PROFIT FROM FOREIGN LANGUAGES
THE ULTIMATE
BUSINESS GUIDE
NICHE MARKETING OPPORTUNITIES
OCTOBER 2010 VOLUME 2 ISSUE 2 Rs 100
TAMING THE DRAGON HOW TO DO BUSINESS WITH CHINA
Ways to Start and Invest Tools to Close a Deal Tips to Source, Sell and Export Smart Steps to Protect Your IP
Greener Telecom with GTL The HTC Desire: iPhone Killer? The Benefits of Banking Online Do it Right with Yes Bank’s HR Strategy Sanjna Kapoor and the Revival of Prithvi Theater
table of contents 28
INSIGHTS 20 THE GARAGE Ankush Chibber goes from writing about entrepreneurship to actually living it. 21 LOOK OUT
TAMING THE DRAGON 62 ENTER THE DRAGON
Pack your bags and get ready to enter the biggest market in the world—China. By Ankush Chibber
66 ACROSS THE WALL
Taking your business to China is actually easier than doing the same in India.
76 CHINESE CHECKERS
An Indian couple shares their experience of living in Shanghai. By Kumud & Ashwin Bondal
78 BREAK THOSE CHINESE MYTHS Contrary to recent prognosis, China is a market worth investing in. By Arindam Ghosh
Wondering if open source or proprietary software is the way to go? Bindi Mehta helps you decide.
22 SOCIAL MEDIA MARKETING Surajit Agarwal puts social media marketing to the test. 24 WOMEN IN CONTROL
Nandini Vaidyanathan on what entrepreneurs can learn from Rafael Nadal.
26 SOLUTIONS FOR SUCCESS Vijay Anand on the increasing use and misuse of the word ‘innovation’.
80 ALONG THE SILK ROUTE
Want to export your product or service to China?
The President of NIIT China talks about the ease of doing business in China.
28 SETTING STANDARD T TANDARD S Jaspal Bindra explains how Standard Chartered Bank is tapping into a new consumer segment—women.
By Pranbihanga Borpuzari
By Prakash Menon
30 BUSINESS BASICS Pradeep Sindhu on the journey from idea to accomplishment.
70 SINO SOURCING
83 HAND-IN-HAND
By Pranbihanga Borpuzari
By Pravin Shah
72 SELLING TO THE DRAGON
84 THREE WA WAYS TO KILL A DEAL
By Ankush Chibber
68 MADE IN INDIA
Indian companies will be sourcing extensively from China in the near future.
The most common mistake when selling in China is thinking of it as a single market. By Ankush Chibber
74 PROTECT YOUR IP IN CHINA
Chinese authorities are taking steps to prevent piracy and counterfeit operations. By Darius F. Dalal
6 Entrepreneur + October 2010
Mahindra & Mahindra has identified a huge potential in the Chinese tractor markets.
IN CHINA
Definite no-nos you would need to keep in mind while doing business with the Chinese.
32 STRONG FOUNDAT OUNDA IONS OUNDAT Rajeev Karwal on the value of having values in a business. 34 SANU’S CORNER
What makes Indians corrupt? Sankrant Sanu explores the root of the problem.
35 MEET YOUR MENTOR
Ivy Hughes shares tips on finding the perfect mentor for you.
By Joanne Yao
WOMEN ENTREPRENEUR 38 ALL THE WORLD’S HER STA T GE TA How Sanjna Kapoor turned around the fortunes of Prithvi Theater through her innovative initiatives. By Bindi Mehta
42
SOCIAL ENTREPRENEUR 42 MISSION 20/20 Dr. R.V. Ramani’s Sankara Eye Care Institutions help the visuallyimpaired in rural India. By Shonali Advani
GREEN SIGNALS 44 PURE CELLSATIONS!
