1. Successfully Entering the Indian Market Harinder Lamba 18 September 2012 Nottingham UKTIEM & UKIBC Conference

2. 2 Two Speed India India Shining India Grid-locked

3. 3 Saturnian Reality: Shining Grid- Lock Yes, money to be made And yes, money to be lost Saturn is not all bad.. It helps us focus… be realistic… Yes, money to be made And yes, money to be lost Saturn is not all bad.. It helps us focus… be realistic…

4. 4 India: “Successful” Entry? Successfully Enter(ed): Revenue Profit Business Plan Objectives Enter(ed): Treading water Cost Centre Breaking even or Stay Loss Centre Reputational Risk Impacted LARGE CO. VS SMALL CO. Successfully Enter(ed): Revenue Profit Business Plan Objectives Enter(ed): Treading water Cost Centre Breaking even or Stay Loss Centre Reputational Risk Impacted LARGE CO. VS SMALL CO.

5. 5 Before you Enter India A relevant product, technology or service – that works A plan : sell in India, Manufacture & Sell in India, Export from India? Realistic estimate of resources needed: people, money and time Owner /Controller Involved. Internal politics Right man for the job – attitude, empathy, cultural awareness, integrity. Knows your business, carries Internal stakeholders. Not necessarily ‘British Indian, not even ‘Indian’ Discern between of “Indian Culture” & “Culture-driven Risks” Shiny Offices and Indian head-count – measure of Success? A relevant product, technology or service – that works A plan : sell in India, Manufacture & Sell in India, Export from India? Realistic estimate of resources needed: people, money and time Owner /Controller Involved. Internal politics Right man for the job – attitude, empathy, cultural awareness, integrity. Knows your business, carries Internal stakeholders. Not necessarily ‘British Indian, not even ‘Indian’ Discern between of “Indian Culture” & “Culture-driven Risks” Shiny Offices and Indian head-count – measure of Success?

6. 6 Enter the India Market Two Sets of Factors will Drive a British Company’s Success 1.Bare-Minimum (“Admin”) 2.‘Soft’ Issues- Culture Driven Cultures within Culture, Communities within communities Community Allegiances Manipulation & local tactics Corruption, Bribery & UK Law Local Partners (business partners, employees, agents) in practice Engagement Model impact Financial & Information Bleed Disputes & Tactics Cultures within Culture, Communities within communities Community Allegiances Manipulation & local tactics Corruption, Bribery & UK Law Local Partners (business partners, employees, agents) in practice Engagement Model impact Financial & Information Bleed Disputes & Tactics Products/ technology/ services India Market Research Partner selection flow charts Office space Headcount plan/ HR issues Legal & Financial Advice & DD Tax & Contracts Etc. Products/ technology/ services India Market Research Partner selection flow charts Office space Headcount plan/ HR issues Legal & Financial Advice & DD Tax & Contracts Etc.

7. 7 Enter the India Market 1.Technical Factors/Steps (“Admin”) 2.‘Soft’ Issues- Culture Driven Products/ technology/ services India Market Research Partner selection flow charts Office space Headcount plan Legal & Financial Advice & DD Tax & Contracts Etc. Products/ technology/ services India Market Research Partner selection flow charts Office space Headcount plan Legal & Financial Advice & DD Tax & Contracts Etc. Can be Decisive Cultures within Culture, Communities within communities Community Allegiances Manipulation & local tactics Corruption, Bribery & UK Law Local Partners (business partners, employees, agents) in practice Engagement Model impact Financial & Information Bleed Disputes & Tactics Cultures within Culture, Communities within communities Community Allegiances Manipulation & local tactics Corruption, Bribery & UK Law Local Partners (business partners, employees, agents) in practice Engagement Model impact Financial & Information Bleed Disputes & Tactics

8. 8 Culture Driven Soft Factors Big Deal!? It’s like entering any new market………. Big Deal!? It’s like entering any new market……….

