CELERITY IN BUSINESS BUSINESS THROUGH THROUGH SUPPLY SUPPLY CHAIN CHAIN IN
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HERO CYCLES:
RIDING HIGH ON WALMART: SUPERHIGHWAYS
THE ORIGINAL SHOP & SAVE
Pankaj Munjal, Chairman & MD, Hero Cycles on the driver’s seat to capture new markets
Krish Iyer, President & CEO, Walmart India, gets candid on living Walmart’s mission everyday
LEADERSHIP
EXCLUSIVE
What should you do to prepare for the soon-to-be coming GST
Analysts' Colloquium on GST EXCLUSIVE
The potential of direct selling in India is Rs 72,000 crore by 2025 Anshu Budhraja, GM, Amway India
Business leaders talk on demonetization effects and Budget 2017-18 IN-DEPTH Opinion & Perspective
The clarity & ambiguity in GST
Manish Saigal, MD, Alvarez & Marsal UPTAKE INTERVIEW
Insulate supply chains How SCMglobal optimization is moving from Trump's protectionist policies the wheels of success
Nick Miller, Head – FMCG, Crimson FCA & Co India Automobiles Pankaj Chandak, Asst. Vice President, INTERVIEW
MovingINTERVIEW through the value chain - on time, every time Simplify SCM by wearing a broader hat Raviraj Rodrigues, SCM Head, Wildcraft India Chain, Rohit Batra, Vice President – Supply Ferrero India
FOCUS ON PHARMA CHAIN + DISRUPTION THE WAY FORWARD INSECTICIDES (INDIA)SUPPLY & ANMOL BAKERS TOP BRASSISHIGHLIGHT THEIR UNIQUE SCM MODELS
K N OW L E D GE PA RT N E R
Publisher's Note
2017-18 Setting the growth trampoline Dear Readers, The process of remonetization is 'almost normal' now, and the focus is back on GST. The Union Budget also kept to the straight and narrow with a rigid focus to move towards less cash economy and bringing transparency in value chain through digital payments & GST. This issue covers interesting Perspective given by Industry leaders across sectors about the budget. When Trump won the US elections, our PM announced a surgical strike on black money. Economy came to an almost standstill. Analysts share their views on the impact across sectors during the last 100 days of remonetization. Trump’s ‘America First’ has created an outrage across the world. Nick Miller of Crimson & Co, UK, talks about what companies with global supply chains should do in a world trumped for trade. When we were planning this issue, and got confirmation of an interview with Mr Pankaj Munjal, Chairman & MD, Hero Cycles, a tussle between the Yadav father-son duo was going on for the cycle symbol in the state of UP. Mr. Munjal is working towards global dominance in the bicycle sector, through in-house innovations as well as acquisitions. Ministry of Consumer Affairs has created new guidelines for the Direct Selling Industry. This will give a huge boost to companies like Amway using direct selling as their core channel. This will also bring many aspiring entrepreneurs to look at getting into direct selling channel as a serious option. With the optimism and ambitions that Indians are famous for, corporates in India are moving on with their plans to expand, to capture new markets in India & abroad and roll out new products and product extensions. God Speed!
Charulata Bansal Publisher Charulata.bansal@celerityin.com www.celerityin.com Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya Email: prerna.lodaya@celerityin.com | Designed by: DesignStyle Studios Email: hemali.dss@gmail.com 1504, Darshan Heights, B M Marg, Off Tulsipipe Road, Elphinstone (W), Mumbai- 400013 Tel. No.: +91 9821245526. Email: Charulata.bansal@celerityin.com Printed by: Magna Graphics (India) Limited, 101 C & D, Government Industrial Estate, Kandivli (W), Mumbai- 400067. Logistics Partner: Blue Dart Express Limited
CELERITY • March 2017 | 03
CONTENTS
Vol. 1 • ISSUE 2 • MARCH-APRIL 2017
COVER STORY
20 Pedalling to new markets
Pankaj Munjal, Chairman & MD, Hero Cycles, looks forward towards global dominance. While ensuring that the business he has inherited conquers new boundaries, he has set the ball rolling towards superhighways to growth.
OUTLOOK
LEADERSHIP SERIES
Manish Saigal, MD, Alvarez & Marsal (A&M), analyzes the small & medium term impact across consumer industries.
Anshu Budhraja, GM, Amway, India, looks forward to creating opportunities for entrepreneurs in India
OPINION
UPTAKE
Subrata Ray, Group Head – Corporate Sector ratings, ICRA Ltd., evaluates demonetization impact on road logistics
Nick Miller, Head – FMCG, Crimson & Co, talks about what companies with global supply chains should do in the world of uncertainties.
06 Analyzing 100 days of remonetization
08 Is the demonetization impact withering away?
09 McDeliver’ing powerful performance in the demonetization era
Amit Jatia, Vice-Chairman, Westlife Development Ltd, on achieving desired results in tough times
INTERVIEWS
10 Crafting an adventurous legacy
Raviraj Rodrigues, SCM Head, Wildcraft India talks about becoming India’s largest head-to-toe outfitters.
17 Farming the future Rajesh Aggarwal, MD, Insecticides (India) Ltd, shares insights on catapulting the agro-chemicals dynamics in India
29 Growing the pie Gobind Ram Chaudhary, MD, Anmol Bakers Pvt. Ltd, shares his journey to becoming a national player.
04 | CELERITY • March 2017
14 More power to the entrepreneurs
24 Businesses must prepare for a world trumped for trade
PERSPECTIVE
26 Subtle yet balanced budget
Breakdown of perspectives & projections on the fortunes of Indian economy in the year 2017-18…
GAMECHANGER
32 Golden revolution in F&V supply chain
Decoding Rivigo’s revolution in F&V supply chain
RECAP
34 A Trailblazer
The 6th Annual Manufacturing Supply Chain Summit & Awards event recap EDITOR: Prerna Lodaya
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CELERITY • March 2017 | 05
OUTLOOK
ANALYZING
100 DAYS
OF
REMONETIZATION The event of demonetization has, in many ways, significantly impacted numerous stakeholders. While some have viewed this as an opportunity, others term it as a major disruption for their business. There is general consensus on lower than expected growth for economy in short term. However, the impact on long term growth and impact on specific industries is yet to be witnessed, highlights Manish Saigal, MD, Alvarez & Marsal (A&M).
N
ow that we have completed 100 days of remonetization, a lot of noise around the event has cleared. We thought, this may a right time for us to analyze the event and its impact in short and medium term. Let’s look at various industries and analyze the impact individually:
FMCG
December quarter results for all FMCG companies were down by 3-5%. The impact was more evident for FMCG companies with more exposure in discretionary spent categories. Personal care items like soaps, toothpaste and shampoo were severely affected. Inventory depletion was witnessed across the value chain in the months of December and January with participants reducing monthly orders. Short term impact: Supply chain of
06 | CELERITY • March 2017
OUTLOOK FMCG companies has multiple mid-size and small participants. The collections at multiple levels got delayed by as much as 45-60 days during the last 2-3 months. The sector may take 2-3 months to come back to normal levels of sales and fill rate. Inventory had ballooned which will take 3-4 months to come back to normal levels. Medium term impact: Companies are expected to significantly alter roles of participants on the distribution side post GST. Demonetization has revealed strong and weak candidates in the chain. The level of intermediation is expected to decline in near term. Long distance transportation was last to get impacted in the chain due to demonetization. There could be 3-4 months of reduction of business for secondary warehousing and distribution companies. Long distance transportation is expected to pick up in 1-2 months.