GTL offers a host of solutions to keep the environment clean. By Bindi Mehta
OPPORTUNITIES 38
46 TALK T GLOBAL, THINK LOCAL Language is more than just a means of communication. It throws up a host of options for entrepreneurs to choose from. By Bindi Mehta 52 CARVE Y YOUR OWN NICHE Niche merchandising is on the upswing in India today. By Shonali Advani 56 FREELANCE NATION Almost every single company in the U.S. is outsourcing. Are you benefiting from it yet? By Kate Lister
MONEY 96 SPREAD THE NET OVER Y YOUR BUSINESS The myriad advantages of online banking. By Rajiv Rai 36
98 FLY FL HIGHER Benefit to the max from your airline travel rewards program. By Rosalind Resnick 99 PUT UT Y YOUR CUSTOMERS TO WORK FOR RY YOU Building businesses inexpensively through client referral incentives. By Jennifer Lawler
IN CONVERSATION 36 “CHINA HAS MORE TO LEARN FROM INDIA THAN THE U.S.” Peter Yip, one of the first Chinese businessmen to float a software and internet firm on the NASDAQ, talks about doing business in China. Entrepreneur + October 2010 7
table of contents
123
THE ULTIMATE 'HOW TO' BUSINESS GUIDE
108
HOT STARTUP OF THE MONTH
115 Shut Down a Private Limited Company
108 The Mall Mechanic
117 Name Your Startup
All is not well with the malls in India. By Ankush Chibber
119 Write a Business Plan – Part VIII
112 On Record
Vinit Chordia’s venture Records Guru makes managing and retrieving documents a breeze.
121 Get Venture Capital Funding – Part VIII 123 Track Your Startup’s Performance
By Shonali Advani
125 Select Your Legal Advisory
TECH DEPARTMENT
CLASSROOMS 90
90 THE REAL ONE With the Desire, HTC just might claim the smartphone throne. By Ankush Chibber
100 THE HARDER YO Y U WORK, THE
LUCKIER YO Y U GET A father’s wisdom helped his son realize his dreams. By Rana Kapoor
92 ADAM GOES TO WORK
The younger of Dell’s two Adamo lookalikes packs in quite the punch. By Ankush Chibber
93 COLLABORATION OR AGGRAVATION?
Two small-business owners stick to two sides of the fence regarding SharePoint. By Craig Asher & Justin Singer
94 WEBSITES IN MOTION
Tips on designing your website for use on the mobile web. By Mikal E. Belicove
SUCCESS STRATEGIES 86 YES! BANKING ON HUMAN CAPITAL How YES Bank created multi-pronged strategies in order to get the best out of its employees. By Bindi Mehta
10 ONLINE 12 FEEDBACK 14 RESOURCES 16 NEWS IMPACT 18 STUMPSPEAK 130 BACKSTAGE
SPEND IT
By Nirmit Parekh
126 THE BIG PICTURE
Check out these cool products. By Team Entrepreneur
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COVER DESIGN
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106 HOW CAN YO Y U SPOT THE RIGHT
REGULARS
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Do’s and don’ts for using social networks for communicating. By Ericka Chickowski
By Ved Prakash Arya
T ENT FOR YO TAL Y UR STARTUP? Find the right talent for your startup—and keep them onboard.
95 BEWARE THE BITTER TWITTER
102 BE REALISTIC ABOUT PAYBAC P K PERIODS The importance of an honest business plan.
COVER ILLUSTRATION
CHAITANYA SURPUR
128 CLUB CLASS! Trilogy brings upper crust pub culture to Juhu. By Ankush Chibber
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VOICE OVER
TALK
GLOBAL, THINK LOCAL Language is more than just a means of communication today. It throws up a host of options for entrepreneurs to choose from... By Bindi Mehta
S
ubhra Doshi, a 24-year-old IT executive recently went on a trip to Kochi. She visited an Ayurvedic Treatment Center, where the young therapist gave her a soothing head massage. However, the communication between the two during the two hours of the treatment was restricted to a lot of smiles and a few gestures. There was no common ground for them to start a conversation, because the nurse spoke no English or Hindi, while Doshi did not speak or understand Malayalam. Doshi’s experience in Kerala, the most literate state of the country, is similar to what many of us have experienced in different parts of India, even at the most prized tourist hotspots and urban pockets. Well, in India and globally, not everyone understands and speaks one language. However, all of us transact with each other, share resources and are bound by common human sensibilities. In this linguistic diversity that defines our world lies a lot of untapped business opportunities.
