Coimbatore's entrepreneur has shown a remarkable ability to survive crises by adapting and innovating. The result is that its industry is a big success at the international level.
ENTERPRISE and resilience are ingrained in the Coimbatorean's psyche. The entrepreneur here has shown a remarkable ability to survive crises by adapting and innovating. This is widely held to be the main reason for Coimbatore going global ahead of the country.
The district has nearly 4,000 registered factories, some 300 large and medium units, over 30,000 small-scale industries, and over 4,500 cottage industries, besides several village and agro-based units. One of the 10 most industrialised districts in the country, it supplies 60 per cent of all pumps used in India, 40 per cent of motors, and a significant percentage of auto parts. While Tata Motors sources over 25 per cent of its components from the region, Maruti Udyog gets 40 per cent of its requirements. Coimbatore has made a foray into knowledge-based industry too.
Coimbatore's growth is sustained by a variety of industrial activities. But textiles have been at the core of all industrial activity, and these almost revolutionised the region's industrial scene. This revolution was set off towards the end of the 19th century when the first textile mill was set up here.
If drawing water for cotton cultivation got the pump industry going, the latter fired the foundries. With the pump industry, the Coimbatore entrepreneur developed engineering skills to develop farm equipment. From there to auto components was a natural progression.
With industrial development, the trade and finance sectors grew. This not only led to massive industrialisation but also created the spirit of enterprise. Large, medium and small manufacturing sectors grew at a fast clip, linked with and feeding one another. The free flow of technology and knowhow also helped. This was dictated by quality considerations. Bigger companies expected and got quality products from their feeder units; to ensure quality they were willing to offer the technology at their command. Quality is, in fact, an obsession with the Coimbatore industrialist.
While Coimbatore seemed all set for a boom, a number of bad monsoons between 1971 and 1981 sent the pivotal textile industry into a decline. A number of mills became sick because of their uneconomic size and the competition from modern units in north India and from manmade fibres. Some of the sick mills were taken over by the National Textile Corporation. But, once again, the region showed its resilience by taking advantage of the export incentives offered to the hosiery industry. This led to the growth of Tirupur and the development of markets abroad.
Although the 1970s saw many other sectors, besides the hosiery industry, looking outside the country for market and knowhow, most continued to rely on homegrown technology, especially that provided by the PSG, Lakshmi and Ramakrishna groups which had varied interests, ranging from textiles to finance.
There are, of course, countless success stories For instance, the Sharp group, founded by K.K. Ramaswamy in 1967 with just a lathe, today has a turnover running into crores of rupees. G. Thiruvenkadaswamy, who completed Tenth Standard, started Jeetstex Engineering Ltd in 1978 after a long stint with Textools as a design supervisor, with an investment of a few lakh rupees. His company's turnover is several crores now. The enterprise and tenacity of the Coimbatore industrialist is striking. While Ramaswamy attributes his success to his win-win policy (benefiting both himself and his clients), for Tiruvengadaswamy it is ploughing back much of his profits. This constant reinvestment seems to be true of most industrialists here. The profits are used to fund expansion.
Generally there is backward integration. For instance, a pump unit invariably puts up a foundry, initially for its casting requirements. But after some time, the foundry begins supplying to other units and soon reaches a stage where it can survive independently of the pump unit. This is the general pattern of industrialisation in Coimbatore.
A number of units are also run by second-generation professionals, who have had formal education, usually from PSG's educational institutions and then abroad. There are some cotton farmer-turned industrialists like K. Govindaswamy Naidu, who founded the KG group in 1932. Then there are people like Narayanaswamy Naidu who started the Dhandayuthapany Foundry in 1924 and travelled 1,000 km to sell a pump. His turnover is several crore rupees now.
One striking aspect of many multi-crore industrial units here is their humble beginnings. For instance, the Elgi group, which has in its fold 14 companies in the automotive, engineering, transport and textile sectors, started out by operating a few buses in the 1930s. Now it manufactures, among other things, air compressors, diesel engines, hydraulic lifts, industrial and automotive chains, pre-cured tyre retreading systems, textile machinery and accessories, electrical motors and pneumatic control elements, besides building bus bodies. Pushed by recession, which seems to be ending at last, and the urge to innovate, the group has started on new products, moved the production chain to include forward and backward linkages, and increased exports.
The Elgi group was the first to come out with a `farm to textile' integrated link, both for value addition and for self-sufficiency. For instance, as a step in forward integration it makes T-shirts and high-end garments (it is the sole supplier to the premium Color Plus brand). It is also setting up dyeing and knitting units. In backward integration, the group has started `contract farming' of cotton through tie-ups with farmers. It provides farmers with high-yielding hybrid cotton varieties that it develops in-house. This helps the company to source contamination-free cotton.
