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FEATURES/PHILANTHROPY AWARDS 2014 | Jan 6, 2015 | 3503 views
The Piramal family's purposefulphilanthropyby Salil Panchal
For Ajay Piramal, wealth earned is not to keep, but to share. It
is a legacy he'sinherited from his grandfather, and one his
children are upholding throughtheir work with the Piramal
Foundation
Image: Vikas KhotFrom left: Anand Piramal, executive director,
Piramal Group; Swati Piramal, vice-chairperson, PiramalGroup; Ajay
Piramal, chairman, Piramal Group; Nandini Piramal, executive
director, Piramal Enterprises;and Peter DeYoung, president, Piramal
Enterprises
t is Monday afternoon and Saurabh Shukla, a qualified teacher,
convenes a meetingwith a primary schools principal and senior
staff. He has his Android tablet out and issharing data which
reveals that the schools third and fifth grade students have
seen
a 10-12 percent improvement in their learning skills over a
one-year period. As otherteachers take in this data, Shukla talks
about various ways in which the school canengage students in the
curriculum, and improve their performance withoutoverburdening
them.
This meeting takes place, not in an air-conditioned or
well-ventilated office in a cityschool, but in a single-storey
rural setup in Soti, a village in Rajasthans Jhunjhunudistrict,
five hours north of Jaipur. Only 60 students are enrolled into the
GovernmentUpper Primary School in Soti; the village has an adult
population of less than 1,000. Butthe school takes pride in being
part of a programme that helps teachers enhance theirability to
teach and interact with students.
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Shukla plays a vital role in identifying such learning trends,
and in sharing thatinformation with government schools like the one
in Soti. The 24-year-old fromRajasthans Basti completed his
Bachelor of Education from Dr Ram Manohar LohiaAvadh University in
Uttar Pradesh a few years ago, and was worried about his
future.That was until 18 months ago, when he was awarded the
Piramal Fellowship, part of thePiramal Foundation for Education
Leadership (PFEL).
We are influencing the lives of children who, in 10years, will
be ready to elect the next government.We have to make sure that
they becomeresponsible people, says Shukla. He is one of the150
fellows that are selected by PFEL every yearfrom colleges and
business schools to develop on-ground leadership skills and work in
conjunctionwith schools in rural India. Now in its seventh year,the
Piramal Fellowship has tied up with 1,300schools in three states:
Four districts in Rajasthan,all schools under the Surat Municipal
Corporation inGujarat, and 200 schools under the
BrihanmumbaiMunicipal Corporation in Mumbai, Maharashtra.
This experience has transformed me. My fatherfinds me more
responsible and aware of communityneeds. Once I complete the
[two-year] fellowship,which will be in six months, Id like to
create schooldevelopment programmes, preferably in myhometown in
Uttar Pradesh, says Shukla, whocurrently works with eight
government schools inRajasthan.
PFEL, which runs under the aegis of the Piramal Foundation,
started taking shape in2007, when MBA consultant-turned-social
entrepreneur Aditya Natraj approachedchairman of the Piramal Group,
Ajay Piramal, regarding funding for a project that wouldimpart
leadership skills to school principals. (Natraj had earlier worked
with NGOPratham, where Ajay Piramal is chairman.) He [Ajay] heard
me for 10 minutes andsaid, Yes, okay, lets try this out. What I
found different about him was his risk-takingability and his desire
to bet on the youth, says Natraj.
The outcome of that meeting was not just the launch of the
Piramal Fellowship but also aPrincipal Leadership Development
Program, a three-year Masters training programmefor headmasters
from government-run primary schools. Piramal initially donated Rs
50lakh towards these initiatives.
We are privileged because of who we are. We are born in an
affluent family and areeducated. Not everyone has this luxury. We
have a responsibility to share, says 59-year-old Piramal, who was
ranked 44 in the 2014 Forbes India Rich List, with anestimated
wealth of $2.1 billion.
Natraj, who is now director of PFEL, says: We were betting on
the fact that youngurban Indians would want to be a part of this
initiative, and become nation-builders.
Image: Amit Verma
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Tanuja Kanwar (left), a trained health worker with Piramal
Swasthya Sahika, attends to a patient inKalipahari, village in the
Jhunjhunu district of Rajasthan
It was a risk that paid off beyond expectations. In 2007, the
first year of the fellowship,Piramal met graduates who were willing
to leave their jobs in cities to work towardsimproving the countrys
rural education needs. The Principal Leadership DevelopmentProgram,
which started the same year, was also a success: To date, over
1,000 schoolprincipals have taken this programme. And by 2010,
Piramal had donated Rs 10 crorefrom his personal wealth to PFELs
initiatives.
Apart from education, the Piramal Foundation conducts
philanthropic activities in healthcare (Swasthya), water
purification (Sarvajal) and rural empowerment (Udgam). Set upin
2007 by the Piramal Group, the foundation has a presence in 15
states in India, andclaims to have positively impacted the lives of
146 million [14.62 crore] Indians.
Our core principle is to not do more of what the government is
doing. We dont want toreplicate any existing programme. We look for
out-of-the box solutions to bring aboutsustainable change, says
Paresh Parasnis, head, Piramal Foundation.
Carrying Forward a LegacyThe Piramal family has been associated
with philanthropy even before socialresponsibility became a part of
corporate Indians lexicon. Much of Bagar in Rajasthanbears the
stamp of Seth Piramal Chaturbhuj Makharia (grandfather of Ajay and
hisbrother Dilip), who began his philanthropy work in the 1920s.
Piramalji (Seth) laid thefoundation for the development of Bagar.
Apart from schools and colleges, there arehospitals, water tanks,
street lights, gaushalas (protective shelters for cows)
andcremation grounds, says Ravi Kumar Ojha, principal of Piramal
Boys School in Bagar.
Seth Piramal is still very much a part of Bagars history. He
would meet with locals, sitwith them and share stories, says Ojha.
He recalls anecdotes passed down from eldersabout how the senior
Piramal would feed everybody on the train while travelling
fromBagar to Sawai Madhopur (a district in Rajasthan).
My grandfather was an inspiration. He was not a wealthy man, but
shared a largerproportion of his wealth than others, says Ajay
Piramal. If you dont share your wealthyou are doing a
disservice.
With the Piramal Foundation, the family is able to formalise and
expand its philanthropywork to other parts of the country as well.
Ajays wife, Padma Shri awardee SwatiPiramal, who has helped
influence public health policy, says, Giving back to thehometown
was always in our culture, but we realised that it was not
enough.
She recalls an incident that took place in 1984, around the time
she had graduated frommedical school, which underscores this point.
I was driving down Parel, [which wasthen] the mill land of mid-town
Mumbai, when I saw a girl stricken with polio, strugglingto walk
with wooden crutches. That was my trigger, she says. What is the
point ofhaving all this knowledge if we cant take care of these
problems?
At the time, the governments National Polio Programme had yet to
kick in. Swati andher college friends started a small clinic in
Parel and made calipers out of plastic forchildren who were
paralysed. Within a decade, with no fresh incidents, we closed
downthe clinic, she says. Over the years, Swati realised that
philanthropy initiatives had tobe conducted on a large scale to
make any real difference. Ajay bought that belief andthinking, she
says.
The next generation of PiramalsSwati and Ajays children, Anand
and Nandiniarekeen to carry on their great grandfathers legacy, and
build on their parents work.
