MARKETING: Gaurang Pandya - Head of Carrier India Our aim is to have at least 70% localised products.

Interview: 

As MD of Carrier India, Gaurang Pandya has unceasingly focused on embedding value propositions into his firm’s product offerings. But with sales of air conditioners dipping and the markets not looking up as expected, there is trepidation in the air on whether their industry will grow or not. Pandya feels strongly that it will, and answers B&E’s queries on his strategies

Gaurang Pandya has been at the helm of Carrier India – the air conditioning arm of United Technologies (UT) for just over an year. And in this short span of time, his sole focus has been to grow the AC business in line with other revenue arms of UT (it also makes Otis elevators and offers fire safety and electronic security solutions under UTC Fire and Security). “The idea is to grow the commerical AC market in tandem with the growth in the infrastructure and real estate sectors,” he says. Carrier ACs contribute roughly one-fourth of UT’s global revenue of over $52 billion (it’s a Fortune 500 company). In an exclusive interview with onkar pandey, Pandya, shares his company’s future plans and growth strategies, especially in the B2B segment.

Q: AC sales have been adversely affected this season. How did the last fiscal pan out for you? What are your expectations from this fiscal year?
Gaurang Pandya (GP): The year 2010-11 was good for us in terms of overall business, and we see continued opportunity to grow. In the B2B segment, which is 30% of the overall AC market (roughly over $2 billion) we are the leader, and are confident of strongly growing in this segment, as AC penetration in India is still low at 3% as against more than 40% in a market like China. Currently 65% of our revenue comes from B2B.

Q: Manufacturers are increasingly turning global to meet the specific needs of markets. How are you planning to improve your ranking and market share in the Indian market? How have you been keeping score in this regard?
GP: By tapping into Carrier’s rich global resources, cutting-edge technologies and local market knowledge, we have been bringing to India the latest products and technologies focusing on ozone protection, energy efficiency, and indoor air quality features. We tailor our products to meet the increasingly diverse needs of our customers. With our residential products – Window ACs & Hi Walls – we were one of the first to have star-labeled products, and in 2010, 100% of our residential products produced at Carrier India’s manufacturing facility were labeled as per the BEE (Bureau of Energy Efficiency) standards. Not only do our products meet local energy efficiency standards, our Gurgaon factory considers the impact to the environment with our methods of production, and has achieved a reduction of 57% in air emissions, 50% in energy consumption and 54% in water consumption since 2006. We have made significant investment in our Gurgaon plant to maximise localisation. Our aim is to have at least 70% localised products.

Q: Manufacturing environment-friendly and energy-efficient products comes at a cost. How do you keep your sales ticking in a cost-conscious market like India?
GP: Carrier India’s domestic marketing strategy is based on the company’s global strategy of innovation and environmental sustainability. Carrier’s wide range of products (both for commerical and consumer needs) that include chillers, VRF, ducted units, cassettes, window and hi-wall ACs as well as commercial refrigeration and food transport equipment, have helped us expand our footprint in India. Our TG is high-end consumers, for whom the overall value of ownership plays a key role in the purchasing decision. For the commerical business we take part and promote industry events and trade fairs.

Q: Are there any new brands and value propositions you are looking to offer?
GP: We have introduced our new product line of energy-efficient ACs here, including the X-Power Gold Inverter hi-wall, Durakool Star Premium hi-wall, and Estrella range. We also retail the Toshiba brand of ACs in India. In the B2B segment we have introduced, SMMi Acs and AquaThrust 30XA chillers. Carrier Corp. has incorporated sustainability within its brand identity, which combines the elements of a stylised green leaf with the existing “turn to the experts” tag line, which showcases our incessant focus on the environment and sustainability issues.

Q: You have seen dramatic innovations in colour & design of room ACs like SMS-ACs, low-energy consumer ACs, dust-and-worm-resistant ACs. Are these innovations helping AC sales? Also, how is innovation being carried out at Carrier?
GP: We have introduced many innovations of our own too. Besides, we believe in offering sustained value to customers through better cost of ownership rather than on just the initial cost of products. The focus is to proactively understand customers’ needs and create products and services that deliver value and make life comfortable. Carrier invests in products, people and technology, to meet customers’ expectations. Our global platforms allow us to bring the latest technology to India. Further, Carrier’s Lead Design Centers in Europe, China and other parts of the world assist India’s operations.

