Page last updated at 10:50 GMT, Friday, 12 June 2009 11:50 UK

India's firms eye swift recovery

By Ben Richardson
Editor, BBC India Business Report

Spice warehouse
Spice traders expect to be tasting success again soon

Hidden from the harsh summer sun in the half-light of an old warehouse, bird seeds are being graded and packed for the export to the US.

Spice-sorting machines chug dust and strange smells into the air. Workers move barefoot between stacked bags of cumin and turmeric, stopping only to shimmy up and down the Hessian wall using their barefoot strength and hooked knives.

GR Singh has been in the spice business for 25 years, and he took over from his father. The economic slowdown is hurting his business, and he has seen a drop in sales to markets such as Europe.

And he is not alone. India's companies have been trimming their operations following a fall in foreign orders.

However, latest government figures showed industrial production rose 1.4% in April from a year earlier, raising hopes that the worst is over for India's economy.

Taking stock

GR Singh
No one likes a slowdown, but it could help us in the longer term
GR Singh

Mr Singh is circumspect about the problems he faces. He has been through tough times before, and has always come out the other side.

If anything, the current lull in business is giving him a chance to take stock, rework how he operates and hunt out new markets.

While Europe may be weaker, sales to East Asia and countries such as Taiwan are strong, and growing.

Meanwhile, domestic demand is steady and Mr Singh is planning to set up distribution hubs nearer the production areas in the north and south of India in order to cut his transport costs.

He also wants to revamp his online operation, and look at ways of reaching out to new customers.

"No one likes a slowdown," he says, "but it could help us in the longer term."

Growth targets

Another company that is also taking a more rounded view of India's recent economic problems is Mahindra & Mahindra.

There is no dust at the vehicle maker's tractor factory on the outskirts of Mumbai. Only spotlessly clean production lines, where workers crawl up, over and inside the hundreds of chassis that roll past them with clockwork timing.

Mahindra & Mahindra tractor
Mahindra has focused on emerging markets to maintain sales

Overhead, bright red panels wobble as they leave the paint shop, and you get a strong whiff of success mixed in with the axle grease and diesel fumes.

Mahindra is well on the way to becoming the biggest tractor company in its sector.

It has operations in China and the US. It is eyeing the growing agricultural power of Brazil and South America. And it is backed by a domestic market that gives it enviable strength in terms of a growing client base to fund its expansion plans.

The economic slowdown has hurt exports to the US, which dropped some 12% in the past year. But the firm has managed to offset that slide by focussing on emerging markets such as Africa, where demand has surged.

In fact, the company is so confident about its prospects that it is spending significantly on research and development so that it can be ready with new products when the global slowdown turns and demand picks up again.

The company's boss, Anjani Kumar Choudhari, cracks a grin when asked if this is a good time to be an Indian manufacturer.

There is no doubt that India has been affected by the global economic crisis. Exports have fallen and millions of jobs have been lost.

However, thanks to the size and power of its domestic market, the country has also managed to escape some of the problems that have hit so many of the world's other main markets.

When exports dry up, the country can turn in on itself and survive.

Getting ready

Back at the spice warehouse, Mr Singh wipes sweat from his brow and allows himself five minutes to reflect on the future.

He says he won't be firing any staff. They've been with him for years, and are like his family.

And anyway, what's the point? Things are going to pick up again, they always do, and he needs to be ready.



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