Face to face with, Azim Hashim Premji- Chairman and CEO of Wipro Ltd

Source: Mint.
Azim Hashim Premji, the 61-year-old chairman and CEO of Wipro Ltd, owns more than 80% in the company, which transformed itself from making vegetable oil to a global software services business with annual revenues of around $3 billion (Rs12,300 crore). In a wide-ranging interview at Wipro’s Bangalore campus, Premji, who chooses his words very carefully, spoke candidly about Wipro’s acquisition strategy, its ambitious plans to establish centres in the US, the ongoing controversy over H1B visas in America as well as how being “humble” and not being an overt posterchild of Indian technology is actually helping Wipro differentiate itself from rivals. Edited excerpts:

We find many Indian companies today expanding their global footprints by making big-ticket acquisitions that are over $1 billion in size. What is your philosophy for inorganic growth?
Unless it has a lot of strategic value for us, we will not look at a $1 billion kind of acquisition. But we are looking at acquiring companies larger than the eight firms we have acquired in the past, certainly those between $200 million and $300 million in size. We are looking at companies employing 50-300 professionals. Good companies are never cheap; the issue is whether they can add value to our company in terms of the existing customer base, or a new technology.

Even though you serve global customers, your workforce is still almost 90% Indian, based in the country. What is the offshore story beyond India?
What is an Indian company and what is an American company? Take Accenture, for instance. They have around 37,000 professionals in India today. At the end of this year, they will employ 40,000-45,000 people in the country and there are around 42,000 employees globally. So, is Accenture an Indian company? IBM has already got 48,000 people in India, and they say that they want to go up to 75,000 professionals in the country. They are downsizing in America and laying off people in other locations. So, what is IBM two or three years from today? I think we need to get ourselves branded as a global company, which works in a global set-up and has a workforce which is reasonably global. Today, we employ around 3,500 people in Europe, out of which around 1,300 are locals. Foreign workers outside India account for 7-8% of our total workforce currently, and we would like to take this up to around 20% in the coming few years.

India is still a predominant centre because the cost economies and the talent economies are just unbeatable. You can’t move out just for the sake of it, you do it because you have to have insurance. You cannot ignore the prospects of China, but India is still very high value. We now have a centre in Shanghai, and are looking at another one in China. We have a centre in Romania, Brazil, and Mexico. We are now looking at three centres in the US. There will be cost savings because they will not be in mainstream New York city and even the state governments are willing to give a package of grants for setting up these centres. We will also become huge, huge local heroes by employing the local people (there). This will help in combating whatever anti-offshoring sentiments are there. This also gives you insurance for new visas. Not only are you doing a community-sensitive service, you are also generating local talent. You also globalize the company by these initiatives. Today, business models require your people working on the customer sites, so we would have around 10,000 professionals working on customer sites in Europe, America, Japan, Middle East and Asia Pacific. These professionals are paid local salaries standard in those geographic locations because the laws demand that. In order to achieve cost benefits there, we are doing local hires, who could be brought back to India for training. The three centres coming up in the US will employ anywhere between 250 and 1,000 professionals in each of the states.

One of the advantage companies such as IBM Corp and Accenture Ltd have over you is their business and management consulting expertise, which helps them in getting those long-term engagements with clients. Do you find it a challenge to get into the consulting space?
We have today about 2,000 people in the consulting division, which accounts for about 6.5% of our revenues ($195 million) currently. Our objective is to have 15% of our revenues coming from consulting in three to four years. We have a central consulting team for Europe and America, headquartered in Boston. We also have embedded consultants in each of our verticals, who work with the customers. We have around 300 consultants in our quality engineering division, apart from a 300-member strong India consulting team that serves customers in India and the Middle East. At present, we are covering IT consulting, domain consulting and process consulting. We are now trying to build our expertise in management consulting and strategy consulting, which will have a broader perspective. We are hiring consultants from Accenture, IBM Global Services and Deloitte Consulting.