Textile & garments
Textile and garments is an industry which is significantly fragmented. The industry is manpower intensive across the value chain. As expected, the industry witnessed significant disruption due to demonetization. This included impact on availability of working capital for small companies and availability of labour in general. The demand of garments dropped by 30% in the months of Nov, Dec 2016 and Jan 2017. The impact on the supply side is expected to be more long term. Short term impact: Impact on disposable incomes and hence consumer spending has resulted in slowdown of consumer demand. Accumulation of inventory in the supply chain is expected to defer production plan and elongate cash collection cycle. Cash crunch is expected to delay crop arrivals as well. This impact is expected to last for the next 2-3 quarters. Medium term impact: The yarn manufacturers which are largely organized are expected to be insulated from the demonetization impact in medium term. The impact is expected to be pronounced on the unorganized segment, which forms a large part of the domestic textile sector where cash transactions are more prevalent, as reduction in currency circulation is likely to temporarily affect their routine business transactions. As per experts, large brands could insource additional logistics activities as learnings from this event. Logistics buying may shift from shipper to consignee in many parts of the value chain. Large logistics companies are expected to benefit from this event and increase their penetration.
Automotive components
&
automotive
This being a discretionary product for most consumers, the industry witnessed around 30-40% dip in sales compared to last year (Nov and Dec 2016). The used car segment witnessed a dip of around 60% during the same period. The impact was significantly higher in rural areas. Short term impact: As per most experts, the sales are expected to normalize by April 2017. According to leading 3PL companies, industry is expected to return to normal practices in the next 1-2 months. However, transportation is expected to get consolidated to lesser number of vendors due to lack of reliability witnessed in the last 3-4 months. Warehousing and inventory levels are expected to return to normal
expected to be slower than expected due to lower CoD levels targeted by companies. This will impact performance of logistics companies by 6-10% in revenue as CoD shipments are higher realization product. Medium term impact: E-commerce industry is expected to get back to normal levels in the next 4-6 months. CoDs, which have declined by approximately 10% in the last three months could be substituted by other various formats of digital payment. Ecommerce companies may have to relook at their economics of operations and rework their overall pricing strategy with reduced levels of CoDs.
What does the future hold?
100 days on, the situation has stabilized
Demonetization process impacted the middlemen in supply chain more than the buyers of services. For 3PL companies, this event has triggered the need to fast track disintermediation both in transport and warehousing. Most companies have also revisited automation plans and are expected to lay down more aggressive plans for medium term, impacting productivity and cost of servicing. levels in the next 2-3 months. Medium term impact: Demonetization process impacted the middlemen in supply chain more than the buyers of services. For 3PL companies, this event has triggered the need to fast track disintermediation both in transport and warehousing. Most companies have also revisited automation plans and are expected to lay down more aggressive plans for medium term, impacting productivity and cost of servicing. Companies offering technology and automation are expected to reap the benefits if the overall demand for finished goods attains normalcy soon.
E-commerce
E-commerce companies witnessed significant de-growth after a good festive month in October. Volumes were down by 15-20% in November and December compared to expected volumes. Short term impact: Volume growth is
100 days on, the situation has stabilized to some extent, but the shock is still felt and will take some time to wither away.
to some extent, but the shock is still felt and will take some time to wither away. Economy is expected to grow around 7.4% in FY18 as per RBI. Short term high frequency indicators are also supporting this forecast. The Nikkei Purchasing Managers’ Index (PMI) for manufacturing fell to 49.6 in December, for the first time in 11 months. But it moved back into expansion territory in January with the index at 50.4. The question now is where the index will stabilize and whether it will rebound to pre-demonetization levels when the manufacturing PMI was at a 22-month high of 54.4 (October 2016). On the supply side, demonetization has impacted supply chains, particularly in the informal sector. Hence, while business practices in logistics may continue in cash as availability of cash is resolved, type of participants in the value chain may become more organized in the medium term.
Manish Saigal leads strategy, market entry, commercial and operational diligence, and post-merger integration offerings for A&M in India. He brings more than 17 years of rich experience in strategy, operations, private equity (PE) and M&A consulting. He specializes in market entry strategy, business planning, commercial and operational diligence, integration and separation advisory and bid advisory for PPP projects. Before A&M, he spent 11 years with KPMG India, where he most recently served as Partner in their Transactions and Restructuring group.
CELERITY • March 2017 | 07
OPINION
IS THE DEMONETIZATION
IMPACT WITHERING AWAY? Despite high financing penetration in the commercial vehicle space, the tight liquidity impacted the road logistics sector, prompting the transport community to put their vehicle replacement or addition plans on the back burner, writes Subrata Ray, Group Head – Corporate Sector ratings, ICRA Ltd.
T
he government’s move to replace high denomination currency notes effectively withdrew 85% of the currency in circulation in November, resulting in disruption in liquidity. This impacted cash transactions and hurt demand as consumers were forced to minimize discretionary spend during last two months. This apart, some of the segments which have traditionally been dealing largely in cash, like real estate, transportation and small businesses faced disruptions due to non-availability of adequate cash. The rural market, which has a higher propensity of cash transaction, faced a stronger cutback in consumer spend, which directly impacted segments like two-wheelers, jewellery, tractors and other consumer discretionary items. In the longer term, the drive against black money, coupled with implementation of GST is expected to shrink the unorganized segments of the industries, which often depended on tax evasions for viability, benefitting the organized sector players.
The big bang theory impact
Some of sectors severely impacted by demonetization include real estate and construction. In real estate, both residential sales and new launches have declined sharply during the last couple of months and is expected to remain subdued over next several quarters as even end users defer their purchase in expectation of price declines. The cement sector has also been impacted by the slowdown in two of its major consuming segments being real estate and construction. With a significant
08 | CELERITY • March 2017
While demonetization has affected the near-term sentiment, we expect the situation to gradually improve as systemic liquidity normalizes and demand to get a boost in the current quarter from pre-buying preceding the implementation of BS-IV emission norms from April 2017. proportion of cement consumption being contributed by the real estate sector, the continuing weakness in real estate demand would have a bearing on cement demand. Despite high financing penetration in the commercial vehicle space, the tight liquidity impacted the road logistics sector, prompting the transport community to put their vehicle replacement or addition plans on the back burner. As a result, the domestic commercial vehicle sales contracted by 8.2% over the last two months. Our channel checks with various stakeholders in the logistics sector suggest that the liquidity crunch has impacted the near-term demand for trucks. Availability of trucks, especially from market-load operators has reduced significantly owing to limited availability of cash to meet trip expenses. According to commercial vehicle dealers, new enquiries have dried up and some of the ongoing transactions have been put on hold by fleet operators.