9. 9 India: “Successful” Entry? Successfully Enter Generate Revenue Make a profit As per projected business plan Enter Treading water Cost Centre Just breaking even or covering losses Suffered reputational risks Easy to enter the market. But have you “successfully” entered? Successfully Enter Generate Revenue Make a profit As per projected business plan Enter Treading water Cost Centre Just breaking even or covering losses Suffered reputational risks Easy to enter the market. But have you “successfully” entered? It is a “Big Deal” In India 80/20 Rule Pareto Principle What are you getting into? With whom? Where are they really taking you? What are you getting into? With whom? Where are they really taking you?

10. 10 Foreigners in India 2.‘Soft’ Issues- Culture Driven Cultures within Culture Community Allegiances Manipulation tactics Corruption, Bribery & UK Law Local Partner (partners, employees, agents) in practice Engagement Model impact Financial Bleed in partnerships Information bleed Disputes & Tactics Cultures within Culture Community Allegiances Manipulation tactics Corruption, Bribery & UK Law Local Partner (partners, employees, agents) in practice Engagement Model impact Financial Bleed in partnerships Information bleed Disputes & Tactics European Power co Midlands Wind Turbine SME Aerospace Major SME Architects firm Major European Clothing Brand European Looms Manufacturer SME European Electricity Infrastructure Major Castings & Forgings SME European Biotech SME European Aerospace SME European Rail Infrastructure Major Security Technology SME European Power co Midlands Wind Turbine SME Aerospace Major SME Architects firm Major European Clothing Brand European Looms Manufacturer SME European Electricity Infrastructure Major Castings & Forgings SME European Biotech SME European Aerospace SME European Rail Infrastructure Major Security Technology SME 80/20 Pareto Principle

11. 11 Grid-locked in India? Mislead on Opportunity Excluded from Customers Uncertainty IPR & Financial loss Entangled in Bribery& Corruption Reputation Loss Trial by Tabloid media Mislead on Opportunity Excluded from Customers Uncertainty IPR & Financial loss Entangled in Bribery& Corruption Reputation Loss Trial by Tabloid media Consequences of Local Culture Driven Manipulation

12. 12 This Biz Of Indian Culture Holiday vs Business - When to wear the Kurtas & Saris Be ‘Hospitalitised’ – On Holiday 7 Day Crash Course in Indian Culture? Be Contrarian – Be English, German, yourself Culture & Cultural Risk Distraction – Stop Worrying, Keep in the Game Understand the local culture – to understand delays & complexities Risk of Manipulation in Negotiations Focus – who dealing with, where you are headed “Respect” is Universal to all Cultures Holiday vs Business - When to wear the Kurtas & Saris Be ‘Hospitalitised’ – On Holiday 7 Day Crash Course in Indian Culture? Be Contrarian – Be English, German, yourself Culture & Cultural Risk Distraction – Stop Worrying, Keep in the Game Understand the local culture – to understand delays & complexities Risk of Manipulation in Negotiations Focus – who dealing with, where you are headed “Respect” is Universal to all Cultures Culture Worry?

13. 13 Your Choice of Market Engagement Model/ Strategy India has moved on since 1992 Is a JV partner really needed? Is an “agent” needed, or even permitted? 100% Own Team – more appropriate? YOUR DECISION WILL DECIDE: Import risk of manipulation & bribery Financial bleed? Will you be allowed to make money? Control issues? Will you have a real say in India? Exclusion from direct Customer Interface? Creeping re-negotiation of your business plans Vulnerability to protracted court disputes India has moved on since 1992 Is a JV partner really needed? Is an “agent” needed, or even permitted? 100% Own Team – more appropriate? YOUR DECISION WILL DECIDE: Import risk of manipulation & bribery Financial bleed? Will you be allowed to make money? Control issues? Will you have a real say in India? Exclusion from direct Customer Interface? Creeping re-negotiation of your business plans Vulnerability to protracted court disputes Many Indian parties need foreign partners to no more than pursue speculative adventures... at the expense of the western ‘partner’...

