"We are planning for more service centres”
T. S. Vijayan , Chairman of LIC Nepal Ltd, is also the Chairman of LIC (Life Insurance Corporation), the insurance business giant of India. He was in Nepal recently to attend meeting of the board of directors and AGM of the shareholders of LIC Nepal. Excerpts from a brief interview:
LIC of India has a very wide insurance business with a wide-ranging product portfolio. What is being done in Nepal to emulate it?
LIC of India does have a wide range of insurance products and it has been our endeavour to bring some of these products to Nepal. Introduction of the plan “Jeevan Anand” on the same pattern as in India has been very successful in Nepal and it accounts for major share of the total new business in Nepal. We have now filed for our new products with the “Beema Samiti” and we will launch these new products soon after we receive approval from the Regulator.
LIC of India is also a very prominent player in the capital and money market of India. What problems or restrictions do you see here to replicate similar activities?
We look forward to opportunities in the capital and money market in Nepal particularly for long-term life insurance business. At the moment, lack of long-term investment avenues is a concern, but as the industry and market develop, I am sure this will also change and more depth and activities will follow.
What do you suggest to the regulators here with respect to new rules or regulations to facilitate insurance business ?
Any regulator formulates rules and regulations to ensure that the interests of the policyholders are well protected. We appreciate their role and abide by the regulations. The role of regulator is significant in both creating awareness about the need for insurance and also ensuring that the rights of policyholders are protected.
How is LIC Nepal’s business? Are you satisfied with the growth?
We are satisfied with the growth of new business of LIC ( Nepal) during the year ending on mid-July 2007. Where the industry grew by 21 percent, LIC ( Nepal) has grown by 33 percent. Our market share has increased by almost 25 percent in the second quarter from 22 percent in the first quarter of the current fiscal year despite overall slow growth rate in the industry.
How do you analyze the current situation of doing business in Nepal ?
During the last two months, we were able to record a growth rate of 46 percent in number of sales and almost 70 percent in First Premium Income. We hope this trend will continue.
Till the recent past, insurance business in India was the government’s monopoly. How tough is the competition for LIC India after the private sector was allowed to enter this business ?
We are already in the 8th year of competition and we have been successful in maintaining the leadership throughout. I feel proud to mention here that LIC of India has emerged as the Most Trusted Service brand in India for the 5th consecutive year. This shows that competition has made us more alert and better equipped for the delight of our customers. With innovative products, latest IT packages and new CRM initiatives, we are sure to sustain our market leadership and bring more values to our customers.
Also in Nepal many new insurance companies have entered the market and more are in the line to get the license. Is it an opportunity or threat for LIC Nepal?
As said earlier, we always deem the competition to be an opportunity to update ourselves and grow systematically. The well-built tradition of excellent systems and procedures of LIC of India would help its Nepali arm to improve its market share in the days to come.
How is the insurance business trend worldwide ?
The world insurance market grew by 12 percent in the year 2007-08. The real growth, after adjusting to inflation, works out to 5.4 percent. However, the real growth in India was 14.2 percent in the year 2007-08. As a result, India’s share of the world life insurance business market grew from 1.68 percent to 1.97 percent during the year 2007. There is a shift from traditional life insurance products to pension plans and health insurance plans.
How do you see the future of insurance business in South Asia and in Nepal ?
In most of the parts of South Asia, life insurance provides significant growth opportunities. With the introduction of new products, robust and multiple distribution, world class customer services, the growth opportunities can be realised. The competition in the region with effective regime of regulation shall help develop the market.
The penetration level of insurance products and services in Nepal is also low and we are hopeful of creating awareness about insurance throughout this country in our own way.