What keeps you up?
Maintaining the solidarity of the company’s culture is a huge challenge, which requires huge amount of time and effort. I spend a lot of time doing this at open forum, question and answer sessions with employees even when travelling. Fighting complacency and retaining the same hunger with the growing size are other big challenges.
At the macro level, what is this all nonsense going about the visas? They want us to open our retail, and we have around 20 million retailers. Eventually it will help around 80 million of Indian farmers with better margins. But those 20 million retailers would get hurt because of this. These are very, very bold decisions, which the Western world must see and realize. They must realize that we are creating markets, and their companies will grow by accessing bigger markets.

That is why the biggest lobby for services globalization is the American companies, because they have their vested interests. IBM was the largest recipient of H1B visas this year; while we (Wipro) were No. 3 with Infosys probably at No. 2.

You and your family own around 80% of the company. Will you have a significant say in the company going forward?
We have a significant stake in the company and its strategy going forward. I think you need to divorce the ownership issue from management of the company. Enlightened owners don’t shoot themselves in the foot. We have consistently displayed a very high degree of professionalism, in spite of very high concentration of ownership. Why don’t you look at Infosys, which is owned by institutional investors? They own around 50% in the company. These investors control the markets today; they can make and bring down the markets. The retail investors hardly have any say. I don’t think ownership is a bad thing. Look at our top 25 leaders in the company and see the variety, and compare it with our competitors.

How sustainable is the restructuring of your top management that resulted in four CEOs for each of the business units? Will you ever have a group CEO or a similar position at Wipro?
There is no immediate succession plan for me, nothing immediate that we will announce. The idea is to engage with clients more comprehensively. The software model is getting very complex now, situations are very dynamic, global requirements are very intense. Our model of having around four functional CEOs for our different business units works better because it builds knowledge and depth in terms of customer proximity. This model works well when you are growing more.

In the global software services landscape, many India-based vendors such as Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd seem to be facing the challenge of differentiation? What is Wipro’s strategy for differentiation?
I think there are three drivers of differentiation as compared to our competitors: the Wipro way, which is our integrated quality management system, is the first one. I use the term quality management carefully, because it’s not just the way we write software programs, but it’s more about understanding customer requirements, the way we solution the customer and manage all our processes. We integrate (quality benchmarks) to deliver measurable benefits to our customers. We believe this puts us ahead of all our competitors.
The second driver for differentiation is our deep investment in innovation: about 10% of our revenues this year will come from innovation. Last year, we got around 7% of our revenues from innovation. Innovation for us means a new market segment, a new product that could be licensed and can be applied to solve business problems. Analysts are saying we will do around $4 billion in revenues this year: 9-10% of those revenues will come from innovation, and that's a substantial amount. We are not talking small investments; some of these projects will pay back this year, while some others the year after.

We have a central innovation council, which champions innovation projects and funds them centrally at my level. Then we have a 'quantum innovation' centre where we are changing the game. We have five projects running, and we use external consultants to help us facilitate them. We will do six more innovation projects this year, in the areas of people productivity, infrastructure services.
First we form project teams, which are given incentives based on the commercial success of an innovative idea. They have a variable component as part of their compensation that takes into account the profit their initiative may have generated for the company. Another level of innovation is based on our centres of excellence, which are very embedded in each of our verticals (industries that Wipro groups its clients into). The third area, which we believe is an important differentiation, is the fact that as a company we are more humble. We listen to our customers all the time, and are more sensitive to them, which I think is a very important attribute and philosophy in this services business. I could have told you more differentiators, such as our specific domain skills, or training programmes, but those are all incidental. These three attributes are fundamental philosophies, which we think differentiate us from our competition. We are always trying to be two years ahead of the competition; it is difficult to build a lead time beyond that period. There are superior companies in this field, and India is definitely mainstream for these companies.

As you continue to grow your revenues ($3 billion now) exponentially, and also expand your employee base, (68,000 now) what happens when you become, say, a 150,000-people company? Wouldn't you like to pursue non-linear models of growth and address the productivity challenges?
I think the industry has to drive non-linearity in this business. I don't think we are necessarily doing a great job of achieving this. If you are talking about 75,000 people, it (the growth) can still be managed over the next three years. I can’t, however, tell you what happens beyond 2010. But we believe it's a scalable model, the talent is available, and we can change skill sets by de-skilling at times. In one of our innovation projects, we are actually addressing these very issues because they are strategic for us. When you deskill people, it is cheaper than hiring qualified engineers, and there are significant cost benefits; there is no doubt about that.
One of the ways for driving non-linearity is to establish platforms on which common services could be delivered. Take financial and accounting platform in business process outsourcing, for instance. They deliver these processes to different customers. Around 90% of these services are common for most of their customers. Even SAP solutions and services have almost 70% common services for most customers.