IF A IS FOR APPLE, M IS FOR MONEY Just like you teach the alphabet set to young kids, there is a lot of potential in the market to coach young professionals and adults in English and several foreign languages. “It is 46 Entrepreneur + October 2010
often difficult to find the resources to learn multiple languages under one roof. Access to cultural books, dictionaries and other resources that make one familiar with the language is restricted. From my experience, I decided that I wanted to make the learning process simpler and more interesting for students,” says Professor Amrutha Joshi Amdekar, a foreign language translator, interpreter and teacher based out of Mumbai. Joshi runs the Academy of Foreign Languages and Culture in Mumbai and her students can pick any of the 22 foreign languages she offers coaching in. However, Joshi goes a step further and gives free counseling to potential students to help them pick the language that will best align with their careers. “An engineering student can benefit from learning Japanese as he would be likely to work with a manufacturing company that uses Japanese technology somewhere. A travel and tourism student, on the other hand, QUALITY IS THE KEY: would gain from learning Spanish as Manoj Desai, Chairman and MD, CTI he would probably need to interact with Spanish-speaking customers,” explains Joshi. Since 2002, Joshi has coached about 680 students at the Academy. “There are about 80-100 fresh pupils every year,” she says. Joshi’s fees start at Rs.5,000 for learning the first or base level of any language. The duration
opportunities for this could be either six months or one year depending on the frequency of classes that the student chooses. While Joshi’s USP is that she offers a wide plethora of languages, there are other players in the market, who have carved a niche for themselves while offering single language coaching. “Our main customer segment comprises young professionals. After joining the workplace, many young adults come back to add value to their profile by learning a new language,” says Giola Rodrigues, Public Relations Director, Instituto Hispania. This Spanish institute today has six centers across the country and enjoys FIDESCU accreditation. “We cater to professionals from the IT, pharma, travel and tourism and hospitality sector,” says Rodrigues. The institute charges Rs.7,000 for the first level of the language and the prices go down as the students advance to higher levels.
ENGLISH, STILL A ‘FOREIGN LANGUAGE’ If Spanish is the second most-used language in international communication and, therefore, demands a market, we cannot forget that English still remains the primary and mostused language of global communication. And now it is also the language in which Indian companies conduct their operations. “Over the past 10-15 years (following the liberalization of the market), a large number of foreign companies and MNCs have entered the Indian market. The jobs that are available with these companies make it a must for young Indians to be fluent in English. This has created a huge demand for spoken and written English skills in the market, especially in tier II and tier III cities,” says Manoj Desai, Chairman and MD, Corporate Training Institute (CTI). After getting over 15 years experience in sales training and recruitment functions across various industries, Desai stepped out of the corporate world last year to start CTI in Surat. “There are several players in this sector and consumers are paying money too. However, due to various reasons, their needs are not being met. The right course structure needs to be emphasized upon. When Photo©Neha Mithbawkar
we learn to talk in our mother tongue, nobody teaches us tenses to begin with. The stress on grammar before basic reading and conversational skills are acquired often spoils the case,” says Desai. It is evident here that a gap exists in the market for a successful course structure and English coaching methodology. Desai’s institute offers a one year corporate grooming course for graduates and young adults that includes three months of coaching in English communication skills. From his own experience of starting up, Desai estimates that in a tier II city, an entrepreneur can start an English coaching institute with an investment of about Rs.3 lakh (this includes property rental, resource cost and marketing expenses for the first six months), charge an annual fee of Rs.10,000 for a comprehensive, well-structured curriculum and break even in the first year itself even if he manages to get 50 students in the first batch. “The location plays a very important role for any coaching class.
FOCUS ON ASIAN LANGUAGES: Amrutha Joshi Amdekar, foreign languages trainer
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cover story
ENTER THE
DRAGON The biggest market in the world cannot remain closed to Indian entrepreneurs. Pack your bags and get ready to jump across the great wall. By Ankush Chibber
N
eighbor. Mao. Enemy. Bruce Lee. 1962. Noodles. Jackie Chan. Communism. Floods. Population. Jet Li. These are the answers I got on asking a random bunch of people to respond with the first thing they think of when they hear of China. These were average Indians, from all walks of life. Now, ignorant as they may seem to informed readers, the common Indian does really associate China with these things. We know it is a folly, because China is now so much more than that. That ‘much more’ has to do a lot with China’s still rapidly increasing economy, which has now come within touching distance of the economies of the U.S. and Japan. In 2009, when the entire world was still shaking off the worst depression in almost a century, China’s economy grew by 9.1 percent. Her GDP stood at Rs.393 lakh crore, just behind Japan and the U.S. In the same year, it also made Rs.54 lakh crore in exports, just behind the exports made by the entire European Union. These are jaw-dropping figures when you consider that till about 1978, China had a predominantly centrally-planned economic system which was closed to international trade. It was only after a series of systematic reforms were undertaken under Deng Xiaoping that the system turned into a market-oriented economy by the early ’90s. From then on, fuelled by the availability of cheap skilled labor and a determined government, China has rode on to become the economy of this century. To explore the greater Chinese picture, however, is the mandate of other publications. Our job though is about informing and educating our readers, who are mostly entrepreneurs and small businessmen, about opportunities and how they can best tap them. That is what exactly this issue on China will focus on. Further down this issue, we will give you onthe-field information on how you can take your business there and how you can do business with the Chinese. These will be practical and informed steps and tips that entrepreneurs can deploy in order to break through the China wall. But going in uninformed about the factors that make China’s economy and market what they are would be foolhardy.
