the business to keep it running.
While increase in the marketing budgets in difficult times may continue to a distant dream for most marketers, the circumstances offer opportunity to become more effective. The adage necessity is the mother of all invention never works better that it does in current macro-economic environment..
So how can marketers become more effective and get more bang for the buck? The first step is to segment your customers by the product categories and allocate the marketing budgets to different segments depending upon its profitability. Then develop a marketing strategy for each segment depending upon the customer profile or its behavioral traits. Seek synergies by identifying segments with similar customer profile. Reduce corporate campaigns and launch product category focused marketing programs as it would help improve profitability and enable the company to endure difficult times.
It is always cheaper to retain existing customers that to procure new customers. Hence, a very strong customer relationship program is the need of the hour. It is important for marketers to integrate with the overall business and not operate in isolation. This will help them create new customer offers at low cost to the company. For example, if the company is carrying huge inventory for certain product categories, CRM program can create attractive offers for the existing customers using these product categories. This can help liquidate inventory without having to drop the prices in the market which can have deleterious consequences on the brand equity. The communication costs for CRM program should be closely monitored and reduced as far as possible. Email marketing, mobile marketing or social media networks (e.g. facebook) provide communication channels at no cost.
No sector or industry has been left unscathed by the recession. There are many businesses that are looking for avenues to utilize their existing capacity. Marketers should collaborate with them and offer them benefits that cost nothing. In return, they should get higher visibility for their brand. For example, retailers can distribute discount coupons at its billing counters for a famous restaurants or clubs in the city. In return, they can get high visibility through placement of tent cards at the tables of the restaurants or through setting up kiosks at the clubs.
The art of negotiation can always add the much needed strength to the marketers. Whether it is the airtime or column area in print media, there is tremendous room for cost reduction. One must not forget that marketing budgets are down and media companies are probably running helter-skelter to fill airtime or column space. And they would go lengths to retain you as a customer.If airtime is extremely essential for your brand, an effective PR strategy can help gather lot if airtime literally free of cost. For example, a company in education business can voice its opinion on education policy of India or release papers on related subjects. This followed by effective networking with media personnel would lead to opportunities to participate in debates or forums where such issues are discussed.
With every problem comes an opportunity. It is clearly a very opportune time for the marketer’s to break the shells and think creative, and frugal. It is a different matter that this is not longer a choice , but the need of the hour.

EUCALYPTUS: Makes ‘Cloud Computing’ Even More Cheaper and Easier

2009-01-15T19:57:00.000+05:30

Contributed by Mitesh Agrawal

While it is still early days, Software as a Service (SaaS) aka 'cloud computing' is a technology which perhaps has the disruptive potential to overcome conventional paradigms. Cloud Computing is a technology wherein large groups of servers that often use low-cost consumer PC technology are networked together, with specialized connections to spread data-processing chores across them.

The ubiquitous Indian cable TV model is a good illustration of what SaaS can achieve. Indian cable TV users access a localised bouquet of channels paying a monthly fee without worrying about how and where the content is created, what technology is used for broadcasting etc. The cable viewer's only capital investment is the TV with the local cable TV operator resolving all issues.

Similarly SaaS can help create an IT model analogous to cable TV where remotely hosted IT applications are made available to a MSME cluster over a reliable telecommunication network with the user paying a subscription fee. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support. Each user only has to invest in an internet connected PC(s) which can also avoided if the service provider 'bundles' the hardware and connectivity as part of the package.

EUCALYPTUS - Elastic Utility Computing Architecture for Linking Your Programs To Useful Systems - is an open-source software infrastructure for implementing cloud computing on clusters. It duplicates the functionality of Amazon's EC2, using the Amazon command-line tools directly. It allows users to leverage their own server farms. The current version requires Xen to be installed on all nodes available for allocation. Among its features:

• Interface compatibility with EC2 (both Web service and Query interfaces)
• Simple installation and deployment using Rocks cluster-management tools
• Secure internal communication using SOAP with WS-security
• Overlay functionality requiring no modification to the target Linux environment
• Basic "Cloud Administrator" tools for system management and user accounting
• The ability to configure multiple clusters, each with private internal network addresses, into a single Cloud.

Two reasons why Eucalyptus is potentially important: private clouds and cloud portability:

Private clouds: Let's say you want a cloud like infrastructure for architectural purposes but you want it to run on your own hardware in your own secure environment. EUCALYPTUS comes into picture

Cloud portability: With the number of cloud offerings increasing how can you maintain some level of vendor neutrality among this "swarm" of different options? Portability is a key capability for cloud customers as the only real power customers have is in where they take their business and the only way you can change suppliers is if there's a ready market of fungible services. And the only way their can be a market is if there's a high degree of standardization.

It implements virtualization by allowing companies to run multiple applications on a single server computer but also makes it as an open source by collaborating the data of multiple companies under a single unit.

Other advantage can be explained as following that in the current scenario MSME users invest substantially in implementing ERP before being able to use it and mostly end up procuring more than they require. EUCALYPTUS can serve as enabler for open-source SaaS based ERP solutions and can allow users to 'cherry-pick' applications as per their business requirements and comfort levels at an incremental increase in costs. While the above may sound a little far-fetched, the success of firms like salesforce.com has established the viability of the SaaS paradigm and availability of EUCALYPTUS merely expedites the attainment of an open-source SaaS world.

Be Ethical, Stay Committed & Focused, and Deliver Quality in Time: Miracles Will Happen For You

2009-01-15T19:48:00.000+05:30

Contributed by Mitesh Agrawal

Mr. C S Prakash started “Pushpak Industrial Services” from almost zero investment and today “Pushpak” is approximate INR 10 crores company. He, a diploma holder in mechanical engineering who comes from a very moderate family background, claims “Being Ethical and Constant in nature” is the success mantra behind Pushpak. Pushpak Industrial Services, incorporated as Pushpak Products India Pvt. Ltd, is now having three different lines of businesses – Manufacturing of Industrial & Office Furniture, Ground & Material Handling Equipments and Electrochemical Process on Spacecraft components (Anodizing). It has customer base from defense sector to MNC like ISRO, HAL, NAL, BEL, Toyota, Bosch, etc.

Like others Mr. Prakash too started doing Apprenticeship Training with Hindustan Aeronautic Limited (HAL) in Bangalore for a stipend of INR 500. But there was big difference among others and him during apprenticeship. He was doing his apprenticeship so seriously that he started working continuously for 2 shifts (from 6am to 11pm) so that he would be able to learn more than others. After completion of his apprenticeship, realizing his talent his well wishers in HAL recommended him to start his own business. At that time, due to poor financial condition, he did not even have money to open a bank account.

But as the saying goes, “Where there is a will, there is a way”. Few of his well wishers opened him a bank account, gave him space for day to day operations and not only machines to operate but also first order of welding and gas cutting rate contract from HAL. Foundation of Pushpak Industrial Services was laid.

And “Sustained efforts lead to sustainable results”. Toyota Groups, L&T, HAL, BEL, NAL, ISRO, Bosch are few of their regular customers and Pushpak has also started to venture in export markets. No compromise on quality is Pushpak’s priority in each order delivery. That’s the reason, ISO certified for Zero Rejection, Pushpak is being able to retain their first customers till date. It was also involved in few of the world renowned projects like “Edu-Sat” and “Chandrayaan”. Pushpak’s aim is to become Rs. 100 crores company by 2012 and go for an IPO in coming 5-6 years.

But “Rome was not built in a day” - This all could have not been achieved in mere few months and without the endless toil that Mr. Prakash has put in. The person who struggled to open a bank account how could have paid salaries to his employees!? After starting in 1992, for quite some time he worked in HMT factory during second shift and night shift in VIPRA Machine Tools, just to pay his employees.

Mr. Prakash is the man who never let down his spirit of entrepreneurship and kept on growing without compromising his ethics and values.

In 1993, with-in two years of setting up the enterprise he had lost all the rate contracts. Without any revenue generation activity for some time, it was a very challenging time for Pushpak. All he was left with man-power and he started technical man-power contracting which grew from 8 technicians to 450 by 2003. This not only helped Pushpak survive through those tough times but also provided foothold in various organizations which boosted the core fabrication business over the time.

But that was not the end to Mr. Prakash’s problems. In 1999-2000, fabrication activity at most of the clients was stopped. But, Pushpak did not stop. Mr. Prakash had a plan ready. Pushpak immediately diversified into furniture manufacturing utilizing the existing fabrication facilities. As a result, now Pushpak has a strong hold in industrial and office furniture manufacturing with manufacturing capacity of 3,000 cabinets and chairs both per month.

In 2007, Chandrayan, much hyped Lunar Landing project of India, was not an easy task with project being so sensitive but he had the incessant willingness and commitment to carry on and result being an appreciation certificate from ISRO for 0 defects for Chandrayan project.

During the time of crisis, he always leads his organisation from front and sets example in front of others. Mr. Prakash summarizes his feeling as “Whenever difficulties or crises came, we never neglected our core business of fabrication. We added additional activities related to our field only using the existing facilities, infrastructure and man power. If any additional machineries or facilities were required only then we added. We have always been upgrading the new technologies belonging to our business field. And as on today we have very strong foundation to "PUSHPAK" though we still have to construct professional building as per the market and customer needs. We achieved only 2 to 3% of my vision, still 98% to be achieved in future business journey.”

There are problems for which Mr. Prakash is looking solution. In real time market scenario, they are also challenged from the competitors. “Sometime Pushpak faces competition from small organisations which only do trading and claim to be manufacturer and from big organisations which have huge economies of scale for reducing cost.” Another difficulty is that “It is not cost effective to execute small quantity orders and sometimes even after making the design and prototype there is no commitment for a bulk order and you have to fight with open competition”, he adds. High excise duty continues to be another element eating up the profit margins for Pushpak.

Mr. Prakash’s views on dynamics between Govt & MSMEs
Mr. Prakash firmly believes that MSMEs have to be educated by Govt. for all the schemes and options available for them. “Every SME should register itself under SSI. Then govt. should take the responsibility of circulating notification of latest updates to all of the registered SSIs so that each and every SSI will be having update information about various schemes and options”, suggests Mr. Prakash. “SMEs themselves are also responsible for their bad condition because just for the sake of earning money nobody goes to internet and do research about the facilities available for them by Govt”, He adds.

Interview with owner of Pushpak, which has registered phenomenal growth of more than 50% in the previous year and has set aggressive targets for 2012 in these bad times, and a successful entrepreneur Mr. Prakash throws light on the following rules of thumb for MSMEs:

Being opportunist is must for sustaining business and diversifying the risk as evident from “I work on opportunity basis. If I see an opportunity which can be in-cashed very easily in near future, in no time I will start working on it and mold myself and the team for in-cashing that opportunity by proper planning and excellent execution”, adds Mr. Prakash. Also, it is important to create opportunities at the same time, as “Opportunities are for opportunists”.

Being skilled is not the must to take-off, but becomes essential to fly higher. This is an area where Mr. Prakash thinks that he needs to nourish his skills for growing the organization. Mr. Prakash is totally first generation entrepreneur without any prior knowledge of business management. He believes that he was able to bring Pushpak up to this level by utilizing his skills. But from this level to another level, he wants to have knowledge of entire management process. He has already registered himself for the course in IIM-B for Entrepreneurship and Family Business Management. The basic knowledge set that he deemed necessary for growing the business further includes:
i. Procure Funding – VC funding, Equity,
ii. People management – Leadership, Employee motivation
iii. Sales & Marketing, E-commerce and Exporting
iv. Accounting & Business planning
v. Management skills – Supply Chain Management, Product Life Cycle Management

Need of mentor cannot be undervalued. He says, “Mr. K.G. Dutta Prasad, who is the financial advisor to me, is always a great well wisher as well. He has always helped me in defining goals and making strategies for near and long term future. Along with managing finances he had helped me a lot in operational aspects too. He has been with me side by side from the very early years of the Pushpak and had been a mentor to me in resolving all my difficulties. I strongly advocate the need of a mentor to support the professional and personal growth”.

