Will the nomenclature ‘Father of successful Indian IT hardware manufacture’ be apt to describe him? It just might be. While there have been players like the Tandons, and TVS Electronics, none of them can boast putting a ‘Made in India’ brand in the global league the way Deepak Puri’s Moser Baer has. Talk to Puri and he is quick to add that every carton leaving the Indian shore has a bold ‘Made with Pride in India’ label on it.

Talk of India-and-hardware, and not many will bet their monies on that. Talking about numbers, let’s look at a few of them. In a short span of five years, Puri’s company has increased capacity by over 30 times and grown revenues at a CAGR of a whopping 170%, slowdown or no slowdown. Just for comparison’s sake, on the software side, Infosys grew by 133%, TCS by 199%, and Wipro by 155% for the same period.

Within five years, Puri’s company has increased capacity by over 30 times and grown revenues at a CAGR of a whopping 170%, slowdown or no slowdown

So is Moser Baer’s Deepak Puri an aberration, an anomaly in services-dominated India? Indeed. He is the lone IT manufacturing Indian champ, who’s put the country on the global map, supplying to the world’s biggest optical media brands. What is more commendable that this phenomenal success has been achieved in a short span of six years.

How It Started
Puri came from a Punjabi family that saw government services as a dignified way of earning livelihood and looked down at business. Puri did try to go in the ‘service’ line, but survived for only 18 months. In 1964, back with a mechanical engineering degree, he joined the oil giant ESSO. He joined the company because ‘it had the finest training system’. Eight months down the line, he quit to join Shalimar Paints and there too he lasted for about eight months. Why? Comments Puri, "I realized that I was far too ambitious to work for anyone." That’s the time when the entrepreneurial bug bit him and he started a venture in the precision tool segment in Calcutta. The city and its labor problems went hand in hand and Puri’s precision tool company also had to suffer. Eventually, the company had to be shut down. In 1983, scouting new opportunities, he joined hands with the Switzerland-based Moser Baer AG to manufacture time-keeping solutions. The opportunity was in the banking segment and the threat came from the bank unions. Puri realized that he had to look for another opportunity when he heard that some union members had poured acid on the machine as a mark of protest.

Deepak Puri Born July 1941 Education College, St Stephens, Delhi, 1960; BTech, Imperial College of Science and Technology, London Current Position Managing director, Moser Baer India Career Path 18 months work experience with Esso and Shalimar Paints, 1964–65. Started own high-end precision tool company, 1966. Started Moser Baer for time-keeping solutions, 1983. Steered Moser Baer to floppy disks manufacturing in 1986 and optical media manufacturing in 1998. Family Married, two children Milestones 1983 Incorporated Moser Baer in 1983 in technical collaboration with Swiss based Moser Baer AG to manufacture specialized high-technology time-keeping devices and technology products 1986 Helps Moser Baer foray into floppy disks 1995 International Finance Corporation (IFC), a member of the World Bank Group, gives loans of $5.7 million for the MFD expansion. Further investments by IFC, Warburg Pincus, and Electra Partners 1998 Foray in CD-R manufacturing with planned investments of Rs 330 cr 2000 IFC invests $40 million (175 crore) Takes over Capco SA of Luxembourg for Netherland guilders for $12 million (approximately Rs 23 crore) Moser Baer incorporated a marketing subsidiary in the US earlier this year. The subsidiary—Glyphics Media—will spearhead the company’s penetration in key North American markets Capacity expansion planned from 350 million units to 750 million units 2003 A JV with the US-based Imation for a $100 million sourcing deal Increased capacity to 1.45 billion optical media units per annum

And then storage fanned its way in Puri’s life, literally. On a hot day, at his friend’s office at IBM, he saw an 8-inch ‘something like a fan’ and was quick to use the same for some relief from the day’s heat. Quickly enough, a reprimand came from his friend who told him that such a silly action would cost him his prized data. Puri saw that the 8-inch fan was inserted into a huge box and data was being accessed. Soon, business potential overtook curiosity and Puri landed in California to talk to Xidex—the largest manufacturer of audio/video media.

With that began Puri’s tryst with data storage. He started manufacturing floppy diskettes out of India but a whole lot of problems awaited him. Given the good old days of the license raj and the small-scale industry preference, Puri was given a license to manufacture 50,000 units per month. Puri needed no market research data to figure out that since the Indian market was practically nonexistent, competing with global players with such low-capacity output was sheer foolishness. Also, the demand that Moser Baer got from international customers were half-a-million diskettes in one go. The license restrictions meant that Moser Baer could produce those many diskettes once in a year only, then sell them, and shut the factory for the rest of the year.

Puri took the next logical step in a country trying desperately to promote exports. He moved to the Noida export processing zone. From then on, life has been on a fast lane. The company moved from 8- to 5- to 3- and even to 2-inch diskettes (the last one though never made it to the market.) Extending the magnetic media product portfolio was the next logical move, and soon Moser Baer was deep in the production of audio/video tapes. Looking beyond the magnetic media, the company saw opportunities in the optical media space. However, the market was in its infancy and in 1996, the management, after evaluating its resources and the high risk involved, decided against getting into manufacturing the product. However, a year-and-a-half later, they relooked at the opportunities and decided to take the plunge. But then other problems came up. When the company started its due diligence, sales prices of CDRs were about $7 a piece, but within three months that crashed to about a dollar. The problem was that the manufacturing cost was about a-dollar-and-a-half per piece. Also, the company was looking at an annual capacity of 30 million units, while the global demand was pegged at 60 million. So here was a Rs 60-70 crore Indian company keen to invest about Rs 300 crore and cater to nearly 50% of the global demand and yet sell products at a price less than the manufacturing cost—the ideal recipe for becoming a millionaire, from a billionaire that is. However, Puri gambled on the huge potential market and rest is history.

Creative Financing
A key to Puri’s and Moser Baer’s success is the compression of complex projects. Explains Puri, "Committing huge amounts of money and waiting for 18 months—the normal gestation period for most manufacturing projects—is sheer stupidity." Puri is quick to point out that most of his projects have been completed well before schedules and his team has been able to compress projects to about six months. And this is where Puri uses creative financing. He explains, "Given the low global interest rates, we open a letter of credit for 180 days for machinery supply. So we start paying very small interest for the time period while the money is in Indian banks. I can still come out better due to the higher rate of interest in India. Three months later, we take a forward swap. Also, given our strong standing with our suppliers, we get about 180 days credit period from them. Since we look at completing the project in six months, we do not have to shell out huge amount and can get the commercial production rolling."

Puri’s Moser Baer has also become a master in the art of mass production, like the Taiwanese. For example, when the company moved into manufacturing floppy diskettes, its annual capacity was 600,000 units, while today its daily production is over 5 million units. With mass production came the volume of scales and the cost of economies. (The company claims to be the lowest cost manufacturer in the world.)

Crystal Ball Gazing
What next? While the company will continue to ramp up its optical media business, it is also looking at other segments like photovoltaic batteries, flat panels, and semiconductors.

And the new businesses are not out of sync of Moser Baer’s core business—large-scale, efficient multiple manufacturing facilities, high-precision injection moulding, working in a controlled environment, and working with silicon. These are the common elements of all the new businesses that Puri is evaluating. And he is sure that like the optical media business, he will bring glory for the ‘Made in India’ brand in these businesses too.

Yograj Varma in New Delhi

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