The Elgi group's other products include biomass power plants, 100 per cent sound-proof PVC (polyvinyl chloride) windows and multilingual, multi-tasking computer platforms. Elgi Equipments is today the leader in compressor and garage equipment production. The 75-year-old Elgi group is now trying its hand at software development. Its eSTEL, formed by consolidating several independent IT-enabling units, integrates capacities in the design and development of customised hardware for a range of commercial and industrial applications. It provides end-to-end solutions in multi-format convergence.
Another big Coimbatore outfit that started off on the road to success by operating buses is the Sakthi group. It now touches the lives of almost every person, with interests in sugar, alcohol, tea, soft drinks, soya foods, synthetics, gems, textiles, transportation, foundry and finance. The group's annual turnover exceeds Rs.1,200 crores and it employs over 15,000 people directly and 10,000 indirectly.
In 1964, the group started the ABT parcel service and emerged as the biggest operator in South India. In 1994, the group clinched several Maruti dealerships, also under the ABT umbrella. Recently, it started cargo and courier services. While the company is modernising fast and moving towards a more efficient system of vehicle tracking, it plans to go global with its courier service.
Coimbatore is best known for the manufacture of automotive parts. Regardless of the vehicle one drives - be it a Tata Motors truck or a Mercedes car - chances are that one will be using a made-in-Coimbatore horn. Roots Industries Limited, one of the eight companies under the Roots group, has been making electric horns since it started operations in 1970 as American Auto Service. Besides a variety of horns, the Roots group now manufactures various other auto accessories, including halogen headlamps and fog lamps and parking and reversing sensors. Its clients include such big names as DaimlerChrysler, Mitsubishi, Mahindra and Mahindra, Toyota, Tata Motors, TVS Motor Company and Piaggio. Roots products find their way to the United States, Europe, West Asia and Africa. It is the first horn manufacturer in Asia to obtain the QS 9000 and VDA 6.1 certification and the first in the world to win the ISO/TS 16949 certification.
Thriving on high-end research and diversification, the Roots group also manufactures a range of non-automotive products, including cleaning equipment, castings and precision tools. According to its director N.V. Krishnan, the group is constantly innovating and developing technology. The technical collaboration with Bosch SA for auto products in 1995 set the group on the path of sustained technical growth. It also has collaboration agreements with other German companies for non-auto products - with Hako for multicleaners and Zeinser for textile machinery.
The Roots group's obsession with technology is evident from the range of the state-of-the-art tools it uses for research and development (R&D) - solid modelling, hard prototyping, drafting and graphics. Its metrology laboratory is a comprehensive calibration-cum-consultancy centre that offers electrical, mechanical, pressure and vacuum calibration. It also offers specialised CAD/CAM consultancy services for a range of products and industries. According to Krishnan, Roots has several new products in the pipeline.
In top gear is Shanti Gears Limited (SGL), which commenced operations in 1969 with the manufacture of gear products. Incorporated in 1972 as a private limited company, it went public in 1983. It has created a niche for itself with its quality products. The company, a dominant player in the design and manufacture of premium industrial gears and gearboxes, commands 25-30 per cent share of the organised sector market valued at Rs.400 crores.
It has built for itself a reputation as a quality supplier with strong design capabilities and quick turnaround time. From products weighing a few grams to ones that are more than 20 tonnes, SGL manufactures a wide range of gears, gearboxes, geared motors and gear assemblies (both standard and custom built) to global players in critical industries such as cement, power, steel, sugar, fertilizers, paper, Defence, passenger lifts, medical electronics and proton collision. SGL is the leading aviation gear manufacturer approved by the Directorate-General of Aeronautical Quality Assurance. Its gears meet ISO (international), DIN (German) and AGMA (American) standards.
SGL is the only industrial gear-manufacturing company in India that has all support manufacturing facilities such as cutter-manufacturing unit, pattern-making unit, casting unit (ferrous and non-ferrous) and fabrication, forging and heat treatment facilities in-house. This, according to senior vice-president P.K.R. Kurup, helps to gain better production control, improve quality and maintain delivery schedule.
SGL has a well-diversified customer base of over 15,000, which covers over 35 industrial categories. Its clientele include Ingersol Rand, Atlas Copco, Bharat Heavy Electricals Ltd (BHEL), Siemens, Mitsubishi, Rolls-Royce, Hindustan Aeronautics Ltd (HAL), L&T Komatsu, Bharat Earth Movers Ltd (BEML), Tata Iron and Steel Company Ltd. (TISCO), Steel Authority of India Ltd (SAIL), the Indian Space Research Organisation, Alfa Laval, Rieter LMW and Suessen and Himson; for some of these companies SGL is the sole supplier. Recently SGL was listed as one of "Asia's rising firms" by the Forbes magazine. Sustained gains in sales and returns, market momentum and investor friendliness were considered for the ranking. SGL is one of the 24 Indian companies that figure among the list, and the only engineering company from South India.
