I can unequivocally state that the conclusion you reach for many corporations or companies in India may be true. But not for these two. The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu. The second is owned by a very famous and politically connected man in Tamil Nadu, and now in New Delhi.
In India, Bharti Airtel, Reliance, Bajaj and these are among the many companies that are strictly profitable because of state capitalism, or as is more commonly known: Crony Capitalism. I am not going to write an entire political discourse here, and of course, just because they got the permits does not mean they would do extremely well; but it is a significant hurdle.
For a restaurant to operate in any city of any state in India, you need 180 licenses, with 105 of them renewed on a yearly basis. Do you know how many bribes that entails?
For an FM radio station to operate, as a public welfare concern, you MUST pay 65% of your operating profit BEFORE tax to the government for the 'privilege'.
These crony capitalists pay over some money to the politicians, but these extreme barriers to competitive entry in many fields allow them to rake in the profits. Rahul Bajaj is one: any traveler to India must have seen ubiquity in the autorickshaw. Ask the owners of Piaggio how quickly they were decimated when trying to introduce a bigger and better auto, by the so-called authorities, simply by having to get a bunch of licenses and also not being allowed to compete in key markets because of union rules.
The only area in India where you can run an honest company without having to fork over bribes incessantly is the internet.
Just to add to your last statement about internet companies being relatively bribe free, I've heard pieces (rumours) from well places influential people in the government that this is changing fast too.
Allegedly, the recent court cases against Google and Facebook asking them to block content was an attempt to get them to fork over some money.
Also, the recent banning of websites of companies like dailymotion and vimeo was our not so clean judicial system at work.
> The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu.
While you make a good point, I have to that guy and ask for some sort of a citation on this. I've lived in Chennai for 5 years and never heard anything of the sort. (that Saravana Stores is part of the Karunanidhi empire)
@kshatrea : Very true. I cant agree on that more. The angle I was looking for was more on how one can achieve heavy success rate without the modern corporate structure or the contemporary methods of marketing.
reply