RISE OF THE CAPITALIST CLASS Beginning in 1978, China undertook a series of reforms akin to Russia’s Perestroika that saw the development of civic infrastructure, 62 Entrepreneur + October 2010
Illustrations© 8]V^iVcnV Hjgejg Infographics© Nirmal Biswas
networks and public transport. Quite naturally, this transformation has changed the standard of living for the average Chinese citizen as well. And that is evident in the changes they have made to their spending and lifestyle patterns since the economic reforms began. Till the late ’80s, shopping in China was boring and uniform. There was a lack of variety in the products available and supplies were perpetually short in state-owned stores. But now, the average urban Chinese consumer is sitting in a market miles away from those times. In 2008, China was home to about 549,000 retail enterprises, each with an average of 15 employees. According to the PRC Ministry of Commerce, China had about 2,400 foreigninvested retail enterprises in the country as of August 2009. And the Chinese love having a choice. In 2009, China’s retail sales hit Rs.81 lakh crore, up 5.5 percent from 2008. This was a year that saw declining sales everywhere else in the world. What this data has made evident is that the better living standards have now created a class of people that has moved on from the basic needs of life to pursuing a better lifestyle. According to available government data, in 2008, China’s urban and rural households spent 37.9 percent and 43.7 percent of their incomes on food, respectively, down from 44.7 percent and 53.4 percent in 1998. Again, between the years 2001 and 2008, the average Chinese household more than doubled its spending on clothing, healthcare, transportation, and telecom services. The Chinese now have extra cash, thanks to the growing incomes. And they are spending
it. In 2009, the per capita disposable income in urban areas reached Rs.1.1 lakh, three times over 1998. In cities like Shanghai, the average per capita disposable income is more than Rs.1.7 lakh. This is a class on the urge to move higher. And entrepreneurs should ride with them.
GET OVER THE SIZE
IN 2009, CHINA’S RETAIL SALES HIT RS.81 LAKH CRORE, UP 5.5 PERCENT FROM 2008. THIS WAS A YEAR THAT SAW DECLINING SALES EVERYWHERE ELSE IN THE WORLD.
Yes, you need to get over the size of China pretty quickly. You also need to understand that the 1.3 billion people are actually groups of people of much smaller populations clubbed together by over-eager economists who see it as a sort of Shangri-La for their clients. These economists don’t tell you that China’s economic development and wealth distribution varies greatly from east to west and from south to north, thanks largely due to a variation in population density. While western China is very thinly populated, eastern China is one of the world’s most densely populated. And thanks to a policy of the Chinese government to develop selected cities on the western coast on the Hong Kong model to lead its economic transformation, there now exists a staggering economic gap between China’s eastern and western regions. According to data from the Chinese government, GDP of the western regions is 58 percent of the national average, far below that of the east, where it is about 85 percent of the national average. Further, according to the Boston Consulting group, in urban cities, incomes have been growing at about 10 percent annually in recent years, while incomes of rural people rose only 1 percent a year. Much
Perceptions of import quality Imported products usually purchased
Sample Size = 353
First Criterion
Reasons for buying imported products
Second Criterion
Third Criterion
Perception of imported and local cars
Fourth Criterion
To read more, grab the October issueEntrepreneur of Entrepreneur + October 2010 63 To Subscribe, visit www.entrepreneurindia.in
Source: Roland Berger China Car Consumer Survey 2009, Focus Groups, Dealer Interviews, Roland Berger analysis
cover story
MADE IN L
