Entrepreneur 1 (to Entrepreneur 2): Have you noticed one difference between the large companies and us SMEs?
Entrepreneur 2: Yes, they are bigger than we are.

Apart from the obvious difference highlighted in the apocryphal exchange above, perhaps what best distinguishes an SME from its larger counterpart, is its complete functionality and absence of frills. Nowhere does this strike one better, than on the premises of Karthik Flowtech, a Bangalore based manufacturer of valves. The road leading to the manufacturing facility winds through a row of semi-pucca houses. The CEO operates from a cabin in one corner of the shopfloor, and discussions ensue against the background acoustics of the neighbouring horns manufacturing facility. indiamarkets spoke to the technocrat CEO of Karthik Flowtech, R. Ramani:

indiamarkets: What prompted you to set out on your own, in a market dominated by giant companies, including multinationals?
Ramani: I am basically a technocrat, with a background in Design and Application. Having worked for a long time with large companies such as Vickers Systems International Ltd, I decided to strike it out on my own. I guess at the bottom of it lay a desire to make quality products, and exploit the obvious potential offered by the export market. In the valve manufacturing industry, technical expertise is very important. I had gained this through years of experience. Nevertheless, I spent a long time travelling abroad, undergoing training in specific areas, and studying the markets there. After this process, I had the necessary confidence to set up shop on my own, with the assistance of the Aspa group, which has been in the auto ancillary and engineering business for decades now. We began manufacturing ball valves here at Karthik Flowtech only last year, and are already looking at some big export orders from Korea and Saudi Arabia.

indiamarkets: In which areas do your products find application?
Ramani: In a nutshell, valves are used wherever there is a pipe/flow involved. There are numerous kinds of valves, but we specialise in ball valves. These include a wide range of sizes, from 10 mm to 8 inches, and are of threaded, flange, and welded types. We do manufacture butterfly valves also, though in smaller numbers. The user industries cover chemical & petroleum industries, oil handling, paper, sugar, breweries, dairies, tanneries, and other process industries. We supply to OEM as well as to the replacement market. Typically our buyers are process equipment manufacturers, companies handling large projects such as ONGC, and process industries.

indiamarkets: Which are the best known names in the market?
Ramani: The domestic market for valves itself is estimated to be worth around Rs 600 crore per annum. The leading players include Audco (an L&T company), BDK, and Virgo Engineers, Pune. In fact, our competitors are also among our buyers! Today, as an SSI entrepreneur, I feel proud to see our products hold their own in the market against some of these giant companies.

indiamarkets: What are your future plans for Karthik Flowtech?
Ramani: We want to establish a market in India, as well as abroad. As far as the exports market is concerned, we have shipped our samples to various parties abroad, and some have been approved. We expect a large volume of export sales this year, headed to Korea, Sharjah, Singapore and USA. We are also negotiating with customers in Europe, Africa and the Middle East. In the domestic market, we are looking at establishing a network of dealers and stockists, primarily to service the end user (as opposed to OEM) market. We have finalised various stockists in towns across South India, and now are on the lookout for some partners in the North, especially in Delhi.

On the technical front, we are actively pursuing ISO 9000 certification, which we expect to get within six to nine months. We have already obtained Indian Boiler Regulations (IBR) approval for ball valves. We are also planning to get approval for our products from recognised bodies in the field such as Engineers India Limited.

indiamarkets: Could you tell us about the your company's technical base?
Ramani: Our strength lies in our technical skill. We have an inhouse drawing and design team, in addition to around 20 skilled workers. Our high skill level enables us to manufacture the latest products including fire safe valves and remote operated valves.

indiamarkets: There is a perception that Indian products do not quite conform to global quality standards. What is your view in this regard?
Ramani: I don't think such a view is justified, at least in this day and age. Indian manufacturers are very conscious about quality, and do not compromise on quality to reduce costs, despite severe pricing pressures in the international market. Yes, we do lag other countries in terms of aesthetics - we make functional, rather than beautiful, valves. Also, Indian manufacturers need to understand the importance of attractive packaging, which has perhaps not sunk in sufficiently as yet.

indiamarkets: How do you view the Indian industry's export potential?
Ramani: One needs contacts to carve out a place in the exports market - these need to assiduously cultivated over a period of time. Firstly, one needs to make a decision about whether one wants to be in the export market at all - the domestic market itself is quite huge. Being too dependent on one export destination also can be a high risk strategy, as Indian exporters who were heavily dependent on South East Asia found out during the currency meltdown in that region. The bright side of course, is that payments are generally much prompter in the
international market.

indiamarkets: As a small scale entrepreneur, how do you view the climate for private enterprise in our country?
Ramani: The climate is not exactly conducive. One should embark on own's own venture only if he is assured of support on the business and personal front. Liberalisation has also brought about its share of woes. For example, we have to compete with brass valves from China, even in the domestic market - foreign manufacturers generally enjoy far lower raw material prices than we do, so they are able to price their products lower. It is difficult to survive with a single product, as you never know when a cheaper alternative may hit the market. So a diversified product portfolio, in addition to a wide customer base, is extremely important.

R Ramani can be contacted at rramani@mantraonline.com