After exchanging ideas and perceptions on issues varying from ERP to farm labour, Ramco Systems CEO & MD, Mr P.R Venketrama Raja talks about the evolving IT industry in the country and Ramco’s foothold in the scenario to Rasheeda Bhagat.
The conversation appeared in Hindu Business Line and here is what he had to speak...
P.R. Venketrama Raja, MD and CEO of Ramco Systems, and his quest for a business model that will ‘dramatically change operations'.
Ramco Systems was largely started to solve the IT problems of the Ramco Group, which had businesses in textiles, cement, and steel among others. “It started in 1989 more as a division to find IT solutions for the group; only later, in 1999, it became a separate business,” says P.R. Venketrama Raja, Vice-Chairman, Managing Director and CEO, Ramco Systems.
When he returned from the US in 1993, armed with an MBA in strategy and finance from Michigan, he got involved with the cement business of the $875 million Ramco group, which was then building cement factories. Before getting an MBA, he had graduated as a chemical engineer from A.C. Tech in Chennai.
IT, then a sunrise industry in the West, was just beginning to take root in India. “The computers were just coming in and we wondered how to systematically bring in controls, and thought of creating something generic.” The focus in those days was more on harnessing knowledge power to offer cost-effective IT services. But Raja felt that cost-advantage was a short-lived value proposition and so “embarked on a journey to create Indian intellectual property and develop a world-class ERP (enterprise resource planning) product for the global market.
With its focus on R&D and innovation, Ramco has today carved a niche for itself in the Indian Product Story, says Raja.
Its latest product, Ramco OnDemand, he believes, will help companies make the enterprise solution software they use “simple, powerful, easy and less expensive… We put the solution on the Internet, so people don't have to buy hardware and software, and it requires no initial IT investments. All you need is an Internet connection and what earlier took months you can now do in weeks.”
His take on global recession is interesting; he thinks that “the worst is yet to come” and the steep increase in energy prices will pose a huge challenge in the future. But as far as India is concerned, for some years to come, its growing middle-class will act as “the local engine of growth”.
India no superpower!
What strikes you about this industrialist is his honesty and bluntness; he makes no attempt to sugar-coat anything. Take, for example, his views on India as an “emerging superpower”, which take you by surprise. He doesn't think we are an emerging superpower; “I am sure about that. We are a large democracy with a large economy, but that does not make us a superpower.”
So what is his definition of a superpower?
“You need to have a certain level and quality of governance; your judiciary should be of a certain quality, as also your Parliament, which should be able to function smoothly. Your infrastructure also should be great; but we have none of this in place. It's all by God's will that we are working together. So how can we call ourselves a superpower?” is his blunt question.
He adds that at the moment we are “a large democracy which is moving forward, but to be a superpower you need a lot more discipline, a lot more intellect, R&D and pride in our products. We have to ask the question: ‘How many Nobel Laureates have we produced?' You don't call yourself a superpower without all such things.”
So does the US fit in his definition of a superpower?
“Yes, though not militarily; in the last 10 years they have made big mistakes in this area, causing a very difficult situation. But it is not only the military that makes you a superpower. It is the inherent ability to innovate, the discipline, honesty, fairness and growth with honesty…”
Black money in foreign banks
Similarly, Raja is blunt about the generation of black money in the country and the current debate over huge sums lying in foreign banks. Ask him what can be done about it and he says: “If you want to be practical, you can do nothing about it.”
He links the huge generation of black money to historical reasons. “Wherever there is a shortage of resources worldwide, there is bound to be corruption. Also, years of very high controls in India, coupled with very high taxation, spawned the culture of black money. You can't wish it away in 10 years.”
Also, he adds, the political democratic system, “which is our strength, is also our weakness. Because, legally, for a democratically held election I cannot pay money… so black money gets spent. Two, given that political parties want huge sums of money, there is corruption and scams. So it's all feeding on each other. Then, of course, there is the issue of extreme greed. We have to learn from what happened in other economies like the US 100-150 years ago, and how they emerged from it.”
But shouldn't the black money be brought back?
“How will you find it? You can't do much about it. But what we can do is improve our systems. The complexity of our tax system is too much. While taxation rates in individual areas have come down to 30 per cent, if you see the entire value chain for most manufactured products, right from excise duty, sales tax, income tax, etc… if you add it all up, it is 40 per cent or more of your complete turnover! And you are dealing with multiple agencies to give 30, 40 or even 50 per cent of your turnover. It's all very complicated.”
In “streamlined economies”, he argues, “you pay only one tax and deal with only one or two agencies.”
Raja believes that while India will maintain a high economic growth rate in the coming years, “how this will benefit people and change the quality of life remains to be seen”. While the inequitable distribution of wealth is an issue, “luckily the middle class is growing bigger. Take people who were cooks or drivers with us 20 years ago… their sons and daughters are in the US, and doing very well. Even the children of our domestic servants are today working in factories or offices.”
At a glance
Reading: I read everything… whatever I can — magazines and books on science, maths, management and fiction… James Clavell is one of my favourite writers.
Music: Earlier it used to be rock-pop… now more of classical music, particularly Carnatic music.
Food: Simple vegetarian food. But I prefer not to eat Indian food when I travel, as Indian food abroad is not good if it isn’t prepared well.
Cooking: I used to cook during my student days in the US; I still cook once in a way. I think cooking is rather easy; if you organise yourself, you can make a simple, vegetarian meal in less than an hour.
Fitness: I used to play a lot of badminton but injured my shoulder. So in the last two years, I exercise at home for about an hour with a personal trainer about 2-3 times a week.
Religion: I am religious but not a fanatic. I pray at home, which is a part of our family culture.
Religion dividing people: Religion doesn’t divide people; people divide people. Religion is a concept which is political; spirituality is something that is culturally oriented. How you pray to God is cultural and how you think of God is philosophical.
Role model: Don’t have one. I like a lot of abstract ideas... from philosophy.
A good leader: Anybody who can motivate and rally people.
How to motivate people: I wish I knew!
Dream for Ramco Systems: If we succeed in creating, through R&D, a new kind of industry and business model that will dramatically change operations, then we will have created a strong institution that will last for ages.
Challenge ahead: From the technology point of view, we have reached this point; but from a business point of view… to flower as a business, is a challenge.