14. 14 Your Choice of Local “Partners” Local Partners, Agents, Employees, Advisors Legal & Financial DD limitations Attitude of Manipulation Attitude towards Bribery & Corruption, Financial Bleed Integrity: real reputation, pending corruption/ tax investigation Exclusion from Direct Customer Interface Community links of Partner: Information leakage & Collusion Most Listed Indian Companies – family Control/ Cliques, strong Community allegiances Real Controller – Who are you really negotiating with? Undisclosed Promises to officials – UK Bribery Law Financial Bleed Previous treatment of “foreigners” “Own Local Team” risk: Collusion by some Senior employees & local Advisors Local Partners, Agents, Employees, Advisors Legal & Financial DD limitations Attitude of Manipulation Attitude towards Bribery & Corruption, Financial Bleed Integrity: real reputation, pending corruption/ tax investigation Exclusion from Direct Customer Interface Community links of Partner: Information leakage & Collusion Most Listed Indian Companies – family Control/ Cliques, strong Community allegiances Real Controller – Who are you really negotiating with? Undisclosed Promises to officials – UK Bribery Law Financial Bleed Previous treatment of “foreigners” “Own Local Team” risk: Collusion by some Senior employees & local Advisors Make the extra effort... If you really need one

15. 15 Disputes & Extraction Get your Engagement Strategy & Partner Selection Right Some Local ‘Partners’ easily resort to the deliberate (re)negotiating tactic of generating ‘lock-down’ in the overloaded Indian Courts...

16. 16 Relationships & Resisting Corruption Good Relationships in India are: Not just about ‘Contacts” Not just about getting a “deal” Solid Relationships may help resist Corruption and heavy-handed Partner tactics Good Relationships in India are: Not just about ‘Contacts” Not just about getting a “deal” Solid Relationships may help resist Corruption and heavy-handed Partner tactics IN INDIA, EVERYBODY HAS ‘CONNECTIONS’, CAN GET YOU A DEAL, KNOWS SOMEONE...

17. 17 Influence Partner Behavior 2.‘Soft’ Issues- Culture Driven Cultures within Culture Community Allegiances Manipulation tactics Corruption, Bribery & UK Law Local Partner (partners, employees, agents) in practice Engagement Model impact Financial Bleed in partnerships Information bleed Disputes & Tactics Cultures within Culture Community Allegiances Manipulation tactics Corruption, Bribery & UK Law Local Partner (partners, employees, agents) in practice Engagement Model impact Financial Bleed in partnerships Information bleed Disputes & Tactics Make proactive effort to be Be informed, use “Relationships” Subtle communication to Partners & Stakeholders Deflect Partners from potential manipulation, financial leakage and making promises to Officials Save the business relationship Make proactive effort to be Be informed, use “Relationships” Subtle communication to Partners & Stakeholders Deflect Partners from potential manipulation, financial leakage and making promises to Officials Save the business relationship Use the 80/20 Rule, Navigate the Grid-lock Deflect Potential Negative Behavior

18. 18 Summary Success Factors Housekeeping: right product, right plan and right person Revenue: Not Losses In India = Successful Entry ‘ Admin’ Steps: Starting Point Culture Worry: Be English, Keep Eye On the Ball ‘Partnering’ : Only if needed; Own Team alternative Customers: Insist on Customer Interface Assess, Investigate: beyond Legal & Financial DD Discover: The real reputation & Community dealings of your local Partner, Agent, Licensee, CEO, Lawyer, Accountant Subtle Influence: Deflect negative behaviors of Indian “partners” Housekeeping: right product, right plan and right person Revenue: Not Losses In India = Successful Entry ‘ Admin’ Steps: Starting Point Culture Worry: Be English, Keep Eye On the Ball ‘Partnering’ : Only if needed; Own Team alternative Customers: Insist on Customer Interface Assess, Investigate: beyond Legal & Financial DD Discover: The real reputation & Community dealings of your local Partner, Agent, Licensee, CEO, Lawyer, Accountant Subtle Influence: Deflect negative behaviors of Indian “partners”