We are uncomfortable with the nuclear liability clause: Banmali Agrawala

Interview with President & CEO, GE India

Six months after taking charge, GE India President and Chief Executive Banmali Agrawala, a sort of outsider at the helm, having joined GE in December 2011 after stints in Tata Power and Wartsila India, tells Sudipto Dey the iconic US conglomerate is looking at India with a new approach. Edited excerpts:

   

Given the size of GE, do you feel in India you are far from realising the potential?

Yes, and that is not as much about GE but as a country. We need to appreciate this from GE’s perspective. We are a fairly large company and our globalisation strategy is not playing in one, two or three core markets in the world but playing across 150 markets across the world at the same time. Last year, we got business from 164 countries. Nineteen countries gave us more than a billion dollars of business each.

Forty countries gave us more than $400 million. And, when you play the whole world on this scale, there are pockets of opportunity that have come from so many places, be it Africa, Southeast Asia, Latin America or East Europe. In a global context, there are other options that are fairly attractive from the GE perspective. The rate at which things happen in India and the pace at which our business is growing doesn’t frankly meet our expectations of a market or country the size of India — by population or economy — and the need for infrastructure that there is. We certainly feel this market should offer us a lot more in terms of infrastructure.

So, has India become less for GE?

I would say, yes. No matter what you say, a country the size of India, with a billion-plus people and a sizeable economy, will always remain attractive. But I would also say there are other markets that are catching up, are doing very well and in the short period, clearly have taken off. And, here you (India) have got to compete for attention and investment. For a global company, it’s wherever the opportunities are.

Have you made up your mind on the nuclear business? Are you not going to play in India, given the current state of nuclear liability laws?

We have made our position pretty clear. We need to see how the whole liability issue is addressed. The way the liability clause currently stands, we are not comfortable. The point we have made even earlier is that there is a global construct of how liabilities are divided among players. That is the way the global nuclear regime works and we would urge that the same practices are followed in India. The global way that GE works, we work on the same practices that are followed in India as well. That’s what we want to see happening.

One recurring theme in GE India in the past four years has been localisation. What is the current level of localisation and how does the road ahead look?

The year 2013 would see the fructification of our localisation drive. Wind, water, measurement and control, and healthcare are our most localised businesses. For us, localisation means how we design products that are suitable for the market here and are also eventually relevant to many other parts of the world. This is what we are practicing in healthcare and a few other businesses. However, we need to appreciate that everything cannot be localised.

For instance, aviation turbine cannot be localised and also, oil and gas. The whole approach, which we call the super value approach, is how you innovate products at disruptive prices without compromising with efficacy. We have gotten into a process of finding the right opportunity, making a product that meets the right price, manufacturing it and taking it to the market. The idea is to come out with a range of products at regular intervals. We see lot of promise in the healthcare business and want to make the most of it.

For the supply chain, we have a facility in Pune, where we assemble wind turbine parts. We do the complete erection of wind turbines in India. It’s a local business for us. We will be expanding and growing this as we set up our new facility at Chakan (Maharashtra).

As far as a multi-modal facility is concerned, we feel this is the right time to step up our efforts in local manufacturing and local sourcing not just for India but also for feeding our global supply chain.

So, is the multi-modal facility at Chakan also a local innovation?

This is the first time GE would be doing something like this in the world and we are eagerly waiting to look at the outcome.

We are waiting for it to fire, because if it succeeds it gives a template for how things can be for GE in other parts of the world. Another dimension of globalisation is almost every country and market around the world would insist on us to set up local manufacturing facilities, create jobs locally.

 

Our approach toward manufacturing has been different. When we make investments in a machine, say for instance fabrication. The pay back on that machine, if I were to just have one product would be very difficult but if I were to pass five different products through that machine and make sure the utilization is high, I get a payback on that investment. Normally, you would not pass different products through the same machine because you need different settings, fixtures etc. but we challenged ourselves that we want to do it. 

 

Once Chakan becomes operational do you expect a major drive in exports out of India?

 

Yes, we expect a major ramp up in exports out of India. Even as we speak we have a fairly good idea of what we will manufacture, how much will go out, where and when. As a matter of speaking let me say whatever we will make in Chakkan in Phase I is kind of sold out. We already have commitments from our global supply chain and we are working towards growing that.

 

You are one of the few companies in India that shrunk business, then cleaned up, re-focussed with country-specific P&L, rolled-out a localization drive. So do you now have renewed set of targets for India?

 

We look at different businesses in different manner. In certain businesses we can be completely local and approach the market directly. We have competitive technology.  In those businesses – such as healthcare, wind, water, etc - we will shoot for profitable growth. There is another bunch of businesses that are dependent largely on government policy – such as gas, coal, oil, transportation. Whenever the deals happen we will ensure that our market share is intact. There is different approach to different businesses. What is important for us is to get our due share.   

 

Profitability is important.  And we kind of keep innovating. We are not just chasing one number we have to get to. We also look at what India can contribute to larger GE.