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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.

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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



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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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FEATURES/BOARDROOM | Nov 24, 2014 | 23180 views

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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Forbes India Magazine - Apollo Hospitals' Prathap Reddy grooms daughters for leadership positions 1/7/2015

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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.



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.



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



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.




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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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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.

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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.

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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!

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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.

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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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FEATURES/BOARDROOM | Dec 8, 2014 | 27717 views

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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Forbes India Magazine - How Mahindra & Mahindra came to dominate the Indian automotive industry 1/7/2015

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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



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.



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



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

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