When some large customers do not want their projects to be delivered through a common platform, they have to pay a price, because everything has to be custom-made for them. There are many technology customers today who are not clear about the final architecture of the solutions they want to be delivered. They say that we cannot even do a fixed-price projects with you, and would rather do projects based on the number of hours put in by our professionals. We are not necessarily doing 'donkey-work' in such projects.

As you move beyond serving large customers, such as General Motors Corp, to serving relatively smaller outsourcers looking to leverage offshore advantages, is there a challenge in terms of attuning to the specific needs of these smaller companies?
We have a unique advantage in terms of dealing with such customers, thanks to our product engineering business, which accounts for around one-third of our total revenues. While on the one hand, we deal with 11 of the largest telecom companies in the world, we also deal with companies that are around $500 million in revenues. This experience has helped us in successfully delivering to the smaller companies. We have a qualification system for identifying 'must have' customers. We look at the business we could be building with a customer, in order to avoid a lot of customers who we can keep adding every year without any repeat business! It's very expensive to have such customers in the service business. If a customer does not have what we want in our ‘must have’ list, we say ‘no.’ We have turned down customers in the past.

Sunil Bharti Mittal - The new CII President

Source: Mint

Sunil Bharti Mittal, the chairman of Bharti Airtel Ltd, India’s largest mobile telephony firm with over 40 million customers, is the first representative of the service industry in five years to head industry lobby Confederation of Indian Industry (CII). Mittal, who recently divested operational responsibilities at Bharti Airtel to focus on CII, heads a corporate group with interests in telecom, agriculture and retail. He terms the year ahead that he will spend heading CII as a year in national service. In an interview with Mint, Mittal spoke about the need for inclusive growth, education, and skill development. Edited excerpts:

How have you been preparing yourself for this role during the last year?
We’ve prepared the company for this year—prepared the management board. I clearly knew that this year a lot of (my) time would be spent outside the company, travelling in India and outside. So, that part is done. As vice-president, I have been preparing in my mind to do this as a national service and learn the nuances of the chamber’s working, and its huge reach across the country and the globe. I am leading a delegation next week to Washington, New York and later in the week to London. So, there’s a lot in my cup.

What aspects of your leadership style are you going to bring to CII?
Transparency, I think —transparency of industry in dealing with society at large. Collaborating with the government, that’s my style. Even if we have any disagreements, we’ll try to resolve the disagreements with logic and the conviction that what you are proposing is good for the nation at large. I would equally want the government to be brave and try to overcome critical obstacles.

Do you see any areas of conflict (with the government) that could come up in your tenure?
I think we want deregulation of financial services and retail, and then, there are specific industry issues like 3G (the issue of licences to companies wishing to operate third-generation telecom networks). Those issues will evolve.

Have you identified any issue you will focus on within your tenure?
Education. That’ll be my big drive. Education is very regulated today and there are issues like private participation in the education area, foreign universities, corporate universities, development of faculty and teachers, higher compensation for teachers.

To what extent do you think the government is aware of these issues?
They are aware, very much aware. But there are voices which say that private-sector participation in this sector would drive up the cost of education. We have to work with the government and address these concerns.

What sort of time frame do you have in mind for resolving this issue? And do you have any specific plans?
I’ve got 12 months or 11 months, depending on the next annual session of CII. We would have a major education summit in the next three to four months and before that put out a position paper on what exactly we want.I don’t think that we can solve this problem within this year, but I’ll be glad if I canlay a foundation. CII has traditionally been perceived as a club of manufacturers, in a manner of speaking. But the service industry has played a big role in expanding the economy in recent times.

How do you plan to increase the service industry’s involvement?

Who are the top two people in CII? They are both service (industry) people (Mittal himself, and vice-president of CII, K.V.Kamath, the managing director of ICICI Bank Ltd). There are (also service) people in development councils.

