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Small Beginnings, Vision Unlimited

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The small and medium enterprise sector in the country is being irrigated with unique ideas and dauntless effort. "India, standalone, is being seen by global players as a centre for mass action" says Kavi Arora. Read more.

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Small Beginnings, Vision Unlimited

  1. 1. SMEs in India cove r s to ry Small Vision Beginnings, Unlimited The small and medium enterprise sector in the country is being irrigated with unique ideas and dauntless effort. By Sangita Thakur Varma Design by Charu Dwivedi, Imaging Anil T “W ith the rise of the millennial generation, the wave of entrepreneuhip has caught up,” says R Narayan, Charter Member, The Indus Entrepreneu (TiE), Delhi-NCR, and Founder and CEO of Power2SME. You can’t agree more with him. India is in the throes of an entrepreneurial evolution with the SME sector driving the change. It is not a sudden or a new phenomenon. The SME sector had been diligently working on the sidelines alongside their big brother corporates, doing their bit towards growing the Indian economy. Now, however, with the economic headwinds forcing the bigger ships to slow their pace, it is time for the smaller boats to zip ahead. And how! Significant Stakeholders According to Prof V Padmanand, an SME expert, “India is aptly considered as a developing country (industrial) superpower.” It has a large population and the fourth-largest gross domestic product (GDP) in purchasing power parity (PPP) terms. The micro, small and medium enterprise (MSME) segment is a significant stakeholder in the country’s industrial base. The sector contributes most significantly to employment, GDP and exports. Today, India has perhaps the largest MSME base in the world, as it has for decades had an exclusive policy (and dedicated promotion schemes) for SMEs,” Padmanand contends. Narayan seconds this, saying, “India was second among all nations in Total Entrepreneuhip Activity as per the Global Entrepreneuhip Monitor Report of 2002. It is ninth in the Global Entrepreneuhip Monitor (GEM) survey of entrepreneurial countries and is the highest among 28 countries in necessity based entrepreneuhip.” He attributes the SME wave to liberalisation post 1991, and the information technology boom of the late 90s. “They were significant factors contributing to the www.ibef.org August-September 2013 15
  2. 2. cove r s to ry SMEs in India wave of entrepreneuhip in India,” he says. The fact that India has the largest young population in the world has given rise to “a huge risk-taking category,” continues Narayan, adding, “The Milennials believe in working for themselves, and the emergence of social media and funding platforms, etc., have given them the opportunity to explore unexplored waters and realise their dreams.” MSME Cluster: Engine for Growth Professor V Padmanand, an T he MSME sector serves as a veritable engine of economic growth in India. Today, India has perhaps the larg- Guiding Lights If the young guns were rearing to go, the investors, eager to fund their dreams, were not far behind. Incorporated in 2006, Religare Finvest Limited (RFL) is a dedicated SME lender and a subsidiary of Religare Enterprises Limited. It is a non-deposit-taking systemically important Non-Banking Financial Company (NBFC). “Since 2008 we are focussed on the SME segment as our priority,” says Kavi Arora, Managing Director and CEO, Religare Finvest. “RFL’s intent was to drive a paradigm shift in how people running small and medium enterprises sourced funds from lenders for their expansion,” says Arora. Realising the untapped market opportunity, the company adopted a contrarian approach and targeted building a lending business around the underserved MSME segment. “In the financial year 2012-2013, RFL took meaningful steps to position itself as a distinctive SME-focussed lending platform,” adds Arora. What Religare Finvest Ltd is doing for profit-oriented commercial SMEs in the space, Ennovent does for for-profit SME social startups. The company is a forprofit innovation accelerator that operates on a fee-for-service basis for various services offered through its exclusive network, circle and solutions. Ennovent was established in September 2008 as an impact fund by Peter Scheuch, to help clients accelerate innovations for sustainability in low-income markets. It is currently focussing on India. Scheuch, who has extensive experience in the development and environmental sector across markets in India, Nepal, 16 August-September 2013 www.ibef.org MSME expert, says India is on the right track with its MSME clusters and believes PPP is the way to consolidate on past gains. est MSME base in the world by virtue of its exclusive policies and dedicated promotion schemes. In fact, even countries superbly rich in resources, like the Kingdom of Saudi Arabia, are now evolving an MSME