Benchmarking is an important exercise to build a strong organisation. “I too had a big target for my company, but I have always set realistic short terms goals and milestones based on benchmarking with my next bigger competitor. As, I kept on advancing to achieve milestones I also set my benchmarks to the next higher levels.”

Maintaining a good credit history helps in difficult times to procure the required financing. “Company is having excellent track record of clearing liability and good relations with banks. Therefore, banks are ready to extend new lines of credit even at this time when most of the banks are reluctant.” Also, “Due to Pushpak’s strong relations with vendors (majority from India), vendors have good amount of faith in us to give more credit”, which helps Pushpak when the accounts receivables are not settled in time.

Don’t say no to outsourcing. Companies that want to maintain their focus into main business can outsource the support activities like sales and marketing, IT etc. instead of building in-house capabilities. Whereas in-house functioning offers more control, more often than not outsourcing is a profitable proposition, because of the economies of scale the vendor/ supplier is able to offer the services at a lower cost than in-house functioning. Mr. Prakash says, Pushpak is “looking to expand its sales and marketing staff or looking to outsource its options to other companies so that Pushpak can just remain manufactures. These all options are still in pipeline which has to be shortlisted.”

His final suggestion to SMEs:
Be firm to your business and direction. Do not go for two things in parallel which disturb both and finally both of them will never be justified.

Mr. Prakash shares his idol as Mr. Lakshmi Mittal and wants Pushpak to be a leading organization recognized globally for Industrial Material Handling Solutions and Furniture Systems. He gives credit of all his success to his friends and well wishers who helped him throughout his journey and he wants to thank them all for their continuous support.
Mr. Prakash is one of the two Indian entrepreneurs selected by the Asian Productivity Organization for Honda Foundation Joint Conference for Entrepreneurship in Asia held at Tokyo, Japan in 2008.

Success Creates its Own Applause

2009-01-15T19:44:00.000+05:30

Contributed by Mitesh Agrawal

Micro and rural entrepreneurs can constitute an integral part of county’s economy. They can serve as the appropriate channel to reach out to largely untapped rural market and help sustain the business for big players. The efforts made by them have been duly encouraged. Next issue will be further detailing on how rural and micro entrepreneurship can be developed and how its benefits can be drawn towards economy’s overall development. Not only MSMEs who fall under this category help strengthen country’s economy but also have triumphed over poverty to empower themselves, their community and the nation. Two attempts of rewarding rural/ micro entrepreneurship are detailed below:

For The People Who Dared To Dream

The Micro Entrepreneur Awards program is an endeavor to recognize individual micro entrepreneurs from across the country, who have risen from poverty to self sufficiency. The program, launched in India in 2004, is an annual feature and has the following objectives:

* To recognize and honor micro-entrepreneurs who have exhibited the best performance that has helped them emerge out of poverty, create jobs and add value to society.
* To invest in the skill and knowledge building of these exemplary micro entrepreneurs, so as to support the development of state-of-the-art micro enterprises, and the creation of role models who inspire and mentor future generations of entrepreneurs.
* To analyze and disseminate select best practices derived during the awards process

To read about the recipients, award process and jury please click here

Entrepreneur Feted With Award

Proprietor of M/s Romi Bag Kh Dhanachandra Singh has been honoured with this year's National Award for Outstanding Entrepreneurship in Micro, Small and Medium Enterprises during a function at the conference hall of the Micro, Small and Medium Enterprises (MSME).

Takyelpat Industrial Estate here today. The award carries a cash reward of Rs 1 lakh, a trophy and a certificate. Dhanachandra has been honoured with the award in recognition of his entrepreneurial skill in the field of manufacturing leather goods like bags, wallet, shoes, sandals, etc.

Accepting the award, Dhanachandra said that he began his business venture way back in 1996 along with making wallets and purses. Then slowly he expanded his products. Today, a wide range of products are being manufactured which have become household name not only in Manipur but also in other parts of the North East region.

Organised under the aegis of MSMEDevelopment Institute, Imphal which is under the Ministry of MSME, Govt of India, the award distribution ceremony was attended by Minister of Commerce and Industries Y Erabot as chief guest, Commissioner of Commerce and Industries IS Laishram as functional president, Director of Commerce and Industries Dhiraj Yumnam as guest of honour and president of AMEA S Rishikanta Singh as special guest.

In his address, Minister Erabot stressed on strengthening the micro and small scale industries in a State like Manipur where there is scarcity of resource for setting up large and heavy industries. In his presidential speech, IS Laishram observed that MSME has registered tremendous growth and progress in term of product development, quality, innovation and import substitution.

Source: e-pao

Data Somewhere out there – Computing in the Clouds

2009-01-05T12:24:00.001+05:30

Contributed by Neha Bhatia

Technology advances, and with it, new terms build up. Grid computing has been shifted to “Cloud Computing”. As the name suggests the data is somewhere in the clouds simply because large groups of servers that often use low-cost consumer PC technology are networked together, with specialized connections to spread data-processing chores across them.

You don’t know where the server located is and where is the data amongst multiple servers but it is ensured that you have created repository of information which will stay lifelong irrespective of common problems of losing data- computer crashes; file lost or damaged. One of the best examples of implementing the Cloud is Google Apps, which not only implements so called virtualization by allowing companies to run multiple applications on a single server computer but also makes it as an open source by collaborating the data of multiple companies under a single unit. Software as a Service (SaaS, typically pronounced 'sass') is a model of software deployment where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support. Cloud computing easily manages Saas by reducing the overhead involved in buying the software simply by offering “on demand pricing”.
Since the simple storage service is provided by the vendor, there are lot of risks being involved in the technology

What will happen to data in the case of a disaster of the server
How will data be accessible when server is down
What will happen to data if the company goes out of business; how data be returned
Quality of Service when internet connections aren’t fast, reliable and available at all places at all the time

Even with the cons, this technology is getting adapted worldwide with Oracle introducing the cloud based versions of its database – Imagine unlimited database accessible to privileged user all the time with no hassles of online transfers!

Amazon operates a booming cloud business by renting out storage space of 440000 developers, with more than 30,000 signing up each quarterly. Microsoft is coming up with Windows Azure an OS designed for allowing to run Web based applications.

In the near future it would be “Information – Not into some device but into the service that exists in the sky”

Reference: Wikipedia

Govt to set up Rs 10 cr fund to support young designers

2008-10-16T10:19:00.000+05:30

Government will set up a Rs 10 crore fund at NID's National Design Business Incubator (NDBI) to help young designers become entrepreneurs in their field.
"Needy young designers desirous of pursuing their business ideas through incubation route at NDBI can now avail this rolling fund support," Commerce and Industry Minister Kamal Nath said in a statement. The need to set up a separate rolling fund has arisen especially when most financial institutions do not support young, fresh designers and first generation entrepreneurs who have just passed out from academic institutions without any industrial experience, it said. Government has also agreed to permit the National Institute of Design (NID) faculty to have a share in their consultancy work. The pattern of consultancy sharing would be on similar lines as those of other premier educational institutions in India such as IITs and IIMs. NDBI was set up by NID in 2005 with an aim to build on India's design strengths. Lack of adequate support in pursuing designers' ideas into business models has so far been a debilitating factor for young designers in setting up their businesses.

Source : The Economic Times

Indian SMBs To Invest $640 Mn On Packaged Software

2008-10-16T10:04:00.000+05:30

SMBs in India are on track to invest about $ 640 million on buying packaged software this year, up more than 25% over what they invested in 2006. Spending on databases, accounting, networking, productivity and system software will account for more than 90% of the total software spending by SMBs this year, according to the latest report by New York-based Access Markets International (AMI) Partners.According to Nirupam Chaudhuri, research manager with AMI Partners. “SMB users have become more alert and they know what they need to be able to accelerate their business. A small percentage of IT-savvy SMBs have progressed to the third wave of IT adoption and are now demanding tailor-made solutions with superior support services.”Small businesses posted a 23% rise in software spending while medium businesses showed 30% growth in software spend last year.Investment in packaged software is driven by business needs. SMBs are most concerned about rationalisation of investments. Having state of the art technology with the latest security features is viewed as a major factor in overcoming competition. Vendors can no longer push anything and everything as a package to users. "These days SMBs need to be convinced on all the features a software package contains, and are only willing to pay for features they plan to use,” Chaudhuri says. “In keeping with this trend, vendors have also launched solutions and packages in which pay-as-you-use features are incorporated, thus allowing SMBs to access only the modules they’ve paid for."

Source : Sme Zone

SMBs Perturbed By Rising Costs And Insufficient Funds

2008-10-16T09:54:00.000+05:30

According to an AMI study, rising operational costs, insufficient access to capital and growing competition is forcing many SMBs to re-evaluate their competitive strengths.In the emerging markets, lack of access to capital is a major concern, as in the mature markets."While firms in mature markets are more concerned with satisfying their current revenue forecasts, SMBs in emerging markets - such as India in particular - are finding it difficult to obtain the necessary capital to grow their operations," claims Spencer Richardson, AMI analyst. "This leads to delays in the launch of new products and services, since cost control often takes the form of curtailed development efforts."In the newly industrialised markets (NIM) in south-east Asia, getting access to market intelligence and information is the greatest hitch."SMBs in NIM are faced with a very real issue; their basic infrastructure deficit disables much of their ability to communicate with the outside world. SMBs in mature markets are taking giant strides in business operations while SMBs in the NIM regions are struggling just to catch up."SMBs rate uncertain economic environment and insufficient access to capital as the top two concerns, across mature markets like US, UK and Japan.

Source : SME Zone

Special regime for SMEs in new companies’ Bill

2008-10-14T11:21:00.000+05:30

Small companies will now get a say in the corporate sector. The new Companies Bill, 2008 will for the first time define what makes a small enterprise. The bill is up for approval in the coming parliament session.
A small company shall be defined as a company which satisfies three conditions—it should not have a paid-up share capital and a turn-over beyond a specified limit, the company should not be regulated by any sectoral regulator and it should not hold any subsidiary company.
According to the first condition, the company should not have a paid-up share capital and a turnover beyond a specified limit. The limit is to be notified later on by the central government. According to Micro, Small and Medium Enterprises Development Act, 2006, a small enterprise is one having an investment of more than Rs 25 lakh but less than Rs 5 crore if it is dealing in the production of goods whereas if the enterprise is dealing in the rendering of services then the investment in equipment should be more than ten lakh rupees but should not exceed the limit of two crore.
As per the second condition for a small enterprise in the new Companies Bill, the company is not to be regulated by any sectoral regulator, which means that those companies that are governed by a sectoral regulator cannot be classified as small companies.
Banking companies, which are regulated by Reserve Bank of India (RBI), telecom companies, which are governed by Telecom Regulatory Authority of India (Trai) and electric companies by electricity act do not classify under the provision for the small companies in the new Companies Bill.
Jawahar Sircar, additional secretary and development commissioner, ministry of micro, small and medium enterprises (MSMEs) said, “Only a small form of micro, small and medium enterprises in India are in the form of companies, partnerships and lending institutions.
The ministry of MSME has been advocating as a matter of policy lesser thresholds and lowering the compliance cost in order to encourage more and more micro and small enterprises to corporatise. This step has been taken so that the small enterprises would be able to access more finance and graduate upwards.” According to third condition in the new Company’s Bill, the enterprise that is having other subsidiaries does not classify as a small company and hence will not be able to enjoy the privilege of certain exemptions. Besides, there are simplified procedures for mergers and amalgamations of small companies. Rajan Gupta, Partner of India’s leading corporate firm, Fox Mandal Little said, “It is a welcoming step to create a class of small companies and to provide for simpler compliance regime for them. It will also help the entrepreneurs in organizing their businesses in better form and will provide more certainty with regard to a definite code of regulations for smaller businesses.”
The concept of “small companies” is being introduced in the new Companies Bill to allow lower levels of compliance to medium and small size companies. The new bill proposes to exempt small companies from certain provisions of the company’s act. Those exemptions will be notified by the central government separately.