"There is no stopping us”
Suraju Dutta, Regional Manager-GSP Operations, Planning & Development, FedEx Express Middle East and Indian Sub Continent & Africa was in Kathmandu recently to celebrate the successful ascent over Mt. Everest by twelve Nepali girls under First Inclusive Women Sagarmatha Expedition (FIWSE), which was supported by FedEx among others. He shared with New Business Age the driving mantra behind the successful operation of FedEx Express, which describes itself as the world's largest express transportation company transporting more than 3.5 million items to 220 countries and connecting areas that generate 90 percent of the world's gross domestic product. The company says that it deliver consignments anywhere within 24-48 hours with door-to-door, customs-cleared services and money-back guarantee. Excerpts from a brief interview:
What’s the purpose behind FedEx support to FIWSE?
Their beliefs and morals are similar to that of mine and FedEx has been promoting teamwork and ensuring employment opportunities for women. The twelve Nepali women who climbed Mt. Everest, all from different ethnic backgrounds, proved that they can achieve the impossible. I am here to support the campaign as I appreciate their courage and conviction.
How long has FedEx been in Nepal and how has been the growth rate?
FedEx has been in Nepal for almost a decade now. However, in 2002, we transferred our liaison to our local service provider, Everest De Cargo and since then, we have been witnessing a constant growth rate (50-60 percent last year) in terms of services, sales and marketing. We see a great amount of promise in what Nepal has to offer. In the West, we would be happy if we achieved 5-10 percent growth rate.
What sort of problems do you generally come across in Nepal in terms of your business operations?
Coming back to Nepal after my visit that was five years ago, I have noticed that lack of infrastructure is a major problem. Added to this are other interruptions like lack of fuel and energy. But when I see how the Nepali community handles these problems, it fascinates me. I don’t know any other country under my operation going through all these problems and still promoting business. Through all this, I see a lot of strength and willpower in Nepalis, which makes me confident about the business potential here.
What is FedEx currently focusing on in the global level?
We are focusing on emerging markets like China, India and parts of Africa. We have witnessed an incredible growth in these areas in the past two years. But with the downturn in the American economy, we have started to witness a dampening effect on the consumers who buy products and services from Nepal. We are under pressure to continue services at the same cost, thus enabling Nepali manufacturers to keep up with their exports to key global markets—the USA and parts of Europe. Despite these huge challenges that lie ahead, we are optimistic about Nepal returning to its stable past and speeding up its business growth in the next 6-12 months. We are also looking forward to attaining a significant growth through our strong partnership with Everest De Cargo.
How possibly has FedEx contributed to turn things around in the recessing Nepali economy?
Last year, because of the stable market growth, people looked willing to spend and invest. It gave a major thrust to Nepali economy as more and more international buyers imported items like carpets and handicrafts. This is what we expect to be our major contribution to the global economy—shipping things between Nepal and countries like the USA, the UK and Germany. It was a better time and Nepal was able to get a fair deal out of it.
What is the current market share of FedEx in Nepal?
It’s hard to tell in exact figures as anyone can claim to be holding more market share than us without possessing confirming details. However, with the rate that Everest De Cargo and FedEx have been growing in Nepal, I see immense market share potential here.
What are the current trends in cargo service and what do you think the future trends will be?
The current trend is to play an important role in business as trends are dictated by consumers. I think cheaper transport means and methods will be the future talk of the cargo business or services. This will put an immense pressure on air express business as it is an expensive and premium method for transporting goods between countries. For example, we have been able to connect Nepal to America within three days, with a 10:30 AM delivery. With air express being the ideal method (surface mail takes up to 7 or 10 days longer) of transportation, cutting costs is what I think the future trend will be.
What sort of challenges has FedEx encountered all these years? Is there anything you are still trying to overcome?
We face the same problem that every other mailing company does: customs clearance. A Nepali exporter must be competitive enough on time while shipping out his products to countries like the USA or Japan as compared to his competitors from other exporting countries. If he moves his products through customs as fast as possible compared to his counterparts, it’s likely that he will receive an upper hand in the exporting markets. I believe that Nepali exporters need to streamline their custom clearance process to be more competitive to do business with international agencies and organizations and to protect their revenues by getting preferential treatment at the respective destinations.
How do you ensure that contraband items don’t get through FedEx?