ooking to export your product or service to China? The present picture may not be too rosy, but the future certainly looks full of possibilities. Figure this: If China frees her currency, on one hand her export will become costlier and on the other, import will be cheaper. The moment imports become cheaper the normal tendency is to curb imports by non-tariff measures. This is bound to happen in China and Indian exportexport ers would do well to take note of this. “While the change in the demographic profile of China will play a key role, it is not that Indian products will become competicompeti tive all of a sudden. China has started paypay ing attention to social welfare now, which has meant higher wages by as much as 40 percent, enabling higher purchasing power and, at the same time, denting the cost-competitiveness slightly,” says Ajay Sahai, Director General & CEO, Federation of Indian Export Organization. When India reaches the export mark of 28 percent to China, imports are expected to be steady and therefore, at that time, the trade balance would be in India’s favor. Of the Rs.49,500 crore export-related business that we have with China today, close to 70 percent is in iron ore, cotton, iron and steel, alu aluminum and copper and inorganic chemicals. Of this, iron ore exports forms about 50 percent of the total exports to China. Of late the “Made in India” tag has started making a mark as the
68 Entrepreneur + October 2010
The U .N repor . Comtrad t 2050 says that e by India’ s to Ch ina w expor ts ill a for 28 perce ccount nt of total it s e f r o m x p o r t s , up the si x p e cu r r e n t rcent By Pr . a n b ih a nga B or
puzar
i
country steps up its exports in auto compo components, pharmaceuticals and gems & jewelry (about Rs.3,375 crore last year). “There are, however, a number of issues regarding exports to China. While the sys system is difficult, countervailing duties, factor cost advantage, pricing advantage because of economies of scale, and weak currency aggravates the situation. Despite the current trade deficit being on the higher side, we are not perturbed and should see a correction in the next few years,” says a senior official at the Indian Ministry of Commerce. Here’s taking a closer look at the three main sectors which form the backbone of Indian exports to China today:
JUTE, COIR AND COTTON Many exporters in the jute sector have started exporting to China because, barring Bangladesh, no other country exports jute products. The case is similar for coir; with Sri Lanka being the only other country which produces it. This means India has virtual monopoly in these two products. Last year coir got a good response from China. Cotton exports faces tougher competition but that does not dimindimin ish the scope. In labor-intensive sectors like coir, jute and cotton, we can supply a varvar ied number of products. The emphasis on coir products is gaining ground as the world attempts a ban on the polluting plastic products.
PHARMACEUTICALS The future holds much promise for Indian pharmapharma ceuticals and medical equipment manumanu facturers. Today, it is difficult to get a registration for
INDIA a pharma company in China. Even big companies like Ranbaxy found it difficult to supply pharmaceuticals from India to China and had to resort to setting up a unit there. Barring the usual processes, the only other requirement for export to China in this sector is that one needs to have the Drugs and Pharmaceutical License, whether you produce or export. In the case of medical devices, a Free Sales Certificate from the government is needed. Additionally, you have to register with the Chinese authorities for export and this is problematic. “The Chinese market is highlyregulated and under influence from pharma multinationals, making it tough for smaller units to enter the market. It will be worthwhile for Indian companies to move for process patpat ent and then, if possible, move collectively for Chinese registration or get into a venture with a local company in China. For a single SME, it may be difficult to enter the Chinese market,” says Sahai.
AUTO COMPONENTS AND MACHINERY India has the advantage here because car modmod els undergo frequent changes and upgrades. It is not easy for Chinese companies to quickly cater to such changes. “China can propro duce goods in bulk but it is not easy for them to quickly adapt to changes. In the next 10 years, we should be doing auto exports of about Rs.22,500 crore to China. China has a growing middle class with a strong auto market and this will help India,” says Sahai. However, the emphasis has to be on exporting finished goods and not raw materials and intermeinterme diaries. Many Chinese compacompa nies are already inking JVs with
manufacturers in Chennai. “Small machinery is also exported to China. I personally feel that in the next few years, with India becoming the R&D hub of the world, we will be exporting more and more sophisticated machinery to China,” says Sahai. The only other criterion to meet is that the vendor has to be approved by a car manufacturer and you cannot send your components until you have an established contact.