Source : The Financial Express

The pressure point

2008-10-10T16:41:00.000+05:30

For the first time in nearly four years, the economy is under strain. And everyone, from the small farmer to large companies, is feeling the burden.

The situation is grim. The big numbers say it. The captains of Indian industry reaffirm it. Most importantly, the
people who live it, day in and day out, feel it. About two months ago, the Outlook Business team fanned out across India to gauge the economic health of the nation. At two levels. The first objective, the short-term one, was to see whether people were better off or worse off than before. The second objective, the long-term one, was whether the nation was riding an economic wind that would blow the fruits of progress and prosperity to all, not just a fortunate few who happened to come in its way.
So, our team of reporters and photographers went out and met people, by the hundreds. We met them in the fields of Ropar district in Punjab, Navsari in Gujarat, Akola in Maharashtra, Hassan in Karnataka, Pollachi in Tamil Nadu, Hajipur in Bihar... We met them in the industrial clusters of Baddi, Moradabad, Ludhiana, Haridwar, Parwanoo, Durgapur, Surat, Coimbatore, Tirpur... We met them in swanky, blue-light offices in Delhi, Mumbai, Bangalore, Chennai... We met them in their homes, on the streets, in chai shops, on highway eateries, under the banyan tree, in the middle of nowhere...
We visited bicycle units, textile factories, brass and aluminium export houses, pharmaceutical companies, malls, bank branches, housing complexes... We met farmers, labourers, daily wage earners, unemployed, shop-floor workers, managers, CEOs, bankers, economists, consultants, policymakers, DSAs, exporters, job consultants, builders, village mukhiyas, ministers, distributors, wholesalers, kids... And the one nagging thought we came back with is this: the situation is grim and there’s work to be done.
The small squeeze
Three examples, representing the masses in two of the three pillars the Indian economy stands on, epitomise the recent deterioration in the state of affairs that is squeezing many, and making them worse off than before.
Poonabhai, a 50-something farmer, has been sweating it out on a rented 36-bigha land on the Surat-Navsari Road for the last 11 years. For all his labour, his landlord pays him Rs 2,000 a month. His grouse is not so much with his landlord, who has loaned him money in the past, but with the market economy, whose intended benefits bypass him. "My cost of all inputs—from seeds to fertilisers to pesticides—has gone up substantially in the last few months. I sold brinjals for Rs 40 per quintal and you buy the same for Rs 40 per kg," he says ruefully.
Unmanageable input costs is the refrain up North, in Ludhiana, India’s cycle-manufacturing town and home to mostly small- and medium-sized enterprises (SMEs). Manufacturers say runaway prices of steel has resulted in bicycle sales falling 20-25% between December and April. "A cycle needs 18 kg of steel. Our input costs have increased by Rs 270 per cycle, but we have increased prices by only Rs 165," says Charanjit Singh Vishikarma, Managing Director, Vishikarma Industries and President, United Cycle and Parts Manufacturers Association. If managing higher input costs isn’t hard enough, they also have to compete with cheap Chinese imports; steel costs 30% less in China.
Cheap Chinese imports are also turning the screws on SMEs in many other sectors like textiles, pumps, electronic items, even handicrafts that were the legacy of India. Says Shailesh Chandra of RV Handicrafts, an exporter in Moradabad: "A buyer is not attached to Moradabad brass or Indian art work. If he gets a similar quantity at one-tenth the cost of the original, never mind its quality, he is happy." It’s not just manufacturers who are affected by the Chinese deluge. Wholesalers are caught between staying Indian and seeing business dwindle, or start stocking Chinese goods.
That’s pretty much the story on the fringes. If it’s not input prices or the China threat or stiff competition, the fingers are pointed at crippling infrastructure, bad governance, corruption, government apathy—factors that have always existed in the matrix, but the side-effects of which get pronounced during difficult times.
The biggies are worried...
Besides taking on more burden in the recent past, the other thread running through these three stories is that they are about people who don’t have much of a voice in shaping their destinies or the resources to weather difficult times.
India Inc does, but even it is feeling the pressure. The mood is not as despondent as in the fields or in the small factories and workshops, but there is nervousness on whether the current bout of hardship is just a passing phase, or whether it could be of a more lasting nature and end up leaving a deeper bruise.
The circumspection is evident when one gleans from the numbers that showcase various facets of economic decision-making by households. Credit growth has dipped significantly in 2008-09. Housing loans, which grew by 25-158% in the last four years, had grown by just 9.1% in 2008-09 (till February 15). Worse, delinquencies are on the rise. Although numbers aren’t available to quantify the scale of defaults, anecdotal evidence from banks suggests that it is high.
Although realty prices have dropped, they are still high enough to be a deterrent to buyers; banks too, stung by recent reversals, have become conservative in extending loans. Similarly, because of the dip in the stock market, retail mutual fund collections are said to have dipped 30-50% since January. Elsewhere, the IT/ITES sector, one of the big employment generators in the country, is talking in euphemisms that basically mean it is likely to hire fewer people this financial year than in the last one.
Outlook Business, in partnership with the Confederation of Indian Industry (CII), polled 90 luminaries from corporate India on what lay ahead for the economy. The results of the survey corroborate the concerns we derived from our ground-up reporting (See box: The Going Gets Tougher). As many as 88% said their margins were under pressure. And, more importantly, nearly half of them admitted they were seeing a drop in sales and orders, a pile up of inventories and an increase in payment cycles—usually, the first signs of an economic slowdown.

There’s no doubt that India’s economic juggernaut will slow down. By how much is the question. And 63% of the respondents feel that GDP (gross domestic product) growth will fall from 9% in 2007-08 to below 8% in 2008-09; nearly one-fourth think it could fall to even below 7.5%.
Research houses too see a drop to the trend rate of 7-5-8%. Kotak Mahindra Bank has lowered its 2008-09 GDP projection to 7.8%, with a normal monsoon. Standard Chartered Bank has pegged it at 7.4% in 2008-09, with a bounce back to 8.5% in 2009-10. "The moderation in growth is a reflection of cyclical fluctuations, higher local interest rates and a slowing global economy," says Sucheta Mehta, Senior Economist, Standard Chartered Bank.
Morgan Stanley is the most bearish of the lot, projecting a growth of 6.7% in 2008-09. Chetan Ahya, Executive Director, India & South East Asia economist at Morgan Stanley cites three threats that can pull the country’s growth well below its potential: continuing rise in global commodity prices, strengthening of the dollar and consequent depreciation of the rupee, and continuing risk aversion in the global financial markets.
In the Outlook Business-CII poll, India Inc cited high oil prices and rising input costs as the two biggest threats. As many as 91% see crude at $100 a barrel or more in 2008-09 and 85% see inflation at 7% plus. Tackling such high inflationary pressures is going to be a tightrope walk for the Reserve Bank of India (RBI) and the government.
Increase in interest rates in major economies will reduce demand and, possibly, commodity prices, but this will happen over time. Reducing interest rates is not an easy choice to make given that growth is flagging and further throttling may be undesirable. Oil prices are another policy dilemma. There is pressure on the government to keep absorbing the burden, ruining its own balance sheet and that of the oil PSUs. Even if it manages to pass on the rise to consumers, as it managed earlier this month, it will fan inflation. The latest price rise could nudge inflation beyond 10%. "If the government erases the entire subsidy burden and passes it all to the consumer, inflation could cross 20%,’’ says Mehta.
...but remain optimistic
High oil prices and high inflation is turning out to be a bug-bear for economies around the world. As a recent World Bank report noted: "Measured correctly, two-thirds of the world population have double-digit inflation.’’ Such high inflationary pressures are sure to have an adverse impact. Business confidence has dropped, consumer demand has fallen, stock markets are taking a beating and governments are returning to era of protectionism to ring-fence their economies from the turmoil outside.
The biggest source of concern of the ‘turmoil outside’ is the US, which, according to The Economist, is slipping into "its deepest recession for several decades". It estimates the losses from the home mortgage crisis to be about $900 billion, nearly double that in the South East Asian currency crisis of 1997-99. It also describes the US housing boom as "biggest bubble in history’’, far bigger than the Internet bubble of 2000-01. However, while it predicts the demise of the dollar as the main reserve currency and the shrinking dominance of the US, The Economist doesn’t predict a world in crisis. Asia, it says, is more important than the US today as a driver of global growth.
Subir Gokarn, Chief Economist, Asia-Pacific, Standard & Poor’s too expresses this point of view. According to Gokarn, the mild US recession—growth dropped to 0.2% in the first quarter—is unlikely to have any dramatic effect on emerging economies of Asia, which are the new global drivers and have managed to de-couple themselves from the US economy. "The Indian economy is far more resilient today than it was during the last US recession of 2001 or even during the East Asian crisis of 1997," he says.
Gokarn feels the US recession might be a short-lived one—the economy should start looking up after October—because of the government’s ability to set in place the right mix of policies. Rate cuts by the US Federal Reserve will help shore up bank balances, and help them get back in the business of lending to corporates and individuals; plus, a "cheque in the mailbox" of individuals will also foster consumer spending.
Hence, any discussion on the state of the Indian economy should be studied from two perspectives. The immediate, which takes into account the cyclical nature of the Indian economy; the medium and long term, which looks at the structural changes that have come about in the Indian economy in the past decade.
So, the immediate future may look a little cloudy and uncertain. For instance, 40% of Indian exports go to the US and European Union. In case these regions go comatose, Indian exports, which grew a handsome 23% in dollar terms, will suffer. Says Standard Chartered’s Mehta: "Exports in 2008-09 are expected to reel under the triple whammy of a stronger currency later this year, correction in commodity prices and a slow down in trade with major trading partners."
However, over the long-term, the Indian growth story remains intact. "All debates about the recent slowdown is because we have been spoilt by the buoyancy of the past three years," says Gokarn. Indeed, if one steps back from the here and now, the mood is considerably more upbeat. Despite the tightening environment, 68% of the respondents in the poll said they didn’t plan to defer large capital investment plans. Says Mehta: "Although some negatives like a stronger currency, higher interest rates and restricted borrowing options can hit producers, a positive assessment of evolving demand conditions and underlying plans for expanding capacities should keep the engine chugging.’’
Crossing the hump
That’s at a big picture level. Down the ranks, for many SMEs, small exporters, wholesalers and farmers, it’s less a question of expansion and more a question of survival. Even among the more affluent, some belt-tightening and withdrawal is being seen.
In a sense, the Indian economy finds itself at a crossroads. There is a slowdown and the economy's constituents.
are feeling greater discomfort. The global upheavals are having a trickle-down effect. Demand is there, but it is flagging. How the economy responds to these challenges will shape the trajectory of growth and the nature of that growth—whether it is equitable, inclusive and sustainable.
For all the noise made by the UPA government, the character of this 9% growth is incredibly skewed. Neither are the rewards being broad-based nor are they gushing down to the people who need it the most. This was a common refrain among the people we spoke to. Many of them—from the landless unemployed who are getting short-changed under the NREGS to exporters facing the brunt of an appreciating rupee—expressed dismay at the general apathy towards their plight.
In order to ensure that India’s growth story remains sustainable, policy, industry and society need to ensure four things: move the excess people out of agriculture by providing them alternate employment; create world-class infrastructure; improve public services such as rural healthcare, drinking water and sanitation; improve the quality of governance. Otherwise, the disparity between the urban rich and rural poor will continue to grow, resulting in huge social tensions. And that is something the country can ill-afford.

