Monday, Oct 23, 2017
Industry & Trade | Asia-Pacific | India

Kirloskar Brothers Ltd

Engineering leader advocates industrial, environmental change


2 years ago

Sanjay Kirloskar, Chairman and Managing Director of Kirloskar Brothers Ltd
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Sanjay Kirloskar

Chairman & MD of Kirloskar Brothers Ltd

A world-class pump manufacturer with internationally sought-after expertise in engineering and manufacture of fluid management systems has also become an impressive example of women’s empowerment in India and the push for greener industry. Sanjay Kirloskar, Chairman and Managing Director of Kirloskar Brothers Ltd explains the company’s view on how best both it and India can progress further. 

 

Kirloskar has been very active in the field of women’s empowerment. What has been the reason behind setting up a plant in Tamil Nadu that is entirely ran by women?

I believe that in our country we need to give more opportunities to women, which is why we have taken the decision to set up a plant entirely managed and operated by women. In India we have very highly qualified women who get their degrees, then get married and are not allowed to work, because they get into the family environment.

When we were to set up a new plant for very small pumps, we wanted to make a difference in the lives of rural women, because all our plants are in rural areas. We decided that since the product was rather small and it was made of aluminum and very small parts of steel and cast iron, we could try this out. We were not only happy with the results – i.e. productivity per person was the highest – but the quality was also the highest. This has made a big impact in that area. Girls who would otherwise have gotten married are now looked upon as breadwinners. A total perception change was the result. In the family and the village, these women are valued now because they can do jobs that a man can do. If they can assemble a pump, they can help someone in the village who has a pump for his farm. We told them that if they wanted a higher qualification, we could help them to get one. We have also ensured that after marriage and having children, they could come back to the plant. We really want to make this model a success and replicate it.

Women account for approximately 50% of our population. They are an asset that we do not use to its fullest potential. We are not the first employers of women, but probably the only one that has a plant entirely run by women; right from the person in charge to the people on the line and managers at the shop floor, everyone is a woman. I am very happy with the results.

In the next plant, we had slightly bigger pumps and we thought of applying the same principle. Eventually we ended up with 35% women in that plant. I believe that we have to use all available assets and if that can change society for the better, we should go for it. You get more equitable as well. Finally, women are the bedrock of every society.

 

Given that Kirloskar puts a lot of emphasis on “Green Industrialization”, how do you interpret COP21 and what are in your opinion the far-reaching effects for Indian industry in the short and medium term?

In our company we implemented an energy conservation competition to reduce our energy consumption in 1989, even though it was more as a cost-reduction exercise. At the same time, I was very lucky because Jamshyd Godrej asked me to lead the Water Management section of the CII-Sohrabji Godrej Green Business Center, where I learnt a lot about what was happening around the world. This was between 2003 and 2005. With this experience, we got a sense of what we needed to do as industrial companies.

By then, we also had acquired a British company that we wanted to bring back into one of the country’s biggest markets, which is the water sector. Britain, unlike India, has private sector water companies. We looked at designing products which would not only be highly efficient, but also efficient for a long period of time. Pumps lose 1-1.5% points of efficiency every year. Through design, we were able to ensure that the loss of efficiency was significantly lower than what would normally be the case. We have been rewarded for this by gaining a large market share in the UK water market.

Our office at Kirloskar is an IGBC LEED “Platinum” rated Green building. I have been able to build it thanks to what I learnt from CII-Sohrabji Godrej Green Business Center. We also are a company where close to 40% of the energy we use is generated by our own renewable sources like windmills and solar. It is our intention to increase this.

As a manufacturer, my concern is that the world is starting to move in a certain way. If you look at the history of the trade or environment rounds, a lot of countries have made promises that they don’t keep. But they expect others to keep theirs. I think that Indian industry needs to be very careful about where it is going. We have to do the right things, which I believe are the right things for the environment, and start meeting international standards. If not, we might lose out on opportunities and even be denied business or trade with certain countries. In light of Make in India, we will have to look at how to decrease our emissions. This won’t be easy. But as the cliché goes, we have to leave a better place for our children. We are all responsible for this one Earth we have.

 

Perhaps India has an opportunity to show the world that it is serious about decreasing its emissions and improve its image in this respect?

Yes, we can definitely show this, although as individuals or a nation, we are not the biggest polluters on Earth. I think that the entire climate change discussion, which puts a lot of responsibility on the developing world, blaming it for its emissions, is not entirely fair. This being said, I know that there was an age in this town when there was no smog and this is definitely a problem that we need to solve today.

 

What would be your message to an American investor looking at India?

I would like to quote an American who said in the 60s that if you invest in India, you are a fool, but you are a bigger fool if you haven’t invested in India. Many American companies have been here for decades and made good profits. There may still be issues about the ease of doing business, but from a business perspective, you cannot ignore India today. The country is growing and going through a transformation. Indian companies are also growing bigger regardless of what everyone complains about.