Anand, who heads the Piramal Groups real estate business, tells
Forbes India that it washis experience as an economics student in
the University of Pennsylvania thatstrengthened his resolve to give
back to the community. In 2005, when he was on asummer programme in
Italy, he shared his enthusiasm and fascination for the countrywith
his teacher. My Italian professor scolded me and said, You should
be singingpaeans about Indian civilisation. Its richness is second
to none. And from that moment, asingle thought began to take root
in my mind. India has known greatness, and is at aninflection point
once again. In a patriotic impulse, I decided to return to India,
andcontribute in some way to the countrys growth and development,
says the 30-year-old.
Much like his father, Anand is inspired by the Bhagavad Gita.
The Gita advocates the
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concept of trusteeship of wealth. We were always taught that
just trying to give backsomething to society is not enough. You
must do it to contribute to your own spiritualdevelopment, he
says.
Road to SwasthyaWhen he was 19, Anand returned to India and
started an NGO called DIA (Dreaming ofan Indian Awakening). The
NGO, which wanted to encourage youth to take onleadership roles,
was the prototype for what would later become the foundations
healthinitiatives. In 2008, before the Piramal scion left for
Harvard for a three-year MBAprogramme, DIAs work started slowing
down, but it gave shape to the PiramalSwasthya Sahaika (PSS), an
initiative that trains rural women in Rajasthan in basichealth
care.
Tanuja Kanwar, in her early 30s, may not be alicenced health
worker but villagers in Kalipahari,Jhunjhunu district, are
comfortable discussing theirailments with her because she is one of
them. As apart of PSS, she has a small clinic, stocked withbasic
over-the-counter medicine and a first aid kit.I am satisfied and my
mother-in-law is happy thatI am able to contribute more to the
community,says Kanwar, who maintains a record of everypatient who
visits the clinic. When someone comesto her with an ailment, she
contacts a call centre,manned by paramedics and counsellors, and
run byof the foundations rural BPO initiative, PiramalUdgam. Based
on symptoms and patients history,the call centre relays the best
possible treatmentand medication. While this works for
commonailments, emergency and more complicated casesare referred to
doctors and hospitals in the district.
The Piramal Foundation has also set up 40 telemedicine centres
in Assam, Telangana,Andhra Pradesh, Karnataka and Maharashtra that
connect patients to doctors viavideoconferencing facilities.
According to Parasnis, who heads the foundation, thisinitiative has
helped address major health concerns such as high maternal
mortalityrates (common in tribal communities in Andhra Pradesh),
and diabetes (in Assam).
Six years ago, Swasthya started operating mobile health vans for
people in remotevillages who dont have access to doctors or health
care centres. A doctor and anassistant on board a van, equipped
with diagnostic machines, travel from village tovillage. Swasthya
also has a 24-hour health advice and counselling helpline in
Rajasthan,Maharashtra, Jharkhand, Chhattisgarh, Assam and Andhra
Pradesh. It is more anadvisory service than a treatment centre.
Ajays daughter Nandini, who heads HR operations at the Piramal
Group, also oversees(along with her husband Peter DeYoung) the
foundations Sarvajal project, whichprovides people access to safe
drinking water in parts of Rajasthan. Piramal Sarvajalruns a
franchise model, where an entrepreneur buys a water purification
machine(costing Rs 2-4 lakh) from the foundation, and sells clean
drinking waterat 30 paise alitreto villagers.
Putting Wealth to UseA lot of the foundations work is
concentrated in Rajasthan, but as it expands its reach toother
parts of the country, Ajay Piramal has two questions on his mind:
How tomaximise the impact of his philanthropy? And how to innovate
through new solutions?He tells Forbes India that it can only be
done by scaling up in a cost-effective manner orcollaborating with
other like-minded institutions, NGOs and government bodies.
Wealth is just a question of adding zeroes. If we can put it to
use, people will rememberit. Look at what the Tatas have done. The
Bhagavad Gita says that you are the trusteesof wealth; it is not
yours, you have to see that it is well used, he says. The purpose
forthe group is to do well and to do good.
This article appeared in the Forbes India magazine issue of 09
January, 2015
Keywords: The Forbes India Philanthropy Awards 2014, Ajay
Piramal, Piramal group, Piramal Foundation,Piramal Fellowship,
Piramal Foundation for Education Leadership, Principal Leadership
development Program,Piraml Swasthya Sahika, Sarvajal, UdgamAnand
Piramal, Sw
Forbes India Magazine - The Piramal family's purposeful
philanthropy 1/7/2015
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Rupali Mishra Jan 7, 2015Great job...... And piramal always
rock.... Its give best result for the future,... @rups
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FEATURES/REAL ISSUE | Jan 6, 2015 | 2611 views
Havells India MD wants to growthe Indian business aggressivelyby
K Yatish Rajawat
Anil Rai Gupta, Havells India's new chairman and managing
director, talksabout growth, expansion and warding off competition
in the electrical goodsmarket
Image: Amit Verma
illionaire-entrepreneur Qimat Rai Guptas second son, Anil, was
appointedchairman and managing director of the $1.4-billion Havells
India in Novemberfollowing his fathers demise. At the helm of
Indias leading electrical goods
company, this mild-mannered 45-year-old looks to double its
domestic business,increase global footprint, upgrade manufacturing
facilities and branch out on ecommerceplatforms. Excerpts from an
interview:
Q. Now that you are in charge of the business, what is your plan
ahead?Havells is an excellent platform. We will generate close to
Rs 5,500 crore in revenues
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Havells is an excellent platform. We will generate close to Rs
5,500 crore in revenuesfrom the domestic business and about Rs
3,000 crore from overseas operations. Ourmain focus would be to
grow the Indian business aggressively. And to strengthen
theprofitability of Sylvania (a German lighting company it acquired
in 2007) from 6 percentoperating margins to at least 10 percent
over the next two years. Finally, we would wantto grow LED to 90
percent (from its current 30 percent) of our overall business.
Q. How do you plan to improve operating margins at Sylvania?We
have planned some changes. Some restructuring in the company is
still pending. Wehave to turn around loss-making units first.
Q. Will you now use Sylvanias distribution network to introduce
theHavells product range in the European markets?We have already
introduced Havells in some European markets (like the UK). But
onlysome product categories such as switchgear have been
introduced. Sylvania will be ourbrand for all lighting products.
Though we are focusing on Sylvanias growth in Europe,we are also
looking to grow Havellss presence in the Middle East, South-east
Asia andAfrica.
Q. How aggressive will your international strategy be? Will
manufacturingcapacity double?Our major thrust would be on the
domestic business. We plan to double that in the nextfour to five
years. We possibly have the largest product portfolio for an
[electrical]company. And we have built capacities for the future;
those would suffice our needs evenif we double our turnover. But we
will certainly upgrade some of our manufacturingfacilities.
Q. Where would you direct maximum attention and the majority of
yourspends? I spend 70 to 80 percent of my time on sales and
marketing because that is the breadearner for Havells. But if you
visit a Havells plant, you will feel that manufacturing is ourcore,
as we have spent enormous amounts of time and effort in building
the plants. Ourmajor expenses would be on sales and marketing and
branding. [Well also spend] onincreasing our distribution reach to
new geographies, adopting modern platforms likeecommerce, going
into modern retail formats, and expanding our retail reach in
smallertowns.
