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Laura Donovan

MGT 340
Entrepreneurial Activity in India

INTRODUCTION
“Businesses can fail but an entrepreneur does not. They learn.” Sandra says, as
she speaks to our class about her journey as an entrepreneur in India. With the help of the
government and start-up agencies to guide and support aspiring entrepreneurs, the social,
political, and environmental barriers to successful ventures in India are diminishing. The
National Association of Software and Services, otherwise known as NASSCOM, is one
of many companies promoting entrepreneurial activity and enabling the product and
service industry by incubating, funding, and supporting new businesses. With growing
opportunities in India, entrepreneurs outside of NASSCOM like Chandubhai Virani are
also finding ways to overcome adversity and start businesses independently. Regardless
of the path young entrepreneurs take in starting their business, the growth of the start-up
industry in India has given aspiring business men and women the tools and support they
need to succeed.

ENTREPRENEURIAL CONTEXT: KERALA, INDIA


Entrepreneurial Infrastructure
When looking at the entrepreneurial environment of Kerala, it is important to note that
the state is far ahead of the rest of India. The infrastructure, income, standard of living,
and literacy rates are much higher than the rest of the country. These resources are why
NASSCOM decided to base out of Kochi rather than Delhi, Agra, or any other large
cities in India. Business ventures in Kerala stem from three sectors: IT, services, and
tourism. Most of these ventures are small scale, with 72% of NASSCOM member
distribution belonging to the under 50 crores category, 11% in the 50-200, 7% in the
200+%, and 10% in the Institutional sector. Because privatization and liberalization are
somewhat new concepts in India, the participation of private entities and ability to work
within government regulations are somewhat new concepts in India.

Opportunities for Entrepreneurs


As India breaks its traditional roots and stretches towards more progressive and liberal
values, women and college students are receiving more opportunities to start their own
businesses. While women entrepreneurs constitute only 14% of all entrepreneurs in India,
there is a growing amount of support for females wishing to pursue business ventures.
Shri Melwyn Rego, head of the State Bank of India, assists future ventures with financial
support in hopes of giving women every tool and opportunity that their male counterparts
receive to start a business. She does this in hopes of breaking down gender barriers and
cultural norms so that any women can start a business if she wishes to do so.
With a very young population, finding ways to encourage entrepreneurial activity in
school is vital if India wishes to pursue their innovative track. The India Electronics and
Semiconductor Association recently established a National ESDM Technology and
Research Academy in 12 states, including Kerala. The academy funds incubation centers
that provide mentorship to students for 12-18 months to develop their product. Colleges
are also taking leaps towards entrepreneurial support, pairing with companies like
NASSCOM to give students entering business ventures a 20% attendance waiver and 4%
grace mark on final grades. These opportunities give support to the less-represented and
resourceful members of the Indian society, who may not otherwise have the means to
pursue their venture.

Challenges for Entrepreneurs


Many of the challenges aspiring entrepreneurs face stem from social and political factors.
The caste system still has a strong presence in India, and businessmen fall into the
Vaisyas caste, which is a less-respected class than the Brahmins and Kshatriyas. In a
country that highly values their social standing, this discourages aspiring entrepreneurs
from pursuing ventures in fear of social embarrassment or family disappointment. Sijo
Kuruvilla George, CEO of MobME, says despite his company’s success, his family still
asks him when he plans to get a “real job.”

From a political standpoint, the Ruling Left Democratic Front is causing political
violence that is hurting the state’s bid to attract investments and create jobs. The high risk
economy, paired with a deplorable trend in unemployment and decline in the farm sector,
is scaring away foreign investors left and right. It is a very risk-averse environment with
intense competition between states to attract investments. Without willing investors,
many entrepreneurs do not have the resources and means to bring their ideas to life.

ENTREPRENEUR PROFILE: CHANDUBHAI VIRANI


When we came alongside in Kochi on March 1st, I never believed that a few days later I
would be eating breakfast at a hotel in Agra with the CEO and founder of the Balaji
Wafers and Namkeen Group. Mr. Chandubhai Virani was happy to share the story of him
and his brothers’ venture into the chip and wafer market. Through his perseverance in
times of adversity and innovative mindset, it was clear to see how he made his company a
success.

Building an Empire
When Chandubhai Virani’s father gave him and his brothers 20,000 rupees to venture
into business, never did he dream his company would explode like it did. In 1970, the
Virani brothers invested the money into farm equipment; their first venture failed and
they lost the money. Looking for a way to earn back the money and try again,
Chandubhai had the idea to use the equipment to make wafers to sell at the movie theatre
in his town. With overwhelming retail success, he quickly earned back the 20,000 rupees,
and was inspired to invest the money into a semi-automatic plant to make more wafers to
sell. He focused his efforts on the production cycle, boosting quality and taste while
lowering overhead costs and increasing sales. The unique taste attracted markets
throughout their home state of Gujarat, and eventually throughout western India.

Elements of Success
Chandubhai attributes him and his brother’s successes to their strong values, stemming
from their mission statement of “Trust, Passion, and Steady Hard Work.” We spoke about
the elements to success in starting a business, and he said timing was the most important
part of his venture. He noticed the struggles multinational corporations were facing in
attracting the Indian markets, and capitalized on the potential for a local chip company as
a blue ocean. Today, on average regional snacks have a 30% higher volume at a lower
cost than multinational rivals. The tremendous growth and success in separating itself
from its competitors has allowed the group to outgrow Lays, Kurkure, Parie, Bingo and
other multinational household names.

Current Operations
In 2014, Lighthouse Funds LLC acquired a 25% stake in Bikaji Foods International. The
funds from this acquirement were used to expand manufacturing and distribution to
markets outside of northern India and move into ready-to-eat-segment. World wide, the
market share grew 4.2% in just 3 years, and continues to dominate the western market
with a 90% share in the home state of Gujarat.
Today, the Balaji Wafers and Namkeen Group run a full automatic plant near Metoda.
Their most recent venture has involved aims at a niche market in the frozen food and fries
sector through a new line of production under Iscon Balaji Foods. The focus on all
production remains on cheap overhead costs to keep products affordable while
maintaining high quality.

CONCLUSION
With a rise in education rates, higher household incomes, and a cultural shift
towards acceptance of entrepreneurship as a viable career track, start-ups in India are
receiving more support than ever. Political, social, and environmental barriers are
decreasing and helping a historically risk-averse country take the leap towards starting
their own business. While NASSCOM has helped hundreds of companies start-up,
entrepreneurs like Chandubhai Virani have found paths towards success on their own as
well. Regardless of their background, all entrepreneurs can attribute their success to their
perserverance and ability to learn from failure.
WORK CITED

E. Wayne. Nafziger
Stamford, CT : Jai Press , c1998

Gayatri Saberwal
Nature Biotechnology, 2013, Vol.31(2), p.104[Peer Reviewed Journal]

P. C Jain (Prakash Chand), 1949-; Entrepreneurship Development Institute of India.


Delhi ; New York : Oxford University Press ; , 1998

Tarun. Khanna
Boston, Mass. : Harvard Business School Press , c2007