policy to help generate employment opportunities for the rising unemployed. Nurturing Environment MSMEs in India are defined in terms of investment in plant and machinery, a rather appropriate definition, to encourage labour-intensive (technology) growth of the sector. Over the last few decades, appropriate policies have fostered value-addition and infant (to mature) industry. Value-addition had been encouraged in many sectors through imposition of export duties on raw material exports, and by protecting the domestic market by high import tariffs from product and services imports for several decades. In addition, a policy of product reservation for MSMEs encouraged the growth of a large MSME sector. SMEs in the country have also been supported by special investment and interest subsidy schemes as well as preferential procurement regimes and price preference in government purchase on products produced by small firms. Many sectoral ministries of the Governmnent of India (GoI), such as the Ministry of MSME, Ministry of Commerce and Industry, Ministry of Textiles, Ministry of Food Processing, Department of AYUSH, Ministry of Chemicals and Petrochemicals, etc., are also encouraging MSMEs to pursue joint-action through cluster development initiatives targeting strengthening of the intra-cluster and national value-chain through special purpose vehicles and consortia to upgrade technology, consolidate themselves and benefit from scale economies in procurement and marketing on the basis of joint initiatives and public private partnerships (PPPs). Policy Outreach However, it is felt that there is a need for better policy orientation and field-level implementation of schemes on a war footing, in the light of growing international competitiveness threats. This is to prevent industry and service sector clusters and related value-chains in the country from turning into mere commodity exporters to industrial behemoths abroad and to competitive firms in Southeast Asia which would imply losses in jobs and GDP. Facilitating Finance For financing instruments and institutions for term loans and working capital, as well as to optimise the procurement function in MSMEs, industry associations play the role of
  3. 3. SMEs in India financial intermediaries. Other than exploring the Mutual Credit Guarantee Fund Scheme (MCGFS) option, cluster specific industry associations need to establish Non-Banking Financial Companies (NBFCs) and assume the role of large MFIs, going on to lend to micro-sized members with funds drawn from institutions like Small Industries Development Bank of India (SIDBI). There is also need for lending institutions and SIDBI to jointly share the burden of recovery vis-à-vis possible CGTMSE default cases to encourage credit offtake under CGTMSE. Building Infrastructure There is ample scope to leverage different large cluster-based schemes such as Integrated Infrastructure Development (IID) scheme of the Ministry of MSME, Scheme for Integrated Textile Parks (SITP) of the Ministry of Textiles, etc., and establish new industrial estates as well as upgrade existing industrial estates on a PPP mode. Labour hostels as well as bio-mass/renewable energy based energy supply options may also be accorded greater support for establishment under available PPP schemes. There is also a call for developing new industrial estates in Tier II cities and urban agglomerations to encourage more balanced growth of clusters and regional economies. There is need to develop alternate sources such as bio-mass based energy in locations not conducive to the wind energy option. It is necessary for infrastructure development institutions and/or potential SPVs to establish bio-mass plants to provide stand-by energy required and PPP options of the government may be leveraged. PPP for Progress MSMEs must adopt the PPP strategy to establish training facilities such as those coming up in locations and clusters such as Bahadurgarh, Kannur and Nagpur for the footwear, furniture as well as printing and garment industry, respectively. Large corporates may also be encouraged to establish and operate vocational training institutes (VTIs) as part of their CSR initiatives. Technology upgrading may be undertaken by enterprises individually or jointly in the public private partnership mode. The need for such upgrading is critical as evident from successful PPP initiatives for joint technology upgrading in clusters across the country ranging from value-chains related to pulses (Nagpur), steel re-rolling (Howrah), steel fabrication (Salem, Guntur), printing and packaging (Karnal, Krishnagiri), etc. Project cost in each of these interventions varies from `19,074 to 95,370 crore (US$ 3 to 15 million). With regard to foreign investment, there is need to ensure that inward foreign direct investment (FDI) is channelised into particular value-chain activities in certain prioritised value-chains and sub-sectors, also a minimum local MSME input content (of at least 30 per cent) need