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customers worldwide, served by over 27,000 sales representatives.Würth, globally, is a direct sales organization, which services a variety of industries and sectors, and caters to their assembly and maintenance needs.The key divisions are
automobiles, metals and wood.The product range includes fastening and connection parts, chemical technical products, electrical, pneumatic and hand tools and retrieval systems.
Indian operation has exceeded the parent’s expectations
The group’s expectations about India have been exceeded in the recent years.The company found it difficult in the initial years of operations due to import restrictions and low level of indigenization of products.The company also faced difficulties in sourcing the right products at the right prices.
However, today India is a key growth market for the company.With the relaxation of import duties
Background
Würth group started India operations in 1995-96 after the economy was partly liberalized.The group has 6 companies in India, including 4 regional companies. In India, operations have largely been focused on the automobile sector, especially in the direct after-market segment, which includes authorized and private garages.The fast growing automobiles market and the potential for
aftermarket and assembly products for the sector were the main reasons for the group to enter India. Recently, there has been a focused approach to key account sales, i.e. OEMs, with the Tata Motors becoming a larger customer.The metal and wood product lines are yet to be launched in India.
Würth group has over 350 companies in 81 countries. It recorded sales of US$ 7.69 billion (Euro 6.20 billion) in 2004 and had 46,973 employees.The group has over 2.8 million
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organization, manpower costs of the sales force personnel form a significant proportion of the overall costs. In India, these costs are only 22 percent of the overall costs. (In Japan it is nearly 50-60 percent). Another important reason for success in the Indian market is the increasing degree of localization that has been undertaken over the past few years.
Würth feels comfortable doing business in India as India is a democratic country with a well
established banking and judicial system.
Organic growth and investments for the future
India is perceived as a high growth market over the next 5 years, and significant investments are being planned.While China received a lot of attention 5 years back, India is receiving similar attention today, and specific growth plans are being made.
The company is planning to ramp up its sales force from the current strength of 200 to more than 1,000 in the next couple of years.The metals and construction business areas are also likely to be launched in the country in the next couple of years.
The plan is to grow organically and within the next 4 years, the current set of 6 companies within the Würth umbrella may multiply to 14-15
companies.
and increased localization, there has been a significant growth in the last three years.Würth group in India has grown to US$ 5.68 million in sales and is expected to be about four times this value in the next three years. Already, the original Indian company has multiplied into 4 different companies through its ‘multiplication strategy’.The idea is to take a sales area and break it into two smaller areas so that more focussed attention can be given to each and thereby generate more sales.This process is repeated until the sales potential of the region is sufficiently tapped. Company used the same strategy to expand across India. Once the company reached a certain size it expanded into other geographies as different companies (currently there are 4 regional companies).This approach has resulted in significant growth over the last 3-4 years.
The growth and increasing importance of the Indian business is indicated by the fact that today India and China are one of the few markets with growth targets in excess of 30 percent.Within the Asian region, China is looked at as being a high volume, low cost manufacturing location, whereas India is perceived as relatively higher skilled with a potential for higher quality workmanship.
Keys to success
Growth of Indian economy, low manpower cost and increasing degree of localisation
The growth of the Indian economy and the resultant growth in the automotive industry is a key factor of company’s success in India (Indian automobile Industry has been growing at 15 per cent over the last 5 years). Other important factors include the company’s ‘multiplication strategy’ and the sales force incentive schemes.Through these policies, company has generated a healthy competition amongst Würth companies within the country.
The profitability of Indian operations is higher compared to other countries. As a direct sales
Würth: At a glance
• Started India operations in 1995-96 and currently there are 6 companies of the Würth group in India
• For Wurth, India is: A key growth market and Indian operations have exceeded the parent’s
expectations.
• Factors for success: Growth of Indian economy, Low cost of manpower and increasing degree of localization.
• Future plans: Organic growth, More investments and ramp up the sales force from
200 to 1,000.