Source : Outlook Business

Industrial convolution

2008-10-10T16:12:00.000+05:30

Small and medium units have been hit the hardest by soaring raw material costs, exchange-rate volatility and cheap Chinese goods

Walk around Moradabad today, and you’d find it hard to understand why this was once considered India's brass city.’ This industrial centre in Uttar Pradesh, which was founded by Mughal emperor Shah Jahan’s son Murad early in the 17th Century, has now become more of an ‘aluminum city,’ having almost abandoned its brass heritage.
The shift has been swift. When brass prices started soaring, small-scale industries exporting artefacts to the West passed on the higher cost to end consumers. Meanwhile, the Chinese banked on huge volumes, copycat designs using brass-like materials, and, more importantly, government control over costs. Moreover, as Shailesh Chandra of RV Handicrafts points out: "The buyer isn’t attached to Indian artwork. If he gets a similar product at one-tenth the cost of the original, he’s happy." The result: demand for Moradabad’s artefacts slumped.
Almost 70% of the small-scale industries that fed the large export houses closed shop, consequently. Those who shifted to aluminum survived, but may have only delayed the inevitable. "Even aluminum prices are rising," says 50-year-old Haji Mohammad Saleem, owner of a small unit. "At best, it’ll be a couple of years before we close too."
In Ludhiana, another North Indian industrial hub, the situation is eerily similar to the one in Moradabad. The difference being that it’s steel and not brass that’s the commodity in question. Here, Sanjay Gupta’s 35-year-old cycle pedal-making unit is already history. "My clients were unwilling to take on the added burden," he says, referring to the soaring cost of steel.
Each day, over 5,000 small and medium enterprises (SMEs), employing more than 600,000 people, churn out about 40,000 bicycles in India’s bicycle capital. That bicycle economy is now under threat. "Steel costs have risen by about Rs 270 per cycle, while we have increased prices only by Rs 165. We are incurring a loss," says Charanjit Singh Vishwakarma, MD of Vishwakarma Industries and President of the United Cycle & Parts Manufacturers Association. One simple fact makes the picture crystal clear: steel sheets cost Rs 46,000 a tonne in India and Rs 32,000 in China.
Down South, the 5,200-plus members of the Coimbatore District Small Industries Association may not be on the verge of closure, but they’re certainly feeling the heat from rising commodity prices. "In March, our production loss was 15% due to non-availability of steel and other raw materials," says the association’s President, C Muthusami. "Margins will surely take a hit." In what was an unprecedented act for the association, its members took to the streets recently. They want the government to intervene and control raw material prices, a la the Dragon Nation. Says HP Kumar, Managing Director, National Small Industries Corporation (NSIC): "How long can China carry on with hidden subsidies? They will have to fall in line with WTO norms."
Moradabad’s Saleem echoes Muthusami’s views: "The policy changes and schemes don’t even touch us, and we are unaware of any move to bail us out. We just want metal prices to come down." Making a similar request, the South India Mills Association recently asked the government to regulate cotton exports, which it linked to soaring cotton prices (cotton prices contribute over a third of the cost of making yarn).
Mani Chinnaswamy, Partner at Appachi Cotton in Pollachi village, Tamil Nadu, says: "Cotton prices don’t look like they’re coming down much. There’s a crop failure every other day and consumption is soaring."
Seeking intervention from above
Although each of the stories highlighted above is disparate, the theme is the same. And, it tells us that small enterprises have got used to a stable cost environment all these years. When that stability is punctured violently, it is natural for them to look to the government to put things in order. This has something to do with the fact that SMEs have been a government priority for long. They account for almost 7% of India’s GDP.
Data from the office of the development commissioner indicates a 5.6% growth in the number of micro and small enterprises between 2006-07 and 2007-08, as well as a 3% increase in employment in these units. But perhaps the small units are expecting too much from the government. Ajay Sahai, Secretary-General, Federation of Indian Export Organisations, reckons that liberalisation and the new business environment have reduced the government’s ability to dole out sops.
It has to be said that small units are doing more than just seeking governmental intervention. There’s a sense that rising commodity prices are here to stay, and that a more practical approach is the need of the hour. The NSIC, for instance, is buying steel from the Steel Authority of India and selling it to SMEs that wouldn’t be able to reach long-term agreements with large steel makers on their own.
Interestingly, the Coimbatore District Small Industries Association is taking another look at a bulk purchase system that worked for it more than a decade back. It has requested the Small Industries Development Corporation of Tamil Nadu to carry out bulk purchases of materials on its behalf.
Challenges galore
Unfortunately for SMEs, commodity prices haven’t struck in isolation. You would expect an original equipment maker to have the ability to pass on cost increases. But that’s not the case. Take the example of Coimbatore-based Mahendra Pumps, which makes and sells pumps predominantly for the agri sector. Its Managing Director, Mahendra Ramdas, says: "We aren’t able to increase prices due to intense competition. Also, agri sector sales are sluggish because of a serious crisis in the sector." Hence, he expects annual revenue growth to slow down to 5-7% in the coming years, from 10-15% over the previous five years.
The hosiery and knitwear sector faces competition from across the border. Pramod Kumar Aggarwal, Director at Himker Knits, says there haven’t been any orders from European countries, including France and Germany, this year. "The absence of import duties on Bangladeshi products makes them 33% cheaper than Indian products, which attract a 14% import duty," says Aggarwal. "And economies of scale make Chinese products at least 20% cheaper."
The other problem that export-oriented industries, including textiles, faced over the last year was a sharply weakening dollar. Ramesh Kannan, CMD of Kaynes Technology, a Mysore-based provider of electronic manufacturing services, puts the issue in context: "SMEs don’t have rich surpluses and huge reserves, whereas big companies do." In the process of managing an unprecedented quantum of change in forex equations, some of the bigger companies got into exotic derivatives that they never understood, and incurred losses.
Though the rupee has weakened slightly, of late, there are many concerns on the forex front. "If you ask me the scenario for the next few years," says Ramdas of Mahendra Pumps, "I’d say it depends on how the rupee behaves." His view is that the rupee at 44 would be great for exports.
Finance doesn’t come easy either. Banks do not extend credit without securing some sort of collateral. Even though they operate in priority sectors, many small units do not approach financial institutions for loans due to the paperwork and processes involved. A general reluctance to give loans to this ‘high-risk’ sector also remains a cause of worry.
There’s some relief in sight with the NSIC roping in seven rating agencies, including Fitch, Dun & Bradstreet, and SMERA, to provide credit ratings to small enterprises. Under this plan, NSIC will reimburse 75% of the performance and credit rating fee levied by the agency to the enterprise. Banks have also been mandated to aim for 20% year-on-year growth in lending to SMEs. But banks and financial institutions are also under close scrutiny and responsible to their shareholders—they are unlikely to extend credit just because the government wants them to.
What adds to the gloom on the input front is the state of manpower. In many industries, manpower is getting expensive. As Roorkee-based consultant Hemant Arora points out: "The shortage of skilled labour has made SMEs a training ground for workers before they are poached by large corporates." And companies catering to the agri sector would like to see the manpower situation in the agri sector sorted out. Labourers are increasingly shunning farm work, preferring the higher wages they earn in the manufacturing or construction sectors instead. Many industries are seriously looking at automation as a partial solution to this problem.
The silver lining
Amid the cost-side assault on SMEs, there is some good news. Consumption is still good. "There certainly is demand," says D Bala Sundaram, Chairman of cast iron industrial components maker, CPC. He is also the President of the Indian Chamber of Commerce and Industry, Coimbatore. "Even if economic growth drops to 7%, that’s still good growth."
The smaller you are in the unorganised realm, the worse it is for you. And though things appear better in the organised space, Sanjay Agarwal, Executive Director (SME) of KPMG, reckons that small units’ ability to survive would be severely tested in a downturn. "They have to reinvent themselves."
That’s already happening. For instance, even in Moradabad, exporters like CL Gupta and Globe Metal Industries have quickly changed tack, and diversified into products made of glass and wood. They did this even as small units supporting artisans folded up.
In Coimbatore, companies are looking to get into newer markets or rising up the value chain. That, they say, is the only way for higher realisations, given that there isn’t much they can do to control costs. For instance, Bala Sundaram’s company is in the process of increasing manufacturing capacity by 60% to 800 tonnes. And the company is slowly bagging more value-added and high precision work. Says Jawhar Sircar, Development Commissioner, Micro, Small and Medium Enterprises: "The nimble and flexible nature of these players has enabled them to survive the vagaries of industrial change."
Mahendra’s Ramdas has two alternative markets. One is exports, which currently contributes only about 12% of his sales. He wants this to go up to 30% in the next five years. Secondly, he wants to look beyond agricultural pumps, and get into the housing sector aggressively.
Sharp Pumps’ chief Kannan Ramachandran wants to get into the high-margin game. He’s looking at a drastic shift from the current focus on the domestic and agricultural segments to industrial pumps. "Or else, it’s a volumes game. You need to get into the newer categories, otherwise you’ll be out of the market," he says.
New segments where large players aren’t venturing is the other destination for the SMEs. For instance, Zircon Products’ CS Gupta supplies zirconium powder to nuclear power plants. He also hopes to benefit from opportunities that would arise if the India-US nuclear deal is ratified. However, that doesn’t appear likely to happen any time soon.
Taking the inorganic route
Some players are also looking at acquisitions and joint ventures. Like the big players, they’ve been bitten by the M&A bug. And their stage for this mode of expansion is global. Companies like Ajanta Watch and Muzaffarnagar-based Bindal Duplex already have a China footprint, and others like Shivani Locks and Imperial Auto have European technology partners.
In fact, a British government delegation visited Lucknow and its surrounding areas in an attempt to get SMEs to form joint ventures, partnerships and alliances with British firms. However, by taking the inorganic route and increasing in size, many of these firms would cease to be SMEs, at least not by the government’s definition. They would thus cease to be eligible for government sops to the sector.
"We’ve gained confidence and are exploring opportunities," says DS Verma, President of Indian Industries Association of Lucknow. The size of some of these could be as small as Rs 1 crore. Understandably, therefore, the support from the investment banking fraternity is lacking. "The potential for M&As and consolidation is there, but most advisors are busy with big-ticket deals," contends KPMG’s Sanjay Agarwal.
Apart from the broad economic indicators, there is apprehension over the kind of government that will come to power after next year’s polls. That’s despite the fact that India’s top two political groups have a broad consensus on economic reforms.
Too much volatility in economic factors is surely a challenge for SMEs. But these units would do well to remember they’ve survived numerous changes in India’s economic landscape over the decades. Despite volatility in many sectors, India has been adding almost 200,000 new micro, medium and small enterprises every year, with the old giving way to the new.