be specified “The need for individual and joint upgrading is critical as evident from successful PPP initiatives for joint technology upgrading in clusters across the country ranging across value-chains.” to encourage sourcing from Indian SMEs and facilitate their upgrading. As in the past, the guiding hand of the Indian government will ensure that the Indian MSME and SME sector contributes towards rapid growth and continues to sustainably remain a model for the sector in other countries. (As told to Sangita Thakur Varma) cove r s to ry Africa and Asia, started Ennovent because he realised the importance of for-profit enterprises with innovations in the form of products, services, processes or technologies to make a fair profit and a sustainable impact in low-income markets. Thus, with a fund of `17.17 crore (2 million Euros), Ennovent’s Impact Investment Holding was created to transform earlystage enterprises into professional and scalable organisations by providing capital and by adding value. However, Ennovent soon realised that early-stage enterprises require more than money to take ideas to low-income markets and impact communities at scale. It was then that Ennovent transformed into an innovation accelerator. Today, Ennovent offers a complementary set of services designed to move enterprises from concept to scale. “Our services enable clients to discover enterprises with novel solutions, develop business models to start up enterprises, provide finance by facilitating early-stage investments and grow operations to scale profit and impact,” says Scheuch. To do this Ennovent works with a variety of clients such as entrepreneurs, investors, mentors, experts, NGOs, government and industry bodies, etc. What’s unique about Ennovent is its focus on impact before profits. “Despite being a for-profit enterprise, we consciously ensure that our drive to create a sustainable future is not sacrificed for short-term financial profits,” says Scheuch. The impact of this approach is certainly growing. Narayan pins the rapid growth of the SME sector to “the growth of the social media” that resulted in “increasing confidence of consumers across various socio-economic classes to use internet for discovering new products and new marketers”. Explaining the social media impact, he says that the rise of e-commerce and e-shopping has made it easier for a new generation of entrepreneurs to reach out directly to their targeted consumers by putting in minimal effort and cost, as compared to the traditional distribution and retail channels. www.ibef.org August-September 2013 17
  4. 4. SMEs in India What an Idea The Indian spirit of enterprise had already awakened to the benefits of the internet way back in 1996. IndiaMART.com, which has a current turnover of `100–150 crore (US$ 15.73–23.6 million) and is growing 40 per cent annually, was a creation of that movement. Brijesh Agrawal, Co-founder and Director, IndiaMART. com, says of his 16-year-old company, “We started our journey in 1996 and are in the 17th year of our business operations. Regular outreach, handholding of SMEs and innovative services helped us create an online B2B marketplace which is the largest in the world.” The company started with only 500 subscribers, as the awareness level was abysmally low. “We had to handhold small enterprises and make them aware of how the internet worked.” Language also proved to be a barrier as not many SME entrepreneurs are well-versed in English. “We worked closely with these small enterprises to help them realise that internet was a business-friendly and powerful tool for them to connect with buyers across the world who were searching for suppliers online,” says Agrawal. Once the concept clicked, there was no looking back for this SME. The SME that started in a 400 sq ft room and with a group of four people today has 2,800 employees of which around 1,500 are internet consultants based across 21 cities and 100 towns. There are now about 1.4 million suppliers online who conduct business with Leading the Growth Revolution 6.5 million buyers through the company platform. Its customer base has grown five times in the last seven to eight years. The company now operates out of an office with swank infrastructure. It was the innovative hallmark of the model that helped it break even within six months of inception. It was Agrawal’s elder brother Dinesh Agarwal, a US returnee, who introduced a very new medium of conducting business to the SMEs—the internet. “It had made major headway in the US and was emerging as a powerful tool. Dinesh wanted to introduce this medium in India and help SMEs leverage its benefits,” says Agrawal. With complete faith in his brother, he joined the dream and since then “both have been involved Distribution of Working Enterprises by Area (Total) Area-Wise Share Rural The Annual Report 2012-13 of the Ministry of Micro, Small & Medium Enterprises unveils a quiet revolution. 