Strong bearing on auto demand
While demonetization has affected the near-term sentiment, we expect the situation to gradually improve as systemic liquidity normalizes and demand to get a boost in the current quarter from pre-
buying preceding the implementation of BS-IV emission norms from April 2017. Within the commercial vehicle industry, we believe that the bus segment would however remain largely unimpacted by demonetization move owing to a higher proportion of sales to institutional clients. The impact of demonetization on consumer demand, especially in the rural market, is most visible in the two-wheeler segment. Domestic wholesale volumes for the two-wheeler industry, declined by 5.9% and 22.0%, during November and December 2016, respectively. The demand declines have been more significant in the commuter segment two-wheelers, while the premium segment has been relatively un-impacted. Our discussion with industry players however indicate, the demand deferment in the segment is likely to be temporary and normalcy should return as liquidity in the system improves. Demonetization has impacted discretionary consumer spend significantly in the last two months, much of that is however expected to normalize over the next 3-6 months as liquidity situation normalizes. The return to normalcy for the rural market may take longer, due to its traditionally cash dependent nature.
OPINION
MCDELIVER’ING
POWERFUL PERFORMANCE IN THE DEMONETIZATION ERA
At a time when companies across the country are reeling under demonetization and subsequent policy changes, McDonald’s has achieved considerable feat in its Q3 2017 performance. Amit Jatia, Vice-Chairman, Westlife Development Ltd, shares with us the strategies and USPs that have helped McDonald’s achieve the desired results…
L
et’s look at the facts first… Westlife Development Ltd (WDL), owner of the Master Franchisee of McDonald’s restaurants in west and south India, reported 14.6% increase in total revenues ₹2417.5 million from ₹2109.1 million y-o-y riding on the restaurant operations of its subsidiary, Hardcastle Restaurants Pvt. Ltd, (HRPL). Topline performance growth was driven by restaurant network expansion, addition of new formats, brand extensions and innovative menu additions. Our company’s y-o-y gross additions stood at 29;
WDL invested in increasing footprint of McDonald’s by entering Kollam city in the state of Kerala and opened 7 new restaurants in this quarter by taking the total count to 252 restaurants across 34 cities and 10 states. The company is on track to take its restaurant footprint to 450-500 by 2022. During the quarter, WDL opened its 100th McCafé in a span of 3 years and overall increased its footprint to 104 restaurants by adding 11 new outlets. WDL is on track to double its McCafé base by FY17.
In the past few months, we saw an increase in payments by customers through cards and wallets at our restaurants and for delivery. We feel the customers are adopting the cashless/digital payments and it’s likely to increase in the future. 7 new restaurant openings in Q3FY17; we expanded our total network of restaurants to 252 across west and south India.
The demonetization dilemma
The company witnessed headwind on demand, which was also perceptible in eating out segment post cash crunch. Westlife Development took this opportunity and provided ease of ordering via multiple payment options, thereby seeing an upward jump in cashless transaction to 50-55% system wide. In the past few months, we saw there’s an increase in payments by customers through cards and wallets at our restaurant and for delivery. We feel the customers are adopting the cashless/digital payments and it’s likely to increase in the future.
6th consecutive quarter of positive comparable sales of 5.1%, demonstrating consistent performance across all segments in the face of recent volatile macroeconomic challenges. Our bold actions have differentiated the brand in the minds of the consumer across the QSR segment and is testament to the progress we are making too. With the revamped MDS app, we are confident of connecting more than ever with consumers and offering them easy, personalized and truly useful features. In fact, our web and mobile platforms contribute over 55% sales to the total McDelivery business for McDonald’s.
Our results reflect the balance of our brand portfolio, geographic footprint, consistent marketplace execution and a relentless focus on productivity. While facing the challenges of a volatile macro environment, we continued to make thoughtful investments in our 20 years’ brand journey communication, introduction of our premium Share Shakes, an LTO at McCafé and riding on the popular Mexican and Lebanese McAloo Tikki fest and Mexican Cheesy Fries. By making such investments in product innovation and expansion, we have fortified our business for sustained growth.
Fortifying business sustenance
towards
We are happy to report our
CELERITY • March 2017 | 09
INTERVIEW
CRAFTING AN ADVENTOUROUS LEGACY “Our complete value chain, from start to finish, depends on our ability to move material to where it needs to be, on time, every time. Increasingly businesses are looking at supply chain to become enablers of business opportunities and one should always keep this in mind when designing or running your supply chain,” shares Raviraj Rodrigues, SCM Head and part of Leadership Team, Wildcraft India. Poised to become India’s largest head-to-toe outfitters, Wildcraft is well on its way to an adventurous ride…
You have been a part of FMCG growth expanse. How has the sector evolved over the years as far as supply chain is concerned? The FMCG business in India, in my opinion, has moved from being an intuition led model to an analytical based approach. Market research plays a key role in determining which brands to launch and which segments to capture. While there are reasons for this approach given the highly competitive nature of the business and narrow margins it makes, this approach will result in incremental changes and I have not seen too many examples of disruptive thinking be in the products or supply chain. Having said that, I always believe that one should have FMCG experience under one’s belt as this is the segment where the market changes daily and one understands the true relevance of the 4 Ps of Marketing.
10 | CELERITY • March 2017
Since its inception, Wildcraft has established an unbeatable position in the Indian outdoor market. What is the success matrix behind this stupendous feat? Wildcraft started as a passionate belief in one man’s mind and it has grown to become India’s fastest growing outdoors brand. What sets us apart is that we haven’t forgotten what we started off trying to do – to make functional, lightweight, performance-driven clothing, footwear and gear for the adventurous kinds. Over the years, our focus has been on maintaining strong
business fundamentals. We have invested in our production capacity, supply chain and key functional areas in order to keep our leading edge in the market.
Today Wildcraft is just not about bags, you have ventured into other fashion categories as well. What all goes behind making a successful product on time every time? It takes the work of a small army to be honest. From the first brief rollouts to the final product coming out to stores, there are a myriad people involved and departments need to function almost
Increasingly businesses are looking at supply chain to become enablers of business opportunities and one should always keep this in mind when designing or running your supply chain.
INTERVIEW seamlessly together. Since we own the entire value chain of the business, we need to ensure everything from timely raw material imports to a smooth factory production process. In order to succeed every time, we keep a keen eye-out for potential pitfalls and address them before they become issues. Planning and information sharing within the company are critical.
How difficult and challenging it is to be able to establish in such a competitive space?