We have our own facilities that scan packages just as they scan luggage at airports. We also have closed circuit televisions at all our acceptance points, which take pictures on real time on everybody who drops packages at these points. The recordings are kept until the packages have been delivered. There have been no complaints lodged to us relating to contraband items as of now. However, to overcome this global challenge faced by many other companies such as DHL and UPS, we work very closely with law enforcement officers in all our representative countries and make sure that we give them our cent percent support if anything suspicious comes across. Our own officers, coupled with the local police of the respective countries, are brought in immediately to analyze the situation and to take the required actions.
In some countries, particularly in the United States, it is common for people to say ‘I will FedEx it’ if they want something to be delivered. How do you think you can achieve this type of branding in other countries?
With FedEx being an extremely young company in comparison to its counterparts (UPS being over 100 years old and FedEx only 30-35 years old) we have still managed to overtake these companies in terms of air express business. We don’t worry about competition. We just follow our working philosophy, ‘People, Service, Profit’, and focus on ways to improve our services. It’s our guiding mantra and it makes all the difference. We believe that if you look after your people well, they will make sure that your services are being delivered to your respective clients on time and thus you draw profits. It’s our system that works out for us. We are providing services in more than 220 destinations and I think the only thing left to do for FedEx is to keep growing. There is no stopping us!
"We have special considerations for Nepali customers”
Major General M-Bhatia, VSM (Retd), Senior Advisor, Network Security Solutions (India Ltd) was recently in Kathmandu to launch SecretSMS, an application that offers password locking system for mobile phone users through which users can send secure messages to their friends. The service was launched in Nepal in collaboration with Innovative PPL. Excerpts from a brief interview with Bhatia about the technology and its implications:
Why should anyone buy your services?
In today’s world, you can’t afford to start inventing everything by yourself. The world is progressing and making new things. You need to take the best out of what is already in the world. Why should you waste time trying to invent a cartwheel? So, whatever you think is good for you, take it and thereafter, establish that as a base and progress further.
When it comes to taking the best available in the world, the price factor becomes a major concern. How have you been addressing this concern particularly of the smaller organizations?
Yes, technologies always involve costs. But consider why we have chosen Nepal to launch this new product. The first fact is that we are neighbours. We have close ties continuing since several centuries. We consider each other’s country as our own home. And as they say, ‘charity begins at home’, we thought why not introduce the system in Nepal? We have special considerations for the Nepali customers. I would like to assure you that the price that we have in case of other countries doesn’t match in any way with that in Nepal.
How big is the market for your kind of products and services?
There is an unlimited market. In fact, you can’t measure it. As they say limitation is the state of mind. Now the technology is there and it depends upon you how you want to use it. It requires your own innovative genius and your quest to run in line with the front-runners in the world. Today, the environment is such that you can’t afford to lag behind. You ought to accelerate. You need to be in harmony with technology.
Did you do any research before launching it in Nepal?What’s your expectation from the market?
Not in Nepal per se but we have done surveys in South East Asia and Middle East. In particular, we have found that South East Asian countries, like Philippines, which is the largest user of SMS, have been excited about SecretSMS. In the Indian Subcontinent also, SMS forms a large part of the communication system. We will use SMS as a platform to launch other programs related to it, which will make life easier for the consumers as well as several organizations in Nepal.
With the growth of telecommunication in Nepal, number of people carrying cell phones has grown exponentially and most of these phones have sophisticated features, like lock and unlock systems. How are you planning to market your products while so many phones already have these features?
We believe that mobile phones will be the focus of all transactions in the future, be it for conversation, passing of information, banking and payment of bills or whatever. This is one instrument that everyone aspires to acquire and use. And I would say even computers will go into shadow as mobile phones are going to be at the forefront. Therefore, every technology or application that relies on mobile phones will find great demand. And Nepal is not going to be left behind too much. In fact, the progress curve of countries like Nepal is going to be much steeper than in the other societies that have already progressed in technology.
A mobile phone is a very personal thing and people are already using phones that have inbuilt locking and unlocking facility that can be operated by password. So why would one require SecretSMS in particular?