Q. You are investing in distribution networks when business is
beingdisrupted by ecommerce companies. How do you see ecommerce
affectingyour dealer network?Some of our products are ready to go
on ecommerce, and we are already selling themthrough platforms like
Snapdeal and Flipkart. But many of our products cannot be
soldthrough an ecommerce platform. We have also been discussing
that if we become tooaggressive on ecommerce, it might affect our
traditional distribution channels.
Hence, we have to strike a balance between traditional dealers
and ecommercecompanies. We will create our own platform and serve
customers with a mix of internaland distributor channels.
Q. Are you hinting at creating your own ecommerce platform?Yes,
for a product like an air fryer or a steam iron, the current
platforms might work.But for the rest of our products, like
switchgear and cables, these platforms wont work.At least, we dont
see them working right now. That is the reason we have decided
tocreate a balanced platform [for all kinds of products].
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Q. The industry you operate in has been threatened by low-priced
Chineseproducts. Many large companies have exited manufacturing
completely.How difficult is it to expand in such a scenario?The
market for electrical products is very competitive, so the industry
has always beenlooking at ways to reduce costs of production.
Besides China, in the last few years, wehave seen large, branded
companies outsource their manufacturing to the small-scaleindustry
[SSI]. Several companies have even shut down their manufacturing
units. Thishas led to the hollowing out of the industry. The
overall quality of products has comedown. Initially, outsourcing to
the SSI happened only for fans or low-tech consumerdurables. Now,
it is happening for even switchgear and other products.
There is a difference between outsourcing to quality players in
China and to low qualitySSI units in India. Chinese companies have
built very large capacities and they producegood quality products.
The SSI in India does not invest in quality goods. For
example,Airtel has outsourced its administration, so that it can
focus on its core business. And theother extreme is where you
outsource your core business. That is not sustainable in thelong
run. Even outsourcing to China is no longer sustainable as the
Chinese currency isunder pressure, their export subsidies are
dwindling. We pre-empted a bit of this[outsourcing] trend. We
acknowledged Chinese dominance in lighting, so we set up a
jointventure in China. But for fans, we have always believed that
we can do a better job in ourown facilities in India.
Q. How has your role in the company evolved in the last five
years with yourfather being unwell? He was not well but he was very
much in control of the business. In every organisation,the buck has
to stop somewhere. When he was there, it stopped with him, even
thoughhe was not the kind of leader who would take decisions all by
himself. He insisted onbuilding consensus. In the last few years,
he had built a top leadership team that wouldjointly run the
business. That team included me. I dont think my role would
changemuch now. Since I occupy this seat, I would look to empower
more and more people andwould work on his vision of building
entrepreneurship for the long term.
Q. How is your working style different from his?My father was a
born entrepreneur and you would categorise him alongside leaders
likeDhirubhai Ambani or Brijmohan Lall Munjal. I have always
differentiated between bornand trained entrepreneurs. A born
entrepreneur will always take more gut-drivendecisions. I am more
analytical and have even debated with my father on things
where,perhaps, analysis fails. Though we will look to make this
organisation more analytical, thespirit of taking fast decisions
will continue.
This article appeared in the Forbes India magazine issue of 09
January, 2015
Keywords: Anil Rai Gupta, Qimat Rai Gupta, Havells India,
Electrical Goods, LED, Sylvania, E-commerce
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Apollo Hospitals' Prathap Reddygrooms daughters for
leadershippositionsby Shabana Hussain
Dr Prathap C Reddy seems on course to navigating succession
issues bytrusting the mutual respect shared by his four daughters.
Even as a model ofrotating chairmanship is being proposed, the
Reddy sisters are only focussedon the secure future of Apollo
Hospitals
Image: indiatodayimages.comA Photograph from the Reddy family
album
ore often than not, first-generation entrepreneurs have been
known to flounderon the succession issue. Not only is it a
touchyeven volatilesubject, it is alsoleft unresolved till too late
due to either oversight or complacence. But Dr
Prathap C Reddy, founder-chairman of Apollo Hospitals, is not
shirking thisresponsibility. The 81-year-old promoter has been
preparing for the future for a whilenow, grooming his daughters
into various leadership positions in the hospital chain set upby
him, while he continues to play an active role.
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by him, while he continues to play an active role.
And they havent let him down. My daughters got passionately
involved in the business.They did everything, says the proud
father. They even printed the first brochure ofApollo Hospitals,
which was so good that people in the US didnt believe it was made
inIndia. They were involved right from that level.
This commitment from the entire family hasproved to be the
accelerator Apollo Hospitalsneeded. Consider that from a
150-bedhospital in Chennai in 1983, Apollo hasgrown to an 8,617-bed
hospital chain with100 clinics and 1,600 pharmacies across
thecountry. Its consolidated revenue for 2013-14 grew by 16.3
percent (year-on-year) toRs 4,384.2 crore and it hopes to close
thisfiscal with Rs 5,000 crore, continuing itsfour-year run of 20
percent CAGR(compounded annual growth rate). Debt,meanwhile, is
comfortable at Rs 700 crorewith a debt-equity ratio of 0.3.
Confident in the growth momentum, thefamily felt the
organisation needed to berevitalised. We are a 31-year-old brand.
Itcan be tiring sometimes, so we thought it is agood time to
refresh it, says ShobanaKamineni who, at 54, is the third of
Reddysfour daughters.
In July this year, then, a seven-memberfamily council headed by
Reddy, andincluding his four daughters and twoprofessional
advisors, met to decide the bestway to rejig the structure. The
councilconcluded that the most effective approachwould be to
redefine the role of every familymember; this would give everyone a
clearfocus. There is no point in everyone doingeverything. We
needed a focus so that wecould perform our roles well, says
theoldest daughter, Dr Preetha Reddy, 57.
In the reorganisation that followed, Preethaand Shobana were
promoted to executivevice chairpersons; Suneeta Reddy, 55, wasmade
managing director and Sangita Reddy,52, joint managing director.
There was another, more vehement,message embedded in this
restructuringexercise. The family wanted to assert thatthe Reddy
sisters were not Daddys littlegirls. I have often heard people say
that weare a shadow of our father, says Shobana.
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Preetha Reddy
are a shadow of our father, says Shobana.We want everyone to
realise that we areserious professionals. I have created
thepharmacy and the insurance businesses.Suneeta has raised more
money than anychief financial officer in the country. Peopleneeded
to understand that, she points out.
More significant, however, was handling thedelicate question of
successionas is thecase with all family-run businesses. In
thisinstance, the promoter family holds a 34.35percent stake in
Apollo Hospitals; 11 percentis with IHH-Healthcare Berhad, a
leading
international provider of premium health care services, and the
balance is in the hands offoreign institutional investors and the
public.There is no immediacy since Reddy isnt stepping down anytime
soon; however, thefamily council felt it prudent to have a
succession plan in place. One of the ideas thathave been mooted is
a rotating chairmanship model, in which each of the sisters will
getthe chance of being the chairman for a few years, says Reddy.
This also manages theissue of choice since, as he points out, I
wont say X or Y is more capable than the otherbecause they are
equally capable.