 

Given India’s impressive growth figures and China’s economic slowdown, do you believe that the country is well positioned to replace China as global growth engine, and taking into account the vast disparities between the rich and poor in this country, is India doing the right thing to build a more inclusive, equitable and just society?

I believe that India can be one of the growth engines of the world, but I would not say it would replace China. Each country has its own strengths and weaknesses. With its population of 1.3 billion, there is a great disparity in wealth. Slowly, but surely however, this will change. There is a rising middle class and millions of people are being pulled out of poverty. India is the world’s largest democracy and an open society. People have opportunities and they are allowed to make the best of them. This will ensure that India will keep growing in astounding ways.

Indians are very entrepreneurial by nature. Many are already making a difference in society. Inclusive growth is critical for people to feel ownership in society. When people feel this ownership, everyone works together to ensure the other person’s success. This kind of inclusiveness stimulates people to take new steps and go beyond.

On whether India can continue to grow at this rate, I feel it will be with ups and downs. One cannot make a prediction about future and certainly not about specific growth figures. I nevertheless hope that India will continue to grow at a very high rate.

When we look back in history there are the so-called golden periods. I don’t know what this means because I don’t think everyone was rich at that time; society as a rule has different kinds of people. I think that a golden age means that we are able to build something that all of us can be proud of, with people able to live in a safe, secure and healthy environment. This is what I hope for India.

 

What is your opinion on PM Modi’s reform program and would you agree with his critics who say that given the mandate he was given, he is not doing or going fast enough? Investment guru Jim Rogers for example pulled out of India saying that one can’t invest on hope alone.

What I like about our Prime Minister is that he has a vision. He wants to make change for the better. Someone at the top has to have a vision and carry through with it. During the first 15 to 30 years of our independence, the state grew bigger and bigger. There was a mindset that things could only be done in a certain way and it takes time for people to adapt to a newer approach. Our Prime Minister has created hope outlining a roadmap that the country is going to be on. Things cannot change immediately anywhere, especially not in India that has a history of thousands of years.

What I see on the ground is that in different areas reforms are taking place for the betterment of society as a whole. It is going to be a step-by-step approach. All of us have to ensure that the right things are being done. The Prime Minister is creating an environment that is business friendly and opening up our markets more than ever before, drawing in a lot of investment from around the world. India is finally becoming a part of the global community. People need to understand that unlike any other country, this is a unique place. Our country has gone through a lot of changes in the last 200 years. Therefore our leaders will have to work in a certain way to ensure that people continue to support them down this reform path. So there is an understanding that India needs to change, that India needs to be welcoming foreign investment and that there needs to be change in the way we do a lot of things. While India is full of people who are very traditional in their approach, we also change quickly when it is needed. Now here is a man also who says that India can be moving again. He laid out his vision. You can indeed not live on hope alone, but hope is a prerequisite for things to change. I believe they are happening for the better.

 

PM Modi gathered 50,000 people in one place in Europe and in the US during his trips, quite an accomplishment and also a statement that India is back on the global map.

I think that has been his biggest mark. Today you notice that everyone wants to meet our Prime Minister. He has made a huge impact as far as perception is concerned. But it is unfair to say that everything will change overnight. It is not going to happen.

 

What is your opinion on the Make in India initiative, its significance for the country, and would you agree with the late President Kalam when he warned about India becoming the low-cost assembly line of the world?

I like that the emphasis has been placed on manufacturing in India. As a manufacturer, I feel that the government of India has been unfair to manufacturing companies over time. Today we talk about the IT industry and how well it has performed, but they did not have to pay income tax for 20 years. If the government did this for the manufacturing industry, it would boom. As a manufacturer and contributor to income taxes and as someone who lives in this country, I believe that taxes should be collected. But if you want a certain area to be a bigger part of our economy, then I believe it is important to acknowledge what has been done for other sectors and implement it the same way. India needs a lot of jobs and manufacturing can create a lot of jobs. The trick is how to skill the people and how to respond to global trends. In the US there has been a lot of on-shoring recently, with jobs coming back from China.

The big challenge is to ensure that what we decide to make in India stays in India. Fortunately for us, we have a huge market. The manufacturing industry is going through huge change and we have to skill people with the tools of the future, not with the tools of the past. At Kirloskar in our 105-year-old factory, we have a 3D printer. We also have some of the latest machinery. This gives me the ability to respond very quickly to the needs of my customers.

Indian companies are going to face a tough challenge in the near future and the government will need to understand that that manufacturing may not create as many jobs as it did in the past because of technological changes. This being said, we need to create jobs and we need to encourage manufacturing in this country. And whether anyone likes it or not, India will be a manufacturing hub going forward.

