Friday, August 31, 2012

INDIA’S 100 MOST PROFITABLE COMPANIES

As the world emerges from global recession, businesses should focus on restoring their profitability. But only short-sighted businesses do so at the expense of the pursuit of a broader purpose, writes Amit Bhatia, scion of the l. N. Mittal group, founder of Mittal Champions Trust and Swordfish Investments

One example in which I am personally involved is the Mittal Champions Trust, set up in November 2005 to encourage the next generation of great Indian athletes. It aims to provide the training, coaching expertise, equipment and nutrition advice to those who otherwise might not fulfil their potential. We have already had some notable successes, not least Abhinav Bindra bringing home India’s first Olympic gold medal at the Beijing Games in 2008.

Success at international sporting events not only brings considerable pride to a nation; it also encourages children to pay more attention to health and fitness and teaches them valuable lessons about teamwork and focus. I am extremely proud of the work of the Mittal Champions Trust and hope that we can bring home more medals at the Commonwealth Games later this year.

Since becoming an owner of Queens Park Rangers and subsequently Chairman for its charitable organisation, QPR Community Trust, I have taken great pride in the endeavours to utilise the QPR brand to enhance the lives of those in the local community and further afield. While success on the field and the club’s business infrastructure must always be of greatest importance, the Trust also uses its resources and influences to support over 100,000 young adults each year.

The well-known business writer Jim Collins has always argued that it is those businesses with a strong purpose beyond profit-making that will be most successful in the long-term. Certainly ArcelorMittal, the company founded and run by my father-in-law Lakshmi Mittal, follows this approach strictly.

ArcelorMittal’s employees are engaged around the common purpose of helping to facilitate the infrastructure of the modern world. It does this predominantly through the product it makes, but also through the work of the ArcelorMittal Foundation in addressing various social issues. ArcelorMittal’s investment in community projects throughout Brazil is one of the reasons why the company was recently acknowledged as the best company to work for in the country. Given Brazil’s importance to ArcelorMittal globally, this really is an example of doing well by doing good.

A successful business is a socially aware business and one recognises that with investment and growth comes a greater purpose: responsibility to individuals and society. This requires a real commitment – not just money, but time, resources and strategic priority. This is why many businesses in the developing world focus on projects that, after initial investment, become self-sustainable.

It is only by paying more attention to the quality of life, in the broadest sense, of the communities in which they work, that businesses can hope to achieve lasting growth and prosperity. This requires a purpose beyond the simple pursuit of profit and organisations with a desire to succeed over the longer term would do well to continue to remember it.



          

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posted by Editorial at 4:47 PM

Thursday, August 30, 2012

“THERE WILL BE A MARGINAL FALL IN EXPORTS THIS YEAR.”

H. W. Park, MD & CEO, Hyundai Motors India talks to B&E on the present challenges – both internal and external – and the plans of his company for both the domestic and export markets

There is no denying the fact that till date the only two companies that have managed to give Maruti Suzuki some sleepless nights on the home turf have been Hyundai (with its Santro model launched in September 1998) and Daewoo (with its Matiz model launched in 1999). While Daewoo had to bow out due to bankruptcy-related issue, Hyundai has grown in stature as a threat to the market leader, chipping away at Maruti’s market share over the past decade. For Hyundai, the Indian episode started with the Santro, and over time the company moved into all the other major segments as well. But despite the best efforts of the company, thick competition threatens Hyundai’s stand as the second largest car-seller in the domestic circuit. H. W. Park, MD & CEO, Hyundai Motors India, in an exclusive interview with B&E, talks about production and labour-related issues and the road ahead for Hyundai.

B&E: The company recently clocked a cumulative sales volume of 30 lakh units in the Indian market. It took Hyundai a little over a decade to achieve this milestone. How have your eight years with Hyundai India been so far?
H. W. Park (HWP): The journey with the Indian subsidiary has been very exciting. India as a region has emerged as the largest export base for our small cars. In fact, the cars made out of Chennai can be seen across five continents now. However, all this was only possible due to our total commitment to the Indian market and the faith that our customers put in us. We will continue to build Hyundai as a brand in the market and bring in the best of products and technology.

