A foreign student-turned investor’s fairytale business success story in Russia
Issue:
May 2012, Vol.7, No.5
Tags:
Alok Kumar
In this edition, we profiled Alok Kumar, the CEO of Russia-based Inpark Group, which owns and manages the famous Pereslavsky Techopark amongst his other major business assets in Russia. In the interview, which focuses on a range of issues, from Russia’s investment climate, successful technopark business models to cutting nanotechnologies, Kumar recounts how he rose from his student years in a Moscow university in the 1990s to become of one India’s major investors in Russia in less than a decade.
Your biography says you first came to Russia as a student. Could you say how you have risen from such a humble beginning to become one of top Indian investors in Russia today?
Yes, that is true. I came to Russia to study in the 1990s, but after graduating from the Moscow Power Energy Institute (now Technical University) in 1996, I started my professional career in a Moscow-based international investment trading company, which specialized in the manufacturing and exportation of chemicals and metals. In 1997, I started my own business, which produced packaging materials for different economic sectors, which gave me great experience in the exportation of Russia’s raw materials to the southeastern Asian markets. Another part of my business was provision of professional consultation services to Russian companies wishing to export their goods to the European and Asian markets. Our clients included large industrial holdings across Russia. However, after the 1998 crisis, business in this sector became unprofitable, forcing me to reorient my attention to other economic sectors. For instance, in 2000, I went into electronics business, and one of my subsidiaries became a major distributor of Panasonic products in Russia. Later, I launched my own electronics brand, Miyota, on the Russian market. So, briefly put, this is how I became an entrepreneur and later an investor in Russia.
As a foreigner, how were you able to find a ‘common language’ with the Yaroslavl Region’s government when securing permission for the development of the Pereslavsky Technopark?
Actually, there was nothing difficult in this issue at all. As I have already said, after graduation, I went into business, where I was in close contacts with the Yaroslavl Region, notably, with the management of Slavich, a major company in the region. This company owns a major industrial zone with huge resources that were underused at the time due to the negative market environment. It was then that I decided to discuss with the management the idea of turning this zone into a cluster of modern industrial parks. So, five years ago, we started the development. Later, we decided to establish a joint venture, The Pereslavsky Technopark, which will professionally manage this business. I participated in the joint venture as a co-investor, as I have extensive international experience in the development and management of technoparks in India, China and several European countries. Also, I’ve long wanted to develop this type of business in Russia. So, when a decision was made in 2010 to attract a pool of foreign investors to the park, I became the company’s CEO.
“Today I see myself as a ‘made-in-Russia’ entrepreneur and personality: it was here that I graduated from a university, began to work, etc. This is why, like my Russian business partners, I also take everything happening in this country, very close to heart.”
What is the difference between this technopark and your other industrial parks in foreign countries and how can this facility be useful to Indian and other foreign firms in Russia?
Our main trump card is our deep and unrivalled knowledge of the local market, the mentality of the key decision makers in country’s economy and politics as well as huge experience in the management of advanced technology parks across the world. Our park can be useful to Indian companies in export businesses as there are, for example, currently certain restrictions on direct importations from India to EU member countries. So, Indian companies, and by the way, other foreign corporations that are subject to similar restrictions, can via cooperation with our technopark, significantly increase their exports both to Russia and other European states, especially given the positive developments in customs practices integration going on in Russia. Specifically, I’m referring to the newly created trilateral Customs Union of Belarus, Kazakhstan and Russia.
How do you attract business residents to your technoparks in Russia?
Most companies come to us by themselves, whilst others come via recommendations. These companies have their business ideas, inventions or projects and we help them via provision of modern premises, finances and new opportunities to realize them. Also, we can, if and when necessary, and especially after our residents have already started production, help with negotiations with venture capitalists and international banks to enable them attract long-term investments for sustainable business development. In this regard, I would like to appeal not only to Indian investors, but to all investors from different countries, particularly China, Germany, Singapore, the EU, United States, etc. to make use of the benefits of being residents in our technoparks. I’m ready to offer different investors individualized proposals with respect to their industries of specializations such as pharmacology, chemicals, machinery manufacturing, construction, hospitality, etc.