 

What do you consider the main opportunities for American companies and do you believe that the concept of reverse innovation presents an opportunity for India?

GE has a plant in Pune, which they call a multi-modal plant. This plant is capable of making anything that GE produces around the world. I think this has been very smart investment because even if the markets or customer requirements might move in a certain way, that plant will be able to pull off any GE product that is needed. GE also has a huge technology center in Bangalore, where some of the brightest Indian minds are employed.

The issue at hand is how to do things differently at low cost. India, with its huge entrepreneurial spirit has an enormous advantage in this sense. Foreign companies that innovate here will be able to do so at a very low cost. This is what frugal innovation is all about. The way Mr Tata introduced the Nano with so many innovations and bringing down the cost was an excellent example of this. I think that this can be applied to a lot of products.

Intellectual property is very well protected in India. This stands in stark contrast with some other countries. I am aware of many companies that have lost technology because of localizing, because there was no protection. I am talking about China, where products are being made and immediately 10 copycats pop up. I do not think that any foreign company has had this kind of issue in India.

 

Please tell us about how Kirloskar has transformed from a small bicycle shop into one of India’s most prominent private enterprises.

My great grandfather wanted to be an artist, to draw and paint. There was a huge issue in the family 130 years ago, because this was not a good profession for young Brahmin boys. They were to be doctors’, teachers or government servants. Finally his eldest brother convinced their father that he would look after the youngest child. So he went to Bombay to a new institution called J.J. School of Arts. On the first day he found out that he was colorblind. Therefore he obviously couldn’t be an artist. So he went into mechanical drawing. In those days, even after getting your degree or diploma, you couldn’t find a job anywhere. So he became a teacher in that institution. He enjoyed reading the magazines that came to the library, like Scientific American, Foundry, and things like that. He saw ads of different companies. His eldest brother had by now settled down in Belgaum a small town in Bombay Presidency. So he got an agency. The name of the company even now is Kirloskar Brothers Ltd. because those two brothers started it. So he got an agency for bicycles and windmills; British bicycles and American windmills. He continued his job at the institution. And one day, when he thought he was supposed to get a promotion, someone else landed it. Upset by this, he quit his job altogether and joined his brother in the partnership firm. At that time, it was a bicycle shop. Lots of people would come to him to repair their bicycles, take lessons for riding a bicycle, and he would charge quite a bit in those days. Only rich people could afford bicycles. People around soon realized that he could fix things. ‘You are fixing bicycles, why don’t you fix our agricultural implements?’ He would fix those for them as well.

And then he realized that he could make something better and that is how we got into manufacturing in 1901. This year’s annual report says “Making in India since 1901”. That kind of work got him into making tools for farmers, as at that time the population of rural India was 80% of the total population. He later entered into centrifugal pumps, which today is this company’s main line.

Over a period of time, he and his eldest son, my grandfather, developed a large number of products. These were on the lines of engines (petrol, diesel and kerosene), machine tools, electric motors, and air-compressors. Slowly those companies were spun out and businesses were divested from this company. Today, the company is mainly into manufacturing of fluid handling products, pumps, hydel (hydroelectric) and steam Turbines and Valves.

 

Are you also planning to diversify into construction?

No. We will be focusing on mechanical equipment, rotating ones, to be more specific.

 

Since you took the reins of Kirloskar Brothers Ltd. in 1985, are you satisfied with what you have been able to accomplish?

I became Managing Director in 1985 and Chairman in 1998. We were one of the first groups to become international. My grandfather started exporting in 1935, but strangely enough, after 1945, the country started looking inwards. By 1955, Kirloskar was exporting engines to Western Europe. At that time there were all kinds of controls and rationing of goods. He requested export licenses but instead the government sent him import licenses. They couldn’t believe that he was exporting, not importing. They told him that perhaps he did not understand what he was doing.

Finally he managed to get the right licenses to export products out of India. In the 1960s, he started acquiring businesses abroad. It was always his dream for Kirloskar to be a global organization. And this is exactly what has happened in the last decade. While we are headquartered in Pune, over 40% of our manufacturing turnover is outside India. We have a plant in the US (Atlanta), one in the UK, two in the Netherlands, and in South Africa and Thailand. As a company we have become more global. I think we currently have 2% global market share in our line of business and have enough scope to grow and become an even larger organization.

Back in the earlier days, most companies diversified in order to grow. They had to get licenses that established their capacity and they were not allowed to grow beyond this. So people had to start new businesses. In 1991, India started opening up and at Kirloskar we realized that we needed to stick to our core strengths and grow in those areas.

As to whether I am satisfied. Not yet! I am happy, and hopefully my grandfather and father would be proud of me.



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