44.66% Leading Industries: MSME Sector 2.33% Manu- 2.33% Manufacture facture of Textiles of Fabricated Metal Products, other than Machinery & Equipment Urban 19.40% Others Nature of Activity (Total) Activity-Wise MSMEs 3.21% Manufac- ture of Furniture; Manufacturing NEC 39.85% Retail Trade, other than of Motor Vehicles & Motorcycles; Repair of Personal & Household Goods 3.57% Sale, Main- tenance & Repair of Motor vehicles & Motorcycles; Retail Sale of Automotive Fuel 8.75% Manufacture 3.64% Hotels & Restaurants 3.77% Other Business Activities of Apparel; Dressing & Dyeing 6.20% Other Service Activities 18 55.34% August-September 2013 6.94% Manufacture of Food Products & Beverages www.ibef.org 68.21% Service 31.79 % Manufacturing All Data Source: Annual Report 2012-13, Ministry of Micro, Small & Medium Enterprises, Government of India cove r s to ry
  5. 5. SMEs in India in building our company’s operations”. “From a total of 500 subscribers of the internet in India to 1.4 million suppliers on IndiaMART.com, we have covered a great journey,” says Agrawal, and rightly so. The future plans now hinge on going from a suppliers’ destination to becoming a buyers’ marketplace. “Our solution Buy Leads is a step in this direction. We also plan to capitalise big on mobile phones and apps. Having launched our mobile-optimised site— m.indiamart.com and an Android App, we expect the mobile traffic to our site to increase significantly in the next 12–15 months and increase contribution to the overall business,” predicts Agrawal.  Rightly so, as Narain says, “Increasing penetration of mobile, smartphone, tablet and other devices and increased access to broadband data networks are all contributing to this rising confidence of the new-age entrepreneurs.” The government is doing its bit to enlarge the scope of mobility and accessibility— for example, the ambitious Bharat Broadband initiative that envisages linking of 250,000 villages across India by the end of 2013 with an optic fibre network. “Once operational, it would be easy for new entrepreneurs to reach out to customers directly, rather than via traditional intermediaries,” he adds. It “would drive this spirit in the long run.” Employment in MSME sector Trends in MSME Growth 1200 Lakh 3.0 The Buck Stopped Here Author of the highly acclaimed book The Consistent growth in terms of number of Entrepreneur Memorandum II filed every year 2.82 1000 2.37 1012.59 965.69 922.19 881.14 842.23 600 2.5 805.23 Lakh 800 400 2.14 1.93 2.0 1.74 200 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Projected data for the years 2007-08 to 2011-12. 20 1.5 2007-08 2008-09 Annual Growth Rate of MSME Sector 2009-10 19.06 All India Growth Rate (%) 15 10.76 10.78 10.93 10 5 0 2007-08 to 2008-09 2008-09 to 2009-10 2009-10 to 2010-11 2010-11 to 2011-12 2010-11 2011-12 cove r s to ry Buck Stops Here: My journey from Manager to Entrepreneur, Ashutosh Garg, 56, though not such a young man certainly exhibits the joie de vivre of youth. Garg exemplifies the spirit that drives certain individuals to choose to become entrepreneurs, giving up successful corporate careers in order to chase some cherished dream that others may call a chimera at the time. Garg left an illustrious 25-yearold corporate career to follow his dream. He had worked for ITC Limited for 17 years, leaving in 1995 as Managing Director of one of the ITC group companies based in Singapore; thereafter he spent eight years in the aerospace industry, four years each in Lockheed Martin and Hughes, running their satellite systems. In April 2003, the entrepreneurial bug bit him and he started a chain of health and beauty retail outlets under the name Guardian Pharmacy. Guardian is the master franchisee for GNC Live Well in India and is now the leading wellness retailer in India. Guardian is also the publisher of the very successful newspaper and magazine in English and Hindi called Guardian Health Chronicle. Things did not come on a platter for Garg despite his many accomplishments. “Starting any new retail business has it hiccups in areas like trained manpower, supply chain and licensing. Guardian was no different,” he says. The Director of the GAVI Fund, a `50,864 crore (US$ 8 billion) fund formed by WHO, UNICEF, The World Bank, Gates Foundation and some of the developed nations to meet the 4th and 5th United Nations Millennium Development Goals for Women and Child Health and a member of the Retail Strategy Council of India, Garg says, “The biggest challenge is to keep motivating oneself as problems are inevitable in any business, more particularly for a startup.” Garg like many othe of his ilk, “first invested my own funds. Then I raised funds from friends and family and then from private equity.” The other common thread running through the young and the older SMEs is what Garg has displayed aplenty and what he says is www.ibef.org August-September 2013 19