PROCEDURES FOR EXPORTING TO CHINA To export goods from India, you first need to have the Import Export Code (IEC) number which is a permanent number given by the Director General of Foreign Trade (DGFT). For this, you need a PAN and bank account. If you want to avail certain benefits under the current Exim policy, you have to apply for a Registration-CumMembership Certificate (RCMC) of the concerned EPC or at FIEO. “These benefits will include duty-free imports of products meant for exports, duty drawback etc. The RCMC is generally valid for five years. If you want benefits of service and excise duties, you have to register with specific authorities,” says Sahai. Most goods have an excise duty and exemption can be claimed for such duties. This can be done under self-declaration after which goods move from your factory to the ports or ICD. If you want customs clearance to be done at the factory, excise authorities will inspect the goods at the factory, seal the consignments and the goods will move from the factory to the ICD or port. Usually the goods are not inspected after this at the ports, unless the seal has been tampered with. Once the export takes place, you will have to negotiate documents like commercial invoice, certif certificate of shipment and the bill of exchange within 21 days to realize the payment, since most transactions haphap pen between bank to bank.
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success strategies [Tips to stay ahead]
YES!
Banking on Human Capital
YES Bank has created multi-pronged strategies to get the best out of its employees. By Bindi Mehta
'PROFESSIONAL ENTREPRENEURSHIP': D.R. Kurane, President, HCM, YES Bank, (extreme right) with his team 86 Entrepreneur + October 2010
PhotoŠ Neha Mithbawkar
A
mit Shah was an engineer working “The performance metrics for a bank may “We let employees take charge of the ideas with L&T till a few years ago. Today, be advances, deposits, book size and the they conceive. We put the ball in their he heads a unit of five people within like, but when the growth trajectory is court and let the onus rest with them. If YES Bank’s Corporate Development, high, the fuel is undoubtedly its people. our sales guy goes out and acquires a new Innovation and Strategy (CDIS) team and We go to B-schools today and ask students customer, we have devised his profile in enjoys direct mentorship of Rana Kapoor, what their dream jobs are. Before we go such a way that he then becomes wholly the bank’s Founder, Managing Director there, we prepare ourselves well. We know responsible for that relationship. Both and CEO, as the latter overlooks the CDIS exactly which departments of the bank the good and bad of it rest with him. Most team. Shah quit L&T to pursue an MBA can accommodate how many people. If banks segregate the customer acquisition degree and joined a consultancy firm we can give them what they want, we take and relationship management functions thereafter in 2007. them on board through the Y-PEP. We but we have converged both so that the “It was a good job but there was no believe that one of the hallmarks of an customer deals with only one person and kick in it. It is no fun sitting in an ivory entrepreneur is he knows exactly what he the employee feels a sense of ownership,” tower and advising company presidents wants,” says Kurane. he says. This move also helped YES Bank to and CEOs without knowing whether the The program is devised in such a way secure the quality of its end customers. strategy you devised for them that a Y-PEP personnel is will ever see the light of day,” he inducted, groomed and put THE YES BANK HUMAN PYRAMID says. Shah wanted to get closer into a leadership role in the to an industry where there early stages of his career itself. were challenges and opportuIn a span of two years, Shah Top: 48 nities for growth. “I wanted to has recruited four people from Senior: 120 do real work, not just plan and the Y-PEP for his team and Middle: 663 present,” he says. one of them recently moved When YES Bank opened its to Delhi to head a team of doors to new recruits through his own. “The program makes Junior: 936 its flagship YES Professional you understand the nuts and Entrepreneurship Program in bolts of the banking business. February 2008, Shah was one You are put on special assignof the first to apply. He was ments and given the freedom hired within four days and to approach any senior with there has been no looking back your queries. When I joined General: 1,584 since. Shah’s transition from in 2008, there were a lot of a non-banking professional challenges before the bankto someone skilled enough at the job to ing sector due to the global economic THE Y-PEP, A SPECIAL PLAN train juniors and contribute to corporate meltdown. However, I feel that my learnThe bank’s trademark lateral talent innovation makes you stop for a while and ing was immense due to the challenges. acquisition program has a tale of its think, wasn’t that quick? In good times, learning is restricted. I got own. “There was a point when we felt YES Bank has put in place a host of to witness first-hand the execution of a lot the paucity of good people at the middle human resource initiatives and programs of risk management and cost optimization and junior management level. That is that feed what the bank defines as ‘profesprograms,” says Shah. when we did some brainstorming in our sional entrepreneurship.’ “This simply YES MENTOR Delhi office and the Y-PEP was conceived means the ability to take ownership for The main criterion for a person to be a over a midnight coffee session. With the what you are doing on the job. If you YES Mentor is his ability to engage with introduction of this program, we started own a neighborhood grocery store, you people around him. “‘Is he a people’s digging into alumni networks of reputed will never let a bunch of misbehaving person?’ is the question we ask ourselves B-schools and opened our doors to young youngsters enter your shop. However, if before designating anyone as a mentor,” people from non-banking backgrounds you work with a supermarket chain, you says Kurane. Like every other organilike FMCG, engineering, manufacturing may think differently and overlook the zation, YES Bank has formal reporting etc,” says Kapoor. kind of customers walking in. We want structures in place. However, the need The CDIS team partnered with the to erase this difference in attitude,” says for a familiar face in each branch/workHCM team to roll out the initiative across D.R. Kurane, President, Human Capital place who could champion the values of the country. Till date, the bank has Management (HCM), YES Bank. And how the bank locally drove the birth of this recruited over 450 people through Y-PEP. exactly does the bank plan to achieve this?
