|Home Tech | Remembrance | Home Solutions | Home Base | Snail Mail | Reminder|
G&B’s First Overseas Branch Established at Sharjah
Godrej & Boyce Mfg. Co. Ltd. (G&B) has a vast portfolio of products and, over a number of years, has been catering to overseas clients on a supply against demand fashion. This set-up graduated into independent companies from different countries across the globe importing and distributing our products in their respective local markets as and when the need arose. It’s needless to mention that if an organisation needs to survive in this fiercely competitive world, it has to venture out into global markets. The senior management team at G&B was already working on a plan to achieve an exponential growth in their export figures with a horizontal growth into international markets.
A strategy of having a direct presence in the international markets was being formulated. Any exercise of start-up operation for an international presence dictated that it ought to be conducted in the markets nearer to the home country (for logistic purposes) and also the base ought to be in the region which is the largest contributor to our export targets. The Middle East region was thus chosen on these parameters and, by default, the United Arab Emirates (UAE) being the hub of the Middle East, was selected as an ideal base for our pilot overseas operation.
Pushkar Gokhale (Senior Manager ?/i> International Business and the current Branch Head in Sharjah) was pegged as the person to work on this exercise. Pushkar has more than 10 years experience in international business and an extensive exposure to 24 countries across the globe. After a lot of groundwork, Percy E. Fouzdar (Senior General Manager [Corporate Affairs] and Company Secretary) and Pushkar were deputed to visit UAE with the objective of conducting a study in terms of the nature of the set-up, location, employee housing, conveyance and various other modalities, related formalities, etc.
The UAE, landlocked on three sides by the Kingdom of Saudi Arabia, the Sultanate of Oman and the Arabian Sea, is actually a federation of seven emirates, namely Dubai, Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. They were independently ruled by their respective Sheikhs and were small enough to invite an invasion and takeover. The current President of the federation and ruler of the largest emirate of Abu Dhabi, Sheikh Zayed Bin Nahyan, a visionary, met the Sheikhs of the six other emirates and decided to forge an alliance within the seven emirates to form the UAE. Abu Dhabi is the biggest oil producer in the federation, which accounts for a major portion of its economy. Dubai, on the other hand, has oil contributing only 10 per cent to its economy. The other emirates do not have much of an oil output. That’s why the emirate of Dubai has to depend on Tourism, Industry and Commerce for its survival and progress. Much of the commerce and trade in the UAE is carried out in the emirates of Abu Dhabi, Dubai and Sharjah. The UAE has since then made its own mark in the world rising from the bleakness of the desert in 1940 to the preferred tourist destination and the biggest financial hub of the Middle East. The State-run Emirates Airlines has recently placed the largest order for commercial passenger jets in aviation history with Boeing and Airbus. This in the recession-hit airline industry worldwide is quite an achievement.
Temperatures here vary from a cool 18 degrees centigrade in winter to a scorching 46 degrees in summer. All construction sites and road construction workers are given the day off if temperatures soar above 44 degrees. The vehicular traffic is very organised and speeds range from 40 kmph. to 70 kmph. in the city to 120 kmph. on the inter-city highways. All vehicles are left-hand drives due to the traffic direction, the opposite to that of India. (Currency: 1 Arab Emirate Dirham [AED] or Dirham = Indian Rupees [Rs.] 12.81). Vehicle prices range from AED 35,000 for a basic no-frills-attached car to AED 9,50,000 for the topmost range. Securing a driving licence in this country is one of the costliest exercises one conducts with expenses in the range of AED 3,000 to 10,000. Expatriates are allowed to own a car but not a house except in some developments. They are supposed to stay in rental accommodation as per their budgets. Sharjah provides the most economical accommodation area among the three emirates and rentals range from AED 10,000 per annum to AED 22,000 per annum for a single Bedroom, Hall, Kitchen (BHK), AED 14,000 to AED 25,000 for a two BHK and AED 19,000 to AED 30,000 for a three BHK onwards till five BHK and then villas as per budgets and taste. Rents in Dubai are about 160 per cent more than those of Sharjah and in Abu Dhabi they are about 200 per cent more. With a few years of rent, we Indians can safely buy our own property in some prime locations in India. But it’s the largest industry here.