  6. 6. cove r s to ry SMEs in India a fundamental requirement to become an SME entrepreneur: “The willingness to do all work without any ego, work 24 hours, 7 days a week.” The other trait that has helped him “stay the course” is “the willpower not to give up when issues are faced”. The Chairman & Managing Director of Guardian advises young people to enter entrepreneurship only if they have courage in plenty. Shekhar Dasgupta, Founder, Greenfield Software adds patience, passion and strong values to the list. A first generation entrepreneur himself, he started his outfit with product development in 2010. Dasgupta’s inspiration when he relocated from the US in 2005 was “the Silicon Valley which is like a breeding centre for entrepreneurs. Many were from India, and a large majority were first generation entrepreneurs,” he says. He chose Enterprise Software for Energy Efficiency and Environment Management “since I am passionate about that subject and I knew it could make a difference with rising energy costs becoming an increasing business risk, particularly in India,” he adds. The subject matter he had selected was complex which needed domain knowledge and knowledge of operations research and technical skills. “Getting all of them in one location was a challenge,” but Dasgupta was not deterred. He feels “Startups are a source of new investment, innovation and job creation for the economy,” and advises only those to venture into the field who have the passion, commercially viable propositions and the risk appetite. Help is at Hand Help is at hand for those who remain in the fray. “TiE is committed to the cause of supporting startups and entrepreneurs to achieve their dreams and is responsible for keeping the ‘spirit of entrepreneurship’ alive,” says Narayan. Narayan explains its modus operandi. “TiE has overhauled its promotion strategy for SMEs in India and Delhi-NCR region.” On the basis of their core business, startups and SMEs have been buck- 20 August-September 2013 www.ibef.org “Future by definition is uncertain...models will fail and it is important to adapt the original...” “Never give up, learn from your mistakes, know your purpose and have a team.” — Ranjan Chopra, Founder, Zorba Entertainment — Ben Kinha, Founder, Dinghy Retails “From a total 500 subscribers of the internet in India to a total of 1.4 million suppliers on IndiaMART, we have covered a great journey.” — Brijesh Aggarwal, Co-founder, IndiaMART “Startups are also a source of new investment, innovation and job creation...” “The willingness to do all work without any ego, 24 hours, seven days a week is fundamental.” — Shekhar Dasgupta, Founder, Greenfield Software — Ashutosh Garg, Founder, Guardian Pharmacy “I have partially achieved my goal. I want to grow as much as I can and become a recognised businessman.” — Rajiv Ranjan, Founder, Imagica Graphics
  7. 7. SMEs in India eted to reach them with better services. A team of specialists has been engaged to conduct a thorough research across industries to help the organisation better understand the industry landscape, the key players, the challenges for new entrants, and the requirements of the target customers, to name a few areas. “This has helped TiE to streamline its efforts across various industries to support the SMEs basis the industry vertical they cater to,” explains Narayan. “This refined approach of TiE has ensured that it can support the SMEs across industries like technology, manufacturing, cloud, services, etc., with strategies for fund raising, customer acquisition, customer engagement as well as new market entry,” he adds. RFL, meanwhile, has developed a unique mix of products that aim to solve various financing needs of every entity in the SME genre, both for long and short term requirements. “RFL focusses on the self-employed, who are in business for more than threefour years with a proven business model and financial track record and who aspire to raise capital for expansion,” informs Arora. Arora believes the SME sector is “crucial to India’s economy”. His reasons for saying this are: there are 29.8 million enterprises in various industries, employing 69 million people. The sector includes 2.2 million women-led enterprises (around 7.4 per cent) and around 15.4 million rural enterprises (51.8 per cent). In all, the MSME sector accounts for 45 per cent of Indian industrial output and 40 per cent of exports. Although 94 per cent of MSMEs are unregistered, the contribution of the sector to India’s GDP has been growing consistently at 11.5 per cent a year, which is higher than the overall GDP growth.  