Do you think that you need to tweak your initiative of ‘Building People, Building India’ to include the service industry?
The service industry is a representative part. People skills and development are very much a part of retail, business process outsourcing, software and therefore, very very clearly, it (our initiative) is going to be service-oriented. Equally, skill sets of rust collar workers —carpenters, plumbers, drivers, chefs—all (are important). That’s why I say, traditionally the blue- and white-collar workers were the base of the industry and rust collar the future.

How do you propose to work on the agenda (of building people)? Right now, it is on paper.
Banking. We need people to be able to pick up money and get skills in a particular trade. If someone doesn’t have the money, but good aptitude, banks must be able to back him and an authority (regulatory or supervisory body) to monitor and push skill-development. What we need is a catalyst. We need some key messages and people will start coming. For example, with a higher level of skill, you can earn five times the salary you are earning. (The) Authority looks after putting in place a framework, certification, the adoption of ITI (industrial training institutes) by industry, some by CII, some by Ficci (a rival industry lobby), creation of 50,000 ITIs by private-public partnership, etc. There’s a planning commission task force on skill development which will come out with a report, and CII and its members will pick up (points) from that report.

Is there any sort of measurable target you have set by the end of the year for the skill-development initiative?
The reports should have the targets. The target actually is that 280 million people are coming (into the working or ready-to-work population) in 10 years. A large number of them may create problems if they are not taken care of.

Is there going to be some monetary commitment from CII members towards the skill-development initiative?
CII is well funded and it will be taken care of.

Industry and services have been growing fast, but agriculture has been lagging. According to you, what are the three most critical points that should be there in the country’s agriculture policy?

In my point of view, linkage between farmers, markets and the customer. (You need) cold chains, storage, warehouses, transportation, packaging… you can’t have all these till you have organized retail come into play. You can’t just wish for great growth. You need to carry it, transport it to the customer. That’s the most critical thing. With technology, farmers are in a position to growmore; they can do a good job. Then (we need) corporate farming. We hope to start adebate at the policy level on this issue.

Face to Face with- Mr J.C. Sharma, MD, Sobha Developers

Source: The Hindu Business Line.


Customers should invest 30-40 per cent of their own money into the cost of the home. This way, the impact on EMIs during interest rate increases will not be significant. — MR J.C. SHARMA, MD., SOBHA DEVELOPERS

After an IPO that received stupendous response from both institutional and retail investors, Sobha Developers has identified high-growth cities and lined up projects. Mr J. C. Sharma, Managing Director, Sobha Developers, says one need not be unduly worried about the price correction happening in some pockets. He views this more as a consolidation phase for developers. He also emphasises the need for home buyers to balance between borrowed and own funds when purchasing a house.

Excerpts from the interview:

There has been price correction in some real-estate pockets. What went wrong with the `boom' story?

I do not agree that things have gone wrong. Home loan growth rates are still above 40 per cent. Further, the home loan to GDP ratio in India is still the lowest amongst all the countries. What happened was that banking funds, which are available to every single industry, were being lent to real-estate at a faster pace than what the RBI desired. This was a kind of fuel to the so-called boom, as people were investing more in land by availing such funds. So the RBI started cautioning banks on the money being used by real-estate developers merely for `land buying/selling' transactions. At the same time, there were inflationary pressures in the Indian economy. Bank lending was growing at 30 per cent over the last four years. They (the RBI) thought that this is an industry where there may not be the right pull in giving or getting funds at this point in time. So restrictions were imposed. At the retail level, home loan rates started going up. At the institutional level, it is not only real-estate but every single corporate has been asked to pay a higher cost to avail of funds. We feel that when an economy has been growing at 8.5 per cent, it is only a desirable step to see to it that if there are some aberrations at the micro level, they are corrected.

So what was the aberration in the realty segment?