Q: Now that incomes are rising in tier-2-and-3 cities, are you targeting customers in these places as well?
GP: Business opportunities are growing in non-metros. However, growth has also received impetus from the low penetration rate of air-conditioners in the growing middle class urban India as well as high-growth commercial segments like airports, hotels, and other areas like health care and IT companies. With the emergence of the modern retail segment, commercial refrigeration and transportation are also being received well. Carrier India has more than 600 sales and service dealers, and 1,200 distributors and retailers throughout the country, mostly in the metros and mini metros. There are also a fair number of dealers in smaller locations. Besides, we have good relationships with most organised retail chains.

Q: Unlike some of your competitors like LG, Panasonic in the B2C space, Carrier doesn’t have a brand ambassador. What is the reason?
GP: Carrier’s pre-sale, sale and post sale processes are an integral part of our relationship with our customers. We believe that customer loyalty and brand strength only comes from products that deliver on their promises. Our BEE-labeled products offer consumers savings by reducing their power bills. We believe having a good quality product that meets customer needs is the best advertisement. Our innovative and sustainable products are our brand ambassadors. However, we do have Sachin Tendulkar as the brand ambassador for the Toshiba brand of air-conditioners.

Q: Since B2B is the most critical part of your business, what is going to be your strategy to build this further?
GP: We are one of the leaders in the B2B segment and specialise in large-scale air conditioning projects. We have a track record of implementing these projects successfully. Some of our key projects that we have handled include: Terminal 3 of Indira Gandhi International Airport, Delhi; ITC Royal Gardenia, Bangalore, which has been awarded the Leadership award in Energy and Environmental Design (LEED) Platinum Rating by the Indian Green Building Council, making it the world’s largest and Asia’s first LEED Platinum Rated Green Hotel; EMAAR – MGF Commonwealth Games Village; Bombay Stock Exchange, and many others. We also create platforms to interact with new clients to communicate Carrier’s strong commitment to providing sustainable building offerings. Venues include seminars, industry exhibitions, one-on-one interactions, demo meets, etc., throughout the year.


(One of my Interviews taken for Business &Economy magazine in 2011)

TECH: PANASONIC Strategem: The vision is great. But who will achieve it?