As if on cue, just as he touches on the topic of succession,
Preetha walks into his office, atApollo Hospitals on Jubilee Hills,
Hyderabad, to meet her father. This is our superstarPreethu, he
says as she goes up to kiss him on the cheek. Meeting over? he asks
her.One down and one more to go, she says with a laugh. See, says
Reddy, pointing toPreetha, this is what I like about my daughters.
They love what they do and dont treatit as a business.
What is perhaps even more reassuring for the patriarch is that
the sisters share agenuine bondone that has allowed him to make
these ambitious, and out-of-the-box,succession plans.
The Ties That BindThe Reddy sisters rarely get to spend
timetogether; more often than not, theirschedules keep them apart.
Which is why,they tend to make the most of anyopportunity to catch
up on the gossip. Afew months ago, Preetha, Suneeta, Shobanaand
Sangita were all in the US to attend afamily event. We spent an
entire daytogether, holed up in a room, talking andteasing each
other, says Shobana. We areeach others best friends. It helps that
thereis not much of an age difference betweenus.
Later, in early August, the sisters were backin Hyderabad to
attend a family wedding.Suneeta didnt want to attend it but
wecoaxed her into it. We asked her to make iteven if it was just
for three days, saysShobana, and she didnt regret it even
once!
The closeness of the sisters can be a peeve for the third
generation in the Reddy family.Our children constantly complain
that speaking to one of us is like speaking to all of usbecause we
share everything with each other, laughs Shobana. It works to
theirdisadvantage but sometimes they cleverly use it too. Her
daughters Upasana andAnushpala are closer to their aunt Sangita
than they are to her, she says. Our childrenunderstand the bond
that exists between us and it is very important to them,
saysShobana.
And she isnt exaggerating. In the family, the glue that binds is
the sisters love andrespect for each other. Mention this to any one
of them and the standard response is aquick knock on a piece of
wood, to ward off bad luck. Is that all you find common amongus?
Shobana asks, surprised, when we point out this similarity to her.
We even speakthe same language and, funnily enough, we sometimes
use the same words.
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Shobana Kamineni
Shobana was the first among the siblings to join Apollo
Hospitals in 1982, as a liaison andproject executive. I graduated
in economics from Stella Maris College in Chennai andthen did an
accelerated course from Columbia University in hospital
administration,which was useless because I dont like
administration, she says with characteristiccandour. She preferred
working on projects and took charge of large hospitalconstructions.
My most useful experience was working with architects, builders,
etc,she points out.
Shobana also shrugs aside the philosophy of loving what you do
as luxury. It is moreimportant to know how to deal with the cards
that you are dealt. She points to hercareer as an example. I got
the most uncool space of pharmacy whereas running ahospital is more
romantic, she says. Nobody wants to be a shopkeeper. But,
today,Apollo Pharmacy contributes 32 percent of the companys
revenues. When we startedApollo Pharmacy, nobody in the company
gave us the time of the day. And then, fiveyears back, suddenly
everyone, including the CEO of Apollo, became interested. It is
aprofitable division today, says Shobana.
Her journeyfrom a place where she implemented projects to
heading Apollo Pharmacy,the fastest growing division in Apollo
Hospitalsmirrors that of her sisters, all of whomworked their way
up and around in the organisation.
Preetha recalls how all of them started their careers by
spending time in variousdepartments of Apollo Hospitalsfrom
housekeeping to food and beverages to workingwith doctors. We felt
that our father was working very hard so we wanted to help himout
in whichever way we could, says Preetha who heads international
business verticalsand leads the organisations focus on quality
improvement processes. In fact, she wasinstrumental in pushing for
Apollo Hospitals accreditation by Joint CommissionInternational
(JCI), a global gold standard for patient safety and quality
improvementfor health care organisations. (Eight Apollo Hospitals
now have this gold standard.)
Given the diversity of experience they had, it took a while for
the family council tonarrow down the roles that each sister would
perform. Shobana admits that it wasnt theeasiest of times.
Restructuring was one of our biggest challenges because we have
neverconfronted each other on our roles and then, all of a sudden,
you have thisrestructuring, she says. It taught us dispute
resolution and the need to be frank witheach other about what we
want.
Not that the sisters claim to be above a fightor two. We are
very different people.Suneeta is an introvert; Sangita is
someonewho thinks things through. We are not likepeas in a pod. We
understand that and arerespectful of boundaries, says Shobana.
Inthis respect, a ground rule set by theirmother Sucharitha Reddy
has provedparticularly useful. Mom said that even ifyou fight, dont
sleep on a fight. She taughtus to say sorry before sleeping,
irrespectiveof who is at fault, says Sangita who has ledthe groups
retail health care foray, whichincludes Apollo Health and Lifestyle
Ltd. Afirm believer in technology, she is alsoworking on the
digitisation of all patientrecords and making Apollo a
paperlessorganisation.
Vinayak Chatterjee, chairman of FeedbackInfrastructure and an
independent director
on the board of Apollo Hospitals, has known the Reddy family for
over a decade. He sayshe is yet to see sibling rivalry among the
sisters. In contrast, there is sibling support. Ihave seen
occasions where one comes to support the other, he says, adding
that Reddyhas been a positive and galvanising force. In many
senses, the sisters draw a greatinspiration from their father who
is almost God-like to them.
And the respect the sisters have for their father manifests in
many small ways. Forinstance, if Preetha enters her fathers room
when he isnt present, she is careful not tosit in his chair. It is
the chairmans chair, she says.
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But Reddy underplays his own importanceand, instead, credits his
wife for the closebond between their daughters. Theirmother has
played a key role by quietlyunderstanding what they need to
knowwithout being forceful. She does it so subtlythat you hardly
notice it. I think that is whythey love her more, he says with a
laugh.
The Rejig That MatteredTough as the experience was for such
aclose-knit family, the rejig was also anunavoidable exercise. Not
the least becauseit had become imperative to send a strongmessage
to Apollos investors; that thoughthe chairman was getting older,
there wouldcontinue to be stability in the company. AndApollo
Hospitals would follow the same valuesystem. That, however, does
not mean thatPrathap Reddy has taken a backseat. Hecontinues to
work eight hours a day,including on the weekends. The only breakI
take is when I go home for lunch onSundays, says the octogenarian
who looksfar younger than his age. He is a veryengaged chairman. We
are empowered butwe feel if it takes just a call to get his
counsel,why not? says Preetha.
On a typical work day, Reddy takes therounds of the wards in the
Hyderabadhospital. But on Sundays, he likes to talk tothe laundry
and kitchen staff as well as thetelephone operators. They are
importantpeople as well. They feel very happy thatthe chairman is
talking to them, he says.Reddy believes he has passed on thewarmth
he feels towards the Apollo staff tohis daughters. I have
inculcated this culturein them. Thats why Apollo won the
GallupWorkplace Award for 2014 for the bestworkplace, he says.
Though he no longer participates in day-to-day meetings, his
daughters continue toconsult him before taking a big decision.
Iknow what is good and what is not and Iguide my daughters when
they need me, hesays. Reddy describes the reorganisation aspart of
Apollos strategy for the next threeto five years to achieve
top-of-the-lineclinical excellence at all levels. Each one hasbeen
given well-defined roles. It will help usgrow the organisation, he
says.
