All set to kick-start Manufacturing

V. Krishnamurthy has scripted three major Public Sector success stories. Now, as Chairman of the NMCC, writes Monavar Alam, he is all set to boost the manufacturing sector in the country to global standards

If V. Krishnamurthy hadn't steered Maruti's wheel of fortune, India 's dream of a common man's car would never have materialised. It was his second great achievement after the first success story in BHEL, way back in 1972


e is a man who wears the crown lightly. His remarkable achievement - just one of a great many - to raise the fortune of SAIL from a loss making PSU to a profitable enterprise with a distinct competitive edge, led him to be hailed as 'Man of Steel', an accolade that suited him perfectly. He was also honoured with 'Padma Vibhushan' title in 2007. Such is the persona of this king of India 's public sector, Mr Venkataraman Krishnamurthy, who is presently heading the National Manufacturing Competitiveness Council (NMCC). He seems quite geared up to face the new challenges presented by this ambitious government body at the relatively young age of 82.

The reinvention of BHEL
At one point of time, Bharat Heavy Electricals Ltd (BHEL) was in a particularly bad shape. The government was even toying with the idea of breaking it up into smaller units to make them more manageable for "Indian managers". That is when Mr V. Krishnamurthy was given the reigns of the flailing organisation. Mr Krishnamurthy asked for a year's time before doing anything drastic with BHEL. In his own words, "The organisation was full of problems . The morale of the employees was very low because they were not very sure whether they had a future. BHEL was being battered in the press every day. Besides, no customer believed that we would ever produce Quality equipment, much less supply it in time." In those days, there was a government executive order that power equipment should be bought only from BHEL. Mr Krishnamurthy changed that. The rule now said that equipment could be from the most competitive seller. The moment a customer felt that he had more than one option, the initial resistance came down, especially when they realised that BHEL was able to offer them better deals in terms of performance and price. A year after taking over, Mr Krishnamurthy chalked out a plan not only to keep BHEL as one organisation, but to merge two other organisations into it. At the time that he left BHEL, five years later in 1972, BHEL had become so good that it was refusing orders. This was one of the first rags-to-riches success stories of the Indian public sector.

  Compiled by Aalok Srivastav

If Mr V. Krishnamurthy hadn't steered Maruti's wheel of fortune, India 's dream of a common man's car would never have materialised. It was his second great achievement after the first success story in BHEL, way back in 1972. In 1980, Maruti was nationalized and the administrators started planning a sedan-type of car. It was, however, Mr Krishnamurthy and his team who put their foot down for a small car after getting a favourable survey report for the market demand of this segment. It was his first victory in the Maruti project. Soon after getting approval for the small version of the car, he went on a tour of Europe and Japan in search of the right model as well as the right partner to roll over the machine. During that tour he brought about the famous deal with Suzuki, which is now part of the Maruti-Suzuki legend.

No customer believed that we would ever produce Quality equipment, much less supply it in time. In those days, there was a government executive order that said anybody wanting power equipment should buy it only from BHEL. The first thing I did was to rescind the order and say, you are welcome to take the equipment from anywhere you like. But I set down certain rules of the game. It takes three years to produce a thermal power station and four for a hydel power station. I said place orders three or four years in advance.

•  V. Krishnamurthy on how he changed the face of BHEL

Starting from a humble beginning - from a landed agricultural family in Thanjavur, Tamil Nadu - he rose to great heights, achieving both name and fame and established himself as a much acclaimed public sector guru.

In an extensive interview to a business magazine, he made a very candid admission about his early days: "When I was in school, my family lost all its land. So there was a compulsion to stand on one's own feet. At the end of the Second World War, a short-term compressed course in engineering was being offered, which I took up. All this shaped my life's philosophy. You are rich, suddenly you become poor and nobody will trust you with Rs 100 and suddenly, within 10 years, you are on the top of the world."

After clearing the Central Engineering Services competition, he was very fortunate to get his first posting as a research officer in the Planning Commission, where he came in direct touch with policy stalwarts like Pandit Jawaharlal Nehru, Mr Gobind Ballabh Pant, Mr Chintamani Deshmukh, Mr V.K. Krishna Menon and Mr T.T. Krishnamachari, taking notes as they were discussing projects. Much later, he recollected about those lucky days and how at a very young age he got the great opportunity to witness decision making by people who were the founding fathers of this country - for instance, Dr Bidhan Chandra Roy arguing about how the Durgapur Steel Plant was important for the growth of West Bengal, or Mr P.C. Mahalonobis expressing his opinion about economic models suited for the country. Certainly it was a chance of a life-time that those who were responsible to decide about the shape of the Indian economy also helped him shape his life and career. He was directly trained by none other than Mr Mahalonobis himself for six months to take the charge of the project.

Such experiences widened his entire perspective and provided him the boldness and confidence necessary for leadership. That is why when in 1972, he was called upon to take the charge as BHEL's chairman, Mr Krishnamurthy did not shy away from this challenging task. Rather, soon he proved his mettle by turning it over as India 's first great success story in the public sector. It was no mean achievement at a time when the public sector's name was synonymous with loss-making and wastefulness.