Source: Outlook Business

Pipedreams of the small and big

2008-10-10T15:40:00.000+05:30

A rash of small companies, fuelled by the expanding oil and gas sector, are coming into their own. They herald the era of globalising Indian SMEs
In Sakhalin, a long, elongated island in the North Pacific, off the Siberian mainland, temperatures can drop to -40 degrees Celsius. Thick clouds block out the sun through much of the year.
Despite the bleak, harsh conditions, consortia of oil and gas multinationals jostle for a share of the immense oil and gas reserves. Armies of oil workers and tonnes of exploration equipment are disgorged here frequently.
Amidst the throng of belching and pounding exploration monstrosities, a leviathan ‘oily water separation package’ tackles oil spills, big and small. It sucks in contaminated sea water and draws out oil from it. The Rs 5-crore separator was designed, built and shipped from a nondescript workshop in dusty Faridabad, outside Delhi.
"It was a difficult project. When treated water is finally discharged, it contains a mere one part per million (ppm) of oil traces," says Viney Kumar, head of marketing at Grand Prix Fab, a small, Rs 24-crore company, specialising in fabricating filters and separators for oil and gas pipelines.
Borders are being breached. The worldwide boom in the oil & gas sector that also embraces pipeline manufacturing and laying has, along with giants like ONGC, taken a host of small companies to distant shores—countries in Eastern Europe, Russia, Africa, Middle East and the Far East.
These small companies, like Grand Prix, ride on the back of Indian and multinational groups and engineering, procurement and construction (EPC) contractors of the likes of Schlumberger, ABB, Emerson, Hyundai Heavy Industries, Burgess Manning, Bechtel, J Ray McDermott, Spie Capag, L&T and Punj Lloyd.
The EPC players have, over the years, worked in tandem with a number of small Indian companies. As the oil boom gathered steam, some Indian companies submitted to being bought off or opted for the joint venture (JV) route to dig into the oil and gas pipeline business. For instance, a $20-billion US company wanted to buy out Delhi-based Rs 25-crore Rockwin Flowmeter India, a pioneer in flowmeters that measure the flows of fluids and gas in pipes. But technocrat Vishnu Prakash is holding ground.
The trend heralds the emergence of global Indian SMEs, some with turnovers as low of Rs 11 crore, as in the case of the Mumbai-based Narmada Offshore, a pigging and hydro-testing company. Pigging is an activity that involves the insertion and running of specialised equipment—called pigs—through crude or gas pipelines for cleaning and testing.
"We had anticipated the boom and had been investing in shoring up our heavy equipment base," says Deo Bhandari, CEO of Narmada Offshore Constructions, which recently set up shop in the Middle East. In August, the company bagged a $1.8-million pigging contract for South Pars 9/10, Iran’s largest energy project.
A bevy of small companies in the pipelines space, right from flow-meters and filter manufacturers, pigging, diving and offshore pipeline support companies, to makers of specialised coatings for corrosion protection of pipes, have seen a spurt in business in recent years, in the domestic as well as foreign markets.
Niche companies providing specialised products and services have thrived. While Chennai-based Pipe Supports India is focused on clamps, braces and hangers that hold pipes in position, Bangalore-based Secon undertakes geographic information system (GIS)-driven route planning, corridor mapping and ‘right-of-way’ work with local bodies, even before a cross country pipeline is laid. Secon recently secured a foothold in Libya.
Mumbai-based Fugro (Survey) India is a key player for sub-sea geophysical surveys. It is heavily plugged into the Krishna-Godavari basin foray of Reliance Industries (RIL).
The KG basin work, in fact, has triggered efforts to scale up technologies among EPC contractors and small sub-contractors. This has been necessitated due to the need to work in greater water depths, which Indian companies were not geared for. "We have two saturation diving systems. We also provide remotely operated vehicle (ROV) services to ONGC. If you don’t own assets you are vulnerable," says Satpal Singh, Joint MD of Dolphin Offshore Enterprises (India), a Mumbai-based diving and underwater pipe support services company. Each sat system costs over $7 million. Dolphin acquired two junked sat systems and refurbished them for $3 million.
These sprightly band of entrepreneurs are catering to the domestic demand and eyeing pieces of the global pipelines market.
At The Golden Threshold
Worldwide, 70,421 miles of pipelines are planned or are under construction, according to Pipeline and Gas Journal’s 2006 report. The Asia-Pacific region accounts for the bulk, 26,849 miles. As India slowly transits towards gas, the demand for pipelines will be staggering. Government projects the share of natural gas in India’s energy basket to grow to 20% by 2024-25 from the present 9%.
The public sector Gail is already building a national gas grid of over 5,000 km, investing Rs 20,000 crore. City gas distribution (CGD), present in a few cities across Gujarat, Delhi and Mumbai, is expected to expand to 230 cities in the near future.
While much of the momentum will come from an expansion of the gas pipeline infrastructure, product pipelines are also growing. Indian Oil Corporation (IOC), with a pipeline length of 9,273 km, plans to invest over Rs 3,000 crore in capacity expansion. RIL, after commissioning its 1,400-km east-west pipeline by December 2007, is expected to make major investments in pipelines in eastern India.
The replacement market is also huge. All of the 30-year-old undersea pipelines in Mumbai High are currently being replaced. "The replacement project is to the order of $120 million every year for the next six years," points out Satpal Singh.

The Indian pipeline market is estimated at around Rs 32,000 crore. Over 20,000 km of pipelines are to be held in the next five years. "The period between 2008 and 2012 will be the golden period for Indian pipe manufacturers," says Indresh Batra, Managing Director of Jindal Saw, which has an order book of over $1.2 billion.
The clutch of pipe makers, in fact, is among the fastest growing companies in India today. Welspun Gujarat Stahl Rohren draws 75% of its revenue from exports. Man Industries, a mid-size company, is increasing capacity at Anjar in Gujarat and targeting a topline growth of 90% this year.
Expectedly, small companies in the pipeline ecosystem, which are riding the wave, are also growing fast. Dolphin Offshore, a Rs 45-crore company just three years ago, touched a turnover of Rs 205 crore in 2006-07. Narmada Offshore languished at a turnover of around Rs 1 crore for years, till it hit double digit last year. Rustech Products, a pipe coatings company, raced from a turnover of Rs 4 crore in 2002 to Rs 35 crore in 2006-07. "A Rs 100-crore target within the next five years is conservative," says Bimal Jhaveri, Vice Chairman of Rustech. The company’s product portfolio was recently spruced up to contain contemporary cold applied tapes and heat-shrinkable sleeves, an expensive polymer used to cover welded joints on pipelines.
Ingenious Stratagems
Growth, however, didn’t come easy to these entrepreneurs. The oil and gas sector is punishing, with an array of entry barriers. It is driven by specifications and every product and process is scrutinised against stringent standards, usually set by American and Western coalitions. "It is conservative, clannish and functions like an old boys club," explains Batra.
The degree to which ‘specs’ drive the sector can be gauged from the growing business of the Navi Mumbai-based Offshore Testing and Inspection Services. It receives over 100 samples of pipeline-related products each day, all scrutinised against an array of specs, including the ones laid by the American Petroleum Institute.
Before the start of any pipeline project, pipe metals used are subjected to radiographic and corrosion tests. "Even during the laying process, samples are tested for welding procedure," says TRK Chari, General Manager of Offshore Testing, with a turnover of Rs 2.6 crore.
While big companies have the resources to conform to the rules of the game, small companies have had an agonising run over the years. Dolphin Offshore’s long association with ONGC did not help when it wanted to graduate to design engineering. It couldn’t bid because prior experience was demanded. So a joint venture—IMPaC Dolphin—with a German company was set up. "We are now in the game," says Navpreet Singh, Joint MD, now competing with big players like Engineers India (EIL) and L&T. In 2005, the company issued $15 million of foreign currency convertible bonds (FCCBs) to fund its growth plans. It has graduated from a sub-contractor to main contractor and can now bid for Rs 4,000-crore of contracts coming up in the next two years.
The conservative Narmada Offshore has also been thrown into the arms of a foreign player. It struck a deal with the Singapore subsidiary of a Norwegian company, IKM Testing, to move up the value chain. "We are not comfortable with conducting nitrogen-helium leak tests. This expertise will help us work on pipelines in the KG basin," says Bhandari.
Technocrat Bighna Nayak, however, has no qualms about conceding 50% stake to Fugro in the JV, Fugro Surveys (India). Nayak now presides over cutting-edge technologies in a company that has presence in scores of countries and is pushing a turnover of $20 million.
"It’s a fair arrangement. I have also absorbed the exacting work ethic of European companies. I now focus on clients like Reliance. It seeks high-tech solutions. We are now perfectly matched," says Nayak.
However, technological advancements needn’t always flow from market leaders in the West. They can be difficult to deal with. A small company with limited resources or negotiating skills may hit a wall. That’s when they try out alternate routes. For instance, Rustech entered into a JV with a cost-efficient Chinese company that had a short while ago severed a tie-up with Polykem, a global market leader. Recently, he bagged 20% of a project for cold applied tapes in Rajasthan. Interestingly, the rest 80% was bagged by Polykem. Rustech, thus, suddently found itself among the global biggies. "I am now priming the cold applied tapes business," says Jhaveri.
Grand Prix, however, had recognised the worth of a foreign hand early on. This resulted in a JV with an industry major—Burgess Manning India. This trading outfit was in place almost 10 years ago channelising overseas orders for Grand Prix. "We are fabricating 17 pressure vessel separators for a client in the US. It’s worth Rs 10 crore," says Viney Kumar. Over 50% of his Rs 24-crore turnover (2006-07) comes from exports. In two years, he plans to double the turnover.

In another smart move, Chander Bhalla, the promoter of Grand Prix, thought it fit to plant himself in London as the MD of the European arm of Burgess Manning, with a strong presence in Europe and Africa. The Faridabad shopfloor has had a stream of orders from the two continents. It is readying a filter/separator, which is headed for Algeria.
For companies engaged in offshore work, it had become imperative to seek out other markets, for work comes to a standstill during the monsoons in India. Both Dolphin and Narmada have benefited immensely from their presence in the Middle East.
Challenges To Managing Growth
The ability to scale up operations has been a major problem with some of the small companies. Rockwin’s Prakash, for instance, rebuffed feelers for a takeover but is now finding it difficult to expand into various markets. "We just do not have the marketing bandwidth," concedes Prakash. "Despite our standing in the Indian market, we weren’t even invited to bid for a Rs 200-crore flowmetering order by RIL recently."
The biggest impediment to sustained growth of small companies is the ability to attract and retain manpower. In the early days, Dolphin coaxed the sons of Indian Navy’s divers to join the company. It paid dividends. Over 20 divers in the team belong to this clan. In Narmada Offshore, the only experienced engineer who resisted the call of foreign shores is the one with a medical condition.
At Dolphin, brothers Satpal and Navpreet are trying hard to delegate work down the line. Managers are sent to business schools for honing project management skills. "Going ahead without losing our business ethos and values is our biggest challenge," says Navpreet Singh.
Bonds nurtured by the Jhaveris, Rustech’s promoter family, with employees have helped it retain talent. Supervisory staff is encouraged to form their own companies and project work is unloaded to them. "Employees are our partners and should benefit from the company’s growth," says Jhaveri. The attitude shows in many ways. The office boy who served tea years ago now heads Rustech’s coatings plant in Kolkata.

Source : Outlook Business

Eight costly marketing mistakes

2008-10-08T12:01:00.000+05:30

Marketing only in the slow times To grow your business, you need an ongoing, targeted marketing programme you can manage year-round along with the day-to-day demands of your new business. One mistake start-up entrepreneurs often make is to put marketing on the back burner and focus exclusively on the few customers they’ve got. Marketing only during the slow times dooms you to living on an economic roller coaster. Failing to focus Often, start-up marketers fail because they try to tackle too many types of prospects on a limited, start-up budget. Going after everyone who will listen is a shortcut to failure. On the flip side, when you narrowly focus your marketing efforts on a qualified target audience, you’ll get spectacular results. Overlooking testing and research So you think millions of people will want to buy your product or service. What makes you so sure? Before committing lots of cash to launching your new business, do some market research. The internet is your best source of published information. You can test the market using surveys. Testing can keep you from making costly mistakes based on false assumptions about your product, service or customers. Relying on just one or two tactics It’s only natural to rely on the marketing tactics you’re most comfortable with. If you like meeting and talking to new people, you may focus on networking. If you’re shy, on the other hand, you might rely solely on direct mail. Such single mindedness is a major marketing mistake because it prevents you from exposing a full range of prospects to your message.
Under spending on marketing It’s just as important to set aside marketing funds as it is to budget for tools you’re going to need to run your business. If you go to a bank for financing, you’ll be expected to show the banker your marketing budget -- because without marketing, there’s very little chance you’ll be able to repay your loan. Even if you’re funding your company without help from a bank or other lender, you need to follow the same guidelines. Failing to present a professional image Your marketing materials sell your company image to the world. To be successful, you need a cohesive family of tools that stand up to those of even your largest competitors. If you hand out shoddy, poorly produced marketing materials to prospects, don’t expect to be picked for plum jobs. Also be aware of how your company ‘sounds’ when prospects call. Ignoring current customers As your business grows, you may become so focused on getting new customers that you overlook current customers. That is a major mistake, since it generally costs more to win a new customer than to ‘resell’ to an existing one. Overlooking what tech can do for you Contact management software and e-mail marketing are just two options that can streamline your marketing efforts and improve your productivity. Without a good contact management programme, business contacts may be lost and call-backs missed. Don’t overlook these valuable tools that can help your business grow.