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THE MALL
108 Entrepreneur + October 2010
PhotoŠNeha Mithbawkar
MECHANIC
hot startup
Have you been to Gurgaon recently? If you have, you must have taken note of the unbelievable number of malls in that city. And many of them empty as empty can be. All is not well with malls in India. By Ankush Chibber
B
ack in the years before the U.S. economy collapsed, taking down with it economies in many parts of the world, malls were the signature a city needed to attest its prosperity. The number of malls in construction went through the roof in those years, with an estimated 200 malls in construction around the middle of the decade across practically every other city. According to Cushman and Wakefield research, 2008’s second quarter saw new mall supply of approximately 2 million sq. ft. across major Indian metropolitan centers vis-à-vis the 6 million sq. ft. anticipated. Sadly, the bottom fell off for these malls somewhere around this time. The lack of cash and the slowdown that followed made most of these malls bite the dust. According to another Cushman and Wakefield report, the average vacancy across malls in major cities of India increased from 10 percent in the first quarter of 2009 to 19 percent in the second quarter due to a slowdown in the uptake of mall space and loss of existing clients. Hardest hit were those mall developers who, in the rashness that typically accompanies gold rushes, ignored the wants of the end user of these malls in search of that quick buck—the retailers. “Not many mall developers made malls to the needs of the retailer in the golden days of the economy,” says Susil Dungarwal, Founder and Chief Mall Mechanic at Beyond Square Feet (BSF), a retail advisory firm that works on the business of bridging the gap between mall developers and retailers. The best malls are the ones that bring together the retailer and developer on one
common platform and in one mutually beneficial relationship. “Typically, the developer says that he has put in X amount of money and he wants Y amount of returns,” he says. “The retailer, on the other hand, says that my margins are W and I cannot afford more rentals than Z.” This wide gap was Dungarwal’s opportunity. He was convinced that a retailer’s requirements and mall development must move in a parallel direction for success in this space. He had to know. Dungarwal had been in both the mall and the new-age retail sector from their infancy. From the original Big Kids Kemp to the first Shoppers Stop, and from India’s first specialty shoe store in The Loft to the first multi-format discount store in the Loot, Dungarwal had seen both sides of the coin for more than two decades to know how to flip it. He had first used it for the Prestige Group’s malls in southern India. “Since I knew the retail side of the malls so well, I got into designing malls from a retailer’s point of view,” he tells us. “This is where I learnt how to work with architects, how to read layouts and plans, how to interpret drawings.” Post a couple of another stints at designing malls for developers, Dungarwal decided to take the entrepreneurial plunge with his skills in mid-2009; around the same time most malls were going belly-up. The mission was simple for BSF, says Dungarwal. He wanted the mall developer to have the best retailer for his mall and the retailer to have the best mall for his products. A little over a year later, BSF is today handholding four projects. “We handle everything
To read more, grab the October issueEntrepreneur of Entrepreneur + October 2010 109 To Subscribe, visit www.entrepreneurindia.in
class rooms [HR Management]
How Can You Spot the Right Talent for Your Startup? Here’s how to find the right talent for your startup—and keep them onboard. By Nirmit Parekh
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“Successful entrepreneurs know that the secret to a great enterprise is to first identify talent.” 106 Entrepreneur + October 2010
ecently, I questioned a successful entrepreneur about the toughest business challenge he has ever faced. Without batting an eyelid, he replied, “Spotting talent.” This is true for entrepreneurs in every professional field, including film production, politics, education, sports and business. It is not uncommon to see entrepreneurs going over their business plan hundreds of times— minutely looking at the business model, their funding requirements and the market. But little time is spent on the human resources aspect. However, successful entrepreneurs know that the secret is to first identify talent, align them with your business vision, and the rest will follow. If you have the right startup team, the business will reap immense benefits. Let us accept that it’s really difficult to identify the right talent, and then remember that it’s really worthwhile to do so. Look for people based on their values, first and foremost. Then look for latent intellectual skills, such as creative thinking, analytical abilities and logic. Thirdly, you’ve got to look for chemistry. At the end of the day, business is a human enterprise. If you cannot see the possibility of chemistry between yourself and the talent, or between the talent and the business, it’s probably not going to be a profitable relationship. Fourthly, you need experienced workers, but this is the least important factor. Spotting talent is the first step in creating a great enterprise. And there is no better individual than you, the entrepreneur, to do this important job. Develop a keen eye to spot talent in others; particularly look for skills you don’t possess yourself. It’s all about finding people who can do a much better job than you can