During his long, illustrious career as a civil servant, in particular, he turned the fortunes of three public sector giants - BHEL, Maruti and SAIL - and brought them at par with the best corporate enterprises Quality-wise and in terms of efficiency and productivity.

Laurels for V Krishnamurthy

  • Padma Shri in 1973
  • Business Leadership Award in 1975
  • Padma Bhushan in 1986
  • Businessman of the Year in 1987
  • Steelman of the Year in 1989
  • Lifetime Achievement Award in Management by the AIMA in 2006
  • Padma Vibhushan in 2007 (for Civil Services)
  • Nakajima Prize Winner in 2007

Thanks to our manufacturing sectors, the country was able to stand on its own without any sort of external help. Because the bulk of these activities and development was through government agencies, we had lost competitiveness and the cost effectiveness to an extent. The Quality of our operations was not upto the mark. Thus we have remained stagnant during the last 15 years in terms of the manufacturing industry's contribution to India's GDP . Given our natural advantages, we could certainly have done better than that. It is here that NMCC is working to improve the competitiveness of the manufacturing industry...

- V. Krishnamurthy on NMCC

In his present avatar as the head of the National Manufacturing Competitiveness Council, he is once again faced with a big challenge of bailing out the Indian manufacturing sector from sloth and malfunctioning, which is hampering its smooth growth and development. Despite all the incentives and encouragement, the Indian manufacturing industry has failed to show its real worth in the world market. India 's share in the global trade is still less than one per cent. As such the task before the NMCC is very vast and its area of operation is literally the entire economy, because manufacturing touches its each and every aspect. Under his leadership the council has set upon the following tasks:

            • Evolving sector specific strategies for enhancing competitiveness of the manufacturing sector;
            • Recommending measures to create common infrastructure and facilities such as testing, quality, design, HRD, skills and training institutes; and
            • Providing a forum for dialogue between public and private sectors as well as labour and academic sectors.

On the basis of his long experience and sharp perspective he has clearly defined and identified the main problem areas: "Attaining competitive edge in 'manufacturing' depends critically on mitigating constraints; both, general constraints such as inadequate infrastructure, high transaction costs, higher interests, power and regulatory issues as well as sector specific constraints such as technology upgradation, market access, duty structure, managerial practices and competitive scales. Resolution of these constraints necessitates focused attention and action involving not only inter-Ministerial/ Departmental co-ordination but also a closer interaction amongst stakeholders viz, industry, input providers, financial institutions, education, research and management institutions."

Now, it remains to be seen whether India will witness another great success story in the near future. However, this time it won't be confined to one isolated company like BHEL or SAIL, but would encompass the entire Indian economy.

NMCC: Catalyst for change

MOVE TOWARDS QUALITY: (L to R) Ashwani Kumar, Minister of State for Industry; Dr. V. Krishnamurthy, Chairman, NMCC; Dr.
Parthasarthy Shome, Adviser to the Finance Minister and V. Govindarajan, Member Secretary, NMCC at the first Meeting of the
Empowered. Sub-Committee of the High Level Committee on Manufacturing (HLCM) in New Delhi on October 26, 2006.

The National Manufacturing Competitiveness Council (NMCC) was set up in 2004 as an interdisciplinary and autonomous body at the highest level to serve as a policy forum for credible and coherent policy initiatives in the manufacturing sector, with the objective of making it globally competitive.

Under the guidance of V. Krishnamurthy, the council has set up:

National Strategy for Manufacturing

After detailed discussions with the Industry, Economists, Academia, Government Departments concerned including Planning Commission, Economic Advisory Council of the Prime Minister and various stakeholders, "The National Strategy for Manufacturing" has been prepared and submitted to the Government for its adoption and implementation. It attempts to identify the areas of policy and outlines the strategic directions that need to be pursued in order to realise higher levels of growth and employment.

National Manufacturing Competitiveness Programme

The Finance Minister in his 2006 Budget Speech had announced the finalisation of a five-year National Manufacturing Competitiveness Programme by the NMCC.

The programme finalised mainly deals with firm level competitiveness. It is designed to address the issues of competitiveness in the background of global challenges. The important components of the scheme include a National Programme on Application of Lean Manufacturing for the SMEs, Promotion of ICT among the SMEs, Technology and Quality Upgradation Support for SMEs, Support for Entrepreneurial and Managerial Development of SMEs, Enabling SMEs to become Competitive through Quality Management Standards, Enhanced use of Design Expertise and Intellectual Property Rights in the manufacturing sector and necessary Marketing Support/Assistance to SMEs.

Visionary Leaders for Manufacturing Programme (VLMP)

India needs to enhance its productivity and competitiveness through development of Visionary Leaders capable of 'breakthrough thinking' and envisioning future concepts, trends and business, thereby transforming the Indian manufacturing industry. The National Strategy for Manufacturing (NSM) of NMCC has recommended development of leaders for the manufacturing industries.

National Manufacturing Portal

A National Manufacturing Portal - the first of its kind in the country - was launched by Dr. V. Krishnamurthy as a major new initiative that will enhance the competitiveness of India's manufacturing sector, especially the small and medium enterprises (SMEs), through the use of information technology and enable them to compete more effectively in today's globalised environment.

- Compiled by Aalok Srivastav