The power of churning

A thought that kept surfacing during a visit to Japan some weeks ago, while talking of that country’s serious economic crisis, was that there was a real dearth of new entrepreneurship — Japanese business, like its society, it would appear, is really ageing. Possibly, someone postulated, the Japanese education system’s emphasis on producing conformists had virtually killed the entrepreneurial spirit and, two, with big business’ stranglehold over the financial and distribution system, newcomers didn’t have a chance.

By this yardstick alone, India is doing wonderfully — a comparison of the top ten firms shows up mostly newcomers every decade or so, and that process is also speeding up now. The last couple of years, for instance, saw the sudden rise of the dotcom crorepatis (the Rajesh Jains and Pradeep Kars), followed, of course, by their now-famous demise. Kar sold his remaining stake in Indya.com to Star TV, which laid off most staffers just a few months later, but talk to Kar even now and he’s quite upbeat about consolidating his other business. Or when was the first time you ever heard of someone called N.R. Narayana Murthy, or Azim Premji in a really serious manner — just a few years ago, right? — and today their companies are the country’s most-talked about.

It would, of course, be foolish to write off the Murthys and Premjis of the world just because of the global tech squeeze which, in any case, is now beginning to ease. Premji’s wealth, in terms of his Wipro shareholding, is down from Rs 46,500 crore at the year’s beginning to 34,700 now and Murthy’s from 10,800 to 8,800. But even if one were to do so, the fact is that this year saw the phenomenal rise of the pharma crorepatis who have also shot to fame really over the last few years — in the sense of being serious research players as opposed to ‘reverse engineers’ which is the glorified name for copycats. Did you know that the biggest gainer on the stock markets this year was Dr Reddy’s Lab? Market capitalisation, or the value of all the shares on the stock markets, for the Reddy group rose from Rs 4,000-odd crore at the end of last year to Rs 7,700 crore some days ago, or a rise of a whopping 88 per cent. Five of the top ten firms whose market capitalisation rose the most this year, in fact, are from the pharma sector.

Don’t want to talk pharma? Well what about Ekta Kapoor, who shot into fame from nowhere (the fact that her father is yesteryear’s matinee idol Jeetendra surely didn’t help get her the breaks she needed in TV), and today produces almost every other television serial you can think of. Other stars of the last few years, again from virtual anonymity, are the likes of Amit Judge of Barrista coffee pubs fame and Rajen Raheja of Shoppers Stop fame — the retail chain, though, is more associated with its CEO, B.S. Nagesh.

And in case you think the retail hype won’t last long — after all, even the biggies like Shoppers’ are bleeding badly — there’s a huge change happening at your neighbourhood kirana store level as well. There are entrepreneurs, like Shivir Jain of eFoodMart, who are getting small kiranas to join hands, to be able to buy in bulk and get larger discounts. Another major success story that is making huge forays into new areas is Amul — the cooperative sector milk giant’s getting into pizzas, restaurants, you name it.

Major changes are also taking place on the agricultural front, with corporates like ITC and Hindustan Lever setting up all manner of e-biz initiatives to maximise farm output. Mahindra Shubhlabh Services, for instance, has set up various Krishi Vihars to try and get rid of inefficiencies in the agriculture chain and also to assist farmers to attain hikes in productivity. It’s first Krishi Vihar programme for paddy began in Madurai in October last year. More than 80 percent of the farmers registered were able to get yields of more than 3,000 kg per hectare which was the benchmark fixed — the prevailing yield in that area was 1,750 kg. ITC, which is big in the farm sector for both its tobacco as well as its oilseeds purchases, has a quarter million farmers selling their produce on its e-chaupals. In other areas, through NGOs like the Gram Vikas Samiti, the government itself has been conducting pilot experiments to help hike productivity dramatically. In Barabanki, near Lucknow, maize yields jumped from four quintals per acre to 30, and incomes of farmers who began growing maize jumped nearly six times — one farmer even saw yields improve 16 times.

This is the power of churning, if you will, and this is what will ensure that the economy will do well in the future. Sure, for every such individual initiative, there’ll be hundreds that get killed precisely because of the country’s massive red-tape — after all, even today, the board of even a cooperative as successful as Amul can be superseded by the local collector at will, just like that. This, of course, is India’s challenge in the years to come. The loosening of controls over the last decade is, after all, responsible for all the changes we’ve been talking about. Long live churning.

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