It is an interesting space to be in and having competition helps us get better and stronger each year. While market competition is a challenge and will continue to be, the real challenge is to understand the unsaid constraints my customer faces and to design and develop solutions that overcome these constraints. For e.g. the breathable rainwear. No one had told us that they wanted breathable rainwear and for years, we have been tolerating rainwear that only protects us from the outside rain, without managing humidity constraints thrown upon us by wearing the rainwear. Wildcraft came up with a solution that not only protects you from the rain but also manages your perspiration. Another example is the UV protection coating applied on some of our summer wear for active outdoors.
the country and thus reduce working capital. Besides this, we have worked on concepts like delayed differentiation – the key raw material, the fabrics are forecasted at a Greige level and the final colors are firmed up closer to shipping, weekly production planning, semi-automated pick/pack operations in warehouses, IQ based replenishment at stores, etc.
Coming to supply chain perspective, how crucial is it for your business?
To give you an analogy, we are the horse at the helm of the buggy. Our complete value chain, from start to finish, depends on our ability to move material to where it needs to be, on time, every time. Supply chain brings in the raw materials from our various reputed international partners – without these the production process can’t begin. We have certain critical seasons that we need to meet in market, so there is immense pressure on planning our inward inventory stocks well. We also connect the finished goods to counter shelves across our many channels – modern trade, general trade, owned retail stores and online partners. Supply chain provides the competitive advantage to the business by providing solutions that enable our channel partners and sales teams to sell better.
What are the SCM innovations that you have implemented in your business line?
At a conceptual level, we have put in place two strategies that are working best for our current business volume and market: a) Use demand forecasting only for forecasting and react to the actual market demand through tracking of secondary sales and in-house manufacturing. Both
Store experience has been an integral part of the entire marketing matrix. What are the thoughts that go behind creating such a store experience? these options give us faster reaction time as well a control on product quality. b) Centralize our distribution centre to minimize duplication of inventory across
Impact GST is slated to bring in • Standardized product offerings rather than designing products to fit individual state tax structures as seen today • Channel margins linked to ROI that the channel partner is expected to make • The inventory will start getting consolidated at select points keeping in mind the time to market v/s competition and not basis the tax laws of the state. For example, Hosur will be serviced from Bengaluru region and Tirupati from Chennai • Manufacturing units will try to be as close as possible to the demand centres and not supply centres as seen today.
In-store retail identity is something we have focused on critically in the last two years. As I am sure people have seen in the market, there are new stores that have a markedly different look & feel compared to our older stores. The plan is to roll this look across our entire retail presence over the long run. Our thinking was actually quite simple – we wanted our consumers to see the outdoors as we see them. There is a lot of play of natural tones and textures, bamboo fixtures and a clean but well-stacked shelving system. The stores are brightly lit and there’s an almost candy-store like assortment of our product ranges, which is a treat to the eyes.
What’s the franchisee and distribution model adopted by you?
Wildcraft has always adopted a Channel Agnostic Strategy. This has helped us in both the boom and the bust cycles through which each channel goes through. We are clear which market we want to tap and how. When we do this through our channel partners, our emphasis has been on how the channel partner gets a
CELERITY • March 2017 | 11
INTERVIEW
better ROI on his investment with us and this need not necessarily comes through better margins as the easiest task is to pass on the margins at point of sale, rather than using it to develop the market. While our effort has always been to have franchisees in our retail business, there are times when we had to do it alone as we saw potential in a particular market but our channel partners didn’t. We have, as of today, 120 out of 130 stores that are company owned and managed. Having said that, we would like to include franchisees in our business as long as they share the same passion for outdoors that brought us this far.
Pls share with us one of the most
12 | CELERITY • March 2017
Omni-channel is definitely a great value-add for companies but the impact of that needs to be considered & decided by each business basis their own parameters. challenging projects managed by you?
At Wildcraft, it has to be the transition from traditional godown style operations to a 3PL managed semi-automated warehouse that went live in Nov 2015. When I joined Wildcraft in April 2014, the Bengaluru warehouse was spread in 5 different sheds of differing sizes. In the system, the inventory was one but
in reality, it was split. There were shortsupplies, orders cancelled and customer complaints galore. My first task was therefore to bring credibility to warehousing operations and I set about doing it with great gusto. To begin with, I had all the inventory consolidated under one roof at a site that was 20 kms away. I had to deal with transition losses and manage employee
INTERVIEW concerns on extra commute, but the task was accomplished within 4 months. Now at least the inventory was in one place. Next step was to identify the challenges faced by the customer and for this I did an extensive market survey using Summer Trainee interns. Having understood their concerns as well as having gone through the next 5-year growth plan, I figured out that we need to automate our warehouse to be able to handle 5,000+ SKUs at a piece-in-piece-out level. We then needed to decide on whether we should build and operate this ourselves, or run it though a 3PL. For this, we did an extensive tour of the best in class warehouses in the country and understood the pros and cons of own v/s 3PL managed warehouse. We settled on a 3PL managed warehouses for 3 reasons – they are in this business longer than us and it will continue to be staple business for them, the onus will always be on them to find newer and better ways to manage productivity, the project management team required for start-up of such large warehouses will have no work once our warehouse is ready (if we manage it) but 3PLs have other projects to move them to. They will always attract better talent than us. Finally the warehouse management system (WMS) requires time and efforts and multiple iterations to get it right. 3PLs have to get it right else multiple clients will be affected. For us it would be another project altogether. Then came the change management – the most crucial part. I had to get the board aligned to the fact that for the first time in Wildcraft’s history, we will not be running warehouses and it is good for us. I had to get my warehouse employees aligned that there would be no job losses and given the rate at which Wildcraft is growing, alternate suitable options would be provided. I also had to get my stakeholder aligned that there would be minimal business loss during transition. It took us 6 months to transition, of which 3 months were devoted to mapping warehouse process to the WMS and the ERP, testing out various scenarios, testing for failure modes before we could signoff on the ERP-WMS integration. The next 3 months went about gradually moving items such that all SKUs were available for sale even during transition. For those 3 months, I personally operated out of the warehouse and I did not visit the Head office even once (or maybe once or twice). It was the best transition ever, as commented by the stakeholders. There were hardly any ripples in the market and we did not let our stakeholders down.
Crucial elements of an exceptional supply chain •
• •
Having a team that believes in itself that supply chain can transform the business and nurturing this team as the company grows Aligning this team to the organization’s purpose and strategy Developing robust processes and systems that work on lowering reaction time to market changes v/s better forecast management.
There is no question about the fact that as retailers we would like to make it as easy as possible for a consumer to shop for our products from the channel that best suits them. Omni-channel is definitely a great value-add for companies but the impact of that needs to be considered & decided by each business basis their own parameters. For example, if there is a premium to retail space then allowing for Buy-Online-Collect-Instore may not be financially viable. Then the challenge is to be able to rethink consumer journeys to remove pain points.
Your advice to new age supply chain professionals on the changing dynamics of supply chain… The traditional belief that supply chain is a cost centre is no longer correct. That approach leads one to search for ways to bring down costs and nothing else. Increasingly businesses are looking at supply chain to become enablers of business opportunities and one should always keep this in mind when designing or running your supply chain. Omni channel is one such good initiative that is a business enabler.
Where would we see Wildcraft 5 years down the line?