Source : Indiatimes

Big opportunity in small cos

2008-10-08T11:56:00.000+05:30

Like in all other eco-systems, the small and the big coexist in business, making each other relevant for each other. Take for instance, the information technology business. While all of us would think that the biggies of the business depend primarily on multinational giants to jack up their top lines, many of them are increasingly turning towards small and medium enterprises for more business. Sample this: Microsoft just launched a new product called Business Essentials which will come at one-fifth the price of a regular ERP package to address a large segment of emerging businesses, which at the moment finds switching to ERP solutions a tad expensive. The package will be a lighter version of a regular ERP package delivering only the essential applications for emerging businesses. "With Business Essentials we are targeting small business upto the range of Rs 50 crore. Small businesses of today will be the large ones of the future," says Rajeev Mittal, group director, Microsoft India. Consumers in this category had to buy a quality ERP package for Rs 10-15 lakh but this one now starts from Rs 2.5-3 lakh along with licensed implementation at the client end by Microsoft partners. The SME market already contributes over 50 per cent to Microsoft's India business. The Indian SMB sector contributes over 60 per cent to Indian GDP, and yet its IT spend is only 30 per cent of the total IT spend of $22 billion by Indian companies, says Zinnov Consulting report. Cisco, the top network equipment maker, has put a multi-pronged strategy in place to ensure that its network follows wherever the emerging businesses go. It has launched an Integrated Services Router (ISR) which combines the benefits of voice, data and video, and does away with diverse sets of hardware.
It's literally an office out of a small box, explains Pramodh Menon, senior vice-president of Cisco India. It has pulled out all stops for its marketing push, with the "Network On Wheels" program, which is the largest marketing programme by Cisco in India. This mobile van visits strategic industrial locations across key tier I, II and III cities and hosts live demonstrations for more than 100 customers per city. The van, which can accommodate up to 10 people at a time, contains equipment and facilities to conduct onsite technical demos of key networking solutions, like IP communications, security, mobility and network management solutions. For this company, whose shares have fallen around 27 per cent a year ago in its home country, Indian SMBs are one of the most lucrative bets. There are around 1,200 SMB clusters across India, and the total number of small businesses would exceed 30 million, according to a recent study by Zinnov Consulting. A study conducted by Access Markets International (AMI) Partners that says Indian emerging businesses are on track to spend $1.26 billion on Internet-related services and products this year, a growth of 35 per cent over similar spends last year by the same businesses. 37 per cent of the businesses surveyed plan a complete overhaul of their Internet related infrastructure. Xerox Corp derives about 55 per cent of its business revenues in India from SMEs and SOHOs. They work with 800 emerging business partners in India, and are giving a long-term savings solution in laser printing. Their new printer model uses solid ink technology and offers colour prints at Rs 2 per page. Mono prints are free for the litime of the printer. "Though the printer costs more, if you do a cost analysis over a year and compare it with a regular colour laser, it offers tremendous savings," explains Princy Bhatnagar, director, Office Group.
The activity is as frenetic with chip companies. "We are targeting all sectors, ranging from automobiles to fashion and apparel," points out Narendra Bhandari, director, Software & Solutions group for APAC region at Intel. The world's largest chipmaker, is pushing for its Business Exchange portal, specifically designed for small businesses and expects a growth of around 24 per cent from this in the current fiscal. This, along with its Atom processor which is a much cheaper version of the Core Duo, are being advertised in smaller towns and cities using roadshows, and other media. A Nasscom report states that nearly 50-60 per cent of IT spend in India is expected from the SMB segment in 2008. India will be among the fastest growing markets in the SMB space, with IT spend set to grow over 20 per cent in 2008 with them spending an extra $1 billion. And so IBM has made emerging businesses its focus by increasing its geographical reach. "Last year, our SMB business grew over 50 per cent," says Shailesh Agarwal, VP, IBM South Asia. IBM is entering more markets, in smaller towns and cities, targeting the burgeoning SMB population there. "We are going to have a geography centric strategy," he says, meaning that the traditional IBM product-centric strategy is history. "We are seeing smaller businesses leapfrogging - they are going straight for full implementation of IT and Net-related needs, from zero installation," he adds, explaining the reason for targeting specific verticals in various sectors. The US-based multinational is now moving fast to achieve its target of being present in fourteen new centers by the year-end.

Source : Indiatimes

Multi-function devices for SMBs

2008-10-08T11:54:00.000+05:30

It wasn't long ago when a printer was just another printer - it did what it was supposed to do - Print! Fastforward to today, there has been a near 180-degree shift. As business demands increase, the printer is morphing beyond its core functions, offering customers more value for money and is rapidly evolving. While printers have added copying functionality, copiers have added print controllers. As a result, the printer and copier markets are converging. Printer-based MFPs typically offer the lowest acquisition price while copier-based MFPs provide a low cost per page. However, under-utilised copiers represent another type of additional cost. While they offer a low cost-per-page, the actual cost of the hardware in conjunction with low utilisation is dramatically higher. For volumes below 20,000 pages-per-month, printer-based MFPs are typically more economical. In addition, you have the option to buy several MFPs and reduce the number of users per device without significantly increasing your total cost. "Multi-function devices are increasingly redefining office life, helping organisations to consolidate investment, maximise space and simplify workflow processes. MFDs also simplify supply ordering and minimise maintenance calls, saving time, money, and critical resources for SMBs," says Samir Shah, director, commercial and enterprise printing business, Imaging and Printing Group, HP India. An increasing number of customers are considering color MFDs that not only combine printing and copying but also produce black-and-white output at the same cost and performance as black-and-white devices. "The new generation color MFDs are designed to remove one of the key barriers to color adoption by reducing the cost of printing black and white documents to the same level as that on monochrome printers, while simultaneously delivering on the quality and experience of color in the office," explains Shah. Capabilities such as HP Edgeline technology illustrate one of the most important milestones in the evolution of MFP technology. "The Edgeline offerings will transform the industry, providing customers a multifunction printing solution with unprecedented ease of use that can improve productivity and lower color operating costs by up to 30 per cent," says Shah. "SMEs today operate in an extremely competitive business environment. They want to cope by opting for business infrastructure that makes them do more for less, i.e. makes them more cost competitive. Samsung has recently introduced its 'Printelligense' range of laser printers with intelligent technology that helps customer save up to 50 per cent on their printing costs, lowers their printing downtime and makes printing less fussy. Some of these new technologies have been developed especially for the cost-conscious Indian customers. We hope our new range of 'Printelligense ' laser printers will help our SME customers become more efficient, competitive and successful,” says Hari Pandey, senior marketing manager, Samsung India.

Information spurs growth

2008-10-08T11:49:00.000+05:30

The mantra repeated over the years is that ‘India is growing at a blistering pace, and it is the SME sector that is powering this growth’. However, the question is - what is really powering the SME growth engine? In this context, it is apt to recall a view of one of the well-known CEOs. He was of the opinion that even in these turbulent times, our economy is still resilient. India also has a vast population (fortunately or unfortunately), to ensure consistent consumption. These comments are often viewed with scepticism. If the growth of our SMEs was indeed infallible, would not India have emerged as a superpower overnight? Notwithstanding, this opinion, the truth lies somewhere in between. Hence it is very important to seek the answers to these questions, as information is the key for progress and further growth in any sector. From general observations, most of the SMEs are contemplating a scaling down of their existing businesses altogether. There are companies, which are struggling to survive, forget about growing and expanding further. So, what is it that has caused cracks in the erstwhile shining armour of these SMEs? Is it the inflation or the severe liquidity crisis or is it a combination of several macroeconomic factors? It can be stated that macro-economic factors have been a mere speck of influence on the overall performance of the SMEs. To begin with, the real causes have been a lack of planning by most entrepreneurs while pursuing the feverish growth targets of the past. Eventually, it always boils down to one thing – lack of accurate and scientific information about their business, their competition and their end users. Nine out of ten SMEs in our country unfortunately are completely oblivious to any form of organised information. Business decisions have often been based on ‘gut-feel’, and the assumption about a general estimate on the ‘business climate’.
Naturally, the bubble is bound to burst some time. Often, it will be sooner rather than later. When the dotcom boom happened, every business – large and small alike – were inclined towards that online domain. Nevertheless, the irony is that, questions like - ‘What exactly did they want to start? And why did they want to do so?’ - were mostly unanswered. The issue that should have been addressed ideally is – what is the sustainable competitive advantage that the business will continue to have over the medium term? This is a question that has not been pondered upon by most of the SME owners. Retail, real estate and IT companies have recently gone the same way. Very often, businesses in these so-called ‘emerging sectors’ have started exploiting the ostensible valuations they would attract – valuations, which are very often restricted to paper, or at best to the Bill Gates’ spread sheets. This is the fundamental ill ailing the bulk of India’s SMEs. Most of these businesses – regardless of the sector – lack a credible, unique value proposition. Without this kind of a value proposition, they continue to remain a mere statistic, not having the ability to become a brand. In addition, this in turn means, without a brand there is no brand value. Therefore, it is crucial for the owners of all the small and medium enterprises to wake up and smell the coffee, and plan their expansion and diversification more meticulously. This plan of course needs to be based on reliable and accurate information. The kind of information the Indian SMEs need to seek are as follows: a) Firstly, they need to understand their own DNA and core values. What is making the business tick? (May be even something like – what is the singular reason they have for continuing to exist for so long?).
b) Secondly, the enterprise needs to understand its competition. The more thorough the information, the more effective can be the SMEs’ plan of growth. (Remember, in today’s times, a watch no longer competes with another watch. It actually competes with a shirt, a pen or a wallet. And in most economics, Coca-Cola’s biggest competition is plain old water!) c) Next, the SMEs need to study and comprehend their end users intimately. The process would involve knowing every single stakeholder interacting with their products or availing their services. They should learn from these insights gathered and understand their requirements. d) SMEs need to then make smart inferences on what is going to ensure their stakeholders’ continued loyalty to their products or services. e) Finally, SMEs need to understand the environment, the various channels of communication and the clutter and budget constraints. How will they enjoy maximum mindshare for themselves? Yes, all this ‘understanding’ stems from insights, which are based on rigorous information. In addition, the information needs to be gathered through detailed scientific processes. The scientific process is no doubt painstaking and perhaps, seemingly expensive for an SME. However, apparently there is simply no other choice for today’s entrepreneurs or their small and medium ventures. Today’s entrepreneurs need to invest more in the process of gathering and effectively collating scientific information. To put it simply, they need to do sufficient ‘looking’ before the ‘leaping’ to the next level. Otherwise, with an ill-informed approach the SMEs will plunge into a cavern of no return.

Source : Indiatimes

High interest rates, strict credit may hit bottomlines: Ficci

2008-10-06T15:34:00.000+05:30

Rising interest rate and stricter credit availability are the two major concerns for India Inc and would affect its performance, according to the latest business confidence survey (Q1 of 2008-09) conducted by the apex chamber, Ficci.
The survey reveals that the bulk of small and medium enterprise (SME) sector is worst affected and that its interest cost has gone up by 3.5% to 5.5% over the last one year.
In contrast, the interest cost of large companies has gone up by 1.5% to 2.5% over the last one year.
In the global context of acute competition and overall slide, the high cost of credit, reduced availability of funds and weak demand have created added hardships for the Indian corporate in the globalised market.
Nearly 75% of the participating companies in the survey agreed that banks have tightened their credit disbursal norms over time and thereby restricted the availability of credit to industry.
Further, nearly 97% of the participants agreed that it is the SME sector that is facing the pressure most on account of the hardening interest rates. Given the present situation and the deteriorating performance of the SMEs, there is a strong demand that the RBI in consultation with the government should look at a scheme that offers productivity-linked benefits to SMEs.
This proposal found favour with 82% of the survey participants.
Ficci’s survey drew responses from 348 companies in the heavy and light industry and the services sectors with a wide geographical and sectoral spread.
Companies participating in this survey had turnover ranging from Rs 1 crore to Rs 1,26,000 crore.
Respondents to the survey were largely from sectors such as cement, pharmaceuticals, textiles and apparel, leather, FMCG, heavy equipment and machinery, banking, insurance, real estate, IT & ITES, paper, metal and metal products, chemicals, auto & auto ancillary and steel.
The prime lending rate (PLR) of banks has moved up from 10% to 10.5% a year ago to 13% to 13.5%.
The survey also shows that over the last 12 months the interest rate for companies has gone up in the range of 150 to 550 basis points which is 1.5% to 5.5%.
The rise in interest rates is seen as having a direct impact on the investment activity of the companies. 48% of the companies that participated in Ficci’s latest survey have reported that they are reconsidering some of their project investments. are going ahead with their scheduled investment plans, a clear discernable trend of dependence on internal accruals to support investments is seen.
In the light of these findings, Ficci is of the view that the central bank must consider lowering of the interest rates as this is adversely affecting industrial performance and overall growth momentum in the economy.

