I
usually don’t read Annual Reports that are mailed systematically by the Company
Secretaries of the organizations whose shares I have bought. More so if it is
AGM address.
But
for a change when the AGM address of ITC Chairman YC Deveshwar landed into
my inbox recently, I felt like reading it. Maybe because the ITC shares have
given me good returns and also the fact that ITC is a great case study of how
the group has reinvented itself from being a predominantly Tobacco major into a
well-diversified conglomerate. It is also probably the best example for a
professionally managed business amidst the predominantly family owned
businesses in India.
Mr.
Deveshwar's address is very interesting and informative. I specifically like
the part on THE INDIAN GLOBAL MARKET: DOMINANCE OF FOREIGN BRANDS. He quotes
The ET Intelligence Group report - "...royalty payments by Indian arms
of top MNCs have trebled over the past 5 years. The report points out that in
FY12, 306 listed companies paid royalty and technical fees aggregating almost
Rs 35,000 crores.” Further, a similar analysis by Business
Standard of 75 BSE500 companies reveals that these firms paid out royalty
equivalent to 32% of their net profits in FY12. This sudden surge he notes
is after the removal of ceiling on royalty payments in 2009.
He
also quotes media reports that this spurt in payments did not reflect any
noteworthy value-addition from technology transfer by the foreign entities.
These media articles also expressed concern at the adverse impact of this huge
outflow on minority shareholders and on the exchequer.
Look
around, one can easily find this dominance in our lives. Almost all the
products that Indians consume are foreign brands. But then as Mr. Deveshwar
says there are not many Indian success stories. He has listed few in that
address.
What
probably he missed is Micromax! The great Indian mobile brand. A brand that has
managed to make a mark for itself in a space that is dominated by the
Korean Chaebol.
And
I must say in its fight Micromax had to face not only the competition but also
the Indian mindset!
Indian
mindset:
I am not sure what it is because of but Indians probably don't trust Indian
brands. Maybe Indian brands actually do not deliver or as it is said we have a
colonial mindset. For us, anything foreign is superior. Couple of years back
when Apple was yet to revolutionize the smartphone market, it was the world of
feature phones. When I bought one of those feature phones, a colleague
exclaimed - Micromax! Yes, it was that degrading tone. Things have
changed since then and Micromax seems to be fast catching up with Samsung. But
has our mindset changed, I can’t be too sure.
Yes,
it's a Me Too: Yes, but in many ways Samsung, LG or any brand is also a Me Too.
The advantage of Android ecosystem is so, it provides opportunities for many.
Everyone assembles!
Branding,
the game changer: In addition to lacking the drive to innovate, the Indian brands
are also not very successful in branding. Thankfully, Micromax has been very
savvy. In addition, Micromax products are attractively priced.
Just
like Galaxy, Optimus and Lumia, Micromax has managed to draw its own Canvas.
The
good news is that Micromax is not alone. Recently when I was planning to buy a
phone and sought advice from some of my friends. They not only suggested
Micromax but also spoke very highly of Karbonn and Xolo. Heartening! Couple
years back, many Indians would not have considered them a great choice.
As
a person who has used Micromax product, I urge my fellow brethren to take pride
in our local Indian brand. Not just because they are Indian but because these
products
- Look as
great as any other
- Perform
as great if not greater than others
- Come at
price points which are very attractive
Unless
you want to sponsor the royalty payments that Mr. Deveshwar's address talks
about.
Go
Indian!
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