Given the immense opportunities, Arora says young people starting their own venture “is what India needs at this hour. An in-house factory of successful entrepreneurs can make our economy stronger.” The factory is already producing successful models. Of course, “with cove r s to ry Building a Reliable Team: Most SMEs cite the need for a dedicated team to grow; IndiaMART team (below). At your Service: 68.21% SMEs are in the servicing sector; Dinghy Retails seconds showroom (above). Strong Foundation: Government lays the ground; Rolling mills cluster at Gumadangi, Howrah (above). handholding of the youth not only by the policymakers but also corporate India,” adds Arora. RFL is already doing its bit. “We participate in various knowledge intensive initiatives to support MSMEs. We also participate and represent our thought leadership stance at various SME associations and chambers of commerce to understand the real requirements of the sector. We also work closely with various bodies who are engaged in advocating policies for this sector.” and franchisee network spanning the gamut of sectors. Fielding financial and organisational hiccups, the company broke even in the first year itself and in FY12 had a turnover of `10 crore (US$ 1.57 million). With a team of 25 in place, Kinha is confident of his future and has a vision to “increase the product category franchisee up to 100 by 2015”. His confidence may stem from the fact that he finds “right talent available in India as consumer electronics, computers and mobile industry are mature in here”. He is a firm believer that to be an entrepreneur you must have a “team in place” apart from “knowing your SWOT, interests as well as future growth and past record” before jumping onto the entrepreneurial bandwagon. The Young & the Bold Dinghy Retails is just two years old. Beni Kinha, Managing Director & Chief “Deelz” Officer of the company says, “Business opportunity was visible in this segment of genuine factory seconds of CDIT.” Kinha’s foray into entrepreneurship is backed by 20 years of rich experience in business development, marketing and sales, retail, distribution, For the Fun of It Zorba is another unique SME that is just a year old, but Ranjan Chopra, Founder and CEO, Zorba Entertainment, says www.ibef.org August-September 2013 21
  8. 8. cove r s to ry SMEs in India “the idea had been waiting for 10 years”. Inspired by the Greek character Zorba, who danced and sang his way through life, living it to the hilt, the company tries to build aesthetic musical experiences and entertainment for its patrons. “Zorba is a platform where great music happens: performers win and the audience has a 10/10 experience. The idea was to synthesise a great music and food experience,” Chopra explains. Contrary to people’s perception, it was not a smooth sailing. As Chopra elaborates, “The north India market loves Sufi/Punjabi rock and I thought it would be a great jazz/blues market space. I also realised that we were competing with cricket, IPL, TV, Bollywood, among other entertainment avenues.” The company that is yet to break even was floated with an initial investment of `4 crore (US$ 0.63 million). “I put in about half of it and looked around for like-minded friends who pooled in the rest,” informs Chopra. Chopra expects to recover investments in three years, saying the company’s current turnover is around `2 crore (US$ 0.31 million). Chopra’s take on entrepreneurship is a wee bit different. He would like young people to take up entrepreneurship for “we have to learn to embrace failure as a society and not look down upon it.” Currently, Chopra is putting in the processes “to scale it (Zorba) up, creating the leadership layer.” He is also “looking around for youngsters who will take it to the next level. Someone who shares a passion for spreading great musical experiences,” he says adding, “go global, why not?” Networked Growth through Partnership: People and networks have a big role to play in cluster development. Small & Steady: For SMEs every minute counts and each error is costly; Imagica Graphics (above). 22 August-September 2013 For Profitable Social SMEs: Promoters in the the SME landscape are offering innovative socially viable ideas. www.ibef.org Mechanical Ability Navyug Sewing Machine has already gone global. From a humble beginning with `1,500 (US$ 23.3) in the account of its founder Harpal Singh Passricha, today it has grown into a company with a turnover of over `50 crore (US$ 7.86 million) employing 120 people. Pa s s r i c h a p r o u d l y c l a i m s h i s mechanical credentials. Known in the sewing machine industry as the man who can pin a technical fault just by listening to the whirring of a machine much like an automobile mechanic, Passricha is aware that his industrial training and knowledge are his weapons as well as his wealth. Passricha’s grandfather had a small shop in undivided India where he traded in sewing machines, ceiling fans and table fans. After Partition, the family settled in Panipat, where his father now dealt mostly in sewing machines. Passricha joined the family business where he got his initial training. However, it was a training offer from the industrial sewing machine company Puff of Germany in 1980 that changed the course of his life. “For two years I underwent training on industrial sewing machines at the company and from 1982 to 1992, I worked as a mechanic and repaired Puff machines,” says Passricha recalling his journey into entrepreneurship. In 1993 he formed Navyug Sewing Machine. “I opened my account with `1500 and then it increased slowly,” says Passricha. “Since I had a mechanical background I could easily take care of my business,” he elaborates his business model. As Passricha attended exhibitions abroad he would pick up good foreign models and bring them to India. “We used to make these models available to exporters and also serviced them.” Navyug then ventured into sale-purchase. “We import machines from abroad and sell them in the local market. We are into importing and trading,” explains Passricha adding, “We import complete machines and spare parts from far-east Asia, China, Singapore,