B&E: Ever since Hyundai started operations in India, its export plans have been very bullish. Can you throw some light on your targets for this year?
HWP: This year, we will be exporting close to 250,000 to 255,000 units. We exported close to 270,000 units last year, but there will be a marginal fall in exports this year.

B&E: Fall in exports you said... So do we put the blame on the fall in demand in the European market?
HWP: As compared to last year, wherein the European government offered scrappage deals to the consumers, the demand has surely gone down in the region. In fact, due to the scrappage scheme, the demand was very high last year, but this year, it is back to normal.

B&E: Can you elaborate on the targets that the company has in mind for the domestic market this year?
HWP: We plan to sell close to 340,000 units in the Indian market this year. Last year, we sold close to 290,000 units. So, we are looking forward to a will be a healthy growth of in excess of 17% for the company.

B&E: The industry is excited about the much-awaited 800cc car that will be positioned below the Santro (expected to debut in 2012). What is the development on the same?
HWP: We are currently in the development stage of the model and it is going very well. However, I can’t comment on the time frame of the launch in the Indian market

B&E: It has also been reported that the company is working on a plan to launch the smaller engine i.e. 1000cc for i10 for the local market. Your comments...
HWP: We already have 1000cc engines used in the i10s that we are exporting. But as of now, we do not have any plan to launch the smaller engine for the Indian consumer as we already have a lot of volume coming in from the currently selling 1.2L model.


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posted by Editorial at 3:50 PM

Wednesday, August 29, 2012

An infamous melee

Not very long back, Mel Gibson was accused of physically assaulting his ex-girlfriend Oksana Grigorieva. Now, with his tapes being presented in public, there is proof enough to prosecute him. Earlier, he had punched his ex- girlfriend in the face and she suffered serious injuries and slight damage to her teeth. Now, he’s openly calling her names and threatening to kill her. Gibson’s goodwill shall suffer further blows if things are proven with respect to the authenticity of the tapes. Mel maintains that he was being used and was cheated on by Oksana...


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posted by Editorial at 3:33 PM

Friday, August 24, 2012

Casting a spell!

From The Princess Diaries to Ella Enchanted, from giving the voice-over for Little Red Riding Hood in Hoodwinked to playing the adorable Andy Sachs in The Devil wears Prada, 27-year-old Anne Hathway certainly has become the face of all fairy-tale and fantasy movies in Hollywood. After recently playing the White Queen in Alice in Wonderland, Anne is now all set for playing Emma, a Cinderella-like character in the upcoming movie, One day. From princess to queen to fairy, she surely has her audience enchanted!


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posted by Editorial at 3:33 PM

Wednesday, August 22, 2012

Dementia, me? Fat chance!

At peace with that ponch? You could be slowly ‘inching’ towards dementia!

You could thump it and mock it by calling it a pot belly, or you could be all lovey-dovey and address it with all due respect as ‘love handles’, but my friend, if you really are in love with yourself, I’m afraid you’re not handling it (life) that well. In a recent research it was observed that belly fat or visceral fat can be instrumental in an individual developing dementia in later stages of one’s life. Visceral fat, which is not routinely given as much importance, clinically produces more inflammation than fat found in other areas of the body. Inflammation plays a key role in triggering heart diseases and is a host to other chronic diseases as well. The point of contention is the overall ‘distribution’ of fat and not obesity in general. It has also been observed that people whose bodies are apple-shaped instead of being pear-shaped are more prone to heart attacks and strokes. Dementia is a clinical condition, which occurs in old-age due to treatable or untreatable causes and it mainly involves cognitive impairment, speech language disturbance and motor skills impairment etc. Basically, the memory and sensitivity of the patient is compromised. Certain treatable causes for dementia could be transmitted through various viral infections in HIV patients. Many cancers such as lung and brain cancer could release certain such chemicals in the blood stream which may cause dementia. Also end stage liver and kidney disorders could lead to dementia.