On tourist attractions, the Burj Al Arab (the world’s only seven star hotel built on its own island) is already the emblem of Dubai. The UAE will also soon be home to the Burj ?the tallest building in the world, the Dubai Mall ?the largest shopping mall in the world, the largest entertainment city in the world and the largest festival city in the world. It is already home to the following projects, either up or under way, having the USP of being seen by the naked eye from outer space: The Jebel Ali Port (the largest man-made port in the world), the Twin Palm Islands (the largest man-made islands in the world) in the form of date palms, with villas, resorts, bridges and undersea causeways on all the fronds and main trunk of the tree, the World (a development of islands out at sea in the shape of the continents of the world). Looks like if you need to get your project approved by the Dubai municipality, it would have to have the distinction of being either the largest in the world or visible from outer space.
One interesting fact in this part of the world is that each of the countries of the Middle East use a typical title to address their monarch; in the UAE and Qatar the rulers are addressed as “HH the Sheikh? in Saudi Arabia and Bahrain they are “HH the King? in Kuwait it is “HH the Emir?and in Oman, “HH the Sultan?
The breed of successful Indian businessmen, who came to the UAE decades ago, saw the opportunity, and made a name for themselves. The Sindhi community leads the flock by far, followed by the Keralite community, which is not much behind. All of them started small and it’s really a rags-to-riches story in their case. The money power they have is evident from the fact that when a UAE developer decided to start a real estate development project with the support of the government, where any expatriate could own his piece of land, villa or luxury apartment on a 99-year lease along with a 99-year free residential visa for his entire family, it was sold out in hours, a majority of the buyers being Indians. It should be noted that the prices for property here started from AED 5,00,000 for a 1 Bedroom and the initial phase had 2,200 apartments. This initiative being successful, the developer has gone on to an 8,888 apartment-complex with the same facilities and, in addition, has provided visa facilities.
All companies which are an international force to be reckoned with are either present in the UAE with direct operations or are marketing their products aggressively here. The UAE government is building entire infrastructure cities focused on each of the important sectors of commerce and thus we have the Dubai Internet city, the Dubai Media city, the Dubai Education city, the Dubai Health city, and so on where companies in that industry can open offices and operate freely.
In the Middle East there are two ways for a principal to start up a trading/manufacturing operation i.e. directly (where the local government legally sponsors your operation) or indirectly (where an independent local citizen legally sponsors your operation). Due to some technicalities, the former is preferred by serious companies looking at long-term objectives. For directly starting up a business, you have to establish your company and register it in the Free Trade Zones (like the SEEPZ at Andheri, Mumbai). The local government will be your sponsor and will not interfere in your day-to-day transactions giving you total freedom to carry on your business. It helps by issuing visas, providing administrative support, offices, warehouse and all other necessary infrastructure. There are principally five Free Trade Zones in and around the Dubai emirate namely the Jebel Ali, the Dubai Airport, the Sharjah Airport, the Hamariya and the Ajman.
We in Godrej chose the SAIF (Sharjah Airport International Free) Zone for economic reasons. This being our first venture we wanted to tread carefully before investing in a full-fledged operation.
Our businesses, namely the Furniture and Interiors Group (FIG), the Security Equipment Division (SED), the Storage Solutions Group (SSG), Prima and Locks had decided to share the costs of this venture. At that time the total export turnover from this region for the above businesses for the period April 2001 to March 2002 (prior to our setting up this office) was close to Rs. 285 lakhs. All the businesses looked forward to an ambitious growth with their own personnel in the region. Material Handling Equipment (MHE) Division joined the set-up at a later point this year, since they already had some prior commitments with one of their dealers here.
Pushkar and Fouzdar made a few visits to finalise the office space, etc. and on 4 July, 2002, Pushkar and I landed in Dubai with hopes, expectations and responsibilities on our shoulders. I still remember the parting words of P.D. Lam, President and Executive Director, and all the Business Heads: We want this venture to succeed, come what may, your foremost virtue for the operation should be integrity and dedication. We really got into the thick of it immediately after settling down. Staying at a hotel for two weeks, we looked for permanent accommodation in Sharjah, as it was the closest to the SAIF Zone. Being colleagues now, married but forced bachelors, and understanding the mechanics of long hours combined with the Small Office Home Office (SOHO) concept, we decided to share a spacious two bedroom for the first few months till we could settle down. We liked a beautiful place overlooking the Sharjah corniche (artificial man-made canal / lagoon) and moved in. We started getting in touch with the existing dealers of the region, but due to lack of awareness among the dealers that such a Branch was supposed to be started by G&B, we faced a lot of opposition; mainly because they assumed that we had set up here to directly conduct sales and would be eliminating them soon. Some even sent letters to P.D. Lam to seek his authorisation of our operation. Finally, after a lot of mail and phone calls, we managed to win their confidence. That done, we then got down to collating our data, what had happened so far and what was to be our action plan. We decided that we had to at least double the targets of the previous year. It was definitely possible, if we set our minds to it.