Wherever you find that there is a demand waiting to happen or is already happening, people would like to take advantage. When this happens, aberrations take place. Some people would have purchased an apartment or an office space with the presumption that there will be a 20 per cent increase. When this 20, or even 10, per cent increase does not take place and they hear that prices are about to crash and corrections are likely to take place, then they may like to sell it. For them it may be a business where they have made money in the past. They are basically traders and not investors. If such people lose, it will give room for the right kind of customers to step in and buy those apartments or commercial space at the right price. It is our opinion that there is nothing to worry about. When employment growth at its highest ever this year, when exports are growing in double digits, when increments in salaries are growing in double digits, how can an industry that is a proxy play to every one of the above not be benefited? Neither have we reduced rates for any of our projects nor do we intend to do. In fact, we are launching new projects in our earlier locations, at higher rates.

Would the correction mean that it is consolidation time for Grade B and C players and they will soon be out of action?

That is the right way of looking at the present scenario. Yes, it is consolidation time. The real-estate industry is fragmented and disorganised. I am told by the Commercial Tax Office of Bangalore that there are 400 developers in Bangalore alone. So if you have so many people coming, you can look at in two ways. There is money to be made in this business, so the new players are flocking. From the industry and customer perspective, one has to be careful since some of them may not have the deliverables — the right processes, right kind of land and execution ability. If such people are weeded out through this consolidation process, it is good for the industry.

Will the North-South divide (in terms of premium paid for land in the North) remain?

The gap will narrow as we move forward. Certain locations have inherent advantages. Such as Mumbai being the financial capital, Delhi the political capital and catering to the whole of the northern market. Pune - because you cannot put up large-scale operations in Mumbai but the Mumbai-Pune highway connects it to a less congested city, there is demand. We cannot wish away the advantages that these cities enjoy. But with the thrust on infrastructure in Chennai, Bangalore or Hyderabad, we feel that the growth that has already taken place in these cities will ensure that once the infrastructure bottlenecks are not talked about as much, there will be less price disparity.

Will the South continue to be your area of focus?

We would like to call Sobha a pan-India company with primary focus on areas that are growing fast. We happen to be in the South fortunately and the South is growing faster than any other part, so the focus will remain on southern cities. Among the southern cities, we have identified Chennai, Coimbatore and Hosur in Tamil Nadu. In Karnataka, we will focus on Banglaore, Mysore and Mangalore. In Kerala, it will be Thrissur and Kochi. Likewise, we have identified eight projects in the South from which we wish to grow. We have already launched projects and a few are coming up this financial year. Apart from this, we feel we must have a presence in NCR (National Capital region) because it is the fastest growing and the largest area in the whole of the North.

Is there a case of excess supply coming up in the real-estate market?

The growth has just begun. If, for a short period of time, developers have some stocks available, no harm done. Manufacturing businesses have one or two months of finished stocks or work-in-progress. Today we are in an industry (real-estate) where there are hardly finished stocks with prominent players. If you wish to buy a Sobha apartment today, I do not have anything on hand to offer. Now, thanks to an increase in supply, maybe some apartments that are to be completed six months from now will be available. In projects, if five out of 100 projects do not get sold, the heavens will not fall. Let there be some stocks available to the customers, always.

But would such a situation lead to panic selling by developers, leading to sharp price corrections?

Many consumer durables have discount sales, nobody questions as to why there is a discount. A finished apartment always get a ready buyer. So out of the 100 apartments in a project, 95 are sold at the developer's price. If the developer needs working capital against a finished project, one can always borrow money. You can securitise or put it on rental basis. These are other options now available but require a newer mindset.

The funding options available to developers appear to be narrowing. What are the options available, in your opinion?

SEBI or RBI norms will ensure that money remains productive and not invested in land which the real-estate company is not capable of developing. Had the norms come three or four years later, the damage to the industry may have been much more. We feel that real estate is a sunrise industry. If a company does not have the right kind of deliverables and cannot be rated appropriately, it does not deserve to either come to the public domain and if it does, it has to come with the right valuations. Some of the companies in India, in my opinion, are being managed professionally, have the right credentials and have every right to access the capital markets by adhering to the compliances required. On the debt part, in our industry, a debt-equity ratio of not over 2:1 is desirable. They should be able to raise money (debt) against the projects on hand. And we feel banks are not refusing money against projects and that is the right way of looking at it. Coming to private equity, PE players will be the biggest beneficiaries of the restrictions as they will be able to invest in the right players who are not ready for public issue, nor comfortable with debt. The company that accepts PE funds will also be sufficiently capitalised, thus improving the debt-equity structure. Of course, the company may have to cede some rights but they will become more professional.