in every single role. Successful entrepreneurs also make hiring mistakes; but hopefully, your successes will outnumber the failures. If you have been lucky enough to recruit talent, you come to the more difficult part of keeping them engaged and motivated. You have to play the dual roles of coach and mentor. Development through mentoring and training are some of the best ways to reward those who stand out from the crowd. Talented, ambitious young people have high expectations, both for themselves and for their teams. Maximize this attitude and let their talent inspire others to work to the same level. Invest in people, in their training and help build their self-esteem as well as their skills. Communicate regularly with the team; make sure everyone knows the goals, objectives and challenges and feels that they have a part to play. Use their positive energy to boost the overall morale of the company. Talented individuals thrive on challenge. It is a well-known fact that employees often move on because their employer wasn’t doing enough to help them develop professionally, not because they got itchy feet. Whether it’s working on something new, taking on more responsibility, or mentoring new recruits, pushing them to the next level is the key to retention. Help your employees think and act like entrepreneurs—to take responsibility for what they do and not set boundaries for what they can achieve. Value your employees and, in turn, they will value how far you’ve brought them. NIRMIT PAREKH is the Managing Director and CEO of 3P Consultants/Penrhyn International.
how to [… do just about anything]
Shut Down a Private Limited Company We hope you never have to. But if you do, then do it right. By Ankush Chibber
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hutting down your company can happen in basically three ways—you either shutdown the company as defunct, you sell it or you wind up and dissolve the company. The last option is the subject of a separate piece, while the first option is what majority of company owners would be going for. Given below is how you can shut down a private limited company by declaring it defunct in an application to the Registrar of Companies (ROC).
RESOLUTION The board of the company has to make a resolution to make an application to the ROC for declaring the company as defunct. Two directors of the company must sign this application.
NO ASSETS OR LIABILITIES
OTHERS
Two directors of the company have to sign an affidavit, which is notarized, that verifies that the company did some business for a period up to date and then discontinued its operations, and has no assets or liabilities.
Companies which discontinued their operations, after carrying the same for some period, should file audited financial statement for the period up to which they carried on the business provided that period is of one accounting year or more. Also, if there is any unsecured loan, then a waiver letter needs to be submitted.
INDEMNITY Two directors have to sign an indemnity bond, that is notarized, which says that should there be any liabilities on the company, such liabilities will be met in full by the applicants even after the name of the company is struck off the register of companies.
FINANCIALS The company will have to file the financial statement for the latest year prepared up to a period, which ended one month preceding the date of application. This will be accompanied with a declaration that the statement of accounts submitted gives a true and fair view of the company’s financial position. Illustration© Chaitanya Surpur
THE FINAL NAIL If the registrar is satisfied with the application under the current laws, then it will proceed towards striking the name of the company and declaring it as defunct and thereafter publish a notice in this regard in the official gazette. The entire process of closing a company can change at least once each year. It is best to keep a track of the Ministry of Corporate Affairs website to keep yourself abreast of all the latest rules. The entire process takes about two months and can cost you about Rs.25,000, including the fees and miscellaneous charges.
To read more, grab the October issueEntrepreneur of Entrepreneur + October 2010 115 To Subscribe, visit www.entrepreneurindia.in
back+stage
130 Entrepreneur + October 2010
IllustrationŠ Chaitanya Surpur