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Suneeta Reddy
Though the rotating chairmanship model is currently at a
proposal stagethe family willhave to arrive at a consensusthe model
is being viewed as an optimal solution becauseequality between the
sisters is a running theme. In the event that it does get
accepted,Preetha, as the oldest, will take over as chairperson when
the time comes. This willpotentially be a seamless transition since
she has always been seen as a leader by hersisters. From a family
head perspective, Preetha is the one, says Sangita. She has
thepersonality. We all look up to her.
But Preetha isnt giving this much significance. I think each one
is equally capable. Wewill have to find a model which takes care of
that. The only thing that sets us apart is ourage. Otherwise, even
our salaries are the same, she says.
There is no rigidity about the order in which they assume
leadership. Right now we areusing the age factor to decide. Preetha
will be the first, followed by Suneeta, me andSangita, says
Shobana. The only thing is if, say, Sangita wants her turn faster,
she canask and we will offer it to her.
Kelly LeCouvie, senior consultant at theFamily Business
Consulting Group, believesa rotating model does work in many
casesbut its success is dependent on many factorssuch as training,
passion for the work,understanding of the business, personalityand
leadership abilities. Naturally, the goodthing about rotating that
role is that itprovides all the shareholders with anopportunity to
lead, and to developpersonally and professionally, she says.
But she cautions of some risks. Rotatingchairmanships do not
generally assure thatfamily disputes will be eliminated. And it
isdefinitely not the right reason to think aboutthat model. I
believe that anyone filling thatrole should be required to meet
specificcriteria, which can be established andmonitored by the
board.
Sustaining The VisionA critical question that arises out of
therotating chairmanship model is this: Whathappens to the larger
vision of Apollo? Will itchange every time there is a new
chairman?Shobana only half-jokingly says, Good. Thatis the way it
should be. Otherwise it getsboring and monotonous. But she also
pointsout that it is unlikely to happen because thecouncil will
constantly engage on issues.
In this respect, it helps that the family
Forbes India Magazine - Apollo Hospitals' Prathap Reddy grooms
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Sangita Reddy
speaks as one while defining Apollos vision.And the goals that
Apollo has set for itselfare rooted in the initial vision of the
hospital,when it was set up by Prathap Reddy. Andthat has not
changed, he says. I startedApollo because I felt Indians should
have thesame level of health care as is available indeveloped
countries. Our family of fourdaughters and, according to me, our
familyof 85,000 people [Apollos employees] are
all focussed on what can we do to offer the best possible care.
You dont have to goabroad. We will give you the same care.
Till now, Apollo has performed 1,59,000 heart surgeries at a 99
percent success rate, afeat, Reddy says, very few hospitals can
match. And it has delivered because it has beena doctor-driven
hospital with a focus on hiring the right people and staff
training. Dr MRGirinath, chief cardiovascular surgeon, Apollo
Hospital, Chennai, was the first doctor tojoin Apollo when Reddy
started it. He recalls the intensity of research Reddy put inbefore
hiring his staff. He wanted people who could make a difference,
says Girinath,who left the railway hospital in Chennai to join
Apollo with his team.
The attrition rate for doctors, who operate on a fee-for-service
basis (they areconsultants who are exclusive to Apollo but not on
its rolls) is less than 1 percent inApollo; the average attrition
rate in hospitals is 15-20 percent.
Thirty-one years after starting Apollo, Reddy continues to be
involved in hiring doctors.Every year, I go to the UK to hire
doctors. We interview 300 from which we hire 100,he says. Apollos
hiring is in tune with its three-year expansion plan. In addition
togrowing the pharmacy, clinics and boutique hospital businesses,
Apollo will add 2,000beds over the next two years. We are totally
stretched for the next two years which isanother reason for
dividing our roles, says Preetha.
A Rs 2,500-crore capex plan has beenallocated for the next three
years of whichApollo has already spent Rs 600 crore.Growth will
also come through acquisitions.We are in a high growth phase. We
haveincubated new companies. We will bebuilding more infrastructure
and capacity. Itis going to be very challenging, saysSuneeta.
An important part of the expansion plan isinvestment in
technology. The hospitalrecently invested Rs 300 crore in a
protontherapy centre in Chennai. It will take sixto seven years to
get return on thisequipment but it is an importanttechnology, says
Krishnan Akhileswaran,Group CFO, Apollo. US has 15
protons[centres]. Why shouldnt India have one?(Proton therapy is an
advanced radiationtherapy technology available globally.
Apollos Chennai centre will be the first proton therapy centre
across South East Asia,Australia and Africa.) Such investments in
technology will continue. People trust usbecause of our
cutting-edge technology, Preetha says. What we really hold close to
ourheart is that people trust us. And there is room to do more.
Generation NextContinuity is critical to the sustainability of
any family business. It is the main reasonfor having a family
council, says Preetha. The Reddy sisters, between them, have
10children, all of whom are under 30 years of age. We feel we are
the custodians of theirwealth, so we formed this council to take
care of the next generation as well, she adds.
While some of the grandchildren have joined Apollo, others are
still very young.Suneetas daughter Sindoori, Shobanas daughter
Upasana and Sangitas son Anindithwork for the family business.
Preethas son Karthik was involved for a while but now hashis own
venture.
Forbes India Magazine - Apollo Hospitals' Prathap Reddy grooms
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I think there is always the promoters perspective which they
have because theyunderstand the business and they talk to their
grandfather a lot about it, says Preetha.They tell us all the time
that they dont like the way business is run. They want
thingsquicker; they are more discerning than us and probably less
tolerant than we are as ageneration. But that is good because they
are smarter and more agile.
The family council is now working on framing the rules for the
next generation. It willspecify processes for entry into the
business, terms and conditions to grow it and themethods for
dispute resolution, among other things.
Shobana accepts that inducting the next generation into the
business will not be easy.The bond that exists between the sisters
has so far kept the family together but with thenext generation,
things could be different. It will be difficult but a takeover by
the nextgeneration is still 15 years away, says Shobana. If the
children are competent, they canbe professionals like we are.
Fortunately, Reddys grandchildren share cordial relationships.
However, there is arider. They are close as cousins but I dont know
whether they will be close in runningthe business, which is why we
have this unwritten rule that Apollo supersedes the familyalways,
says Shobana.
Whenever Reddy meets his grandchildren, he asks them to talk
about one good and onebad thing they did during the day. I tell
them to spend a few minutes thinking aboutthis and the goals they
have set for themselves, he says. This [his grandchildren] is
thebiggest asset we have. They love each other and they love
us.
Spend a few hours with Reddy and it is evident that while the
robustness of Apollosnumbers may satisfy him, the quintessential
family man is more thrilled by the bond heshares with his near and
dear ones. He is currently particularly excited about his
great-grandson, who is Sindooris son. He is six months old. In the
night, I call out to him whenhe is sleeping and he wakes up and
insists I take him home with me, says Reddy with alaugh. That is
how much he loves me. That, for the big businessman, is the
realachievement. And, in many ways, the true story of his
success.
This article appeared in the Forbes India magazine issue of 28
November, 2014
Keywords: Healthcare, Apollo Hospital, Apollo Pharmacy, Apollo
Health and Lifestyle, Prathap Reddy,Preetha Reddy, Suneeta Reddy,
Sangita Reddy, Shobana Kamineni, IHH Healthcare
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All comments are moderated
Reply
Lalit Dec 2, 2014If I can correctly recall, few years back there
was a cover story on Apollo Group/PrathapC. Reddy in Outlook, and
all the copies of the magazine were vanished from Hyderabadover
nite.