  9. 9. SMEs in India Taiwan, Japan and Korea. We import spare parts for spare markets and complete machines for garment exporters.” India does not manufacture industrial sewing machines. Passricha has reasons to be confident about the future prospects of his business given the market scenario. “New fashion entails changing designs which necessitate new machines,” he says adding, “Business has grown because of garment exports and with foreign retail brands coming into India, it has added to this increase.” What has added more to his business, he believes, is that he has been “honest in dealings and serviced clients well” and his knowledge of mechanical data. The advice that this old-timer SME gives to new entrants is to “keep the labour and worke happy. Be honest, punctual, hard-working…all these motivate your employees. Also, keep a strong marketing team.” His message to SMEs is: “Your work is your respect.” “Keep the labour and workers happy. Be honest, punctual, hard-working...all these motivate your people. Your work is your respect.” — Harpal Singh Passricha, Managing Director, Navyug Sewing Machine Co Ltd and consultancy. However, despite getting admission in Shri Ram College of Commerce, the Patna lad could not follow his dreams due to accessibility issues. Not one to be disheartened, he opted for the correspondence medium but yet again, this proved to be entirely unfeasible given the examination centre’s inaccessibility. From the second year of his graduation he shifted to the commerce college in his hometown and it was here that he came in touch with his startup dream. Odds None, Opportunities Aplenty While still a student, he launched his This is the respect that a young Rajiv first venture in Patna, Bihar in 1989 with Ranjan earned through dint of hard `1,200 (US$ 18.87) of which `700 (US$ work way back in 1991 that opened the 11) he borrowed from his sister. It was floodgates of opportunities for him. a partnership with a school friend who The National Awardee for Most Creative had returned after graduating from Adult with a Disability, 2007, had to Delhi University. The signboard for Chapakhana, make many a compromise early in life to choose the entrepreneurial way of their venture, cost `700 (US$ 12), so life. But he took to it like a duck to water, in effect, the business was flagged off loving the challenges, of which there with `500 (US$ 7.86). Computers had just made their entry on the firmament were many. It was in Class X that Ranjan had and Ranjan had become an expert by then through helping to bury his dreams of his father’s friend set becoming a surgeon up a desktop publishing given the fact that he had and printing business. progressive locomotor His Chapakhana was disability and even getting also a similar business, to the laboratories on the but without resources third floor of the school they had to hire was becoming a bit of computers for `50 (US$ a problem. A brilliant Number of people 0.8) per day. student and a spirited employed in the SME The first client, individual, he shifted to sector in India through a contact, was the commerce stream (Source: Reports) a big brand—Blowplast. with plans to pursue The job went well and business management 69 mn cove r s to ry that opened the way for Chapakhana. But it was all low key for a while. In mid-90s, Ranjan and partner Goirik Murthy, conceived the idea of launching a trade magazine to give voice to local traders and also generate ad revenue for Chapakhana. The idea was to distribute it free and get the revenue from the industry. They wanted to compete with Times of India (TOI) that had been launched in Patna—certainly a challenge for a small-time printer. But the idea gelled. AdBazaar, with the tagline “buyer-trader nexus”, was a hit. It soon had a circulation of more than 25,000. Its tabloid format was a novelty and so was the fact that small-time traders found a voice through it. The industry loved the innovative ad designs, the fact that their profiles were being read by their community and the resultant feedback; the general public had soft local news to read in a reader-friendly format that no other paper used. The pricing was also competitive. While TOI charged `100 (US$ 1.57) column cm, AdBazaar charged `40 (US$ 0.63) column cm. TOI soon cut rates to `60 (US$ 0.94). The ideas man Ranjan next tied up with the city’s Book Fair organisers and made AdBazaar the voice of the youth and the platform of live fair news. It was like a podcast in print format where the daily happenings were being reported live. The footfalls doubled and the frenzy at the evening cultural bonanza organised by AdBazaar under its joint banner with the Book Fair was astounding. In fact, he even made a corporate www.ibef.org August-September 2013 23