Panasonic has announced its ‘Mission 2018’ plan, which is to become the largest electronics and durables maker in India. But with its revenues still at one-fourth that of LG’s and Samsung’s, and with these two Korean giants both planning to increase their revenues by 250% by 2015-16, will Mission 2018 remain just a great vision document? B&E does a quick recap of the company’s current standing in India It took Panasonic 40 years to consider India as its number one priority market. But once Ito Shan (as the company’s India head Daizo Ito is lovingly called by colleagues) accepted this in principle, the flurry of action increasing investments into India has been evidence of Panasonic putting their money where their mouth is. Despite the global reverses (Panasonic warned of a record $9.7 billion loss for FY12) and across-the-board job cuts, the company plans to hire almost 6,000 people in next few years in India to keep its ambitious growth plan on track. Also, it has now promoted Manish Sharma to head the lucrative consumer durables division (with Rs.32 billion turnover the particular division accounts for roughly 60% of the company’s overall India revenue of about Rs.55 billion) to add the Indian touch to its operations. But the question remains, now that the Korean giants – Samsung and LG – have already taken the driver’s seat and Panasonic is still languishing at almost one fourth of their India revenue mark, can Panasonic really hope to even close the gap, leave alone focus on becoming #1? Can it actually beat the current czars, who control over 50% of the roughly Rs.380 billion Indian durables market? Going by the present head-to-head situation, Panasonic, which managed a three-fold growth in its India sales over the last few years, is now aiming to hit the Rs.100 billion mark ($2 billion) by the end of FY 2012-13, whereas the same for Samsung and LG is at Rs.220 billion and Rs.200 billion respectively. At least on paper, the ace Japanese durables maker looks quite confident; firstly for its 100% growth in India sales in the consumer durables industry last year when the whole sector was going through a bad phase in terms of maintaining margins; and secondly for the newer product categories like beauty care and green energy solutions that they are foraying into. The aim as Ito states is to become India’s largest electronics and durables company by 2018, when Panasonic completes 100 years. If one were to purely play on the numbers, it’s no state secret that both LG and Samsung are targeting individual objectives of roughly $10 billion (approximately Rs.500 billion at present conversion) in sales by 2015-16. And with their first-movers advantage, a sharper India focus and better distribution, these two Korean behemoths have a much higher chance of increasing the gap with Panasonic. Moreover, Panasonic is yet to disclose a clear roadmap for how to achieve such huge targets to fulfil its 2018 mission. It does seem, though, that sunrise sectors like healthcare, security, energy and education are also definitely on the company’s radar. It has many new product offerings in each of these sectors like ECG machines, blood bank refrigerators and diabetes detectors for healthcare, solar cell and rechargeable batteries for the energy segment, CCTV cameras in security, and interactive whiteboards in education sector. But interestingly, this strategy sounds very similar to rival Samsung’s, which on the back of its multi-product strategy, overtook LG in revenues last year. But Panasonic seems to be playing a tad bit too safe – it has refused to even divulge the current clear revenue targets from these segments. Panasonic India’s contribution to the parent entity in Japan stands at about 2% of the global revenue; and the target is to take it to 5% or Rs.250 billion by 2015. Investments are being ramped up. For example, $200 million is being invested in its manufacturing facility at Jhajjar in Haryana, which is expected to roll out a range of products, including air-conditioners and washing machines by November, 2012. At the same time, its Lifestyle R&D facility in Gurgaon will develop future products, energy management and audio-visual products. However, unlike China (Panasonic’s major sourcing hub) where it has roughly 50 factories, currently it has about 5 plants in India and aims to open four more in next few years. The company also aims to export 10% of the products manufactured here to markets in Africa and Middle East. Nevertheless, following what Manish Sharma says as Panasonic’s India strategy – “localisation, harmonisation and communication” – the company has launched several entry-level mass products to drive volumes, and used brand ambassadors extensively to increase brand appeal. Interesting enough, something seems to be working. The market share of Panasonic products has shot up to an average of 5-6% in this fiscal from 1-2% in last fiscal. Given that, a 10% market share objective by 2012 end and 25% mark by 2018 really does not sound unbelievable anymore. Panasonic has also upped its marketing spend and plans to invest Rs.4.5 billion plus in 2012 for promoting its products in India. This is not a far way off from what market leaders like Samsung & LG plan to spend. While Samsung would be investing Rs.5 billion plus for marketing its products in 2012, LG will cough up a whopping Rs.7 billion (interestingly LG has slashed its ad budget by 15-20%). Further, according to market experts, consumer durable companies with the widest distribution network have been able to grab higher market share in India. And this is where Panasonic seems to be going great guns. While LG and Samsung each have about 5,000 dealers across India at present, the number for Panasonic is 6,000. In fact, the company is really aggressive on this front and is planning to take this number to 9,000 by the end of this year. Panasonic’s renewed focus on emerging markets like India has also helped it in increasing its brand value globally. For instance, Panasonic has not only climbed four steps up in Interbrands’ “Best Global Brands 2011” list (from 73 in 2010 to 69 in 2011), but its brand value has also gone up by 16% to $5.04 billion in 2011. On the contrary, while LG was nowhere to be seen in the Top 100 list, Samsung sat high at No.17 with a brand value of $23.99 billion. However, when it comes to Best Global Green Brands 2011, it’s only Panasonic that stands tall at No.10. A plus for Panasonic, which as part of its global strategy is now focussing more on green products in India. Another area where Panasonic is making a management difference is in regulating control and decision making in India. Unlike LG and Samsung, where the top deck is largely controlled by Koreans, Panasonic has a strong Indian frontline leadership. At the same time, in its attempt to offer a wider product portfolio in India, it’s quite clear that Panasonic may be spreading its resources thin, Will that be a critical issue for its revenue target achievement? That’s a question for which MD Manish Sharma will get an answer within this year... My story in 2012 for Business & Economy magazine :-)

TECH: Timing The Product Right: SOON H. KWON, MD, LG INDIA (Interview)

Be it sustainable development or managing uncertainty, for Soon H. Kwon the trick to success is developing right products. And that’s what he is doing right now – flooding the market with eco-friendly products.