“Out of all dementias, ‘Vascular’ dementia is the most common, and the most common cause of dementia is stroke. In case if someone suffers a stroke or multiple strokes then the portions of the brain which get damaged may lead to dementia. Other than obesity, diabetes and hypertension, the metabolic syndrome is given a lot of importance these days. Also a focus on the waste-hip ratio is very important.


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posted by Editorial at 5:50 PM

Tuesday, August 21, 2012

FOOD: ADULTERATION

Prosecution is a must for control

These contracts are low on transparency and reek of the kind of corruption that has plagued almost every government department across the country. Even spurious drugs are rampant, especially in smaller towns and cities; where curbs are even more conspicuous by absence.

Adulteration is a menace that can only be clamped down by strict policy controls. India should learn from the Chinese example. The Chinese government executed a dairy farmer and a milk salesman in November last year for supplying tainted milk. These two men had tried to augment their profits by selling melamine-laced milk powder that led to the deaths of 6 children and affecting a whopping 300,000. Besides, the Chinese authorities have punished various people accused in several incidents involving food adulteration that included drug-tainted fish, industrial dye used to colour egg yolk red and pork tainted with banned feed additives in the last one year. In India, such cases are largely overlooked. The law is strong, but implementation has to be even stronger.


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posted by Editorial at 5:17 PM

Monday, August 20, 2012

INDIAN GENERIC PHARMA COMPANIES: OPPORTUNITIES

While drug makers around the world are lamenting the death of their patent rights on many blockbusters, there is a certain tribe smiling about it – the Indian generic tribe

So how can Indian pharmacos leverage the opportunity ahead? Says Atul Sobti, CEO, Ranbaxy to B&E, “The opportunity is huge but a lot depends on how you exploit it. Recently we launched an authorised generic of Ocycodone ER tablets (pain reliever), which has been a huge success. Similarly the opportunity that we get through Daichi in Japan’s Generic market is also huge.” Experts like Sanjay K. Singh, Associate Director, KPMG comment to B&E that it has to be a three-pronged move ahead: First, in the coming five years, Indian companies can launch bio-equivalent generic products upon expiry of patents and take Paragraph IV filings route to challenge existing patents or file non-infringing products to launch generics with 180 days exclusivity. Second, as products go off-patent, MNCs look at cheaper manufactuirng options and will look to enter into manufacturing & supply arrangements with Indian companies. Third, emerging markets continue to grow at 10%+ growth rates and are branded generic markets. Indian pharma can further strengthen its presence in these markets.

There are over 100 USFDA approved drug-manufacturing units in India that represent the swarm willing to strip all opportunities to the bone, and this is just a modest expression of what the Indian players have in mind. Indian drugmakers have captured $23.6 billion of the $110 billion value of drugs that went-off patent since 2005, and if history is some proof, then of the $200 billion worth drugs that will lost patent rights by 2014 (as forecasted by Datamonitor), Indian drug manufacturers would atleast be looking at a windfall of $34.32 billion over the next six years, making it the world’s third-largest by value, at $63.42 billion and the highest by volumes by 2016 after US and Japan. Says Adige of Ranbaxy, “The Indian pharmaceutical market will continue to observe double digit growth in the coming years. With increasing incidence of lifestyle diseases, rising disposable incomes, a growing middle class, greater penetration of health insurance and expanding medical infrastructure, India’s consumption of pharmaceutical products will go up.” Indian companies should therefore look to increase their manufacturing capacity in order to meet the likely increase in demand. Indian companies could also look at potential acquisitions that could enhance their capacity as well as reach. But that’s a simplistic view, given cash flows.

