New Delhi: The five-day India visit of Harold ‘Terry’ McGraw III, chairman, president and chief executive officer of the global information conglomerate The McGraw-Hill Companies, was packed with meetings with top government officials, ministers, industry leaders and business partners. Between Mumbai and Delhi, the tireless 61-year-old member of the India-US CEO Forum and the United States Council for International Business, attended an Economist Round Table meeting, celebrated the launch of a new building for Crisil Ltd, the ratings agency in which he holds a majority stake, and graced a ceremony to mark McGraw-Hill’s 40-year-old publishing partnership with the Tata group.
McGraw, with brands such as McGraw-Hill Education, Standard and Poor’s and JD Power and Associates in his stable, spoke in an interview about growth strategies for the Indian market. Edited excerpts:
Special interest: McGraw aims at providing business-to-business information that is digitally and electronically available. Pradeep Gaur / Mint
Recently you talked about increasing the stake in Crisil (a Standard & Poor’s company) from the current 51.5%? How much more are you looking at?
This is probably not the best place to negotiate (looks at Crisil’s CEO and MD Roopa Kudva and laughs). We are very pleased with Crisil’s growth. A market like this that is growing at such a rate requires enormous investment and…it is only going to get bigger rapidly.
Any investment figure you could share?
Any number that you come up with is probably going to be wildly wrong… Everything is going to be bigger and larger than current projections. The Prime Minister has been talking about public-private investment. The notion that it is a decade of innovation, investment and infrastructure is spot-on.
How do you plan to increase your presence in India?
Education and access to capital are right at the top.
Since 2005, Crisil has grown its revenue by 300% and its profit by 500%. Even more important, the ceremony that we had earlier this week, we gave the small- and medium-size enterprises 10,000 ratings— this is from zero in 2005. We will do 10,000 more ratings in 2010 alone.
On the education front, we have Tata McGraw-Hill that started in 1970. We are adding about 10-15% titles every year. That part is going well. We are also working on vocational career development initiatives. We are working with CMC Ltd (a Tata company).
We have started a pilot project in Delhi in the fastest growing area—retail sales and services. Ten million retail jobs by 2013 are what will be needed. We’ve come up with a three-month programme which will cost Rs10,000 and, at the end of it, you get a job which pays Rs7,000 or Rs10,000 a month.
This summer we are going to start two more programmes— one in banking and another in insurance. We have identified 12 sectors in total. Once we know the model is right, then we scale it up big-time.
Do you conduct vocational training in other markets?
We do, in the United States and other markets but the opportunity is so unique here. The workforce development market right now is estimated to be $1.6 billion (Rs7,280 crore) in India.
But Pearson is already here in this space.
Everybody knows that this opportunity is gargantuan. It would concern me if we were the only ones who saw an opportunity like that. If you had a market that you could scale and you had a 30% to 40% market share, wow, what a nice business that is.
Will you bring your special-interest magazines business to India?
That is a smaller part of our business now. We had as many as 60 magazines built on the advertising-led business model. But because of digital and instant access to information content, we have transformed most of them into digital properties. If the business model did not lend itself (to digital), we divested.
Today we are focused on business-to-business information that is digitally and electronically available. Only 2% of our revenue comes from advertising now. Take Platts, which was a series of newsletters in the energy and petrochemical area. Its financial contribution was very small. Today it is completely online and we establish all the benchmarks by which oil, gas and petrochemicals trade around the world. Its revenues are quite large and it defines a high-margin business.
Is the ‘BusinessWeek’ transaction complete?
Yes, it is. From a business standpoint, it was the right thing to do. The fact that it’s been a publication with us for 80 years, tugs at the heart a little bit… But, again, it’s a publication where we were not being able to multipurpose the journalistic effort. Bloomberg (the new owner) could use their (BusinessWeek’s) journalistic capability for Bloomberg news, television and radio.
We haven’t heard much on the India-US CEO Forum lately?
We had a very robust agenda. The forum was launched by president (George W.) Bush prior to his India visit and President (Barack) Obama reinstated that. We have come up with a tighter agenda—we focus on infrastructure, education, health and clean energy. The fifth category is barriers to doing business—issues such as environment, trade, corruption, government interference and things like that. We have got projects in each one of them. You will be hearing more on these soon.
Any specific agenda for your visit?
We always like to be involved on the policy side. We are meeting ministers and business leaders. Mukesh Ambani is also working very hard in the education space. He already has a high school and he has decided to build a university.
Are you collaborating?
We are talking about it. Vocational and professional development and workforce development is what we are really focused on right now.
Are you still associated with the National Actors Theatre?
It was a very different story. A friend, Tony Randall, a terrific actor in the United States, wanted to start a national troupe that was going to do the classics—big and expensive productions.
We also came up with the idea of the actors explaining the elements of the classics to high school students after the production. But that was in 1991. It had the energy, the smarts and vitality of Tony Randall.
Has it shut down?
Yes, when Tony died. Tony was the energy. I did a fair bit of theatre in high school and college. And I was a drummer. I heard Shankar Mahadevan at the celebration of the new Crisil building recently. He is wonderful.
Has Steve Jobs forgiven you? (McGraw was in the thick of controversy recently for talking about Apple iPad on television prior to its launch.)
(Laughs). That was very innocent. I was on CNBC to talk about earnings for my company. And she (the anchor) kept asking if iPad will be helpful to you. I said absolutely. It is one more device and it is a very good one. She said you are doing all these things with iPhone… We have a wonderful relationship with Apple, so I said “well it’s using the same iPhone operating system” not realizing what I was saying… It was completely innocent. But what CNBC did after we left—it said it was the biggest scoop, heard on the channel first…