Beginning in the year, 1989 as Business Consulting Group, Avalon Consulting has today become ‘a partner’ for growth for companies across various verticals. Avalon Group has made forays into the maritime sector having worked their way up with a sound understanding of the Indian economy, global market trends, and their acumen to understand the needs of the clients whether they are setting up facilities, or are already established, and looking for further growth. In an exclusive interaction with S. Sadanand of The Marine World, Mr. K. A. Ramakrishnan, Director and Mr. R. Subramaniam, Vice President of Avalon Consulting discuss their services to the maritime sector, the trends in the maritime sector and the glory this sector holds for the future.
Avalon Consulting and its foray into services to the maritime sector …
Mr. Subramaniam
We started in the year 1989 as Business Consulting Group, which has been ably led by our directors, and our Chairman who has held eminent positions in the planning commission, in the merchant-banking sector, as well as in other consulting firms prior to 1989. Around this time the license raj had come to an end and the Indian economy was poised for a change. It was an opportune moment and for the corporates the only way to grow was to embrace change of mindsets in a significant way. The economy was gearing up for the times to come, and on our part we thought the best way was to take the bottom up approach. Research markets understand what customers want and exploiting our strengths we decided to provide tailor made solutions for our clients. This entailed ground level market research that sought to offer viable solutions. In the early days we worked with multiple verticals such as textiles, chemicals, fertilizers, metals, and we brought out several interesting project concepts to both our corporate clients in India and overseas. We built our strengths one by one and so after market research, we started strategy development work, entry strategies, and performance improvement consulting work. We also spread out with offices in Chennai and Delhi. Shortly after we started doing business in the Middle East and other countries. By the mid 1990s we had a bouquet of offerings from the Avalon Group. We began to place greater focus on some of the verticals and before long maritime sector became one of them.
Mr. Ramakrishnan
We have evolved ourselves from purely a market research company to a consulting company. We believe our offer is an end-to-end support to clients right from data gathering, to analytics to consulting, in terms of the entire gamut of services people require so that they do not have to go to multiple people. And having been in consulting and studied the industrial economy of India for over 15 years we have a fair idea of how it relates to international trade. The growth of the maritime sector is clearly linked to international trade and our deep understanding of the economy and the various sectors stood us in good stead while prompting us to look at the maritime sector more closely. We may not be shipping specialists but since we understand the economy pretty well that really gave us a very strong boost into the maritime sector. We are proud to say that quite a few reputed institutions that lent for port development or port services related development, took advantage of our expertise on the economy, not to mention its implications on the maritime sector.
Services in the maritime sector …
Mr. Ramakrishnan
In the maritime sector, our work primarily comprises assisting in the early stages of decision-making. Whenever people are trying to put up facilities or trying to lend to facilities which is being created they really want to understand the key issues such as ‘is there a market for these kinds of facilities, basically is there a traffic flow which will lead to these facilities, what kind of traffic flow, where is it going to come from how is it going to be competitive which, who would be the kind of competitors, what kind of pricing issues would be there, what kind of inland connectivity issues would be there and hence is there a viable project concept that could be evolved to make a viable one.’ Then there are also issues of financial implications of the market realities, issues of capital costs, operating costs and to approach a viable model and how to structure it. So in the early stages before the project is conceived and it is getting implemented or when it is conceived before people lend to it that’s where we play a very critical role in terms of supporting clients. We also have people who are already operating in these areas that really want to know, how to, whom to target as market. Having said that I know of an established player in the container business for whom we are doing work for, a leading port in UK. For such clients our inputs help provide indications about how to target clients in India, how the sector is going to develop, about the competition, about people moving out etc. Our assignments help our clients to put up a viable business case for decisions such as ‘why they should switch from one port to another port.’ So while we assist in the area of setting up projects, we also assist established clients for strategy and marketing focus.
Mr. Subramaniam
I think our bottom up approach really makes a difference in sound decision making. For instance our traffic studies; we believe they are based on understanding what the customer needs and understanding his options and they are based on real hard facts. We understand volumes, we understand value, we understand costs, likely tariffs that will be allowed by TAMP (Tariff Authority for Major Ports) as well as by the competition itself because the TAMP may publish certain guidelines and this has to be examined through careful consideration of the various provisions. So we try to build a business case based on facts, hard facts. We are proud to say, if the project is not viable we say so, you see we have no axe to grind. We act as consultants, we tell them this project is not viable or this is how you need to restructure it to make it viable and they accept it.
Profile of clients in the maritime sector …
Mr. Subramaniam
We work with three sets of clients. One is financing sector that finances the projects. Our clients here need to take a view on whether these projects would be viable. Our second set of clients is the port developers, who would be typically people like, L& T Infrastructure developers, DP World who are basically looking at port development opportunities in India as well as overseas. The third set of clients is shipping lines, as well as overseas ports. Amongst these are multinational shipping lines, multinational ports, where we are helping the shipping lines from Sweden or from Japan to understand the opportunities here, with things such as ‘how much traffic is possible, for instance, between the middle east and India, between India and South East Asia.’ Information such as this help multinational ports understand what it is that can attract traffic from India to those ports. So in this category we count people like Port of Liverpool, Jo Tankers from Sweden, and Mitsui OSK Lines, which is the world’s largest container shipping line.