For Indian generic drug companies, the news regarding expiry of patents will prove a double blessing – the first is that the imminent bagful of revenues comes minus any headache (Companies like Sun Pharma openly tell B&E they’re happy to be a generics company). Secondly, it’s also an emotional boost (“especially for countries which have a large base of generic manufacturers. India is one such country,” says Kumar of Datamonitor). But there are considerable cynics too, like US-based pharma analyst John Anthony, who while speaking from Massachusetts tells B&E, “You can’t lead by following a dying strategy: generics are the K-Mart part of the Wall-Mart curve. You don’t lead by following and you must innovate to generate income over the long term.” But that criticism cannot succeed in wishing away the future growth of generics and the subsequent fall in drug prices. The October 2009 report titled, ‘The Effect of Patent Expiration on Drug Prices...’ states, that once generic competitors enter the market, “the prices of formerly patent-protected drugs and the marketing expenditures on their behalf fall by about 60%.”

For the Benjamin Buttons, over the next few years (by the time their drug-discover pipeline gets some life-saving batteries that sets their clocks ticking clockwise), they could take two routes to salvation – either acquire generic players at good prices (an idea mooted to B&E enthusiastically by players like Sunil Bhaskaran, MD, Indus Biotech), or take a lesson or two from the GSKs & the J&Js – that is, investing in low-cost R&D developing the ‘diet & digestive’ clan of pills (that is, the body care variety) and non-expensive “patented” re-packaging of baby products for a start.


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posted by Editorial at 5:36 PM

Tuesday, August 14, 2012

It has been able to shoulder the responsibility well.

Whether its about employees, shareholders, customers, suppliers, or India at large, Infosys realises that it has a huge reputation to protect. So far, it has been able to shoulder the responsibility well. Infosys talks to B&E... by Virat Bahri 

When you talk about value for customers, the very fact that Infosys’ repeat business accounts for over 90% of its total revenues speaks volumes of the amount of importance it attaches to customer relationships. This detail does invite criticism of the company being too conservative and low on aggression. They also believe in absolute transparency and derisking of their dealings, as the company does a due diligence on every customer to ensure in every possible way that the deal is not a risky one; particularly with respect to payments by looking at their credit default spreads. CFO V. Balakrishnan comments, “Where CDS is high, we can felt that some of these customers could be in highly vulnerable positions. We put a greater focus on a/cs receivables from them. We ensure that we are able to collect the money on time. In fact our a/cs receivables of 58-60 days includes the credit period we give to our client of 30-35 days, which is one of the best in the industry.” They have tightened their risk management processes even further after the post-Lehman experience.

This extra caution is linked to Infosys’ cash rich and debt free position that it wants to protect at any cost. And that kind of cash has its advantages. Balakrishnan tells us how the company does 99.99% of its payments to vendors via electronic payment, and uses this high creditworthiness to attract better prices from its vendors. In a sense, that is a win-win for both parties. Cash flow position also helps it in implementing a more employee-friendly HR strategy, as V. Mohandas Pai, Director-HR, Infosys, points out, “What Infosys had been doing is, for helping employees with their cash flows, it pays a part of the variable pay for the quarter in advance. This was done with the understanding that the final amount would be calculated after the results and any difference adjusted.”

In tune with Narayana Murthy’s larger vision, the Infosys Foundation was formed in 1996, and its mission has been to promote the well being of the underprivileged. The foundation works on four areas – healthcare, rural development and social rehabilitation, learning and education and art and culture. Under healthcare, the company has accomplished a number of projects, including building of a super-specialty hospital in Pune and a dharmashala at the Kidwai Cancer Institute in Bangalore. For rural development, Infosys conducts programmes for the benefit of under-privileged children, poor women, families hit by natural calamities, et al. For education, the company has taken steps like donating books, promoting computer education, redeveloping old infrastructure and giving scholarships. Under the arts initiatives, the company is endeavouring to preserve local arts and culture in Karnataka and Andhra Pradesh.

But don’t these CSR efforts run opposite to what standard think propagates. Undoubtedly, stakeholder expectations can run contrarily to each other, an issue that Infosys faced particularly during the recession period. But the company has steadfastly believed that honest communication and complete transparency are the ultimate solutions to all such issues. An eco-system of trust and values takes time to build and can be lost in an instant. On those parameters, till, date, the track record of Infosys hasn’t been too bad at all.


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posted by Editorial at 5:45 PM