Tuesday, December 7, 2010
Mr. S. Raghavan, Sr. VP & HEAD, INDUSTRY PRODUCTS, L & T
An Interview with Mr. S. Raghavan, Sr. VP & HEAD, INDUSTRY PRODUCTS & MACHINERY OPERATING COMPANY Larsen & Toubro
Mr. S. Raghavan, Senior Vice President, L&T has been with L&T group for the past 38+ years. He joined in one of the group companies that manufactured Exploration drilling Machines and later traversed through a number of other units. Along the way he has been associated in various functions such as – Supply Chain, Personnel and IR, Manufacturing, as Head of independent group companies, Projects, Business Planning, Corporate Strategy, Head of Business operations of diverse nature etc.
1. Could you please enlighten us on the experience you have had in the various positions you have held within the company?
I have been working with Larson and Toubro for the past thirty eight years and have headed Machinery Business (Construction and Industrial Machinery) and Industrial Products (Valves, Welding Products and Distribution of Cutting Tools) in the past and currently working as the Head of Industrial Products and Machinery Operating Company which has an annual turnover of around 2100 Cr and an employee strength of over 2500. In addition to that I am also an internal Board member of L&T’s Construction Machinery Business with a turnover of around Rs.3000 Cr and 1500 employees and L&T Finance Limited, a wholly owned subsidiary of L&T.
2. In your opinion, how has L&T evolved as one of the most successful corporate brands in India?
Right from L&T’s inception, the founders Mr Henning Holck Larsen and Soren Kristian Toubro emphasized on Values in the company. This value centred approach along with its customer-first approach has largely been responsible for L&T evolving as an excellent corporate brand in India. L&T treats its employees with the highest regard and respect. It is this realization that employees create all our values and profits which have helped L&T maintain its excellence.
Looking out for growth opportunities constantly has been a major contributor to L&T’s success. We have always focused on a “Build India” approach and ventured into core infrastructure services for its manufacture and projects businesses. These elements together have made L&T the excellent brand that it is today.
3. In B-schools, we often co-relate marketing with consumer goods. Please throw some
light on the importance of B2B marketing in the business world.
In my opinion, there is not much difference between consumer goods and non-consumer goods. Whatever goods are consumed by our customer are consumer goods and whatever services that we offer to him are consumer services. Since we are more into Capital Goods and Industrial Goods I will explain on that front.
In capital goods, the marketing efforts begin much before even the need recognition as in the case of any Business Relationship Management. Our sales staffs reach out to all corners and scout for potential entrepreneurs. They educate and advise them on possibilities of commencing an enterprise. The enterprise could be a small contractor kind of activity, a repair shop, an agency to peddle our goods such as welding consumables or cutting tools. On the other hand, if our customer is a large corporation then our task is reduced since the customer can himself decide on buying our product against the multitude of choices.
All our sales managers have excellent communication skills and skilled at articulating ideas. They provide professional advice to the customer about the risk and returns on a particular venture on the basis of their excellent analysis of cost-benefits, owning and operating costs of the equipment. Since the products that they market are based more on aesthetics rather than the esteem value, the initial price, quality, reliability, resale-price for the equipment, owning and operating costs, life-cycle costs etc. play an important role in deciding the B2B customer. We tailor our efforts to these ends.
4. L&T represent the success story of India to the world. What factors, in your opinion, drive its growth in the international stage?
L&T realized that our Indian customers must get the best in class products and services at a global benchmark ,thus leading to our plans for growth. Obviously we cannot do this unless we physically export to other countries and this drove us initially to the neighboring countries and later to the discerning West.
In some of our products – particularly the Heavy Engineering and Projects – we had to obtain international certifications. When the certifying agencies and vendors visited us they were highly impressed by our approach, manufacturing and project execution processes and word quickly spread that here was a company which could deliver on par with global companies and perhaps at Indian costs.
Due to logistics problems we restricted ourselves mostly to the projects in the Middle- East and other neighboring countries but in case of highly sophisticated equipment we supplied to all discerning users in US or Europe or China. Presently our annual international business accounts for 17% to 20 % of the turnover. In addition we have also set up manufacturing presence in the Middle East, Malaysia and China
5. Can you throw some light on the current B2B marketing scenario in India and how is it different from what is being practiced in Western countries?
In the first place it is not vastly different except in the customer perception of values that he looks for in products. In the West, in many Industrial Goods, the daily utilization is seldom for more than 8 hours while in India it is at least for 15 hrs. Obviously when a Western customer uses the same item for – say 2 years – he does not mind for paying for any after sales activities. In India the customers use such goods for the same number of hours in less than a year and hence loathe to pay for any service activity in less than a year! For example an American Ag equipment manufacturer was taken aback when they realized that the equipment would be used for 1000 hours and hence any warranty for 1 year would mean really for a 3000 hour usage; in the USA the same equipment would probably clock 3000 hours in 10 years! They had to take a totally new approach to designs in order to sell in India.
Another area is the abuse factor in India; in the West they take for granted that goods would not be over-loaded or used till destruction; they are used to consigning any equipment that has been used for a reasonable period to the scrap-yard but in India such equipment needs to be supported and serviced for a much longer period. These factors call for a highly customer-focused service organization that caters to after-sales service far superior to what one sees in the west and on top of that, a 24/7 approach as Indian customers tend to use the products 24/7!
6. In this information age where organizations look forward to building relationship with the partners, how do technology and analytics help in customer relationship management? We would also like to know your opinion on unconventional methods like social media in promotion of products and services?
Technology and analytics are extremely useful tools in meeting the exact demands of customers. While the products are often used till destruction, it is no longer the first user that does this; instead the product often changes many hands and the first user quickly replaces the product with the latest state-of-the-art product that keeps pace with global technology trends. Analysis of the use of the equipment and tracking of actual utilization vs. apparent running hours (not necessarily a barometer of productive use) helps a long way in making the customer realize the advantage of technology and analyses. These days we are even capable of installing a GPS tracked analytic tool on machines that we supply and often surprise the customer of the benefits of better performance vis-à-vis the competition. The customer is delighted.
So far we have not used much of social media in promoting products and services but maybe we should consider the same. In one of our products – Microfinance (as part of our Finance subsidiary) – we have already started this in a small way and results have been very satisfying.
7. What advice would you give to budding managers specially those who are preparing for a career in the marketing domain?
There are just two mantras in marketing – Customer and Quality First! Building relationships with the customer is a lifetime endeavor and therefore never attempt to deceive or trick them. Customers never forget; wherever they go their memories of our good deeds and ethical and transparent transactions live with them. Wherever you are fight the customer battles within your organization; it pays in the longer run.