Reply
Drrepute Nov 28, 2014Healthcare in India blog looks at the
emerging trends in healthcare in IndiaApollo Hospitals is an Indian
hospital chain based in Chennai, India. It was founded by DrPrathap
C. Reddy in 1983apollo group has developed services in
telemedicine, after starting a pilot project in 2000in Pratap
Reddy's home village. It is now the largest telemedicine provider
in India with 71centersThe success of Apollo Hospitals has made it
a topic for Harvard Business Schoolcase study.
Reply
Sreekanth Yelicherla Nov 27, 2014In the corporate world, ethics
do not matter but only profits! Apollo is one group ofhospitals who
exploit money with unnecessary surgeries. This is an open
secret!
Reply
Dr Ali Nov 24, 2014Dr Prathap Reddy has done well for himself
but has shortchanged the poor people ofDelhi. He got free land for
Apollo Hospital at New Delhi with a promise that he will treat25
percent patients free of cost. Even after almost 20 years he has
been avoiding to fulfillhis commitment by entangling the issue in
legal battle with the Delhi Government. Ratherthan treating poor
patients he is using Apollo Delhi hospital to earn megabucks for
hisfamily by promoting it as a medical tourism destination. India
will remember him as thedoctor who commercialised healthcare to
make money by exploiting the poor with thehelp of his political
connections.
Reply
Arindam Nov 24, 2014"He is six months old. In the night, I call
out to him when he is sleeping and he wakes upand insists I take
him home with me," says Reddy
Sir, You have a an Einstein in making, who could comprehend and
speak in 6 months.
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How Mahindra & Mahindra cameto dominate the Indianautomotive
industryby N Madhavan
By focusing on product development and taking unprecedented
risks, PawanGoenka has ensured that Mahindra & Mahindra not
only survives competitionand dominates the Indian market, but is
also ready to take on the world
Image: Vikas KhotPawan Goenka, executive director and president
automotive & farm equipment sectors, M&M
Oh God, what have I done? wondered Pawan Goenka as he stood in
front of Mahindra& Mahindras research and development (R&D)
facility in Nashik, Maharashtra. It wasOctober 13, 1993, his first
day on the job as general manager (R&D). He had justreturned
from Detroit to India after a 14-year stint with General Motors,
where he wasmanaging the worlds then-largest carmakers engine
design and development.
He had not expected M&Ms R&D infrastructure to match
that of General Motors which,in the early 1990s, had an annual
budget of $1 billion as well as a team of 20,000engineers spread
across multiple locations. But neither was Goenka prepared for
theground reality in Nashik. Consider that the research facility
was merely a shed and hadonly 50 engineers. I must admit that the
starting point was a lot less than what I hadimagined, says Goenka,
who is now executive director and president (automotive &farm
equipment sectors) of the Mahindra group.
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Twenty-one years on, M&Ms revenue has risen 25 times to Rs
43,838 crore from Rs1,715 crore; profits have gone up 55 times to
Rs 3,758 crore from Rs 68 crore at thetime. (The automotive and
farm equipment business accounts for close to 66 percent ofits
overall revenues.) Also, the company has become the largest tractor
manufacturer inthe world apart from dominating the Indian SUV
market in which almost every majorglobal carmaker is fighting for a
share. The most significant change has been this: Ridingon strong
product development abilities, M&M has managed to launch
several successfulproducts during this period.
Not that Goenka, then 38, could have predicted this outcome at
the time. He was makinghis comeback to India with the broad plan of
helping build a homegrown company. Andhis meeting with Anand
Mahindra, then deputy managing director of M&M, haddetermined
his journey. Mahindra told him how the countrys economic
liberalisationand potential competition from global players had
left M&M, a maker of pick-up trucksand jeeps for the rural
market, with three options: Exit the automotive sector, become
alicenced manufacturer for another company or develop own products.
We have chosento develop our own products and compete with the
world. I am looking for somebody toundertake this big task. You
will have all the freedom. Just give me a product in areasonable
time, Mahindra had told him.
Goenka, who had agreed, says it was one ofthe very few decisions
I have taken withoutlooking at the spreadsheet. And there hasbeen
little cause for regret. Because, despitethe initial disadvantages,
Goenka, with hissingle-minded focus on R&D and the fullbacking
of his boss has steered the companyon to the fast-track of
growthandestablished himself as an India Inc worthy.
The journey has not been devoid ofuncertainty. To leapfrog
limitations of scale,he had to keep drawing M&M intouncharted
waters. Some of those movesbuilding Scorpio ground up when
thecompany clearly lacked productdevelopment expertise, or setting
up theMahindra Research Valley when the countryhad a dearth of
engineers with the requiredexperiencecould have sunk the companyand
culled his career. But for Goenka andMahindra, fortune has so far
favoured thebrave.
And he is not finished yet. Goenka is nowtaking an even bigger
risk by getting M&Mto invest in automotive
technologydevelopmentan area that has been theexclusive preserve of
fat-pocketed global carmajors. But he isnt worried. Because,
asProfessor Vijay Govindarajan, CoxeDistinguished Professor of
Management atDartmouths Tuck School of Business and anexpert on
innovation, puts it, Leaders actwith couragemaking decisions
without full
information and in the face of enormous uncertainty and
potential risk. They are notafraid to fail.
THE IN-HOUSE GAMBITThe transformation had a slow beginning. The
availability of meagre resources in 1993-94 did not permit
large-scale investment in research. Goenka, consequently, focussed
onfixing what was possibleand necessaryto at least set the ball of
product developmentrolling: For instance, various departments for
computer-aided design as well asengineering and vehicle design were
set up and staffed. The minimum requirement ofinfrastructure was
built and people were trained.
This done, the first product to emerge from their
newly-refurbished shop was a pick-uptruck in 1997, followed by
Bolero, an SUV, in 2000 which replaced their Armada, whichhad been
launched in 1993. (M&M, which was established in 1948, had
initiallyassembled multi-utility vehicles under a licence agreement
with Willys Jeep. It
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Image: Vikas KhotAnand Mahindra, chairman and managing
director,Mahindra & Mahindra
continued its manufacturing activity through similar
arrangements).
Though Bolero was the first product to be developed in-house, it
used the Armadaschassis, roof and door. Investment in it was kept
low at Rs 30 crore. Boleros successwas beyond our wildest dreams.
More than 14 years later, it still sells one lakh units ayear,
points out Goenka. Bolero also bolsteredand widenedthe companys
productrange which had, thus far, included pick-up trucks and jeeps
predominantly focussed onthe rural markets.
By 1997, a year after Hyundai and Ford hadset up operations in
India, M&M beganworking on a new product. Aware of howurban
India was transforming, and themanifold opportunities it presented,
thecompany was grappling with a majordilemma, says Goenka. The
quandary was:Should we develop an all-new product or doa tinkering
job like Bolero?
It was not an easy decision. Building a newproduct from scratch
would cost at least Rs600 crore; and at that time, M&Msrevenues
stood at Rs 4,100 crore and profitsat Rs 250 crore. It didnt help
that thecompany had no internal expertisepeople,process or
infrastructureto develop theproduct. That apart, M&M had
previouslynever launched a product for the urbanmarket. It was a
make-or-break situationfor M&M then. Competition was
increasing.We had to take a bold call, says Anand
Mahindra, now chairman and managing director of the Mahindra
group. And it did justthat by deciding to develop a new vehicle.