By March 2003 we had met our objective and achieved a 600 lakhs DS (Desired Sales), a 122 per cent growth over the 270 lakh figure of 2001-2002. This achievement got us a lot of kudos from the export teams of the various businesses. This also meant that we had to be ready for higher responsibilities ahead and they came in the form of our target of 2,004 lakhs for the financial year 2003-2004. This was almost a seven times jump over the figure achieved in 2001-2002 and a 234 per cent incremental growth over our 2002-2003 figures. Of course, this year’s figure incorporates the MHE Division’s targets as well.
This is a stiff target given the fact that we are competing against a host of major suppliers all across the globe having a strong direct presence in the region on price, brand equity as well as quality. We have the disadvantage of a situation where we are yet to prove our quality in a market where products from India and the subcontinent are considered to be in the lower rungs among world players and just cannot ask for a premium over products from countries in the European Union and the USA. Our associate companies, too, operate in the same territory and it’s very difficult to differentiate among our products due to similar looks. Godrej & Khimji, a joint venture between G&B and Khimji Ramdas, Oman, which started manufacturing steel furniture over two years ago, has its manufacturing plant in Sohar, Oman.
The modalities on the way forward were discussed in detail and it was realised that the team strength had to be increased to meet this challenge. The request was presented and we were sanctioned additional resources taking our team strength from two to eight in a short while. The sales personnel who joined us in a staggered manner over the period May 2003 to September 2003 are:
Our geographical area is not restricted due to the fact that a lot of re-export takes place through Dubai. Our direct territories are UAE, Oman, Kuwait, Yemen, KSA, Qatar, Bahrain and Yemen. Our extended territories cover supplies to countries like Egypt, Lebanon, Syria, Iran, Jordan, Afghanistan and countries in the Confederation of Independent States (CIS) and North Africa.
In October 2003, for the first time in its distribution existence in the Middle East, G&B participated in the exclusive INDEX exhibition at the World Trade Centre, Dubai. The presence of P.D. Lam, Anil Sain Mathur (Chief Operating Officer, FIG) and Dara E. Byramjee (Vice President, SED), who joined us along with their respective export teams, gave us a real boost. We can safely say that the participation was a great success as we received many enquiries from the region as well as re-export enquiries into Africa. During the course of our operations, we also had short visits from Jamshyd Godrej and Adi Godrej, who were given a brief overview of our operations. They were already updated about our targets and figures.
We also have quite a number of firsts to our credit. During our very first year of operations here, we managed to secure the first ever export orders for Vertical Carousels and Mobile Shelving for SSG, Godrej Ball Slides for FIG, 3 Ton LPG Forklift in the UAE for MHE, 3 Ton Battery operated Forklift for MHE, Systems Furniture for FIG, Note counting machines for SED, Forklift order from the emirate of Ras Al Khaimah for MHE, Forklift order from the emirate of Abu Dhabi for MHE, etc. Additionally, we have achieved breakthroughs with the National Guard in Saudi Arabia, the National Guards in Kuwait with a host of prestigious organisations/companies in the region. It is noteworthy to mention that the orders secured for our MHE products were primarily due to the efforts put in by our colleague K. Balakrishna (fondly known as Bala), who was based here with our dealers, M/s. Zayani, for a year. Not having a driving licence, he would walk around the industrial areas in the “hot?40 degree temperatures, making “cold?calls and these efforts are today bearing fruit gradually.
Employees are cared for in the usual Godrej style and I am witness to the fact, when I had a major car mishap in August and flew down to India and back, courtesy: G&B. My dormant Paramount Healthcare Management insurance policy was not only revived in time, but even managed a cashless transaction during my admission at the Hinduja Hospital. This was also thanks to the initiative of Pushkar, who appraised and sought the timely intervention of P.D. Lam, A.N. Choksey, Vice President (Finance and Commercial), and Jyoti Sarkhot, Deputy Manager, Office Consumer Products (Human Resources).
The scale of success of the UAE operation has prompted an initiative to start up the Sri Lankan and East African operations this year to cater to the vast, untapped market which we can still spread and cater to, and achieve the internationalisation of Godrej.
Here’s looking forward to this happening and more of our colleagues getting involved to make this possible.