SGL was ranked fifth among the 500 companies by RoCE (Return on Capital Employed) in the engineering and capital goods sector. With effect from September 27, 2004, SGL has been included in the BSE 500 by the Stock Exchange in Mumbai. SGL's dividend policy has been liberal. Not a single year since SGL went public (1986) has gone without dividend.
Coimbatore is the headquarters of one of the biggest component suppliers, Premier Instruments and Controls Ltd., popularly known as Pricol. It produces much of all the precision components for the automotive industry - passenger car, two-wheeler, tractor, commercial vehicle - and for the Ministry of Defence. Since its inception over two decades ago, Pricol has focussed on developing products independently. All its products - oil pumps, electronic counters and controls, products for defence needs, industrial pressure gauges, disc brakes for two-wheelers, gears, sprockets, oil-level sensors or valves - have been developed in-house. Product quality and the company's ability to respond to change with innovative solutions have attracted over a dozen international companies as its customers.
According to Pricol chairman and managing director Vijay Mohan, liberalisation and intense competition among vehicle manufacturers have prompted auto component manufacturers to improve manufacturing processes and productivity and to cut costs. The component-manufacturing industry is in a position to export quality products.
Another auto component link for Coimbatore is provided by L.G. Balakrishnan & Co, founded by the late L.R.G. Naidu in 1960 to make timing chains for two-wheelers. Its `Rolon' brand has a 65 per cent share of the market. The company has several manufacturing units, all ISO 9001 certified. The company also makes transmission chains, sprockets, tensioners, cogged belts and rubber products, mainly for two-wheelers. The company holds over 40 per cent of the market for industrial chains. LGB exports to over 10 countries and has exclusive distributors in most of these destinations to liaise with foreign customers.
Coimbatore's industrial revolution began with pumps and even today it is the main source of pump supply to much of India; 60 per cent of the country's requirement of pumps is met by Coimbatore. Fisher Pumps Private Limited (part of the Sharp Tool group, started by K.K. Ramaswamy in 1967) is the largest producer of domestic pumps in the country. The company produces over 40 types of pumps, including mini-mono-blocks, centrifugal submersibles, and jet and special pumps for open wells. The company `pumps out' new products every year. Fisher pumps are sold all over India as also in Dubai, Muscat and Sri Lanka.
Suguna Pumps, started in 1958 by C.G. Ramaswamy, began with electric motors and then diversified into pumps. Half its products are aimed at the domestic use sector, followed by agriculture (35 per cent). The 90-crore company has a separate R&D division which focusses on efficiency, design (to decrease weight) and materials management (to decrease cost and corrosion). The company has two foundries for its own use. According to managing director V. Lakshminarayanaswamy, while the company exported 50,000 motors last year, it plans to double the figure this year. Increasing cost due to a rise in steel and copper prices without increase in pump price has dwindled margins. Thus a lot of R&D effort, according to Lakshminarayanaswamy, is being concentrated on material substitutes.
Another major player in the pump industry is AquaSub Engineering, which makes the Texmo brand of domestic and jet pumps and borewells and submersibles. Also popular are the Aquatex brand of agricultural mono-block pumps, open-well submersibles and electric motors. The company also has an international brand called `Atx'. AquaSub has bagged the national export award in the last four years.
With over 650 models and 750 dealers, everything is in-house at AquaSub - from R&D to casting to motor stamping. According to general manager V. Krishna Kumar, the drought-like situation across the country is bound to generate good demand for submersible pumps. "But the heavy excise, sales and customs duties make Indian pumps non-competitive in the international market," he says. This apart, over 60 per cent of the demand for pumps is catered to by the unorganised sector, which is out of the tax net and hence is able to cut costs. According to him, as the company is into making water pumps and not industrial pumps, it managed to survive the last recession.
According to Southern India Engineering Manufacturers' Association (SIEMA) president C.R. Swaminathan, there was a more than 50 per cent increase in the number of BIS (Bureau of Indian Standards) licence holders producing borewell submersible pump sets in 2004 as compared to the previous year - 65 licensees in 2004 as against 40 in 2003 - with a corresponding increase in BIS-marked products - from 1.3 lakh in 2002-03 to 1.95 lakh in 2003-04. There was a similar increase in the production of BIS-marked submersible motors and in the number of BIS-licensed producers.
According to Swaminathan and G. Rajendran, Convener of `IIF-SIEMA Pump, Motor & Foundry IIUS Project', the main beneficiaries of the SIEMA-IIF initiative would be the small and tiny foundries that the Centre also is keen to support.