Wildcraft is geared to become one of India’s largest outdoor head-to-toe outfitters. With our expanded offering of gear, clothing and footwear, we are confident that we are on the cusp of defining an industry that has been nascent so far, but is getting a lot of traction and attention recently. We are growing a healthy number each year with a diverse group of channels & geographies contributing to this growth. We are going to continue to push aggressive numbers year on year.
Raviraj Rodrigues has been instrumental in revamping the supply chain processes and Infrastructure for Wildcraft to keep Wildcraft on track to achieve its long-term goal of being the ‘Head to Toe Outfitter for India’. He has remodeled the warehouse and logistics infrastructure to enable Wildcraft to tap into tier II and III cities and has created a supply chain infrastructure to support Wildcraft growth in International markets. An alumnus of IIT Bombay, Raviraj holds a BE in Mechanical Engineering and is passionate about Retail, Technology, and e-Commerce.
Omni-channel retail is the way to go according to experts. What do you think about the proposition?
CELERITY • March 2017 | 13
LEADERSHIP
“We look forward to creating opportunities for people who seek to be entrepreneurs in India and hope to be a big part of growing the business of direct selling in the years to come,” asserts Anshu Budhraja, GM, Amway India. True advocators of ‘everyone can be an entrepreneur’, the world’s biggest direct seller, Amway has given a definitive identity to women in India and it plans to grow that expanse to newer heights, shares Budhraja during this interaction. As they claim, ‘Happiness is best achieved through earned success. Amway rewards what you achieve, and also what you help others achieve,’ the brand totally connects with the new generations’ thoughts and deeds. Kindly enlighten us on the dynamics of direct sales business. Essentially, Amway’s business is like a conventional FMCG where we engage in sourcing, manufacturing, distribution and marketing, except that our direct sellers who engage in one-on-one sale of products also provide extensive post-marketing support through personal contact with consumers. For this, the direct sellers rely on the in-depth knowledge about the products gained through intensive training and education provided by the company. Globally, the direct selling industry is worth more than US$180 billion. According to the Indian Direct Selling Association (IDSA), the direct selling industry size is around Rs8000 crores in India with an impressive direct seller base of more than 5.7 million. There is a huge potential for direct selling in India. This has
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been validated by various studies including the FICCI-KPMG report which mentioned that with the right regulatory environment, the potential of direct selling in India is Rs72,000 crore by 2025. The direct selling industry in India currently constitutes just 0.4% of the total retail sales. This is much lower compared to other economies like China where it is 1%; and Malaysia where direct selling is 4% of total retail sales.
How are you winning the Indian
sub-continent? How is the scenario globally? We are delighted with the sustained and consistent performance of Amway India. Our sales in India grew compared to 2015 and we achieved our financial targets as well. India is a key market for Amway. It is one of our top ten markets and we believe there is great potential here. We have invested Rs1000 crore in India, including Rs600 crore in a state-of-the-art manufacturing facility in Tamil Nadu. This facility provides a number of jobs and is making high-quality
Our sourcing strategy leverages on 4 key parameters - speed, agility, flexibility and cost effectiveness. Our structured localization program for India has helped us enhance the localization index from 30% to 70% over past 5 years.
LEADERSHIP
MORE POWER TO THE
ENTREPRENEURS products for the people of India. It also demonstrates our commitment to Make in India, Make for India and is our first facility, which qualifies to be LEED Gold Certified in the world, making it environment friendly and a sustainable plant as well. We look forward to creating even more opportunities for people who seek to be entrepreneurs in India and hope to be a big part of growing the business of direct selling in the years to come. We have lined up a number of initiatives to spur growth in India and our strategy is focused on delivering value to our consumers through our direct sellers. Consistent innovation will result in high quality products, which address consumer needs. Visibility and easy access are important components of our growth strategy as well. Our plan has four components: a new Preferred Customer program, new express pick-andpay stores, an expanded product portfolio, and technology and training. We believe this approach will be very helpful to direct sellers as they seek to grow their customer base, showcase the product brands, provide personalized recommendations and further develop their own skills.
Amway has a very different business model. How does supply chain play a crucial role in its operational success? What are the unique aspects that make Amway SCM truly unique? We sell more than 130 products across categories like nutrition, beauty, home care and personal care in India. We rely
on a network of approximately 550,000 active direct sellers to sell these products to the consumers. Recently, we have also launched a preferred customer program wherein customers can buy products directly from our website or from our stores. The program offers the option to choose a direct seller if the customer is already in touch with one, protecting established and valuable relationships. Otherwise, we assign a direct seller so that the customer can be serviced appropriately in the future if they so desire. Given the complexity, supply chain plays a critical role in ensuring that all the SKUs are available for our direct sellers as well as customers. Let me explain in detail‌ Our manufacturing facility in India is located at Nilakottai in the Dindigul district of Tamil Nadu. This is Amway’s third manufacturing plant located outside of USA. The other plants are located in China and Vietnam. We have invested Rs1000 crore in India,
including Rs600 crore in a state-of-the-art manufacturing facility in Tamil Nadu. This facility provides direct as well as indirect employment to more than 700 people and is making high-quality products for the people of India. The India facility is touted within Amway world as one of the most advanced with highly sophisticated and latest machinery sourced from around the world. We have acquired 50 acres in Nilakottai, out of which 25 acres has already been developed while balance portion of the land will be developed in the future as per business need. The manufacturing facility can handle a turnover of Rs6500 crore to meet the needs of Indian consumer. The facility has 9 production lines for nutrition, cosmetics and oral care products including 4 lines for nutrition supplements, 2 lines for Protein supplements, 2 lines for cosmetics and 1 line for the Glister toothpaste. The plant has the annual capacity to manufacture
We have a nationwide presence with over 130 sales offices; 4 regional warehouses, 3 regional hubs and 34 city warehouses. The distribution and home delivery network set up with the support of independent logistics partners caters to over 8900 zip codes across the country. We have a robust supplier qualification and development program to ensure consistent quality of incoming materials. We are modernizing our distribution network and are also investing heavily in our support services like warehousing and transportation to ensure a wow delivery experience to our direct sellers as well as customers.
CELERITY • March 2017 | 15
LEADERSHIP 1.2 billion tablets and soft gels, 7 Million canisters of drink mixes, 19 million cosmetic jars, bottles and tubes and 60 million tooth pastes. On the supply chain front, we have a nationwide presence with over 130 sales offices; 4 regional warehouses, 3 regional hubs and 34 city warehouses. The distribution and home delivery network set up with the support of independent logistics partners caters to over 8900 zip codes across the country. We have a robust supplier qualification and development program to ensure consistent quality of incoming materials. Besides this, we also have a stringent in-process quality checking mechanism along with complete batch traceability to ensure consistency in quality. We are modernizing our distribution network and are also investing heavily in our support services like warehousing and transportation to ensure a wow delivery experience to our direct sellers as well as customers. We have also opened Express Pick-andPay Stores at premium locations across several cities and are seeing strong results. The locations provide an opportunity for consumer and direct sellers to interact with the product and experience it for themselves prior to purchase. We have opened 32 Pick-and-Pay stores thus far and are targeting to open 50 by the end of next year.