Views with regard to the scope of maritime development in India during the next few years …
Mr. Subramaniam
It is very clear that the Indian economy has set itself on a growth path. We should not be surprised that the 8 to 9% growth rate we have set for ourselves - in fact there would be a double-digit growth in the years to come. We would be on a strong footing if agriculture also does well. But we must understand that the kind of economic growth we are aspiring for cannot be achieved in isolation. It is essential that we trade, and there is no option to trade by excluding maritime trade since trading by road, air and rail is not going to be sufficient. You need to trade with the Middle East, south East Asia, Europe, Americas, and that trade requires maritime trade. A lot of manufacturing activity is going to happen in India. We are going to compete with China in this sector and we will see export oriented production coming up especially in western and southern India close to the ports. This could either come up in the special economic zones that are being developed or outside as there is good infrastructure in the industrial areas in these parts. We need to import a lot of goods to be able to service the requirements of manufacturing. This means there is going to be import of basic materials, textiles, plastics, in significant quantities for the purpose of processing and this material would be eventually sold. Apart from India, these goods in significant quantities will also be targeted to buyers in the west and to the Asia Pacific countries; we can see that their economies are growing. This means growth in the exports as well as imports. All this means hectic development of newer ports, port infrastructure, the facilities, inland connectivity, etc.
Maritime development and its contributions to the GDP, overall economy …
Mr. Subramaniam
I would rather look at logistics as the share of overall GDP. We tend to talk about 6 to 7 per cent of the overall GDP while we are overlooking certain inefficiencies in the way our logistics operates. The overall maritime logistics costs would be a chunk of the logistics costs that have been incurred especially with the overseas trade. This will grow in terms of absolute volumes and as the GDP grows its share should also grow. I would not like to put a number on it at the moment but I think the trends are quite optimistic.
Mr. Ramakrishnan
The economic growth comprises two components; one is the domestic market and the other is the strong export market focus. And the strong export market focus is really visible in a couple of segments like textiles and apparels where there is already a strong export growth. We also witness this positive trend in engineering products, chemicals, and also in automotive where there’s going to be a quantum growth. If everything works out right, may not be in the next five years, but perhaps in the period beyond, there’s going to be a strong export focus going to happen in agriculture too. There are good trends especially in the producing of grains and maize for the global markets. This means, a couple of new sectors are going to have a strong export focus. At the same time there is also going to be a strong import focus in several areas; to name one, an area like fertilizers where we do not have the required inputs. So there is going to be trade both ways and we can see a vibrant economic growth. The seas are going to be the only route to support the impending growth. An efficient maritime sector must support in terms of cost effective, timely movement of goods. This off course, is contingent on a host of other things, such as inland support development, logistics support development etc. Therefore we prefer to talk about logistics growth also, rather than a mere maritime growth.
About Avalon Group’s GRIN …
Mr. Subramaniam
We were pioneers in what is today known as KPOs or Knowledge Process Outsourcing. In the year 1995 we did our first research overseas purely based on telephonic and email interviews in the year 1995. We subsequently refined our methodology to incorporate interpreters of several languages, to make it more efficient for interviewing to be conducted on significant scale globally. We called this GRIN, which is Global Research Using India as the Node. I just give you an example. Since I want to understand what is happening in the paints market in the Czhech Republic or Germany or Hungary. Now sitting in India without traveling to these countries is it possible to research? We are saying the answer is yes. And how it can be done is all under Global Research Using India as the Node. This business has become so significant and so successful that Avalon Global Research has been formed to basically take this to the next level. We expect that Avalon Global Research promoted by Avalon Consulting will become a very significant KPO and contribute to the needs of the maritime off course, as well as several other verticals that we are servicing.
About the outsourced market research industry in India …
Mr. Subramaniam
The industry had humble beginnings but I think it has a wonderful future. We have capable people who understand business dynamics the world over and have people who can handle multiple languages, understand and analyze it well. So our ability to speak, our ability to understand business our ability to analyze and then put it all together makes a huge difference to managers in the west who find that they do not have sufficient people of adequate caliber. Also, there are a lot of capable people in these countries who find this work too routine and do not want to do it. So we have a great opportunity both in terms of costs as well as in terms of people who are very capable and can execute them well. Our experience so far across verticals has been wonderful and we have happy and satisfied clients.
Industry competence in general for market research …
Mr. Ramakrishan
The industry competence for market research in India is pretty high. This is showing in the way the KPOs, business research and market research space is growing. And they are projected to grow over 35 to 40% over the next 7 – 8 years. Our advantage is that we have people with knowledge, good grasping ability, and the right aptitude. Moreover, we understand the processes as we have set them up in the past. And most importantly, it is cost effective to carry it out from India. The question is, ‘why does a global fortune 100 company have to have a big market research team, when they can very well get it out of India?’ Whether they set up themselves in have their own captive center or they will use third party KPOs is a matter that we will see over a period of time. We will see big KPOs in India to supply to the global research needs in the coming years.
Views with regard to the career aspirations of young professionals, namely in management and engineering …
Mr. Ramakrishnan
One of the main concerns is that they look forward to a very fast growth without giving themselves the time to build a solid base. There is a need to achieve a shift in this attitude.