Soon H. Kwon was appointed as the Managing Director of LG India, replacing the successful Moon B. Shin, at a time when LG was finding it hard to maintain its preeminence in the Indian consumer durables and electronics space with arch-rival Samsung nipping at its heels, and a re-invigorated Sony. Just over one year and Kwon appears comfortable in his new role. 

Prior to India, he has served as the Managing Director at LG Australia in 2009, and have had some impressive stints in senior positions in Korea, US and Canada. His one directional focus is to maintain LG’s leadership in the categories of home appliances and 3D television. In an exclusive conversation with onkar pandey of honchos, Kwon tells us how LG is managing uncertainty to stay ahead of the grueling competition.

Understanding and keeping a track of ground realities is the key to enhance customer experience and increase customer satisfaction. How do you manage to stay in touch with the ground situation in the durables space?

I often visit our franchise stores. Today close to 20% of our business is coming from our franchise partners. I think LG has been more aggressive than other players in setting up franchise relationships in the marketplace, particularly because the modern trade development in India is lower than what we had anticipated. It’s slower than other countries too. So, setting up LG brand franchise network in India is becoming an important initiative for the company.

As head of LG in India how do you manage your attention when it comes to addressing the two ends of the consumer spectrum in the country – the premium consumers and the huge mass market and rural India, especially in the context of LG becoming aggressive in recent times about acquiring a premium brand imagery?
I don’t think LG alone can change the whole competitive landscape or consumer dynamics. But, we know that their is a very clear trend and customers are increasingly looking for advanced products and new technology products. There are more early adopters now. So that’s a big win and we don’t want to lose this opportunity. We want to be the leader and one who guides consumers in the right direction. Similarly, in the product development areas, we are more focussed on bringing more of the global trendy products while developing a lot of Indianised products. So at both ends, we are putting resources to lead the market.



The year has been marked with inflationary pressure and uncertain global economic conditions. Do you think these conditions have affected LG India’s sales and projections for the year?
What I believe is that the domestic slowdown in India is not the bigger threat; it’s the rupee-dollar exchange rates. This year alone there has been a 20% depreciation in rupee’s value. That’s becoming the biggest threat for most manufacturers here because the infrastructure for producing consumer durables products is not well established in India yet. We have to import glass panel to manufacture TV, compressors to make refrigerators and air conditioners. So import contribution of raw material is very high. In fact, for us it’s close to 50%. And with rupee going down that certainly hurts our budget. Although people are worried about a slowdown in India, I don’t think it will happen anytime soon as the Indian economy is still managing over 7% growth. Overall, there’s a robust strength within India.

Today “managing uncertainty” has become a corporate buzzword. How do you look at it as a business leader? Is it for real or still more of talk?
When something changes radically than your anticipation it becomes a big risk to your business. But, in our category, the product tells 80% of the success. How to bring the product on time? How to educate the audience about our products? The answers to these questions are the keys to future success. So we would like to be more diligent in delivering the product and developing new products. There’s no magic in managing your business, but in consumer durables, I believe, you have to be diligent in developing the right product for the consumer. LG’s overall market share in consumer durables is around 30-35% across product lines. And if you are selling to 30-35% of the Indian consumers it means that you have been able to deal with all consumer segments, from one-door refrigerators to those high-end ones which come with a price tag of Rs.1.65 lakh.

What is your view on the concept of sustainable development? Is it still a text book concept, or corporates are actually looking at this model of growth?
Again it’s about the product. To grow sustainably, our products need to be more energy efficient. If you look at our washing machines introduced this year, the water and energy efficiency level is already high. These initiatives to develop more eco-friendly products are the ultimate way of LG’s contribution towards the industry and the society as well. As such government of India is planning to increase energy regulation for refrigeration and compressor built products like air conditioners. Hence, when time comes and more stringent measures are taken, LG will emerge as the leader in terms of complying with government norms.

TECH: Can Samsung keep its edge in smartphones?

