General Electric Bullish On India Despite Moderate Revenue Growth

US-based conglomerate General Electric will not be able to achieve its projection of becoming a $2 billion company in India by 2000. The company, which is one of the largest international investors in the country, now hopes to reach the mark within the next eight years.

GEs projection, which was made some three years ago, will not materialise mainly because of a delay in infrastructural growth. This was disclosed by Scott Bayman, chief executive officer of GEs wholly-owned Indian subsidiary, GE India, in an exclusive interview to Business Standard.

Bayman said: We are not going to be able to make $2 billion out of India by year 2000, as we thought three years back, mainly because some of the infrastructure has not developed. But if it does not happen in 2000, it will happen by 2005.

 

Bayman pointed out that the failure of major power projects to take off in the country in larger numbers means that GE, one of the largest equipment suppliers to the power sector, will not be able to sell as much equipment as planned earlier.

GEs proposed expansion in the aircraft leasing sector has been slowed due to the restrictive civil aviation policy, said Bayman. Finance subsidiary GE Capital, which owns 400 aeroplanes, is one of the largest aircraft leasing companies in the world and had hoped to gain big business in India.

These factors, among others, have added to GEs relatively slow revenue growth in India compared with earlier estimates.

However, GEs Indian operations have grown at an average rate of about 20-25 per cent annually in the last few years, which is far higher than the 3 per cent growth rate in developed countries like the US.

Bayman clarified that the possible delay in meeting earlier projections has not unduly worried the $80-billion multinational, which has identified India as the economy of the 21st century.

This is the place we wanted to be in the 21st century. We do not have profit targets as such. Our focus is on developing our businesses here, he explained.

General Electric is now focusing on newer opportunities in India. Finance subsidiary General Electric Capital has decided to undertake strategic investments in India in some areas, including the telecom sector, by picking up minority equity stakes in certain domestic companies. These will be companies that need funding, and do not want to add on to their debt. We will be a passive investor, stated Bayman.

The company has also recently entered into an in-principle agreement with the State Bank of India (SBI) to launch credit cards in the country.

GE Capital, one of the largest issuers of private label credit cards in the world, proposes to undertake backroom processing as well as collection for the SBI.