The product was Scorpio. The decision tobuild the Scorpio using
indigenous technology and design was a very bold act, says
ProfGovindarajan. To this end, an integrated design and
manufacturing centre was set up at their Kandivaliplant in Mumbai.
Goenka hired a number of engineers (half of them just out of
college).We did the initial styling but did not have the capability
to make the clay model, ordesign the body. For that, we opted for a
UK consultant, he says. In fact, he adds, bulkof the development
was led by consultants. For instance, AVL Austria designed
theengine. However, M&M ensured that its engineers worked
alongside the consultantsduring this process. It cost us money to
send scores of engineers abroad for manymonths. But we saw that
more as an investment, Goenka adds.
Other risks had to be taken as well. There was no expertise in
India to build either apress or paint or body shop. Buying these
from established players would proveprohibitively costly. M&M
began to scout for other options. For instance, it identified
aKorean company which had some expertise in body shops but had
never developed onefully. However, M&M still gave it the order.
Reason: It would cost half the amount itwould have to pay
established players. A paint shop, set up as part of the
Ford-Mahindrajoint venture in 1994, was put to use for Scorpio.
Such jugaad was necessary to keepcosts low.
Inevitably, Scorpios development cycle had its moments of
crisis. There was a lot ofnervousness and challenges. We thought of
abandoning the project mid-way manytimes, says Goenka. It was Anand
Mahindras encouragement that helped the projectstay on course, he
adds.
Five years and Rs 550 crore later, Scorpiowas launched in 2002.
The urban customersloved the product and sales picked
updramatically. Three things went in favour ofScorpioits aggressive
styling, powerful 109horsepower engine and a price point of Rs
6lakh. The company was bent on makingScorpio a success. After all,
it had investedalmost four times its annual profits on thevehicle,
and failure was not an option. Given
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that, it initially even sold a variant of thevehicle at a loss
of 2 percent (a first in itshistory); it also dropped the Mahindra
namefrom the brand just in case the rural imageput off the urban
customer.
The Scorpios eventual success offeredseveral learnings to
M&M. First, that it hasthe capacity to develop all-new
vehicles.Second, to develop those vehicles, it needs tobuild the
necessary capabilities in-houserather than rely on consultants.
This wouldhelp reduce costs and lead time to themarket. Third,
customers would not alwaysbe charitable. Consider that Scorpio,
when itwas launched, was far from perfect.Customers took pride in
the fact that it wasthe first SUV that was developed in India.They
gave us a long rope, ignoredshortcomings and allowed us to correct
theproduct over time. Had we launched Scorpiofive years later, it
would have been a bigfailure, admits Goenka. The need to enhance
and refine the productdevelopment process became obvious.
ButScorpio had drained the companysresources and they had to hit
the pausebutton on the plan of revamping capabilities.
Not for long though: As Scorpios successgrew, so did M&Ms
revenues and profitswhich rose sharply from Rs 4,626 crore and
Rs 146 crore respectively in 2002-03 to Rs 11,645 crore and Rs
1,068 crore by 2006-07. And this, in turn, accorded Anand Mahindra
with the opportunity to fulfil his dream.
Image: Raju Patil for Forbes IndiaRajan Wadhera, head, Mahindra
Research Valley (MRV)
The Dream ProjectIn 1991-92, while on a visit to Chrysler Motors
research facility in Auburn Hills,Michigan, Anand Mahindra was
intrigued by the architecture of the facility. It had aunique
structure where no department was more than a 10-minute walk from
thecafeteria, he says. I was told that it was to create an
environment where engineersfrom various departments can share notes
when they eat. That was when theautomotive world was moving towards
simultaneous engineering in productdevelopment. Getting engineers
to communicate, even in those casual environs, hadhelped the auto
major significantly.
This thought stayed with him. Later, on a visit to Xeroxs PARC
(Palo Alto ResearchCentre), he was struck by the environment which,
he felt, fostered creativity: The
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peaceful surroundings, a strong ecosystem for R&D and
facilities which allowed people tolive, work and play. He wanted to
create similar facilities for M&M in India. AnandMahindra
discussed setting up such a facility soon after I joined, but
conditions thenwere not ripe, both within the company and outside.
We simply focussed on getting theproducts out, says Goenka.
It was only in 2005 that he began work on Phase II of M&Ms
product developmentjourney, and sowed the seed of what is now known
as the Mahindra Research Valley(MRV). MRV was conceptualised as an
integrated product development centre that willhave the best
environment, infrastructure and people for R&D in the auto
industry,says Rajan Wadhera, chief executive, truck and power train
division at M&M, and headof MRV. It would also be seen as a
temple of learning which will attract top talent in thefield from
around the world. A budget of Rs 1,000 crore was allotted for
it.
And, on April 11, 2012, former IndiaPresident APJ Abdul Kalam
inauguratedMRV. Spread over 124 acres insideMahindra World City
(Indias first specialeconomic zone and an integrated businesscity),
a 90-minute drive from Chennai, MRVhas 500,000 sq ft of built-up
area housing32 laboratories to physically make parts, domock-up
testing for use and abuse of variouscomponents, and design offices
to virtuallyvalidate designs and test them.
On last count, it had 2,600 engineersincluding 10 expatriate
employees workingacross four major domainsauto productdevelopment,
farm product development,power train engineering and
advancedtechnologies. M&M has spent about Rs 650crore on the
facility so far, and the annualwage cost of people involved in
R&D as aproportion of the companys total wages hasrisen to 20
percent in 2014 (it was 8 percentin 2004) in just the auto
division. It is theonly place in the world where automotiveand
tractor development takes place underone roof, claims Goenka.
A Bumpy RideExpectedly, M&M faced many challenges insetting
up the MRV. Where should welocate it was the first issue. Should it
be neara manufacturing facility or away from it?recalls Anand
Mahindra. We opted for aplace away from a plant as M&M had
many
manufacturing facilities and MRV cannot be close to all of them.
The other big challengewas moving around 1,000 product development
staff from Nashik and Kandivali (insuburban Mumbai) to the
outskirts of Chennai. Many left and those who took thetransfer
found it difficult as social infrastructure around MRV was not
developed. Theyliked the workplace but their spouses found things
difficult, says Goenka. To fix this, thecompany invested in
schools, housing and clubs. Recruiting new staff also presented a
problem. India has been known, for manydecades, as a manufacturing
country but we never designed or developed auto products.This meant
that there was a serious lack of people with product development
expertise,points out Wadhera. So, M&M opted for the next best
option: It recruited engineersdirectly from college and trained
them.
The most significant challenge was fostering a mindset change
among the engineers.Creating a culture of innovation, risk-taking,
and an open environment that facilitatedcross-pollination of ideas
was critical for MRV to deliver results. But the situation
atM&M was far from that. Before relocating to MRV, the
development teams that werelocated in Nashik and Kandivali worked
in silos [locationally and functionally] and aculture of innovation
was nascent, says Rajeev Dubey, president (group HR,
corporateservices & aftermarket sectors), M&M.