Which companies are already cooperating with your technopark and which are in the stages of making such vital decisions?
First of all, this is Uttar Development Ltd, one of the leading companies in India, which is a co-investor in the technopark. Besides, several other foreign and local companies are already resident tenants in the park or have declared their readiness to establish different forms of mutually beneficial cooperation with us. At the moment, among these I am ready to name such corporations as Miyota Electronics Pvt Ltd, Smitabh Intercone Ltd, Asia Pacific Institute of Information Technology, Wow Vision, Singapore, etc. I believe with the current positive dynamics, this list will continue to grow at a much faster rate.
Can you give some examples of the innovative projects that are being implemented in your technopark?
Researches into and development of innovations are being carried out in different scientific fields, notably, in nanotechnology, advanced development of thin film materials, medicine and pharmacology. One of our technopark’s researches, currently being done in a joint project with Rusnano, is how to create consumables for printing and photocopying equipment. The volume production is expected to reach about RUR1.2bln by 2015. Besides, serious attention is being paid to the development of innovative technologies in the field of medicine and pharmacology in our technopark. For example, researches are being done in partnership with Forte Pharmaceuticals on the synthesis of unique innovative probiotics, medical drugs used to accelerate the rate of restoration of damaged intestinal microflora. Also, there is an ongoing joint project between Puma and Kraspharma, a major Russian pharmaceuticals firm, on the production of polymer films for medical solutions.
What are the immediate plans for further development of this industrial park?
We plan to create new conditions for scientific researches, launch the development of more modern industrial infrastructure facilities and production of innovative products. The first steps in this direction have already been made. For example, we recently signed a strategic agreement with the Chinese company, Shanghai Platinum Development Co. Ltd., on the further development of our park’s industrial infrastructure. Our Chinese partners have already visited the park, got acquainted with the existing infrastructure and were very happy with they saw within the frameworks of the planned upgrading of industrial and office spaces. Our other immediate plans include the creation of new IT-technology parks, the so-called ‘smart business centers’ focused on software development. All this should attract the attention of several more local and international companies, which I hope will also become our residents.
Which of the best global strategies for attracting investors can Russia borrow from overseas industrial parks, specifically in India?
In India and other countries, national or federal governments are actively promoting the development of modern technology parks. For instance, the Indian government support has helped local technological parks to rise to leading positions in many spheres in global and regional economies. In this regard, the best global strategies that Russia needs to borrow from the best international practices include complete exemption of all imported equipment for local production from all types of customs duties and local levies. Also, the government needs to give strategic foreign investors ‘reasonable tax holidays’ for a specified period on payments of certain local taxes, as well as provide them with other preferential treatments such as so-called soft loans, simplified procedures for entry into economic free zones, guarantees of free entrepreneurship and protection of investors’ rights and assets.
How do you explain the fact that most of your businesses are in Russia and not in India, which today is seen as a more promising market with much more favorable business climate?
Indeed, I also have a family business in India. But it is here in Russia that I began my business career, so this country is also as close to me in many ways as my native India. You know, when a person wants to know where a certain good was produced, he simply looks at the product’s barcode. Using this analogy, the barcode of the country, where I grew up to become a successful businessman, will read ‘Made in Russia’ and this is very true, because I really consider myself as a ‘made-in-Russia’ entrepreneur and personality: it was here that I graduated from a university, began to work and earned my first official salary, etc. This is why I take everything happening in this country, very close to my heart, like my native Russian business partners. Besides, Russian and Indian mentalities have a lot in common, if not identical. We are very close and understand each other very well in almost everything, and this helps a lot in all life aspects, including the development of business and business ties.
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