– Jayeeta Putatunda
PGDM, 2012-2014, SCMS-COCHIN
It was yet another Industry Institute Interaction (III), and students of SCMS heard a thrilling tale of how a successful company was launched, and went on to become the only mini steel plant of Kerala. Steel Complex Limited (SCL) was originally promoted in the joint sector between the Kerala State Industrial Development Corporation Ltd. (KSIDC) and SAIL in 1969 in Kozhikode.
Mr. P. Saidev, MD -SCL, started the seminar with a very unconventional yet inspirational twist on the story of the race between the Hare and the Tortoise. As his narrative unfolded, all the students were increasingly curious to find out the context that Mr. Saidev was using it in. When he came out with a new moral of the story – ‘Teamwork Wins’ – he had everyone’s attention. Everyone was keen to hear the details about what he called Joint Ventures.
In very simple terms, he explained that a joint venture is an arrangement where two or more companies co-operate and run a symbiotic business alliance to enhance and capture an increased market share. This has become very important in today’s times, where costing and competition are the two biggest hurdles a company needs to overcome. Generally, companies dive into joint ventures to attain set goals, economically impossible for them to achieve independently. As Mr. Saidev stated, industries strive for economies of scale in their production process. This can only be achieved by reducing the research and manufacturing costs, and mutual expertise from both partners that will ensure a competitive advantage over their rivals. Also, this partnership allows them to be able to take more risks for the company’s expansion, perhaps in terms of production volume or expanding into new geographical territories, as because they are able to share the liabilities of risk-taking. A prominent example he gave was of how Jindal Steel Works (JSW) went on to make a joint venture with the stagnant ISPAT steel industries, as a strategic decision to penetrate into the Maharashtra market – jointly, they captured most of the market in the state.
After highlighting the overwhelming results that can come from a Joint Venture, he moved on to compare the pros and cons. To explain the complexities, he used an insightful quote from one of the papers at Harvard University, which talked about Joint Ventures — “Joint Ventures can deliver more shareholder value than mergers and acquisitions, but getting them off the ground can trip you up in an unpredictable way.”
Using more facts to bolster his opinions, Mr Saidev said that according to Harvard Business Review, almost a whopping 47% of Joint Ventures are failures. He was insistent that mistakes made during the launch period offset the success of many joint ventures. As he summed it up succinctly, “If you get the launch right, the rest will take care of itself.”
Encouraging the young PGDM students who are going to enter the market soon, he gave them the helpful advice that they should remember that launching and successfully running joint ventures is a really demanding task. To do it successfully, they would need meticulous planning and the right amount of investment, which would certainly yield a better return on investments in the future.
Mr. Saidev concluded by saying that “success lies in the details”, and by working to enhance the productivity of an organisation, we should also focus on making a difference to the lives of others.