Kindly share with us changing direct selling avenue with the advent of social media. How does Amway's business model fit with e-commerce and omni-channel management? We are pleased to see the continued and growing relevance of our direct selling model in today’s marketplace as people place real value on personal recommendations, and technology enables our direct sellers to connect more frequently with those people in their networks. Direct selling in the digital age gives customers the best of all worlds – the personal touch of a trusted advisor, top products built on science, and technological support for ordering, education and more. We are placing a lot of focus on the usage of digital media to reach out to the direct sellers as well as consumers. We have launched a Mobile App to help the on-field direct sellers to retail better. The app with all the product details, videos and tools like product recommenders helps the direct sellers explain features and benefits of the product better to the end consumers.
What’s your sourcing strategy?
Our sourcing strategy leverages on 4 key parameters: speed, agility, flexibility and cost effectiveness. Our structured localization program for India has helped us enhance the localization index from 30% to 70% over past 5 years.
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We are aiming to engage different stakeholders on what drives entrepreneurship in India and contribute to the on-going discussions on the role of skill development and self-employment in improving employability of the youth. Entrepreneurship is a way for people to realize a better life for themselves and their families. Entrepreneurs also create jobs and encourage competition. They spur economic growth and bring opportunities to communities. So, it’s important that businesses like Amway know how entrepreneurs think and act in order to better support and encourage them. How do you keep your channel partners motivated to steer ahead the growth momentum? How do you keep them updated? Constructive engagement with our channel partners has helped us encourage & motivate them to deliver optimum results. We partner with our suppliers in the process of objective setting and expectations of deliveries. Strong emphasis is given on ‘ideation’ through our 30-60-90 day action plan developed in conjunction with our suppliers. ‘Supplier road shows’ are held to discuss ideas. The shortlisted ideas are presented to Amway management. This collaborative approach strengthens our relationship with our suppliers and thus helps us achieve our top-line and bottomline growth ambitions for the organization.
The consumer goods supply chain is sensitive to product quality and sustainability. How does Amway embrace green? When Amway was founded in 1959, it marketed only one product: L.O.C.® Multipurpose Cleaner. L.O.C. established our environmental commitment because only biodegradable cleaning agents were used in its formula. Its very name – Liquid Organic Cleaner (L.O.C.) – spoke to that commitment. This initial dedication to the environment has become a cornerstone in the Amway corporate philosophy. Five decades later, our environmental concerns continue to be reflected in our products and philosophies. Whether responding to changing consumer demands or reacting to new scientific findings, Amway has stayed on the leading edge of positive environmental practices. Our manufacturing plant in Tamil Nadu is designed with the most stringent environmental and quality standards. It is a Zero Discharge Waste Facility and qualifies to be LEED GOLD Standard manufacturing plants in the country. In addition, 10% of our total power needs are met through one of the largest roof top solar installation in Tamil Nadu at our facility in Madurai. We are also working on reducing the carbon footprint through bottle weight reduction initiatives.
With the current government policy changes, how do you see shape of
things to come for Amway?
We welcome the move by the Ministry of Consumer Affairs in issuing guidelines for the direct selling industry. We believe that the guidelines will safeguard the interests of consumers, as well as identify and help protect ethical direct selling companies like Amway who have made significant investments in building physical infrastructure, including offices, shops, warehouses, IT capacity, and manufacturing facilities. These investments help to bring opportunity to aspiring entrepreneurs. Additionally, Amway provides world-class products to consumers, built on leading science and innovation. The construct of the guidelines puts obligations on the direct selling entity, as well as the direct seller. The guidelines have correctly placed consumer protection at the center. Therefore, we believe that the guidelines will be effective in weeding out fly-by-night operators. The Ministry is heading in the right direction. As a next step, we believe that appropriate legislation for the direct selling industry will help the industry reach its potential. Amway complies with the highest standard of industry code of ethics and always offers protection to consumers and direct sellers. Amway India does not charge any joining fee from the direct sellers. Further, direct sellers are free to exit anytime. All of Amway's products are backed by a refund policy. We adhere to the clauses that have been mentioned in the guidelines and we seek to not just comply, but set the Gold Standard in the area of consumer protection.
An accomplished Business Leader with 20 years of experience in FMCG direct selling, manufacturing and financial services companies, Anshu Budhraja is passionate about driving entrepreneurship at the grass root level in the country leveraging the direct selling model of Amway. He has hands on approach in driving GTM strategy, geography and cluster management, development of infrastructure (stores / e-com), sales operations and promotions, IT, Development and Crossfunctional talent building. He has completed Business Administration from Thunderbird School of Global Management (Arizona, USA). He also holds a post-graduate degree in accounting from Delhi University.
INTERVIEW
FARMING THE
FUTURE
“We strive to work for the farmers and provide them complete end to end solutions within their reach. Whatever it may be; agrochemicals, biological products, bio-fertilizers, we are not product centric. We are need centric and focus on fulfilling the same,” asserts Rajesh Aggarwal, MD, Insecticides (India) Limited (IIL). With the mantra of saving crops from fields to storage, he aims to catapult the agro-chemicals dynamics in India by bringing in world-class global best practices. Indian agriculture sector has been receiving strong push from the government and is touted as the sunshine sector. Your views on the same. The present government has adopted several pertinent policies and programs to safeguard the interest of the farmers and the agricultural sector as a whole. Even when the PM recently addressed the country on the New Year’s Eve, he announced many initiatives and policies
to incentivize the farmers. We, at Insecticides India Ltd (IIL), wholeheartedly support the initiatives of PMO and would also like to add more initiatives to train and educate the farmers. The role of R&D and farmers’ education is crucial. Farmers’ access to latest researches and scientific information can help in overcoming issues such as seed problems, pest and disease problems, crop sustainability, climate change, irrigation problems, soil erosion, and so on. Technology integration has
great potential to help farmers take informed decisions.
Please highlight India’s positioning in the global agrochemicals market. How is your company destined to make it leader in the same? Globally the agrochemical market will be almost USD 71 billion by FY 18. Out of this, Indian market stands at 16000 crore. India is the fourth largest global producer of agrochemicals after the US, Japan and
CELERITY • March 2017 | 17
INTERVIEW China. Insecticides dominate the crop protection market in India with 60% of the market share. Herbicides, with 16% market share, are the fastest growing segment. The export of agrochemicals from India has seen a strong growth over the last few years. Globally, India is the thirteenth largest exporter of agrochemicals. As a company, IIL is providing latest solutions to the market. We are bringing in patented products through partnerships (Japanese collaborations). We are working towards discovering new molecule, which is unique for an Indian company. We are also foraying into biological solutions. Insecticides (India) Ltd stands as a fully integrated company that gives it an edge over others and gives it a first-mover advantage in the industry.
Your vision is moving towards green growth pastures. How are you going to attain the same? We strive to work for the farmers and provide them complete end to end solutions within their reach. Whatever it may be agrochemicals, biological products, bio-fertilizers, we are not product centric. We are need centric and focus on fulfilling the same.
