Striking with precision
Prakash Jaiswal
Corporate Banking I SME | Startups I Connected Banking I Growth & Innovation I Leadership
We take many things for granted in our lives. One of them is 24X7 availability of water, the moment we turn on the tap. Have we wondered about the action that happens behind the scenes in manufacturing a ubiquitous tap and all other sanitaryware products? Let’s understand it a bit more, from our client Pearl Precision’s story.
A great strike rate so far…
Pearl Precision started its journey in 1986, as an OEM supplier to the TV industry. The association with large domestic and global consumer brands helped nurture Pearl Precision’s focus on new age technology and the end consumer’s needs since inception.?In 2011, the company sensed a great opportunity in sanitary ware. The company pivoted, and started manufacturing various items like Cisterns, Seat Covers, Cabinets, P.T.M.T. Taps, Connection Pipes, Kitchen Sinks & Bathroom Accessories.
However, just like the early part of a typical innings in cricket, the initial few years were a struggle for Pearl. It was primarily because unorganised players dominated the sanitaryware market in India with a market share of 60%. While Pearl’s products were superior, these competitors enjoyed a cost arbitrage of almost 28%.
However, good times were not far away. Demonetisation and introduction of GST paved way for more formalisation of the economy. The disadvantage of cost arbitrage vanished, and Pearl Precision grew rapidly. It is now a leading player in Tier 2-4 cities. A few numbers evidence its growth story:
It has also pioneered manufacturing of plastic taps and pipes, which are much cheaper than existing varieties, yet don’t compromise on quality, and aesthetics.
To differentiate from competition, Pearl puts a lot of emphasis on best in class sales management practices, and focusses on constant learning and self-development.
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Aiming for more…
While things were progressing quite well, Pearl’s MD, Mr Naresh Kumar Garg realised that his products garner only a 1% market share. He felt that there is a huge potential to significantly ramp up this number, considering the company’s geographical presence and manufacturing prowess. With these thoughts, Mr. Garg and his company have chalked out an ambitious 2030 vision plan to increase the market share from 1% to 6%. Some of its levers are:
?Good job needs money….
?In order to achieve the 2030 vision, Pearl Precision decided to set up a new manufacturing unit in Noida. It approached HSBC for funding the project. HSBC understood Pearl’s business model, how it differentiates itself from competition and provided the necessary funding to the new project at the right pricing. Apart from this transaction, Pearl Precision also started actively using HSBCNet, the bank’s one stop platform for global banking.
Says Mr Garg, ‘We had to move fast with the operationalisation of our new unit. HSBC acted as our true partner. All their loan approval processes were very smooth, and we could complete all formalities without the need to visit HSBC branch even once. We also perform payment transactions seamlessly. As we continue to expand and also build in digital capabilities along the way, we look forward to continue working with HSBC in the future’
Says Prakash Jaiswal, Country Head, Business Banking (MSME and startups), ‘There is a story of aspirations and dreams behind every rupee that we lend at HSBC. Pearl Precision’s story is indeed a very fascinating one. It tells us how Indian SMEs are conquering a market as fragmented as sanitary ware, through innovative use of technology and deep understanding of the consumer. We cherish our relationship with Pearl, and look forward to play a role in their growth over many more years’
SME lending is one the biggest focus areas in Indian financial services space. We at HSBC believe in creating a differentiation through a combination of digitisation, empathy, and a partner driven approach. We treat SMEs as emerging corporates while assessing credit worthiness. We are keen to understand your ambitions, and discuss how we can help you achieve your goals
Let’s strike together…
(With inputs from Rashmi Bhatia, Pearl Precision’s RM, Shekhar Lele, Business Innovation Lead, and Devesh Solanki, Change and Implementation, HSBC India)