| |
Philips India
Dwijottam Bhattacharjee
Philips India has decided to move its main consumer electronics division out of Calcutta. This has almost been a forgone conclusion since Manohar David, the architect of the recent resurgence of the division, stepped down as head of the division nearly a year ago. David, one of the savviest marketing brains in recent times, had fought a tough battle with the Philips top brass to take the division to Calcutta, to keep it there, and to achieve substantial success. With his exit, the division always looked certain to move out of its Calcutta base.The move has also been certain since the then new Philips India managing director K Ehrnreich was not allowed into one of the Calcutta-based facilities by workers. The divide between the Calcutta workforce and the management was clearly too irreconcilable. Perhaps, it would be unjustified to suggest that Philips is moving its entire operations out of Calcutta suddenly. Even if it does so eventually, it is hardly doing so at one fell swoop. The Dutch multinational,
since hiking its stake in the company in 1994 to majority status, has carefully been restructuring its Indian business. Last year, for example, it sold out majority stake in its telecom equipment business to Simoco of the UK. But the shift itself can not be doubted: Philips is moving base, and only pacing and sequencing of the transition qualifies the decision. The move out of Calcutta of Philips India's "Sight and Sound" division appears, on the face of it, yet another blow against the Left Front government-led West Bengal's status as an investment destination. True, this is going to reinforce age-old belief that labour militancy and lack of a prosperous hinterland could rob West Bengal of potential investments. This would be a less-than-justifiable impression. There are certain features of the entire Philips shift that would deeply interest investors, especially international ones. The most important is that Philips recently offered and with quiet success managed a golden handshake scheme for as many as
322 employees, without much of a murmur. This was achieved with some coaxing from none other than the CITU top brass, and also personal intervention of chief minister Jyoti Basu. Immediately after the VRS was implemented, production rate improved at the Philips facilities by 15 to 20 per cent. It is also interesting how the West Bengal government, an equity partner in Phillips' telecom venture, not only allowed Philips to sell out to Simoco, but actually assisted the process by selling out its own stake to Philips, which the Dutch MNC also passed on to Simoco. What this goes to show is that, West Bengal is one state where it is possible to get out of business quietly, without too many problems, and with active assistance of the state government. At least, it is clear that the West Bengal government understands the exit imperative better than Indian policy makers have for decades. This may hardly seem a positive way of looking at things -- looking at exit facilities before one checks out entry norms -- till
one finds that there are in fact no entry barriers to investment in West Bengal, and that the State Industrial Development Corporation is chaired by a leading CPI(M) parliamentarian, Somnath Chatterjee, providing political support to investment. The problem with West Bengal is part-historical. Two factors — freight equalisation, which took away the locational advantage of the state, and political extremism, which in turn fostered unbridled labour militancy for about a decade (and no more, mind you) have created an indelible impression of an investment basket-case. Today, West Bengal's greatest problem is it's inability to resuscitate enterprise. Poor education, weakened by a misguided renunciation of English, poor healthcare, and land reforms that in the guise of providing land to all hopelessly decreased plot areas and therefore precluded any chance of rural prosperity have together choked off both the will and the ways to create and construct. But for other entrepreneurs, West Bengal is not the terriblemistake it is made out to be. Investment can provide employment, which in turn will improve the market also. And now, there is always the Philips example to show that even if entry is sticky, exit will not be such a problem.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
 |