How can companies embrace the right balance of ‘smart’ and ‘sustainable’ practices and techniques that can make farmers prosperous? Agriculture systems must become more productive, and losses should be minimized. Sustainable agricultural practices and food systems, including both production and consumption, must be pursued from a holistic and integrated perspective. Most of the farmers face a problem of low minimum support price (MSP). We would recommend them to try and shift to the new crop avenues which are in demand and can yield more profits. Some of the examples are the medicinal herbs, horticulture and flowers.
How do you view Indian economy in the current scheme of things?
We look at today’s economy rightly poised for the future. We need to make use of the current available policies and change yourself accordingly, and if we do not change with time, time will change us. There is a big focus from the central as well as the state government for agriculture sector.
Supply chain plays a crucial role in the entire value chain. Kindly highlight the importance under your business purview.
Supply chain is very important for us, as we have seasonal products based on the monsoon, so we need to mobilize the
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Globally the agro-chemical market will be almost USD 71 billion by FY 18. Out of this, Indian market stands at 16000 crore. India is the fourth largest global producer of agrochemicals after the US, Japan and China. Insecticides dominate the crop protection market in India with 60% of the market share. Herbicides, with 16% market share, are the fastest growing segment. The export of agro-chemicals from India has seen a strong growth over the last few years. Globally, India is the thirteenth largest exporter of agro chemicals. stocks from one area to other so that they are consumed and we do not carry them over to the next year. Here planning and close monitoring is the key.
What are the CSR activities being undertaken by you?
The IIL Foundation, which works closely with farmers, is involved with a host of activities, across India, aimed at improving the lives of farmers by providing awareness, school aid and more. Agricultural experts and scientists working with IIL Foundation offer progressive farm training to cultivators, while educating them on soil fertility management and judicious use of agrochemicals. The organization’s experts regularly interact with farmers to provide them scientific support and knowledge and help them increase yield and crop quality.
Recently we have also signed a MoU with IARI to train the farmers in the selected villages and share the benefits with all if the use of the latest technology. We also work in the area of child education in rural India; we have adopted some schools in states like Punjab, Rajasthan, Bihar, Odisha, etc.
Please comment on enhancing India’s food security over the long term… Food security is the joint responsibility of all of us. We need to work on saving the crops from field to storage. There is need for awareness where the food is not wasted.
How difficult is it for you to reach to the bottom of the pyramid when it comes to implementing technology in the business and make them familiar with the same?
At Insecticides (India) Ltd, we work towards the betterment of the crops and farmers. We strongly believe that farmers do not need chemicals for everything. Chemicals are required for instant solutions or major problems. Hence, a combination of biologicals and chemicals are required for seamless crop productivity. India is a difficult market and local expertise is
INTERVIEW HUMBLE BEGINNINGS Rajesh Aggarwal has established a name for himself in the Indian entrepreneurial arena. Counted among the top five in agrochemicals manufacturing, Insecticides (India) Limited has showcased remarkable growth under his stewardship. Ambitious and determined, Aggarwal has successfully taken the company to new heights and under his leadership its revenue has grown manifold. Moving away from family’s threegeneration-old business, he along with his father Hari Chand Aggarwal established IIL, which started its operation in 2002. It was a period when, India’s agrochemical sector was in doldrums due to economic recession and the days of many multinational companies that had invested in this sector were numbered. IIL started with an established brand Lethal, which they took on lease from Montari Industries. Understanding the vital role of a manufacturing unit he started the company’s own unit in Bhiwadi, Rajasthan. Today IIL, which owns 108 products, has emerged as a formidable player in the Indian agrochemicals sector growing at a cumulative rate of about 35% since inception. important to provide timely education and information to the farmers. We try to reach to the bottom and provide our products at affordable price and we sell our products at cost price (instead of ROI).
Your take on the implementation of GST… GST is being projected as the single
Supply chain is very important for us, as we have seasonal products based on the monsoon, so we need to mobilize the stocks from one area to other so that they are consumed and we do not carry them over to the next year. Here planning and close monitoring is the key. biggest and boldest indirect tax reform in India since Independence. GST arose out of the complexity in the current tax systems. It is an attempt to provide a seamless transfer of goods & services across the entire country, replace multiple indirect taxes imposed by the Centre and states and simplify the existing tax structure, streamline compliance & logistical complexity issues for interstate transactions and make ease of doing business in India a reality. Under the proposed dual system of C-GST and S-GST, both Center and states will continue levying taxes on goods & services at a mutually agreed upon rate, and businesses will need to pay taxes to separate accounts. Worldwide, more than
140 countries have already implemented GST. Majority of these countries adhere to the concept of single GST. The standard GST rates in most countries vary between 15-20%. While it is expected that will create a uniform pan-India taxation rate, it is still a long way to go before this goal is achieved.
Your comments on the recently announced Union Budget 2017-18… The Union Budget 2017 has put substantial focus on agriculture sector, which is a really welcome move. The total allocation for rural, agricultural and allied sectors is set at Rs1,87,223 crore, which is 24% higher than last year's. This is heartening. The government said it is committed to double farmers' incomes in 5 years. The Finance Minister has announced certain measures to incentivize farming, for instance, reducing the interest rate on farm loans. This was much needed to make up for the losses the agriculture sector has suffered in the wake of demonetization. The government has increased the Fasal Bima Yojana from 30 to 40 per cent and has also promised to issue soil health cards and setup a mini lab in Krishi Vigyan Kendras. These are welcome moves. But implementation will be more important than announcement. The decision to set up a dedicated micro-irrigation fund with an initial corpus of Rs5000 crore could make a difference in a country where much of agriculture depends on the vagaries of the seasonal monsoon rain.
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COVER STORY
PEDALLING
TO NEW
MARKETS
From a modest beginning of mere 639 bicycles in the year 1956, Hero Cycles produces over 19,000 cycles a day, the highest in global reckoning. With 48% share of the Indian market, this volume has catapulted Hero in the 'Guinness Books of World Records' in 1986. Since then Hero Cycles has been able to maintain its leadership in the cycle manufacturing industry. Rolling out one bicycle every nine seconds, Hero Cycles has been setting new sales records every year. Pankaj Munjal, Chairman & MD, Hero Cycles is on the driver’s seat to take the global growth trajectory ahead as he says, “We are now looking forward towards global dominance and have already set the balls rolling into that direction. My focus is to ensure that the business I have inherited conquers new boundaries and tails new horizons every day.” Here’s an excerpt from the exclusive interaction with the visionary himself on his envious plans to make Hero Cycles the global leader… Hero Group as a whole has had a very inspirational growth story. Kindly highlight pathbreaking transformations of Hero Cycles?
Hero Group has been one of India’s most trusted brands for several decades now. Hero Cycles has been a market leader in the standard bicycle category for three decades. It was in 1986 when Hero Cycles was first named as the largest producer of bicycles by the Guinness Book of world records. Since then, the company has not only maintained its lead in the market but has constantly endeavoured to improve its products through persistent research and innovation. Hero Cycles currently rolls out one bicycle every nine seconds and has been setting new sales records each year.
