By Bernhard Steinrücke
When German global players that are active in India like BASF, Bayer, Bosch, DHL, KSB Pumps, Merck, Schaeffler Group, Siemens or ZF present their 2014 results to their boards these days, some of the CEOs might rub their eyes and ask their CFOs if they’ve got their numbers right from their Indian subsidiaries. In almost all cases, the book value has doubled, if not tripled, from the one year to the next. Indeed, the Indian Sensex has gone up by 30%, and yes, the rupee has strengthened by 10% against the euro, but outperforming the market with increases in the stock prices between 80 and 200% certainly comes as a pleasant surprise. The market value of the 10 largest German companies listed in India alone stands at €27.9 billion. Considering the fact that this only reflects the performance German companies listed in India, one can only speculate as to how non-listed German companies in India have done.
German companies in India: a success story
In many cases, it is well known that German companies in India are market leaders and have become true success stories over the years. Allianz Insurance, along with their Indian joint-venture partner Bajaj, has become the second largest foreign insurer and the clear leader in the life and general insurance industry (including health insurance) in a span of just 14 years. With more than 15,000 employees and more than 100,000 certified exclusive agents, it is a unique success story for the Allianz group globally and a favorite in the Asia-Pacific region. DHL, as part of Deutsche Post, the global logistic leader, is not only listed in India as Blue Dart Express, but also has its own airline and is the leader in the German logistics industry in India. This important sector is well represented by other well-known names like DB Schenker, Hapag-Lloyd, Dachser, Hellman, Lufthansa Cargo, Hamburg-Süd and Rhenus, just to name a few. The Bosch Group, the largest German industrial employer India, is not only a household name, but with many of its products represents a distinct market leader in the country, known for its unique quality and competitiveness. With recognizable names like Audi, BMW, Mercedes and Porsche, German car manufacturers have a market share of around 90% in the luxury class and are the undisputed kings of the road. Latecomer Volkswagen has also not only managed to penetrate the Indian market and become very visible with its Polos and Ventos, but also to engage India as a manufacturing hub for exporting tens of thousands of cars to other emerging markets like Mexico. For Deutsche Bank, India is one of the best performing markets globally with €1.7 billion under capital. For SAP, the Bangalore R&D lab is the second largest after its headquarters in Waldorf, and a critical element for SAP’s global success story. Without the roughly 7,000 Indian software engineers in its ranks, SAP would hardly be competitive internationally. ThyssenKrupp, too, has been a household name in India for decades and has not only been serving the Indian market, but also its clientele throughout the world. The engineering company UHDE, especially, has been designing and commissioning global UHDE projects and it certainly came as no surprise when the long time UHDE India CEO was installed as the global UHDE CEO. This kind of India expertise also enabled the long time Bosch India MD to become the global Bosch Rexroth CEO.
From cash and carry to Bharat Benz
Metro Cash and Carry is the only non-Indian cash and carry company that was able to conquer the Indian wholesale market and is expanding against all odds. The Daimler group has not only invested €800 million in its Indian commercial vehicle plant, but with Bharat Benz has even created its own brand for Daimler, made in India. The Bertelsmann group, Europe’s largest publishing house under Random House, is also India’s largest publisher and with Avarto Bertelsmann has one of its largest back office operations in India. Linde Group, the German engineering and gas giant in India, has an order volume of about €2 billion mainly from the petrochemical industry and thus is a market leader in the country. In the airline industry, Lufthansa is not only Europe’s largest carrier to the sub-continent, but also exclusively runs its “Miles and More” loyalty program out of Gurgaon, thus fully reliant on India. Schloeman Siemag, the world leader in steel plant equipment, is supplier to more or less every Indian steel plant and thus critical for the whole Indian steel industry. Another German global player, Deutsche Boerse, is not only a 5% shareholder in Bombay Stock Exchange, but also manages the whole derivative business of BSE on its platform. India is also home to many of the Germany’s success stories such as Lapp, EFD Induction, Festo, Rittal, R. Stahl, EBM Pabst, Mahle, M+W, Eisenmann, GEZE, ElringKlinger, Häfele, SEW EURODRIVE, Ottobock, Wirtgen, Dorma, Kübler, Baer Shoes, and many more. Five of the 30 German DAX listed companies have key Indian personnel, including Anshu Jain as Co-CEO of the Deutsche Bank (Note from the Editor: He has recently announced his resignation for the end of June 2015), Sanjeev Gandhi, Member of the Board of BASF SE, Sanjiv Lamba, Member of the Board of Linde AG and Arunjai Mittal, Member of the Board of Infineon and Kamesh Goyal as well as Head of Group Planning and Controlling, Allianz SE. With TÜV Rheinland, TÜV Süd and TÜV Nord, the German quality control institutions are also present throughout the country, thus supporting Indian and non-Indian companies to achieve global standards.
Investment in India: Germany as a front-runner
Germany has always been the frontrunner when it comes to investments in India, be it with Rourkela after the Second World War, or following the liberalization of the Indian economy in the 1990s, or after 2003 during the revival of the Indian economy following the Asia crises. Even in the last three years, when the Indian economy slowed down, it was German companies, big and small, who invested heavily so that as of today, a German factory is opened every month and German companies are anxious to produce goods and provide services in India. At this year’s Hannover Fair, many of these companies have shown the world that “Made in India—made by Germany” is already a reality and a perfect win-win situation. In addition to manufacturing, skills are the other area where Germany proves to be a role model for Mr. Modi, and to be sure, there can be “no making without the skill”. Here, too, Germany and German companies have contributed a great deal in India. The vocational training provided for decades by Bosch in Bangalore is probably the best in the country, as demonstrated by the first prizes won almost every year by their apprentices at pan-India competitions. Volkswagen has its own in-house training center for mechatronics in Chakan, and the GTTI technical training institute has just been recognized with an award as the best vocational training institute in India. The company Würth offers vocational training for their staff, much in line with the German system of dual education, and Siemens is putting up a state-of-the-art training center with a three-year dual course for blue-collar workers. The Indo-German Chamber of Commerce introduced vocational training for the Industriekaufmann/Industriekauffrau (management trainees) almost 25 years ago and has trained more than 1,000 Indians who are “making it in India” with German companies today. And even when it comes to R&D, German companies are using the huge potential that India has to offer. For instance, Mercedes, that is vastly expanding its biggest R&D center outside Germany in Bangalore, or BASF, that is investing €60 million in a new state-of-the-art R&D hub in Mumbai, or Bosch and Siemens that are using India as their hubs for frugal and smart engineering. And the much renowned Nano, along with its 18 German suppliers, is a car that is the result of a combination of Indian vision and German innovation. In a nutshell: Build, deliver and research in India—a tremendous basis for a bright Indo-German future.