These lock and unlock facilities are standard features. There is nothing much to know about them. Almost 99.99 percent users don’t care about the passwords. The lock and unlock facility is there by default. Most users don’t even know how to lock or unlock their cell phones. By nature we are not security conscious. This is true for the entire subcontinent and not only for Nepal. We are an open society, we trust everyone, and we do not consider security as a prime factor in our lives. But today, with technology advancement people can get access to your information and use it against you, which is what we are trying to educate people about.
Convincing such people must be a difficult task. How are you going to educate them?
I don’t see this as too much of a problem. The mobile users these days may not be educated but they are intelligent. They know what they want. If they want to know how to use an application, they will learn very fast. Today, people from all walks of life are tech-savvy. There is no problem.
How much does one have to pay for the software? Are there any additional costs involved other than the monthly subscription charge of NRs 50?
Under the agreement that we have arrived at with Nepal Telecom, the subscription fee is of NRs 50 per month. If you think you need the facility, you can keep on renewing it. We have kept it for one month, not for the entire year because some customers may find that they do not require it for that length of time. So this provision makes them capable of stopping the service when they no longer require it. But I think Rs. 50 per month is worth spending if it helps you make sure that your information doesn’t end up in wrong hands. It’s easy and good deal. You just need a JAVA compatible cell phone and a visit to Nepal Telecom.
What is the success story of SecretSMS and your other services in countries other than Nepal?
We have launched it in many places like Malaysia, Brunei, Indonesia, Dubai and Kuwait. We are in dialogue with South American countries. It has been received well. In fact, the inception of the SecretSMS emerged from the necessity of the consumers. I think it will catch on as we grow in technology and usage of information. And with information getting more and more powerful, security will be of great concern in the future.
You also have another product XMC. What is it?
The XMC is an enterprise version that can be installed in your desktop. It helps in your network of friends. With this you can keep all the information that you share with your friends secret and confidential . When banks send out SMS to give out bank statements to their clients, privacy is very important. Can you imagine someone else getting to know about your confidential bank statement? Banks can use this technology to encrypt what they are sending to their customers. In India, the Reserve Bank of India has laid down certain regulations over SMS banking to make it secure and confidential. We have developed a banking application so that all information comes to you through a secured channel.
"We are not talking about commercial target now”
Gerald Porcario , Marketing Head of India's Mahindra Renault, was in Kathmandu to launch his company's car brand Logan. He shared with New Business Age his market expectations, special features of Logan and plans of Mahindra Renault. Excerpts from a brief interview:
How do you see the market for high-end car brands like Logan in Nepal in the face of frequent fuel shortage?
We think that there is a great opportunity for Logan in Nepal given the fact that this car has a lot of space, which is of concern to everybody today. At the same time, it offers a very good mileage which is focused to address the critical issue of fuel crisis. So we see good opportunity for Logan in Nepali market.
Many car manufacturers are coming up with smaller cars to address the issues like environment as well as rising fuel prices. Do you have any plans in that regard?
Mahindra Renault today is selling Logan which is the first product manufactured and being sold by Mahindra Renault in India. Of course the product plan is under process at the moment for new vehicles. As you may know Renault is also working on electric cars in some countries like Portugal, Israel and Denmark. So there is a strong plan for electric cars. For small cars, Renault has a strong know-how with some very successful small cars being sold in Europe and in some other regions of the world.
What is your market projection for Logan in Nepal?
The first thing is to have some good response from our customers, which has been encouraging in India so far. Customers are talking about this car with high enthusiasm. So, we hope it will be the same in Nepal because Logan is an experiential car and as soon as one test drives it, he/she begins to become its ambassador.
We are not talking about commercial target now as the markets are very turbulent at the moment and it’s important to have a stable market to get a strong market share. We are considering the fact that in Nepal we will be gaining a good market share in between the B/B+ and C segment.
What are the special features of Logan?