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Heres where the Rise campaign that M&M launched in 2010-11
became relevant. Theidea was to create an ecosystem that fosters a
culture of accepting no limits, alternatethinking and positive
change. It rewarded people who were both logical and creative atthe
same time, co-creators (rather than control freaks) who nurtured an
environmentwhich was devoid of fear, encouraged risk-taking and
built trust. It took a while for thisto manifest but reducing
attrition levels indicate a promising movement. Our attritionlevel
has come down in the last three years, from a high of 15 percent to
less than 10percent, says Dubey.
Since its launch, three new products haveemerged out of MRV. The
XUV 5OO wasdeveloped in four years at a cost of Rs 650crore (25
percent lower than Scorpio at thenprices). It has since become the
fastest-selling SUV priced above Rs 10 lakh to sellone lakh units
(it did it in little over 30months).
Arjun Novoa tractor developed at a cost ofRs 300 crorewill give
M&M technologyleadership, believes Goenka (it is already
themarket leader in the tractor industry). Over2,500 units of Arjun
Novo have been sold inthe last two months. The third product,
theNew Scorpio, was launched recently withupdated design and
technology. Engineersat MRV are working on 20 newproducts/variants
and three new tractorplatforms apart from developing many
newtechnologies ranging from in-carinfotainment, alternate fuels,
emission andsafety standards and light weighting the carto improve
fuel efficiency, says Goenkaproudly.
MRV has also helped M&M improve thequality of all its
products. At any giventime, over 300 tests are being conducted
toimprove performance and customerexperiencebe it door-handling,
seatcomfort, suspension, engine noise and so on,says Wadhera.
Bridging the GapThe results are visible in the market.American
marketing information servicesfirm JD Powers Customer
SatisfactionIndex reveals that M&M vehicles havemoved from the
ninth place in 2005 to thefourth in 2014. Also, under JD
PowersInitial Quality Survey 2013, Scorpio andXylo are among the
top three vehicles in theSUV and MPV categories respectively.
Thissurvey takes into account problems per 100vehicles as reported
in the first 90 days ofnew vehicle ownership.
On the flipside, though, a closer look at thesurvey reveals a
huge gap between M&M
and other global players. While Toyotas Fortuner recorded just
53 problems in the SUVcategory, Scorpio recorded 117.
Goenka realised these limitations vis--vis well-entrenched
global players. India lacks astrong base for automobile technology
and engineers with years of expertise, he says.To bridge this gap,
he entered phase II of his strategy by setting up a technology
centrein Detroit earlier this year. The Mahindra North America
Technology Centre (MNATC)with 64 employees effectively complements
MRV.
While the average age at MRV is around 30, the employees at
MNATC hold 1,200 yearsof experience between them along with 100
vehicle-launches and 50 patents. We set upMNATC to speed up our
development prowess. At times, there is a need for vertical
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capacity building as there is no time to [ride the] learning
curve, says Wadhera. In thenext five years, the Detroit centre will
be expanded to house 500 staff members, and willfocus on fit and
finish as well as reliability among other aspects.
These moves point to the creation of a hub-and-spoke product
development model atM&M. At the core is MRV with young
engineers and the necessary physicalinfrastructure. MNATC brings
experience (the engineers in Detroit will handhold thoseat MRV) and
technology to the table. The Nashik facility handles platform
engineeringwhich basically serves existing models.
The other crucial link in the model is SsangYong Motors research
facility (M&M hadacquired the Korean company in November 2010
for $463 million). M&M andSsangYong are already collaborating
on developing four new engines. This joint effortincludes both
designing and sourcing. We are also looking at facilities in Europe
that willfurther our development capabilities, says Goenka.
BVR Subbu, former president of Hyundai Motor India and founder
of Beyond VisualRange, a strategic consultancy firm, says, M&M
has managed to create a relativelyunfettered product development
structure which acquires, assimilates, absorbstechnology and takes
it to the next stage. This will hold them in good stead. The
youngworkforce in product development seems to be learning very
fast, he adds.
With so much already in place, the next question is: Will
M&M get out of its comfort zone(which is the sub-Rs 15 lakh
category in SUVs in which it has a strong 44 percent marketshare)
and challenge global players in the premium SUV segment? We need to
developthe requisite technology and finish such vehicles require.
This expertise comes fromlarge R&D budgets, developing
thousands of new models and producing millions ofvehicles. We are
getting there, Wadhera says. Toyota typically invests $2 billion a
yearon R&D while M&M can only put in $200 million though
both the companies areinvesting similarly in terms of percentage of
sales.
But Goenka is not one to wait. He is already charting the next
phase of M&Ms productdevelopment strategy which will focus more
on building technology. Most of thetechnology that we use in our
cars is developed outside the country. We will get a
realcompetitive edge only if we develop our own cutting edge
technologies, he says.
However, this is a high-risk exercise as it requires massive
investment and the hit-rateis low. For that, he offers a solution.
The government of India should step in and createan environment
where we can access public funds, use knowledge/expertise available
inuniversities and government labs such as DRDO [Defence Research
and DevelopmentOrganisation] or CSIR [Council of Scientific and
Industrial Research], he says. He givesthe example of South Korea
where, in the 1970s, 80 percent of R&D spends was incurredby
the government.
A long-term technology vision is the key,Goenka says, adding
that it can be woveninto Prime Minister Narendra Modis Makein India
initiative which should consider notjust manufacturing but also
technology.Otherwise manufacturing will lose itscompetitiveness in
India once wage costsincrease, he cautions. Germany, he pointsout,
developed technology and thuscontinues to have a strong
manufacturing
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base despite higher wage costs.
Fortitude and FortuneWhile these may seem tall tasks, Goenka
hasbattled enough perceived drawbacks in hisown life to be frazzled
by even the mostostensibly impossible situations. Even from
ayounger age, Goenka (now 59) neverallowed limitations to come in
the way of hisdreams.
Born in a middle class Marwari family inMadhya Pradesh, he was
educated in a Hindimedium school in Kolkata. English was neverhis
forte but that did not prevent him frompursuing mechanical
engineering in IIT-Kanpur, a Masters/PhD from CornellUniversity and
joining General Motors inDetroit. (Folklore has it that his
Englishcommunication was so patchy that GeneralMotors put him and a
few others withsimilar limitations through a 14-weekcommunication
course in the language.)
In all this, his fortitude has propelled him inhis career. His
meteoric growth within theMahindra group is a clear
testimony.Goenka, who joined as GM-R&D in 1993,became COO of
the automotive business inApril 2003 and president of both
automotiveand farm equipment businesses by 2010. Hewas made the
executive director of thecompany in September 2010 and a memberof
the board as wellthe first employee tobe included in over 20
years.
Have the last few years at M&M validatedhis return to
India?
I am very happy to be a part of this journey at M&M, says
Goenka. And his response isnot faux humility, but is in sync with
the reality too. Because while the team, led byAnand Mahindra and
Goenka, has achieved several perceived impossibles, the fact,
asWadhera puts it, is this: For every two steps, we take the world
has already taken foursteps.
Clearly, Goenkas journey is far from over.
This article appeared in the Forbes India magazine issue of 12
December, 2014
Keywords: Pawan Goenka, Mahindra & Mahindra, Anand Mahindra,
Mahindra Research Valley, SsangYongMotor, Product development,
Vehicle design, Engineering, Pick-up trucks, Willys Jeeps, Bolero,
Scorpio, Xylo,XUV 500, Arjun NOvo, Armada, AVL Austria,
Ford-Mahindra Jo
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Surya Kumar Dec 8, 2014A very good Art