Friday, August 31, 2012

BUSINESS BEYOND PROFITS!

As the world emerges from global recession, businesses should focus on restoring their profitability. But only short-sighted businesses do so at the expense of the pursuit of a broader purpose, writes Amit Bhatia, scion of the l. N. Mittal group, founder of Mittal Champions Trust and Swordfish Investments

The past few years have seen growth rates drop everywhere – even in emerging economies like India and China. That process has not only affected nations and businesses but also lives of ordinary people. As the focus of governments, businesses and the ordinary man turned to survival, many personal aspirations were put on hold and major infrastructure projects, such as the construction of new roads and hospitals were shelved or not built as quickly as they might otherwise have been.

As the world starts to readjust to the new normal of a period of prolonged economic austerity, it might be tempting for companies to reign in programmes that make no discernable contribution to the bottom line as they come under pressure from investors to increase profitability. But now is exactly the time when companies must stay true to the ambitions they laid out in more prosperous times and remember that, over the long term, companies with a purpose beyond profitability will enjoy the greatest success.

There are many who would argue that by simply producing its product, being profitable and providing jobs, a business is already making a substantial contribution to an economy. But over the years the accepted view has become more sophisticated. Business, it is often argued, is in a unique position to help make a broader contribution. As part of its license to operate, it should act responsibly at all times and seek to actively engage with the communities in which it is present. This, advocates of corporate responsibility claim, will generate long-term and sustainable advantages for the business in terms of growth and profitability.

I agree. Of course profitability is crucial. A business has no future if it cannot be profitable, something that will have severe consequences for all stakeholders. But equally businesses must look beyond profit, and also pay attention to the quality of life, in the broadest sense, of the communities in which they work.

I have actually always been very impressed by the emphasis leading Indian companies place on Corporate Social Responsibility. The winner of the Corporate Responsibility Award at the Financial Times/ArcelorMittal inaugural Boldness in Business Awards in 2008 was Selco, an Indian social enterprise that provides sustainable energy solutions and services to under-served households and businesses.

There are many examples of leading Indian companies who make a healthy profit, but utilise a proportion of this profit to make a meaningful contribution where they believe they can have a positive impact such as education and health.


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Thursday, August 30, 2012

H. W. Park, MD & CEO, Hyundai Motors India talks to B&E on the present challenges

H. W. Park, MD & CEO, Hyundai Motors India talks to B&E on the present challenges – both internal and external – and the plans of his company for both the domestic and export markets

B&E: The company has been experiencing labour issues for the past many years in the Chennai plant. In fact, this very year, there have already been three such incidents reported. What is the current state of affairs at the plant?
HWP: The factory is now in a relatively safer state and we are currently in a review stage with the labour committee at the plant. We will be in a better position to comment about it after the review stage is over.

B&E: The overwhelming growth in the domestic market has brought about problems of production shortages for many companies. Is Hyundai one amongst them as well?
HWP: Not really. The impact has been minimal and the shortage lag only lasts for a day or two at worst. That is manageable.

B&E: So you do agree that there are shortages. Do you believe that the company will be able to recover from the situation of component shortage anytime soon?
HWP: Surely we will be able to do so. But it also depends on the health of the overall auto industry in India. The industry is growing at a fast pace, something which wasn’t initially expected by anyone. Hence, there has been a minor shortage from the component supplier side, but because we are a big player in the Indian automotive industry, we can handle the problem by adjusting our exports and domestic ratio.

B&E: If the company had been in a situation with no production constraint, would you have produced more cars?
HWP: No. As mentioned before, even today, the production constraint problem is very much negligible, as the lag only appears for a day or two.

B&E: There have been reports of Hyundai India manufacturing electric i10 for the parent company. Your comment...
HWP: For the electric i10, we are only providing parts for the chassis and the engine. This is because chassis for the model can not be locally assembled for the product that will be sold in Korea.

B&E: Initially, Hyundai focussed heavily on exports. So are your views changing in favour of the domestic market?
HWP: We at Hyundai enjoy such a liberty. If the demand in the local market is high, we can always adjust it by reducing the export volumes. As the Indian market is getting bigger, we are gearing up to cater to this rising demand of the Indian consumers.



          
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