Logan is a fully-loaded car at the top-end of this version having airbag and other features like driver information system, MP3 radio, etc. You will very soon have Anti-lock Braking System (ABS) versions. So, everything placed in this car is very well positioned for the Nepali market.
The roads in Nepal are not that driving-friendly because of their poor maintenance. How compatible is Logan to such road conditions?
That’s the reason why we are launching Logan at first to show that we have a great ability to offer ride comfort and a good handling even in bad road conditions. Logan has been designed keeping varying road conditions in mind.
What else is coming to Nepal in the near future from Mahindra Renault?
We are not planning to launch only Logan. As soon as we have an extension plan in Nepal, we will launch a variety of cars in the market but we are still working on it and nothing can be disclosed as of now.
"GM has aggressive, selective plan for Nepal”
Karl Slym is since October 2007 President and Managing Director of General Motors India. He was in Kathmandu recently to study the Nepali market and shared his observations with New Business Age. Excerpts from the interview:
What is the motive of your visit to Nepal?
As you know that General Motors (GM) is a global company as far as automobile is concerned. Its key market area at the moment is Asia Pacific and if you look at this region, the two most important markets for GM are India and China and of course their neighbouring countries including Nepal. We are very pleased with our growth in these markets. In India last year, the automobile industry grew by 14 percent while Chevrolet, which represents General Motors in India, grew by 74 percent. Despite the inevitable downturn in the market due to the hike in fuel prices, we have been able to resist the impact and are looking forward to register a growth of 30-40 percent in India. We are focusing on ‘Spark’ in our expansion streak in Nepal for which we are here.
Majority of cars manufactured in India are small. Is it just because of fuel economy?
It’s not just because of the fuel economy. It is also because of road conditions and customer preferences. The kind of automobiles that we manufacture is specific to the region or the country that we launch them in, depending upon various conditions. Our objective is to offer the best deal to our customers.
How has been the performance of Spark, the small car from GM launched a few months ago?
A test conducted by an auto journalist found out that ‘Spark’ is the best car in the segment in terms of fuel mileage and comfort. In a combined drive between cities with proper traffic and highway, the mileage of ‘Spark’ stood at 16.9 kilometres per litre. In terms of quality, ‘Spark’ has been rated No. 1 in JD Power Survey, the largest customer satisfaction survey of its kind in the UK. And from customer feedbacks, we have learnt that it has big competitive edge over other contemporary car models in the market. Besides that, it is cheaper than Hyundai and Maruti products. Moreover, it has an Italian style and more than two million units have already been sold across the world.
What are the current trends in automobile engineering and what future trends do you foresee?
Currently, our vehicle researchers and developers, from the perspective of India and Nepal, are trying to bring products that are suitable for fuel economy, environment, road conditions, driving habits and style. They are also looking into new light weight materials, vehicle to vehicle communication, self-help diagnostic mechanism that can be positioned in our vehicles to ensure quality driving and customer satisfaction. Besides that, we are also focusing on powertrain engines to economise fuel consumption and further exploring the possibility of ethanol, hydrogen, electricity, bio-diesel and hybrid technologies.
What is your take on customer behaviour in Nepal and elsewhere?
Customer needs in markets like Nepal and India are slightly different from those in Europe and America. Customers here seek to have a reliable basic transportation and are extremely value conscious. They want vehicles with more space. Buying behaviour is very much herdish. They tend to mimic others in terms of choice and opinion in at least some of the mainstream segments. And there is a difference between intrinsic and extrinsic quality. People are more bothered about what looks on the outside rather than what looks inside.
What is General Motors planning for the Nepali market?
The automobile market has grown rapidly over a short period of time in Nepal. Currently, we have through our authorised distributor Vijaya Motors, outlets at Kathmandu, Pokhara, Biratnagar and Patan and we want to make sure that customers get all the support they want from us in terms of after-purchase and other services. As far as new products are concerned, we have a very aggressive and selective planning to bring many products into the market. We won’t be just throwing everything that General Motors has into Nepal. We will launch the most suitable brand keeping customer preference in mind.
