MNCs' second wind

It’s a trend that’s increasingly becoming prominent. Multinational corporations (MNCs) that have been in the country for years and years with precious little to show for their efforts are finally beginning to make the big moves in a local market that’s hit a tipping point.

These include giants like the ¥580-billion (Rs 20,300-crore) Japanese electronics and imaging giant Brother International, the SEK (Swiss Krona) 53,101-million (Rs 31,860.6 crore) global ball bearings and seal giant AB SKF, the m1,177-million (Rs 6,944.3-crore) French product lifecycle management (PLM) solutions Dassault Systemes, and the $47.8 billion diversified US goliath United Technologies Corporation (UTC).

Consider Brother International, which has been present in the country since 1989 with a liaison office. A couple of months ago, it set up a direct subsidiary and announced that it would target a three-fold increase in revenues over the next three years. In addition, the company has projected a sales growth of 50 per cent in the inkjet printer and 35 per cent in the laser printer markets. In all, the company is said to be targeting sales worth a billion yen (Rs 37 crore) by March 2008.

“Yes, we are aware that we have entered a very competitive market a bit late but then we have very ambitious plans,” says Toshiyuki Takamure, Managing Director, Brother International (India). To achieve this, the company has unleashed a slew of products and expanded its authorised service centre network to 85 locations. Brother plans to increase that network to 100 outlets by the end of the year. “We will continue to strengthen our sales and customer support activities, and boost Brother’s brand image in the country as we are relatively lesser known here,” adds Takamure.

Similarly, AB SKF is ramping up its production facilities, thereby hoping to increase its revenues several times over. The century-old company, which has been in India for more than eight decades, plans to invest Rs 420 crore in greenfield facilities in Ahmedabad and Uttarakhand. By 2011, the company hopes to double its revenues to Rs 3,000 crore. SKF India clocked sales of Rs 1,342 crore for the financial year ended December 31, 2006. “Even though India’s share to the global turnover is about 3-4 per cent, it’s among the fastest-growing markets. But the investment we have announced in the country is the highest globally for any geography in 2007,” says Tom Johnstone, President & Chief Executive, AB SKF.

Another company that is increasing its range of operations in India is Dassault Systemes. The company employs 1,000 people and has a joint venture called 3D PLM with domestic IT firm Geometric Software. However, a growing roster of clients, including blue chip ones like Apollo Tyres, Tata Motors, Ashok Leyland, Infosys and Satyam, has prompted the company to set up a fully-owned subsidiary in India. “India is still relatively a small market for us but the kind of growth we are seeing here is really amazing. It will be a market of the future for us,” says Bernard Charles, President and CEO, Dassault Systemes.

UTC, which has been in the country for more than half a century, is well known for its brands like Carrier (air-cooling) and Otis (elevators and escalators). But the country barely contributes just than 4 per cent of its Asia revenues. Now the company is planning to change that with ambitious plans to tap the aviation market. The company is ‘in discussions’ for fabricating helicopters in the country and has a dedicated R&D centre in Bangalore, COO Louis R. Chenevert told BT currently. Clearly, the prospect of double-digit economic growth coupled with increasing action in core sectors like aerospace and infrastructure have convinced the MNCs that India may finally be worth big-bang investments.