Remodelling the manufacturing business for msmes in india 29july17 cii anand

CII GUJARAT FUTURE READY SERIES

Remodelling the Manufacturing Business for MSMEs in India

M A N I S H KOT H A R I , M A N AG I N G D I R EC TO R | S TAT E C O U NC I L M E M B E R R H I N O M A C H I N ES P V T LT D | C I I - G UJA R AT

1500-1800 hrs | 29 July 2017, Saturday | Elecon Hall, Vitthal Udyognagar Industries Association, Anand

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The MSME Manufacturing Sector The MSME Contribution • More than 6000 products traditional to hi-tech • 38% Contribution to the GDP in manufacturing • 40 to 45% Contribution to the GDP in Exports • Sustained Annual Growth Rate – 10 % 2

Why Remodelling?

Unlimited Opportunities – Limited Resources Unlimited Opportunities • Made in India & Make in India push • Automobile Hub – pushing metal industry, electronics • Increasing Domestic Demand from Defence, Rail, Road, Infrastructure

Limited Resources • • • •

Adequate Trained Workforce Affordable Technology Finance accessibility Handling complex documentation 3

Understanding the Models

Model 1: MSME's sharing business The Working • Similar Industries of Small Capacities • One industry takes the order, distributes the same with other manufacturers of similar product

Advantage • Meets the volume and time demand without having a large capacity

Typical Examples • Coimbatore Pump Mfg, Agra Leather Mfg, Jalandhar Tools & Sports, Howrah Foundries…..

Challenges • Few of the industries grow bigger, and start competing with each other • Each Industry has invested in each activity, duplicating machinery & human capital, looses competitiveness in global scenario

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Understanding the Models

Model 2: Ancillary Manufacturing Cluster The Working • One main or few large industries building up vendors and suppliers and creating a cluster

Advantage • Each workshop is a profit centre, better competitiveness, better operational efficiencies

Typical Examples • Pune, Sanand, V U Nagar, Tatanagar, Vadodara, Pithampur… (a more successful model)

Challenges • If the large industries get limited to 1 or 2, the cluster goes up and down with them • Limited industry sector and client is always a risk for small businesses

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Understanding the Models

Model 3: MSME Cluster - Vendor Centric Approach The Working • Similar to Model 2, but with MSME’s creating business opportunities • Similar Industries and Similar Minds come together to grow together

Advantage • Larger spread of industry sectors and client base, reduced business risk • Better Competiveness and efficiencies with business owners working together

Typical Examples • V U Nagar, Rajkot, Pune…

Challenges • Trust and Loyalty are key factors, and are very much related to the local culture • Needs clarity in business and money sharing

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Understanding the Models

Model 4: Dissimilar Industries - Similar Minds The Working • A new growing concept of connecting MSME business owners from distinctly different industries, joining hands to leverage each others businesses and/or create new businesses together

Advantage • Brings synergy of MSME business owners, experiences across sectors, and expertise of varied industries • Allows horizontal growth of business, creating white spaces and creating new businesses • Minimizes Risk of growing vertically in one sector and yet grow turnover & sustainability.

Typical Examples • Rhino’s working with Meemansa (Garment mfg), Ecolibrium (Internet of Things), SkillSonics (Skill Development), Tiino Automation (Weighing & Electronics), Avant Garde Innovation ™(Wind Turbine), Composite Solutions (Business Management)….

Challenges • Limited knowledge of the other partners skillset & sector • Trust & Loyalty in partnership

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Why Model 4 for MSME’s!

Establishment Period (5 to 7 years) • • • •

Establish Product/Process Create Customer Base Generate financial stability Put together at Team

Growth & Stabilisation (Year 7 to Year 15) • Finding the Right Market • Building Assets – Man, Machine & Finance (we feel all is set)

What Next???? – the Dilemma starts • Vertical or Horizontal Growth?

• Retention of Team?

• Tackling New Entrants & Competition?

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Concluding Note for MSME’s Leveraging your Strengths Sharing increases your Strength • Your income with your employees, workers & partners • Your knowledge with your customer and supplier • Your resources & network with your stake holders

Join & Complement Businesses • The faster way to grow is to align with an existing business and leverage your strength • Create a market as 1 + 1 = 11 • Like minded MSME’s of dis-similar businesses are stronger than dissimilar thinking and similar business partnerships 9

Summary of the partnerships Fondarc – foundation for Rhino’s growth Fata – added product range, access to corporates

MSME Branding Govt Policies Social Need

ACEF Sustenance Quality Improvement Sustainability Joy of Giving

Ecolibrium Recurring Income Larger Network Value addition

Leverage Soft Skills & Training

Spread Risk Leverage Finance & Management Resources

Thank You 10