Source : Financial Express

How do I make my business excel in uncertain times?

2008-10-06T15:17:00.000+05:30

Reams have been written on the current global turmoil. Finally, as a small enterprise one tries to figure out as to how is it going affect ones business and survival.
The worst-case scenario shows a not-so-roseate future as expansions are held back, risk aversion grows and costs impact margins.
But is it really that bad? Not really, because no scenario is permanent.
Those who survive trying times are likely to be more successful later.
In the context, it is imperative for SMEs to plug the ‘leaks’ — or operational inefficiencies.
There is no point getting into the specific needs of sectors, for that would require a tome, not a 800-word article.
Instead, here are a few generics that need to be focussed on to survive and thrive.
Inventory management
A good inventory management would mean holding minimum inventory across the chain. In a slowing down scenario, there is a tendency to hold more in anticipation of growth of sales in future, which may or may not occur in the near future. Just desist. The better way to do it would be hold higher levels of inventory when demand slows. The inventory ratios should move consistently with sales turnover.
Credit management or debtor realisation
Like in inventory, funds blocked in post-sale activities, viz., debtors and efforts of realisation would translate into time and efforts. The entities should have documented policy-discouraging sale on credit to new customers.
The policy should ideally fix a cap on open sales policy, say, to about 30% to 40% of the total sales turnover. Further, sales to business entities of friends or relatives in whose business the client does not have any direct or indirect control should not be executed on an open basis. Such sales often not only affect the business but also sour relations between friends or relatives.
A good debtor realisation and sales credit policy would translate into minimum debtor days. The average debtor realisation consistently of more than 90 days would be risky, except where the industry is cyclical in nature and /or the sales are to sovereign customers where the industry average is of more than 120 days in view of the bureaucratic procedures.
Leverage within manageable limit
The SME business is fraught with multiple risks. As such, the leveraging of outstanding outside debt and commitments on a fixed term basis and/or at a fixed cost may turn out to be costly. As risks rise, restrict dependence on fixed term/fixed cost financing to take care of pressures from lenders to repay in the downcycle. A highly leveraged entity would find it difficult to service its debt when the profit margins are also under pressure.
A good SME would have a documented policy that it would not borrow beyond a particular level (as may be documented in the policy) and for purposes specifically laid out. Ideally, the total outside liability to networth should be less than 2 (in few cases it may go up to 3; but the same needs to be seen in conjunction with the margins normally generated). The working capital borrowing should not normally exceed 20% of the turnover.
Constant updating of technology and capacity expansion
A growing SME that is also adding value for the owners would invest/add-on in its fixed assets (mainly plant and machinery) by 20-25% and above in every 3-year blocks. This helps in maintaining quality and efficiency by reducing the operating cost.
Yes, it is easier said than done, especially when there are pressures in maintaining the topline and bottomline, but entities which completed upgradation/ expansion by FY 2007 are likely to be in a better position today.
Growth the topline
The SME must always add value to owners and investors. An SME’s actual margin may not be entirely reflected in the audited results. However, the sales turnover is normally disclosed fairly (in view of VAT/sales tax provisions). In well-run SMEs, the compounded annual growth rate in sales normally beats the benchmark of GDP growth rate plus inflation rate for the period.
For the few industries where input costs have risen more than the national inflation rate, the well-managed business entities would strive to beat the summation of input inflation plus economy’s growth rate. In current scenario, it may be difficult for most SMEs to achieve this.
The never-ending business cycle
Enterprises go through multiple phases in their life cycle, such as:
(i) Ideation or conceptualisation stage — when the idea is generated on the drawing boards and tested on a pilot scale basis.
(ii) Commercialisation — putting the idea into a running concept with returns to recover the investment and return
(iii) Growth — once commercialised, the businesses would like to grow the same to a level which would create enough revenue for diversification/ backward or forward integration/expansion/all of the above. This leads to a scenario of increased competition.
This leads to a scenario where the business would need to create a differentiating feature in the product or service offering or may be even the way of doing the existing business to manage the costs and ensure good margins. This is when it has to go back to phase (i) above.

Source : Sify

Server market gets innovative

2008-09-25T09:51:00.000+05:30

SMBs are a growing market for vendors in the server space. Innovation is what will help them sustain their position in the market

According to an IDC report, the overall revenue of the server market touched $727 million in 2007 recording a 24 percent increase over 2006. A recent joint study conducted by IDC and AMI Partners reflected that there are 1.9 million SMBs and 30,000 mid-market entities in India. Also, as per analyst estimates, SMBs in India will spend up to $8 billion to beef up IT infrastructure, to a robust 24 percent from last year.
The changing trends
Emerging market trends and the surging need for energy efficient data centers and virtualization are the prime factors that have been propelling the server industry in the country. The increasing number of servers accelerates the heat generation and thereby raises the issue of cost efficiency. India being a growing economy, a lot of progress is happening here in the areas of building infrastructure, government initiatives and retail revolution. All the growth factors clubbed with the necessity to build up anenergy- efficient and cost saving IT implementation is driving the server industry on a large scale.
Vendors are making all efforts to harness maximum profitability out of the emerging trends and are coming up with servers that yield better performance and are easy to manage.
Speaking on the availability of energy efficient servers, Mukul Mathur, Director-Channels and Marketing, IBM India/South Asia said, "With our System x and System p servers, we can help cut costs, increase performance and help control power usage. And, by consolidating and virtualizing on IBM System x and BladeCenter servers, customers can increase the utilization of their hardware and decrease the number of physical assets they need to watch over. This translates into real savings through better energy conservation and IT resource usage across the data center."
Non-traditional vertical
Telecom, BFSI and manufacturing have been the traditional drivers of servers in Indian market. However, the year 2007 saw retail and construction as the emerging verticals. In addition to that vendors are observing growth in the adoption of server technology in government, media and entertainment industries. Specific industry segments including education, retail and banking are witnessing a constant demand for servers that undertake specific applications for print, e-mail, etc that ensure that a downtime in one doesn't affect entire system.
"Even the government sector is now posing as a major contributor for the server market in the country. With the increasing number of schools, computerization happening at different scales and e-gov projects coming up at large scale, the entire server sector is seeing a boost. IT and ITeS are the other sectors that contribute to the growth of server industry. The next huge demand is coming from construction and real estate business," says Ashish of Sun Microsystems.
Virtualization ahead
The reasons blade servers are doing better business in the market is because they perform better than the traditional servers and it optimizes space utilization for data centers besides being energy efficient. With power cooling becoming the most talked about technology, blade servers have been able to create a better market in the server segment. Virtualization still comprises a small market share but the server players agree that this is the next big thing happening in the server domain. Virtualized servers have the capacity to increase utilization of a server by 20 to 25 percent and observing the non-utilization of energy by traditional servers and increasing computing across all the verticals, they promise profitable business.
Commenting on the adoption rate of virtualized server, George Paul, EVP-Marketing, HCL Infosystems said that it was slow till key OS vendors announced virtualization support as a standard feature, this has led to the increased propagation of virtualization to a larger segment of the market. Indian players understand the efficiency that virtualization can bring to their organizations and the adoption rate signifies the maturity level at customer's end.
The main factors that drive the virtualization segment is the infrastructure flexibility and lower costs. It enables the organizations to run multiple applications and workloads on single systems safely-radically increasing efficiency and utilization rates while lowering overall costs.
Challenges at SMB front
With the increasing adoption of ERP and other business applications, small and medium businesses (SMBs) have emerged as the key focus area for the server domain. However, in the SMB environment, complexity of IT is a matter of concern, and procuring, deploying, managing and cost implications prevent enterprises to deliberate on decisions.
Managing energy in the data center is a growing concern across companies of all sizes in India. "SMB is a major market but it has its own limitations. Lack of quality manpower in SMB space to manage the IT infrastructure is an issue and therefore, the vendors have to simplify IT to an extent that it is managed easily by the available resources," said Pallab Talukar, Director, Enterprise Solutions Group, Dell India.
SMBs today are looking for customized solutions and products that cater to their unique IT requirements. This has led to an increase in the IT spending among SMBs. Kathuria from Microsoft said that keeping their requirements in mind, Microsoft is looking forward to announce the launch of Small Business Server 2008 and Essential Business Server 2008 later this year, which have been specifically designed for SMB customers with built-in virtualization capabilities.
Vendors need to focus on continuous learning and training programs for their partners to enable them to provide the desired consultancy to the business organizations.

Source : CIOL

DoT allows resale of IPLC service

2008-09-25T09:26:00.000+05:30

In a bid to increase availability of bandwidth for the fast-growing small and medium enterprises (SME) segment, the Department of Telecommunications (DoT) today permitted the resale of International Private Leased Circuits (IPLC).

To boost competition and affordability in the IPLC segment, the DoT has created a new category of licence called “Resale of IPLC Service” that will be permitted to enter into agreements for leased line with access providers, national long distance service providers and international long distance service providers for provision of IPLC to end customers.

Industries like business process outsourcing units, software exporters, call centres and banks are likely to benefit most from this step, given their heavy usage and dependence on leased line services.

According to the norms laid down by the DoT, only Indian registered companies are permitted to apply. The net worth and paid-up capital of company is required to be a minimum of Rs 2.5 crore. It should also be compliant with the current foreign direct investment (FDI) norms where the foreign equity in the paid-up capital of the company must not exceed 74 per cent.

The applicant should have an initial financial bank guarantee of Rs 1 crore. The entry fee has been set at Rs 1 crore, while the annual licence fee shall be 6 per cent of the adjusted gross revenue (AGR), or Rs 5 lakh, whichever is higher.