What should home buyers do to lessen the impact of interest rate hikes?

If I am eligible for 100 per cent loans - a customer should not be induced by institutions. We believe that in the interest of the customer, one should have his own savings to pay the developer and take minimum funds from institutions. A customer should invest 30-40 per cent of his own money into the cost of home. This way, the impact on EMI during interest rate hikes will not be significant. A customer should not be induced by institutions into believing that he is eligible for 100 per cent loan.

Have you seen speculative transactions among Sobha's buyers?

In our sales strategy, if you are a speculator, you pay a price to us at least. For example, if booking is done in the name of X and tomorrow he/she wants to sell it to Y, X or Y has to pay Rs 100 per sq.ft as transfer fee. If you go for cancellation, you have to pay 25 per cent as cancellation charges. The process ensures that the speculator pays a price. This is akin to the stock market. You cannot avoid day-traders. They provide liquidity but may not make as much money as long-term investors.

For Tulsi Tanti, it's 17th time lucky

Source: The Hindu Business Line.

The CMD of Suzlon is fourth richest in the country.

If there were to be a brand ambassador for the Never Say Die spirit, it would have to be Tulsi Tanti. The man from Rajkot who tried his hand at several businesses, including the family business of cold storage and construction, jokes that wind energy was his 17th attempt at business. A ready reckoner on the person cannon balled from obscurity to the top of the super entrepreneurs' A-list (all in three years' time) would read something like this: 49-going-on-50, suffused-with-energy, jet-lag defying, alcohol-shunning workaholic whose only high comes from work. An addendum would include: Earthy, unassuming and laconic with a wry sense of humour. Ask him, as someone did, where he lives, and be prepared for "mostly in the aircraft''. And if you really probed his other interests, don't be surprised if you drew a blank.

Fourth richest

Till yesterday, he was said to be worth $3.7 billion and billed the fourth richest man in the country. Today, with the Suzlon share spiralling, he is undoubtedly worth more. The runaway success and his projected bank balance notwithstanding, Tulsibhai (as he generally addressed) and three younger brothers Vinod, Jeetendra and Girish and their respective families live in adjoining rented apartments in one building in one of Pune's up-market localities. They own no aircraft, flaunt no assets and stay quite clear of the glitterati circuit. The families make a ritual of having dinner together every night at one of the brothers' homes, and though Tulsi is an inveterate globetrotter who travels over 200 days a year, he makes it a point to be part of the annual family vacation to an exotic destination.

Suzlon's birth

If the Rajkot-based family came to call Pune `home', it was a case of default more than design. Around 1995 Tulsibhai discovered that his textile business in Surat was not taking off, largely because of the severe shortage of a primary resource - power. That was when the idea of developing wind energy took shape in his mind and Suzlon was born. A couple of years' on, the Maharashtra Government announced what a company insider calls as a "path breaking wind energy policy'' and set the stage for the genesis of a mega-star on the business circuit.

The Tantis moved to Maharashtra, put up a wind farm with a 250-MW potential at Vankusavade in Satara district (three-hours' drive from here), and decided that all-things considered, Pune was the most favourable location for headquarters. They operated out of a modest office at Yerawada, and added space as they added value. Today, though they have a global business centre in Europe, a Suzlon campus at Hadapsar is still in the blueprint stage. Gujarati, the lingua franca at Suzlon, remains the language of comfort for Tulsibhai who holds a commerce degree and a diploma in mechanical engineering from the Rajkot College. In addition to his formal degrees and his business sense, his associates say he has a mind that thinks at least three years ahead. In the Corporate jungle, it is the quality that separates the men from the boys.

Tried, tested and moved

Source: The Economic Times.

