Value addition key to sustain business: Varadaraj

“Growth is not be limited by the resources, but by the size of one’s aspiration,” said Jairam Varadaraj, Managing Director, Elgi Equipments.

“Unfortunately, most people put resources first. When you are stuck with this thinking, it limits your aspirations. The problem is not resources, but the clarity of thought and the goal.”

Delivering the keynote address at the SURGE SME Conclave, organised by The Hindu BusinessLine in association with Aditya Birla Sun Life Mutual Fund he spoke with the assembled SME entrepreneurs about the need for growth and how it should be achieved.

He shared his own experiences in making Elgi Equipments one of the top 10 manufacturers of compressors in the world.

He gave America’s war with Vietnam as an anecdote. “The Americans had everything, including the strategy for modern warfare. But they had no reason. Whereas the Vietnamese were fighting for their freedom”.

Of clarity and reason

The starting point of aspiration is clarity and reason. “Our freedom from the British inspired us to emerge strong and not our resources. We are, no doubt, a resource-rich country,” he said and added that there was no cost for aspiring and for defining an opportunity.

“We had to reassemble our processes to take the company to the next level.”

While growth can empower people to achieve more, it has to be coherent. “You can’t boil the ocean if you want to be a global player,” he added.

Stating that the air-compressor major has a reasonably good market share in India relative to Europe, he said: “We play in areas where we are comfortable and not into pockets where we are not. We recently initiated an exercise to re-segment customers by their behaviour and realised the growth opportunity in this space.”

Laying emphasis on value proposition, he said: “Low cost cannot be sustainable. Every player should look for value addition and an opportunity to win on the right side of the value chain, and this cannot happen overnight.”

‘Do what you understand’

Sharing his strategy on tiding over economic downturns, Varadaraj said, “Having gone through 20-odd years of ups and downs, my only advice to young entrepreneurs is “do not do anything you don’t understand”.

He highlighted how some big players in this region got trapped in swap deals.

“There was undue pressure, but I abstained from taking the plunge as I did not understand. If you want to stay safe, abstain from doing things you don’t understand.”