Tuesday, 11 November 2008

‘We’ve spooked ourselves into thinking there is a slowdown’

This is a post we recommend. This, appeared in the Hindu Business Line- an interview with Mr J.P. Nayak, Director & President (Machinery & Industrial Products), Larsen and & Toubro Ltd.


We support his view and we take this moment to repeat:
- In a country where TV/ Fridge and Washim machine penetrations are below 25%, how can demand become sluggish? (Who has been smoking the strong stuff?)

- Sure, liquidity is an issue and steps need to be taken to ensure this.

- But we must recogonise that our stock market falls have more to do with foreign investors pulling out from the Indian market (to perhaps raise cash to meet their commitments back home).

- Demand in the Indian market is only limited by the imagination of the entrepreuner.
The real challenge is to set up supply chain and distribution systems that help manufacturers reach to consumers far away from Indian cities.

- This "investment in the interiors" is what new entrants to the market are not doing. Every entrepreuner seems to want to take away share from the current entrants in the cities. (This is in itself not wrong, but a suboptimal strategy for emerging markets.)

The focus on gaining market share in urban markets ignores that larger un-tapped rural India. And it avoids us forcing ourselves to think of profitable ways to making products and services available to this market.

So, evertime the US sneezes, we avoid looking at the opportunity that remains in the country, and quickly send the SENSEX off to the hospital!

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