Dr. Madhukar Gangadi of MedPlus goes the retail way to sell medicines
It’s 9 am and Dr Madhukar Gangadi, founder & CEO, MedPlus Health Services, already needs to recharge his mobile phone. This is just the start of what will be another 14-hour day. Such is life for the person at the helm of MedPlus, India’s fastest growing chain of full-service pharmacies. In less than two years, Dr Gangadi has taken MedPlus from a concept into a major retail player with over 120 outlets spread across Andhra Pradesh and Karnataka. With a commitment to deliver 250-300 outlets more by the end of June, Dr Gangadi and his team are working overtime these days.

MedPlus as an idea was conceived while he was doing his MBA at the Wharton School of Business. He had been researching healthcare in India as part of a business plan he proposed to write for his class project and that's when Dr Gangadi uncovered an astonishing report by the World Health Organisation (WHO) which suggested that a sizeable percentage of India's medicines may be spurious. A medical man himself, he knew the dangers this posed for the Indian consumer. “This wasn't just a matter of people being cheated out of their hard earned money, the Indian consumer's health was at risk,” he says. That's when he decided that for the sake of his family — Madhukar’s father is a diabetic — and the Indian consumer, something had to be done.

Raising funds proved to be a big challenge. “I first tried doing so in the US, but people were skeptical,” says Dr Gangadi. Then, there was the ethical issue of a medical doctor getting into the pharmacy business which kept many investors away. Finally, he approached his classmates, friends and family members to raise the first $500,000 and MedPlus opened its first store in Hyderabad in February ’06. “Within two weeks more funds poured in and once we touched 100 stores several VCs were willing to invest,” he says.

Fast forward 18 months, and MedPlus has logged close to Rs 50 crore in annual sales. It now has the financial backing of a premier Indian venture capitalist, iLabs, which recently invested Rs 23 crore into MedPlus. Madhukar's infectious enthusiasm for improving access to quality healthcare has not just attracted capital, but people as well. The 900-employee strong company is run by a talented five man management team that's growing stronger by the day.

MedPlus' success in pharma retailing stems not just from its commitment to quality healthcare, but also from its operating model. "I wanted Wal-Mart pricing in a Starbucks like store. This way, we would be able to bring low prices, consistency make healthcare more accessible in India," says Dr Gangadi. In keeping with this philosophy the size of most of the company's stores is between 200-400 sq. ft. This provides MedPlus the flexibility of locating its stores where customers need them the most – near their homes, hospitals, workplaces, or shopping areas. The model also reduces MedPlus' capital requirements, speeds up store rollout and enables the company to react faster to changing market.

Developing a successful business model is only the beginning for Dr Gangadi. He knows that the success or failure of the model would largely be based on the customer’s experience. “We win or lose everyday in the shop, and I hate to lose,” he says. The company has therefore invested heavily in employee training, creating a one of a kind facility in Hyderabad in which all shop employees receive in-depth product knowledge and practical customer service training. "We take accredited pharmacists and experienced shop assistants and give them the tools they need to be part of a modern pharmacy chain,” he says. The result has been a dedicated staff of employees who are not just able to dispense medicines but also provide valuable advice to make customers better informed about their health.

After the first phase, Dr Gangadi is looking at expanding the footprint, and launching the organisation’s integrated health centre concept. Dr Gangadi believes that branding is not just about brand recognition but also about the entire customer experience, the services which MedPlus offers, the partnerships which it explores, and the quality of medicines the company sells. Footprint expansion is also critical, as it means more consumers can enjoy the benefits of high quality medicines at low prices. The company has set aggressive growth goals for itself, and believes it can end 2007 with between 700-800 outlets across India.

What really gets Madhukar excited these days, is the Integrated Health Centre. He believes that the same lack of consistency which governs the pharmacy industry is present in the highly fragmented pathology labs and clinics across the country. As a result, the company has announced its intention to broaden its services to include diagnostic labs and clinics. The company successfully recruited a number of the senior management of a major diagnostic lab chain into MedPlus to lead the pathology lab efforts, and is in discussions with doctors to staff the clinics. All this growth has its challenges, but Dr Gangadi remains confident, “We’re improving the lives of the Indian consumer – when you're motivated by a larger cause, you can achieve amazing things.”

Little wonder then he plans to expand nationally and take on bigger rivals like Apollo Pharmacies as well as emerging retailers such as Fortis Health World and Medicine Shoppe.