The South Korean player enjoys a clear lead over its Finnish rival in the smartphone sweepstakes currently but there are quite a few curveballs to come in the hyperactive mobile phone market before a clear winner can emerge.
Issue Date - 30/09/2012

Though Nokia is still the overall leader in the Indian mobile phone market and has a formidable presence with close to 200,000 service outlets, Samsung has ensured that the brand enjoys strong visibility albeit with lesser number of outlets. With 100,000 distribution centres that cover most parts of the country, Samsung is focused on better control on service quality and maintaining a ‘premium brand’ edge over Nokia. So even in smaller cities it runs better designed and illuminated outlets. This ensures that the Samsung brand isn’t just a metro phenomenon like an HTC, BlackBerry or Sony Ericsson. To cement its long-term trust and relationship with consumers, the company has invested heavily in setting up a strong after-sales service network with trained professionals and responsive call centres, which ensure customers have a good experience.

These measures have helped Samsung gain strong ‘word of mouth’ publicity and get repeat buys from older customers, who feel the brand cares for them. It has also ensured that Samsung, which started in India as a consumer electronics players at a distant No.2 to LG, has not only emerged as a strong and credible challenger to global tech giants like Apple and Nokia but also become capable enough to beat them at their own game. The success of its handset business has ensured that almost 55% of its India revenues of over Rs.200 billion comes from the mobile phone division.

In contrast to Samsung’s steady march in India, Nokia’s biggest problem has been its lack of a strong smartphone range in its portfolio. To make amends for its shortcoming, Nokia has, over the past year, started moving (rather late though) aggressively by teaming up with Microsoft to offer Windows OS-based ‘Lumia’ range of smartphones. It has announced slowly phasing out its Symbian phones and would focus on pushing its Lumia and Asha-series range of smartphones in the country. The response so far has been encouraging but not enthusiastic enough. On the other hand Samsung, though still on a strong wicket, has come up against legal troubles that have the potential to upset its smartphone business. The past month has been a particularly bad one for the company, which has been asked by a US district court to pay $1.05 billion as damages to Apple in a patent infringement and copyright related lawsuit.

The court held that many of Samsung’s Google Android-based phones infringed Apple’s patents. The indictment comes as a dampner as it can dent Samsung’s image as an innovator company. To ensure that its brand image remains intact, Samsung will have to focus on creating a strong future product line-up as well as ensure that it doesn’t get caught in more such high-profile legal contretemps. Says Amandeep Kalsi, Director, Protiviti India, “The market is fast evolving in the digital communication devices space and no player can afford to be content about its products and their positioning. Market positions are up for grabs every couple of years and so be it Apple, Samsung, BlackBerry or Nokia, none can afford to take it easy.”


While it’s true that nobody can predict how the tech scene will unfold in the future, a wrong move by Samsung at this stage or a right strategic push by Nokia now can yet again reconfigure their stakes in a rapidly changing market. Though there’s no strong alternative for Samsung at the moment, multiple scenarios have begun to emerge, especially in the aftermath of the US court verdict against Samsung. More and more smartphone makers may turn increasingly to Windows devices because of the legal uncertainty surrounding Android phones. Right now, Nokia is the primary manufacturer designing for Windows phone. But Samsung may actively now weigh in big time in favour of Windows. It has already surprised the market by unveiling a new Windows phone, called ATIV S. The move seems like pre-emptive action on the part of Samsung and designed to steal a march over Nokia whose own Lumia line of smartphones using Windows Phone 8 is slated for release in New York on September 5. Nokia expects its services bundled with the Lumia, such as Nokia City Lens, Transport, for public transport information, and Nokia Music with Mix Radio, a free mobile music streaming and offline listening apps, to be a big hit with consumers.

So even though Samsung enjoys the whip hand in the smartphone market currently, the future is not without upside possibilities for Nokia. The brand continues to retain a huge fund of goodwill and trust among Indian consumers and enjoys an enviable reputation. Millions of Indians who continue to use Nokia feature phones could be potential customers for its superior smartphones. But in a hyperactive market that demands constant innovation, the player that is more innovative and can play the pied piper to the consumer will win the game. With the smartphone market set to grow to 30% by 2015 from 11% currently, the fight for the smartphone market pie is still largely open and the player whose offerings best meet the market pulse and satisfy customer expectations will get to hit the home run.