To provide small foundries located in different areas in the city a common manufacturing platform and to address the problems faced by them on the pollution front, two foundry parks are being established close to the city by the Coimbatore Tiny and Small Foundry Owners Association (Cosmafan).
According to the association, it is perhaps the first time an industrial estate of 150-acre (60 ha) size is being established by the industrial units themselves; usually it is governments that promote industrial estates. The association has also identified a 50-acre (20 ha) site in Manickampalayam for locating another estate for foundries.
Coimbatore's entrepreneurs are also looking beyond the traditional industries and venturing into areas like poultry. Suguna Poultry was started in 1986. Under a contract system, which protects farmers from price fluctuations, the company provides the inputs - chicks, feed, medicine and supervision and training - and buys the birds.
From the UMS group (founded by the late G.D. Naidu) comes Water Tech. Started in 1997 to manufacture plumbing fittings and bath accessories, Water Tech is known in almost all over South Asia. Made of engineering polymer, the company's products have proved an excellent alternative to metal fittings. The company is the pioneer in the use of industrial polymer that does not leak, as the seal (washer) is made of elastic polymer, which prevents sand particles from getting embedded. Besides, it is resistant to heat up to 80 C, and ultraviolet rays, which prevent discolouring. The washers are tested for two-lakh cycles of operation, which translates into a lifespan of 15-20 years.
COIMBATORE is home to India's largest manufacturer of paper conversion and recycling machines. One of the most inspiring stories from Coimbatore is that of N.S. Kumar, a first-generation entrepreneur who developed an eco-friendly machine to make paper bags. In a span of two decades he grew - from dealer to manufacturer to exporter - and made a mark on the industrial map of Coimbatore. His YenYesKey Machine Tools makes a range of machines for various requirements - film lamination, paper flexo printing, paper gum tape plant, paper slitting, heavy and special paper bag making and so on. The main advantage of the machines is that the bag-forming, printing and tube-forming units can work concurrently. According to Kumar, his eco-friendly machine is one of its kind in the world. Exporting machines to over a dozen countries, YenYesKey Machine Tools has bagged several awards.
Trigger 1932 Jeans Inc is the garment business division of the Rs.220-crore KG Denim Limited. Launched in September 1995, it is currently the largest selling brand in the country (in the mid segment) and is available in over 1,500 multi-branded outlets and 10 dedicated outlets called "Trigger Passion Junctions". Trigger will also start retailing in West Asian and South-East Asian countries this year. It has a turnover of Rs.45 crores, selling one million pieces annually.
Trigger set the trend in low-weight denim by bringing in many fabric variations and is the first to bring in satin-wear denim, bio-denim and sand-blasted denim. Trigger focusses on customers rather than on competition. The first garment brand to get the India Brand Equity Fund (IBEF), a corpus set up by the Government of India to promote Indian labels internationally, it was selected as the best communication package for the year 1999 by the Public Relations Society of India.
KG Denim holds the distinction of being the first Indian denim manufacturer to obtain ISO 9002 certification. Apart from basic denims and blacks, KG Denim offers a wide range of clothes weighing from 4.5 ounces (oz) to 14.5 oz (14.2 gm to 297.7 gm). It also offers lycra, modal and polyester denim, in addition to fine cotton. It derives its strength from continuous innovation in colour, fibre, shade, weave and finish.
While doing so, KG Denim has sparked off many new trends in the fashion industry, earning the reputation of being a pioneer in the garment industry, manufacturing over 1.5 million high-quality fashion garments, which are exported to the United States, Europe, West Asia and the Far East.
Assisting existing and new entrepreneurs are the various associations that have played a signal role in industrialisation. These include the South Indian Mills Association (SIMA), the South India Textile Research Association (SITRA) and the Coimbatore District Small Scale Industries Association (CODISIA). A number of others, chiefly the SIEMA, the Coimbatore Management Association, the Coimbatore Small Foundrymen Association, the Small Industries Testing and Research Centre, and the Coimbatore Industries and Foundry Owners Association have complemented and supplemented one another's efforts. These associations, more than anything else, bring out the efficacy of private initiative. There are today 10 industrial estates managed by cooperatives, SIDCO, and in the private sector.
Industry in Coimbatore is not afraid of international competition; it is worried only about government policies. While some feel only the fittest will survive by keeping up to international standards of technology, others say it is a question of economies of scale, as cost will be a major issue. Most, however, feel that big industries cannot survive without the small units. They point to the case of Maruti Udyog, which sources about 40 per cent of its parts from Coimbatore.
But whatever the arguments, Coimbatore's industrialists are gearing up for the future. For, every Coimbatore businessman goes on regardless of recession, slump, competition and adverse policies, relying on the mantra of resilience and enterprise.