Homing in on success

Source: The Economic Times.
It’s hard to imagine a company being rooted in the maxim, ‘There is no such thing as a safe business venture’. But that was exactly what five professionals chose as their guiding principle, when they decided to turn entrepreneur.

With this agenda in mind they decided that they would take the riskier road of setting up an IT products company rather than the safer alternative of venturing into the IT services domain. What perhaps made this decision even more fraught with risk was the fact that they were focusing on an extremely specialised and niche area, that of geographical information systems (GIS). Perhaps, the only advantage they had was that they did not need to start from the scratch. All five founding members at SatNav — managing director Amit Prasad, co-founder A Rajendra Adepu, deputy general manager (corporate group) Arpitha S Rao, associate vice-president (corporate communication & strategy) Pallavi Taori and co-founder & business head (BIM solutions) S Selvamuthiah — were all part of Satyam Navigation, a company incubated by Satyam in 2000 under its technology entrepreneurship programme. And when in 2004, Satyam decided to exit the business the five of them decided to take over the fledgling company and branch out on their own. Says Mr Prasad, “It was our passion and commitment that inspired us to float an independent venture. None of us wanted to abandon the GIS products as we had spent a lot of time and energy conceptualising and developing them.”

Despite operating in what can be called a tricky terrain the company has managed to hold its own and is slowly but surely making a name for itself. In the last three years, the company has successfully developed a slew of products, which have given it both recognition and a strong base. Its flagship product, A-mantra, is a flexible web-based business infrastructure management system. It provides managers with a complete view of the company’s infrastructure, irrespective of its size and can help bring down infrastructure cost by 4% as small teams can manage large facilities with this product. “A-mantra helps integrate data from ERP and other in-house applications to generate a range of customised reports,” Mr Prasad explains.

But the product that the company is really excited about is a navigation device called SatGuide, which is said to be the nation’s first satellite-based navigation device. The device has a mapping software with detailed maps of six cities and an all India road network map. It also has an inbuilt database of 24 categories like hotels, airport and shopping malls. Mr Prasad believes that if all goes well by the end of the year the product will have similar databases for 72 cities. At an organisational level too the company has been making strides. Started with an initial investment of Rs 25 crore and five members, SatNav today has over 75 people working on various products in navigation systems, business infrastructure management system and intelligent transport system. It has also added a new promoter Ajay Prasad, an NRI based in the US. The company though is cautious when it comes to adding to the headcount. For unlike a services company, which can start billing customers from day one it takes product companies much longer to do the same.

So what about the future? SatNav is bullish about the future both because its flagship product SatGuide has been received warmly in the marketplace and the fact that the GIS space is likely to see a lot more action in the coming years. The company also expects that global positioning system (GPS), a network of 24 US military satellites, will penetrate every market. Says Mr Prasad, “Our devices are GPS-enabled so that one can calculate the position dynamically using the radio waves emitted by these satellites. We are also looking at building business models around our directions portal — roadsofindia.com. This will help us tap the potential of the GPS market.”

The company is already looking to capitalise on this trend with work on a vehicle tracking system, which is expected to hit the market next year, already underway. Mr Prasad says the company is not looking for marketing tie-ups, but he says it is open to partnering with leading companies in this space. He says, “Our aim is to join hands with leading players in the GIS segment for technology or equity partnerships, which will help our company grow.”

Given that it is still a growing company, (revenues last year were Rs 3.2 crore) the company has thus far been mainly focusing on India. However, given that this year the company expects a five-fold jump in revenue it is now looking at entering other markets like Singapore and the Middle East as well. So what next, we wonder. Given that the growth plans in the It products space is set are they now back to being professionals rather than entrepreneurs. The founders are quick to dispel any such notion pointing to their latest diversification.

The group has entered into a strategic partnership with the Centre for British Teachers Education Trust of UK for managing its pre-school and daycare chain, Sunshine. Under the new education venture, SatNav Preschool, the group is planning to set up 100 centres at an investment of Rs 25 crore by 2009. Says Mr Prasad, “We have also floated the country’s first maintenance, repair and overhaul (MRO) project, HAMCO, and we are looking at setting up a facility soon. Our aim is to become a billion dollar group by 2012.”