  10. 10. cove r s to ry SMEs in India film on the making of the fortnightly AdBazaar and ran it at their stall in the fair. Corporate films were at the time shown in advertisements during intervals at cinema halls. AdBazaar had served its purpose. Chapakhana had become a name to reckon with in printing, advertising, event-management and communication circles. It had the biggest ad agen— Kavi Arora, — Peter Scheuch, — R Narayan, cies lining up to get its ads designed and Managing Director & CEO, Founder & Managing Charter Member, TiE Delhi-NCR industry clients with printing jobs and & Founder & CEO, Power2SME Religare Finvest Limited Director, Ennovent event offers. Ranjan quietly folded up AdBaazar after some time. He had other business interests. Today, Ranjan again has a wide portBharti Bhavan, one of the largest company name was changed to Imagica publishers of Bihar and organisers of Graphics with some more partners. folio of clients comprising brands like the Book Fair had offered Chapakhana It was then that he ventured into the Benetton, to social startups Happily Unmarried to international agencies a contract. They would outsource large education space. designing orders to the fledgling press After a life-threatening illness in like United Nations Information Centre. under the condition that they had their 2000–2002 that almost wiped out his He has forayed into digital print producown computers. “Now that was a little business and forced him to start from tion domain with top-of-the line engines impossible,” says Ranjan. “A single PC scratch, he migrated to Delhi in 2005 to provide world class services. “I have cost upto `1 lakh which was a big and today has over a dozen Delhi Public partially achieved my goals. I want to amount then,” he adds. Bharti Bhavan Schools as his clients. “I realised I could grow as much as I can and become came to their assistance with another make the education sector my niche a recognised businessman,” says the offer. “A printing unit they worked area and working with them I gained intrepid entrepreneur. with was winding up in Kolkata. They expertise,” he says. Ranjan has also offered to buy it out for us and 50 per gained a reputation for his ability to The Future cent of our payment would design communication According to Arora, an emerging marbe deducted monthly packages. The power ket, MSME is a very attractive segment towards that loan till it was point presentation globally. “India, standalone, is being mopped up,” says Ranjan that he designed for seen by global players as a centre for adding, “Mr Tarit Bose and the Government of mass action and there are numerous his family would always Delhi on their Stree factors that will benefit the MSME remain dear to me for their Shakti project won focussed financiers, like ours,” Arora open-hearted help.” the Silver Medal at adds. According to a recent report by Contribution of With the basic infrastructhe Commonwealth IFC on the Gap in MSME Financing, MSME to India’s ture “we started and by Association for Public the total debt gap stands at a mammoth Manufacturing Output 1992-93 we were flooded A d m i n i s t r a t i o n `26,00,000 crore (US$ 413.29 billion), (Source: Reports) with work; almost all cora n d M a n a g e m e n t says Arora. IFL’s future strategy focusses porate offices were our ( C A P A M ) Aw a r d s on opportunities arising from this. clients and we had shifted The SME sector undoubtedly has a in 2007. His work to a huge office in the heart is displayed on the significant role to play in the Indian of Patna’s commercial centre with five International Labour Organisation economy. The many small players that to six computer systems,” elaborates (ILO) website. An animation film made populate the field are the catalysts that Ranjan giving a measure of his rapid by him for ILO was launched by the are crafting the country’s socio-economsuccess. Mayor of Geneva in 2009 and another ic transformation with their limitless By then Ranjan’s focus had shifted was screened during the FIFA World vision and tireless endeavours—some from AdBazaar to designing and the Cup in 2010-2011. The calendars that he perhaps without realising that their concompany was offering a gamut of designed for United Nations Children’s tributions are critical to national objecservices to its clients. By 1997-98, Fund (UNICEF) won awards in tives of inclusive prosperity. (Inputs from Sanjay Ojha) they also had their own press and the 2005 and 2006. 45% 24 August-September 2013 www.ibef.org

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