Onkar Pandey

(My Story from From Business & Economy)

TECH: “This Business is all about Mastering The Network” MoneyGram Interview

Issue Date - 21/07/2011

Daniel J. O’Malley, Executive VP, Americas at MoneyGram International, joined the American global money transfer giant in 1988. The 22-year MoneyGram veteran was a banking professional prior to this and worked with leading American banks like NCNB Bank and Southeast Bank N.A. in Atlanta. In an exclusive interview with B&E, he talks about MoneyGrams’ modus operandi, and its business in India. He also throws light on their partnership with Walmart globally, and their expansion strategies. by onkar pandey and anirudh raheja B&E: Given that you currently have operations in 191 countries, how strategic is India to the entire business portfolio? Daniel J. O’Malley (DJOM): We have a strong presence in India with over 30,000 agent locations. We also recently tied-up with Bharti Walmart for money transfer at their retail locations. As MoneyGram continues to grow in various markets, it’s important to segment and channelise the business, move along with the socio-economic strata of consumers, and make sure that we are present where our consumers want us to be. We have a global network of over 233,000 agent locations, business transactions with top banks, and post offices. In the US we have relationships with thousands of retail stores (both small and big) and with local communities in over 190 countries. At the same time, we also do business with US based Walmart in around 4000 locations. In this particular sector, you should know how to channel your business and understand where your consumer wants to transact. The importance of being close to your consumer is a key determinant of being able to offer remittances. We are present in both urban and rural areas with a vision to serve as many customers as possible. B&E: Western Union money transfer is very active in India. They have been very proactive in marketing, while MoneyGram has maintained a relatively low key profile. Why is it so? DJOM: I think it’s the foundational activities that we have focused on India so far. We have come up with 30,000 stores in just three years, and we want to continue expanding. With these initiatives, we want to ensure that there’s awareness at the store location by increasing on-ground visibility so that more and more people come to our stores. We have invested in creating signage for the brand as well. Now we will invest in the brand to top it all. In fact, we made significant investments in the ICC Cricket World Cup this year and have also entered into multi-year sponsorship deals for a lot of Cricketing events. Besides, we also ensure investment in local community festivals and use those same connections in our above-the-line (ATL) and below-the-line (BTL) marketing activities. We also try and connect our activities in India to the ones that we undertake in, say for example, Toronto.

B&E: What was your revenue and growth in FY 2010-11? How much did India as an SBU contribute? DJOM: We do break-up our business into various segments, but overall, MoneyGram is a $1.2 billion revenue company. Our India business is relatively small in size but it’s growing significantly. We also have other products that add up to the revenue base such as bill payments in the United States and Financial Paper Orders that we sell at our retail partners’ outlets. Though it cannot be broken into segments separately, but we are experiencing a high single digit growth rate y-o-y. We had a good first quarter in 2011 and are looking forward to strong growth. B&E: Every company is talking about the growing importance of emerging markets for their business? How significant are these markets for Money Gram International? DJOM: Expanding into emerging economies is an imperative. But we are a little different here compared to other companies. For us, these markets did not become important in the last three years (unlike the opposite which is true for other entities). We have been solidly building all of our networks. To be honest, this business is all about dominating the network. The more you grow, the more important the network becomes. India certainly plays into that, China is also an important market. And if you go out and look at our network expansion, BRIC countries make up for the bulk of it. The challenge for us remains to find ways to invest effectively without overstepping. B&E: Which is the most primary immigrant group you target? DJOM: That is the best thing about this business. Our target market is spread across demographics, so we’ll always have customers at any point of time. With 233,000 locations, you have to be able to support and serve any consumer, no matter where they are. The worst possible case for us would be not having a recipient location where the customer wants to send money. B&E: Don’t you provide focused services to countries like Mexico and India where more transactions take place?  DJOM: We do; but in any given market there is a mixture of 6 to 7 different demographics that we are trying to cater to. For instance, if we talk about New York City, you cross one street and you will be in an entirely different demography. We work towards providing a great level of convenience to our consumers at the right price point and place depending on the level of service that is required. Considering the US case, at any given location, you can have as many as 75 different demographics. I have also experienced that in one day eighteen different demographics actually go to one location and we have to serve them all together. Once you have mastered this art, it becomes relatively easier to expand and work efficiently. B&E: How much of your business transactions come through Walmart? DJOM: Walmart makes up for almost 30% of our global revenue. Besides, we also do business with Walmart in Mexico and Central America. Continuing this relationship on a global level is very important for us. Our recent alliance with Bharti Walmart is a step in that very direction and we hope to take this forward to other markets as well.