Source : Business Standard

Top 5 Ways To Generate Low Cost Website Traffic

2008-09-24T09:40:00.000+05:30

There is one hard and fast rule in generating income for your website: A steady flow of website traffic. If no one goes to your site, it hardly bares a chance of generating an income. Many sites have tried and failed in doing so, and these results to the sites demise. It takes money to maintain an income generating site; it also takes money to make money.
BUT, it doesn’t take a whole caboodle of cash to generate website traffic for your site.
Ever wonder how does big hit sites drive traffic top their site? Most of them are spending tons of money to drive the traffic to their sites, investing in many advertising campaigns and different forms of marketing schemes and gimmickries. This is all worthwhile because, well, they are what they are now, high earning, big hitting websites.
You don’t have to do this if you don’t really have their resources. There are many ways to generate low cost website traffic without having to spend what you don’t have or can’t afford. Many people have banked on high cost methods and have ended up losing their shirt over it.
Here I present to you the Top five ways to generate low cost website traffic that could help your site a whole lot. Even if you only get a small percentage of successful visitors in to client ratio it still works especially if you get a high number of website traffic.
Exchange Links
This is a sure and proven method. Rarely would you see a site where there is no link to another site. Many webmasters are willing to exchange links with one another so that they could produce more public awareness about their sites. You’ll soon see and feel the sudden upsurge of the traffic coming in to your site from other sites.
A major prerequisite in exchanging links with other sites is having the same niche or content as the other site. They should share a common subject so that there is continuity in the providing of service and information to what interests your target traffic.
Exchanging links also boosts your chances of getting a high ranking in search engine results. It is common knowledge that search engines ranks high sites that have inbound and outbound theme-related links. With a good ranking position in the search engines, you will generate more traffic in your website without the high costs.
Traffic Exchange
This is like exchanging links but on a different higher level. This may cost a bit more than exchanging or trading links but could be made cheaper because you get to earn credits. You can use those credits when viewing others traffic, while you earn credits when someone views yours.
Traffic exchange services are the viewing of another’s site or page. This is done vice versa where a site can use your sites contents and so can you to his or her site. You both benefit from each others efforts to generate traffic. The other sites visitors can go to your pages and know more about your site as well as theirs. Once again the public awareness of your sites existence is boosted.
Write and Submit Articles
There are many e-zines and online encyclopedias in the internet which provides free space for articles to be submitted. If you want to save costs, you can do the articles yourself. There are many freelance writers who are willing to write for you for a small fee, but to save money, it is wise to do those articles yourself.
Write news articles or marketing news articles that are themed along with the niche of your site. Write something that you have expertise on so that when they read it, they can feel your knowledge about the subject and will be eager to go to your site. Write articles that produce tips and guidelines to the subject or niche your site has.
Include a resource box at the end of your article that can link them to your site. Write a little about yourself and your site. If you provide a light, information-laden and interesting article, they will go to your site for more.
Make a Newsletter.
This may sound like hard work because of all the articles you may need to use to build a newsletter but on the contrary, this is not so. There are many writers and sites that are willing to provide free articles as long as they can get their name in on your newsletter. This will also provide free advertising for them as well.
As your newsletter gets pass around, you can widen your public awareness and build an opt-in list that can regularly visit your site.
Join Online Communities and Forums
This only requires your time and nothing else. You can share your knowledge and expertise with many online communities as well as your website. You can get free advertising when you go to forums that have the same subject or niche with your site.
Share your small amount of money and let them see how knowledgeable you are with the subject. As you build your reputation, you also build the reputation of your site, making it a reputable and honest business that could be frequented and trusted by many people.

Source : The Works-Small Business Hub

How to retain customers

2008-09-24T09:06:00.000+05:30

Businesses, now more than ever, need to harness the attention and loyalty of customers. Customer retention rates are decreasing as people are more inclined to shop around for the best deals. Subsequently, SMEs are advised to ensure their delivery of service is second to none.
The potential revenue stream from existing customers can be enough to keep businesses afloat during difficult times. The actions of a business best articulate it’s objectives and how it values it’s customers. Without a consistent and thorough customer service policy, customers are likely to paint a very unfavourable picture of the business.
There are 5 key areas to address in designing a customer retention strategy. These include:
1. Address customer complaints:
Companies often fall down in the speed and way in which they address customer complaints. Dissatisfaction may derive from customers feeling they are not getting the best deal; they may be unhappy with the length of time goods are delivered; or the speed at which enquiries are answered. These scenarios can lead to a reactive situation which is bad for business identity, brand, and reputation.
Research can help avoid them: implementing and maintaining a customer database, including information such as how often they purchase or use the business service(s) will identify customers who are losing interest in your company, and allow you to make timely communication with them.
2. Communication
Typically, customers want good communication and action from a company to resolve problems, so communication is crucial to retaining existing customers.
Also, it is essential to keep customers informed of new or developing products or services on offer, as well as all forthcoming events/stock etc. Reminding customers of why they selected your company above the competition in the first place encourages advocacy and spend. A measured approach to customer communication can be low cost and extremely effective.
3. Value in Employee Experience
Employees with direct contact with customers have a valuable contribution to make when understanding customer behaviour. They will recognise trends, consumer patterns, potential failings and solutions. Regular meetings with front-line staff provide an opportunity to update strategies and identify areas for improvement.
4. Establish a firm relationship with customers
Not only does this improve their level of loyalty and make it more difficult for them to defect; it also makes it easier for any problems to be resolved without the burden of a reactive situation.
5. Honesty
Trading with honesty and fairness will always attract customers. The fear of fraud, and unfair treatment amongst consumers now puts company traits of honesty and fairness (as well as quality and value) at the forefront of how people select which company to do business with.

Source : The Works : Small Business Hub

SME storage demand to skyrocket in 2009-10

2008-09-23T18:02:00.000+05:30

SMEs in India are heading towards a data deluge within a year’s time between now and 2009-10A Nielsen-Netapp study
NetApp, leading provider of innovative data management solutions, today announced the interim findings of its ongoing survey titled 'Data Explosion in India - Trends & Challenges' in partnership with The Nielsen Company.
SMEs in India are heading towards a data deluge within a year's time between now and 2009-10. According to the survey, there is a clear indication of rapid increase in storage requirements in the SME segment. There will be a 56 percent growth in SMEs whose data storage requirements will jump to the 500-999 GB range from the 100-499 GB range.
Further, there will be a 133 percent growth in SMEs whose data storage requirements will increase in the 6-10 TB range. This shift in increase in storage requirements is also reflected by a corresponding drop by 29 percent of SMEs between 100-499 GB range and a 60 percent drop in the >100 GB range.
In addition, there is expected to be a 33 percent growth in SMEs demanding storage in the 11-15 TB, and >25 TB ranges respectively, which is a huge data management challenge coming up for SMEs.
NetApp launches storage solutions for SME marketOwing to the huge potential in the Indian SME market, NetApp also announced the complete integration of the S Family of storage solutions, formerly known as StoreVault, into its full line of storage and data management solutions for the midsized segment at an entry-level price.
The S550, with 12TB, caters to small businesses with 100 to 500 employees while the FAS 2020, with 68 TB, fits mid-sized business with 250 to 750 employees.
"The report findings clearly indicate that the SME market in India is growing rapidly, which is reflecting in their data storage requirements. The integration of the S family into NetApp's full line of storage and data management solutions has happened at the most appropriate time for us considering the robust growth in the SME segment. The S Family will offer SMEs in India a new world of solutions especially designed for their evolving needs," said Surajit Sen, director, Channel, Alliances & Market, NetApp India.
"The survey revealed that data management was a genuine concern of SMEs. Hence our storage technology would help all the data management concerns of Indian SMBs," he said. "24/7 access is critical for SMEs."
NetApp's S Family of storage solutions finds demand among micro verticals including the telco segment, that offer value added services like ring tones and gaming to customers, says Sen. "This technology is a natural fit to Telcos, smaller banks, small manufacturing, healthcare and auto ancillary organizations."
The S Family products gets integrated with other solutions - in all, acts as a bundled solution including data back-up and data de-duplication. To start with, NetApp will be targeting Class B and Class cities in the south like Cochin, Salem, Coimbatore, Vijayawada and others before moving on to eastern, northern ad westerns markets in India.
"Storage market in India is pegged at 16 to 17 percent growth year-on-year. SME spend on storage is a mere 6 to 7 percent. We expect it to go up to 40 percent," Sen said.
NetApp Data Explosion SurveyThe Data Explosion survey is being conducted by The Nielsen Company in association with NetApp to substantiate the data growth in organizations in India. The survey aims to establish the challenges faced with respect to storage and data management and how organizations are dealing with these challenges.
The SME segment comprises 242 companies from across Mumbai, Bangalore, Delhi, Hyderabad, Chennai and Pune across BFSI, Media & Entertainment, IT/ITES, Automotive, Manufacturing, Pharma and Healthcare.

Source : CIOL

It’s time for SMEs to tap carbon finance

2008-09-23T13:08:00.000+05:30

Market-based incentives for additional greenhouse gas emission reductions for project activities offer new opportunities in developing countries. The revenue from Clean Development Mechanism (CDM) projects can ensure financial viability of energy conservation and cost reduction measures in many industries. Carbon credits generation activity is growing at 80% in India. Though India has the highest number of registered CDM projects in the world, CDM has yet to become popular among small and medium enterprises (SMEs).
The number of Indian SMEs participating in CDM is small. It constitutes only around 5% of the total registered CDM projects in India. SMEs’ contribution is more than 50% of industrial production in India. Going by its value added figures in the manufacturing sector, it makes for one-third of total exports and employs the largest manpower next to agriculture.
With more than three million SMEs, this sector contributes 40% towards the GDP, provides employment to more than 22 million people and is growing at a rate of 20% annually. The wider role of SMEs in the economy and their potential to reduce GHG emissions through energy efficiency and other measures at a marginal cost make them ideal for CDM activities.
SMEs can immensely benefit from carbon cash flows. CDM can provide incentives to SMEs to adopt new and more efficient technologies, improve energy and environmental performance, and help them access finance at low costs.
Benefits from potential carbon revenue streams could be significant in raising the equity component of financing their modernisation. Energy efficiency, which enables flow of carbon revenue in the segment, will not only enhance their environmental quality but will also make the working environment better. Increasing the SME participation in CDM is very critical to achieve desired modernisation and cost competitiveness in the segment. A strategic approach needs to be formulated to leverage carbon finance to strengthen SMEs and their future potential in contributing to the Indian economy and making the economic growth more inclusive.
Since the SME participation to date is not very encouraging, a little effort to create a CDM-enabling environment in this sector could lead to harnessing its latent potential. The units in food processing and agri-industries—sugar, distilleries, meat/fish processing, diaries, poultries, starch, jute and steel rolling mills, ferro alloys, sponge iron and foundries—have excellent opportunities to generate additional revenue flows to enable modernisation and cost efficiency. The participation of SMEs in harnessing this mechanism is slack due to the lack of awareness, affordability of transaction costs and uncertainties in the CDM process and consequent risks.
At present, the sugar industries are active and are developing several CDM projects. At least 15 sugar mills have got successfully registered and a few among them have received carbon revenue flows. Their number can increase manifold with effective intervention by public and private bodies—especially financial institutions, the government and project development entities/consultants.
There are several cost effective indigenous technologies that reduce fuel consumption in boilers and thereby the carbon emission. For example, there are indigenously developed multifunctional fuel additives for petroleum fuels and solid fuels like coal, lignite, bagasse and biomass. Usage of such technologies can result in reduction in fuel consumption by 2-6% and in case of brick kilns, the reduction in coal consumption can be 10-15%. Such additive and emulsifier suppliers can make their business proposition more attractive to customers by using carbon revenue stream or generating upfront debt or equity finance.
In India, the brick industry is still a highly energy-intensive process. The annual estimated coal consumption in the brick industry is nearly 24 million tonne, which forms about 8% of the total coal consumption in India. The share of fuel in the total production cost of bricks is in the range of 35-50%. There are significant opportunities for improving the energy efficiency of the brick production sector. A balance use of energy with some improvements in existing technologies can reduce the sector’s energy usage by 5-15%.
The share of India’s textile industry in its GDP is nearly 5%, and the export earning from the sector is around 25% of the total value of exports from India. There are about 2,000 cotton and man-made fibre textile units in the country. Energy accounts for 12-15 % of the total cost of production in the sector. Up to 75% of energy is utilised in wet processing with temperatures ranging from 40°-140°C. Any initiative that would lead to a reduction is the use of fossil fuel by replacing it with alternative renewable energy sources would earn carbon credits.
The major reason behind the low participation of SMEs is lack of awareness about CDM and carbon abatement opportunities. Further, the kind of costs involved in structuring a green initiative as a CDM project make one look at it as a challenge and the volume of operations in SMEs makes the CDM structuring process apparently unviable.
A new approach introduced by UNFCCC, called programmatic CDM, provides an enabling environment for energy service companies to emerge and aid SMEs to participate in implementing CDM projects. Programmatic CDM can be seen as an attempt to lower transaction costs of the CDM process to bring in the emission reduction opportunities in small and tiny sectors into the carbon market.
This new initiative by the UN body enables emergence of new entities (called energy service companies) to finance and undertake initiatives particularly for renewable energy and energy efficiency projects in small and tiny sectors, which are marginalised in a CDM market dominated by high-yield, low-cost projects.
A clear road map needs to be prepared by the government and trade organisations to create a strong awareness of CDM and its benefits among SMEs. An appropriate policy for promotion of energy service companies (CDM project bundlers and CDM programme implementers), articulation of carbon credit ownership issues and some fiscal incentives will definitely make significant difference in achieving the higher participation of SMEs in India.

Source: Financial Express