Back3M India seeks fivefold growth riding on new products
3M India seeks fivefold growth riding on new products
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Bangalore: On one level, 3M India Ltd, the maker of Post-it pads and Scotch-Brite scrub pads, wants to grow its revenue five times in as many years by focusing on healthcare, consumer products, oil and gas, infrastructure and automotive sectors.
On another level, the Indian unit of the US-based 3M Co. wants to increase the sales contribution of new products made in the country to 40% a year, from 29% now, with merchandise such as utensil cleaners.
In 2009, 3M India developed around 40 products in the country. The firm has developed some 200 products in India over the past two-three years.
“Lot of growth will come from new products. Some will come from share gains and some will come from creating new markets. One of the things 3M does well is create new markets," said Ajay Nanavati, managing director of 3M India. “That is the goal I have set for my team and for myself."
3M India has emerged as a hub for developing product technology specific to small cars, crucial for the group as clients such as General Motors Corp., Ford Motor Co. and Toyota Motor Corp. expand their small car portfolios to other markets.
“It is unique to India, that some of the products we make here is not made elsewhere in the world. Our sister labs in similar emerging economies can tap into our resource," said Nanavati, who joined 3M India in 1988 as its first Indian employee. He later worked in Singapore, the US and Israel for 3M before returning to India to head its operations in October 2008.
As for 3M India’s revenue target, analysts say the firm may be over ambitious as it faces the challenge of creating new market segments and facing competition in businesses where other firms have similar products.
“Unless they have something up their sleeve, targeted growth can be little stretched on a reasonably large base," said Deepak Jasani, head of research with HDFC Securities Ltd. “They need to introduce new products and grow the markets, increase the outsourcing from India to drive towards the growth."
He added that while there are a lot of expectations from 3M India, its “performance has not been very exciting... Last two years, their top line has grown by 11% and 21%. This year, it will be flat".
3M India’s profit increased to Rs64.95 crore in 2009 from Rs57.45 crore the previous year, as sales rose to Rs825.78 crore from Rs742.65 crore. Jasani said 3M India’s operating margins in 2009 and 2008 have hovered around 12-14%.
For FY10, the firm has shifted to an April-March reporting year. It will announce results for a 15-month period ending 31 March.
3M India, which has 24% of its stock held by the public, is expanding its research unit in Bangalore and testing cleaning products for Indian kitchens. Nanavati expects to take these products to other countries with similar cooking habits, but did not set a time frame for these to be introduced in the market.
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