Ammann is a world-leading supplier of mixing plants, machines and services to the construction industry with core expertise in road building and transportation infrastructure. The family-owned company has enjoyed international success since 1869. Hans-Christian Schneider, current Ammann CEO, is the sixth generation to run the business. Much has changed in the 150 years of Ammann history. Technology continues to evolve and the plants and machines deliver productivity that wasn’t even dreamed of in 1869. The company now has a global reach and expansive product line. What hasn’t changed is Ammann’s commitment to its customers, employees, and innovative solutions. Rolf Jenny – Director, Ammann India discusses about M & A, Joint Venture and the complexities involved in doing business in India.
Rolf Jenny has spent almost 15 years in India. He has seen India in three phases:
Phase 1: It is the enthusiastic and exciting about the country. About the extraordinary opportunities this country beholds. You see all these possibilities, you see the streets are in bad shape, a huge population. And a gambit of areas where your business can flourish.
Phase 2: Is the complexity and the chaos in India, everywhere. You cannot drive yourself on the street. It’s chaotic.
Phase 3: This phase is full of learning curve. There is so much to learn from Indian people and Indian colleagues.
Few pre-birth situations to be kept in mind before you step in India:
Youth Potential: India has one of the largest youth populations in the world. So whether your business can uplift its existing product portfolio and the venture capitalist.
Whether the management is able and willing to go through the Indian bureaucracy: Does your business has the financial strength to digest such an operation? Because when you build up, you will need a lot of money. Market expansion is an expensive exercise, it needs a lot of resources on management and also on finances.
What do you really do to assess the potential of the business in the country?
Finding Agents: Find deals, find agents in India, which could sell the products. Find a local manufacturing which would help in reducing the cost.
Know the complexity of your product: The product which you are trying to introduce in India whether you can find a local manufacturer, or you need to set up a wholly owned subsidiary in India or acquiring a local company would suffice your requirements.
Finding the best partner: Enter into a joint venture with a local Indian company. In case of Amman, they saw friendship with Apollo. The reasons why they went for the joint venture were: the opportunity to enter the huge road construction market in India, simplify low cost product portfolio and lastly, low cost location in order to set up a big manufacturing facility layout.
Factors for the success:
Map the ideal strategic fit regarding products and the market. In case of Amman, Apollo catered to the mid segment and the low segment, whereas Amman was the upper segment.
Amman had the global footprint except India whereas Apollo had catered to the local market but very little in export.
Corresponding Values on the commitment of the Company: The vision of the joint venture company should be one and not their individual vision. Then only, they would make an appetite to sustain in the Indian market.
JV’s are more often found in an environment with low competition, Capital-intensive production processes, slow growing industries, great economies of scale and New technologies & new markets.
The Indian JV Experience:
- Cooperation with an Indian partner is usually easier than in other Asian countries
- The foreign partner typically takes the higher stake in the JV
- The Indian partner is typically the one soliciting the foreign partner
- The location of the Indian partner is extremely important in a manufacturing context
- Control Expectations
- Win-lose approach
- Different ownership context
- Cross-cultural aspects
- Legal & Intellectual property environment
Key points which the companies should keep in mind before entering into a Joint venture:
- Clearly outline your need – JV or 100% acquisition?
- In the case of a JV, planning for the start is as important as planning for an exit
- Build trust with your local partner
- Get involved in personnel management
We believe that there are still a myriad of questions in your mind about which is the best way to set your foot in India- joint venture, acquisition or independently starting up. You can just drop in your query and our team will reach out to you. We would be delighted to engage in a one on one conversation and discuss some cases where we have supported our clients which might help you to deal with your organizational issue. If you want to know more about the session please drop in your detail to the below email id email@example.com. We will send you the recording of the webinar.
M+V offers support to foreign companies looking to enter in the Indian market or expand their existing business in India. For more information, get in touch with us on our email id firstname.lastname@example.org.