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Keeping pace with the changing needs of the time, Hero Cycles has entered the premium bicycle segment in recent years. In 2012, we launched UT Edge lifestyle brand; in 2015 we acquired 'Firefox Bikes' further cementing the company’s position in the premium bicycle segment. In 2016, the launch of premium Hero Sprint Pro series augmented Hero’s position in the
lifestyle biking segment. With these strategic moves, the company now commands dominance in the doubledigit growing premium segment while continuing to maintain its leadership in the mass segment with over 45% share. In March 2016, Hero Cycles acquired a majority stake in Sri Lankan bicycle maker BSH Ventures. This acquisition has given us
Central Government must work with state governments to establish a series of skill development centres across the country, preferably in second tier towns and cities where there is a large latent population waiting for opportunities. By encouraging companies and investors to set up manufacturing units in smaller towns where cost of labour is cheaper than in large urban areas, we can retain our competitive edge.
COVER STORY
The way we have known cycles and their shapes are constantly evolving. We have cycles ranging from Rs 3,000 to Rs 4 lakh. We are at the cusp of a major cycling revolution in India, and Hero Cycles is ready to meet the need arising therefrom, with products for all age and financial brackets. a plant that will manufacture for most of our overseas brands. Earlier in 2015, Hero Cycles had acquired a majority stake in UK-based Avocet Sports to enter the highend bicycle market of Europe. We have clearly set our sight at global markets.
With such a strong lineage, how difficult is it to create a niche for yourself and ride the growth bandwagon? Lineage or not, it is always difficult to create a niche for yourself in a highly competitive market, and it requires a high degree of passion and commitment to your business. It requires constant thinking and re-thinking of ideas and objectives, constant innovation, a far-reaching vision that takes several horizons into account and a regular tab on the pulse of the global market. You can never be complacent and rest on your laurels. If you have a strong lineage, expectations are even higher. At Hero Cycles, our motto is to never rest on our laurels. We keep re-inventing ourselves. We are a market leader in India with a clear lead but we do not want to stop at this. We are now looking forward towards global dominance and have already set the balls rolling into that direction.
How was your entry into the business? How difficult has been the journey to follow the footsteps of your forefathers and carry forward the legacy? When you are entrusted with a great legacy, it puts a lot of onus and responsibility on your shoulders to not founder it. While my entry into the business was smooth, given that Hero has
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COVER STORY been our family business, the journey has been full of challenges. In fact, every day poses a new challenge. Our competition is not only with other industry players but more so with our own self. How much forward can we take the legacy is a question I ask myself frequently; and the answer I receive is ‘infinitely ahead’. My focus is to ensure that the business I have inherited conquers new boundaries and tails new horizons every day.
Hero Cycles is touted as the number one cycles manufacturing company. What are the USPs and how do you plan to keep the momentum going? Who would you give the credit to? The USP is innovation and original designing. Our products are designed and created after intensive research on the ground that seek to lay down in minute detail what the customer is looking for. Keeping the customer comfort at the top of our innovation priority has helped us maintain a clear edge. The credit for this goes to our researchers and innovators who constantly strive to improve our products and add new dimensions to it.
Cycling is not mere a hobby these days. It has become a way of healthy living. With never seen before growth projections, how are you poised to march ahead? Some major social issues that concern all of us today include congestion on our roads; India being the diabetes capital of the world; and environmental degradation. Bicycles eliminate all these problems. Several European cities have made great strides towards encouraging use of bicycles on roads. Amsterdam, Copenhagen and Berlin are some examples. Stockholm has become a car-free city. Urban mobility is going to see a shift towards greener transport in India as well as there is greater realization today about the environmental impact fossil fuel burning is having. At the same time, sports and lifestyle cycling is also catching up in a big way. A large number of urban dwellers are shunning their gym memberships and turning to the eco-friendly two-wheeler instead. A lot of it has also to do with the availability of premium bicycles that are highly comfortable and ride worthy. The way we have known cycles and their shapes are constantly evolving. We have cycles ranging from Rs 3,000 to Rs 4 lakh. We are at the cusp of a major cycling revolution in India, and Hero Cycles is ready to meet the need arising therefrom, with products for all age and financial brackets.
Cycling not only aids on to your physical fitness, but also is environfriendly. What’s your marketing strategy or brand positioning to
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spread this message and reach out to a larger audience with varied product range?
We position our brand as a provider of an environment and health friendly transport facility. As part of our initiatives to promote cycling as a clean and healthy activity, we have also partnered IIFA in recent times where leading Bollywood personalities endorsed the need for clean transport alternatives.
Cycling industry as a whole is growing by leaps & bounds. Undoubtedly you are the leader to traverse that growth. How do you see the industrial dynamics shaping up in the years to come? Cycling industry is growing on two parallel tracks. As more people in rural areas move up the income chain, they tend to invest in purchasing a bicycle, which helps increase their efficiency. On the other hand, in urban areas, cycling is emerging as a fitness
How is technology spearheading the growth of the company? Hero Cycles is not just a market leader, it is a leader in technology as well. Hero also has some of the best technology partners in the world. The company made a dazzling debut at the last Euro Bike Show where it launched new a series of new brands under the premium category: Ryedale, Denovo, Lectro, and Riddick. Adding another feather to its cap, Hero Motors’ transmission division has also bagged the pivotal business of Ducati Motorcycle for making gears of its premium bikes recently.
You are aiming to become the number one Recreation transmission company. How do you plan to do that? At Hero Motors, we are working on tapping the best technology from across the world and channelising it, along with local R&D towards, towards producing world class components and parts. Hero has the best technology partners. In Germany, we have
Cycling industry is growing on two parallel tracks. As more people in rural areas move up the income chain, they tend to invest in purchasing a bicycle, which helps increase their efficiency. On the other hand, in urban areas, cycling is emerging as a fitness cum recreation activity. cum recreation activity. The first segment spurs growth for standard bicycles, while the second segment spurs growth for luxury bikes. Given concerns for the environment, urban mobility is also going to see a change. The industrial dynamics are shifting towards innovation to produce a very wide range of bicycles suitable for all kinds of users – standard, fitness, mountain bikes, EPAC, ladies and kids. We believe the bicycle industry will see huge growth in the near future.
ZF (a joint venture with ZF Friedrichshafen, a worldwide supplier for driveline and chassis technology). Besides ZF, Sumitomo, Showa, Honda Foundry are our other technology partners. These partners give us an edge in technology knowhow, while our manufacturing centres in India provide us low-cost manufacturing capability. We are nurturing our own R&D now. We have a small setup in Austria, and we have our engineers placed there close to the customer. That story is building up now, and promises to reap rich dividends in times to come.
The USP is innovation and original designing. Our products are designed and created after intensive research on the ground that seek to lay down in minute detail what the customer is looking for. Keeping the customer comfort at the top of our innovation priority has helped us maintain a clear edge.
Kindly elaborate on your stint abroad. How different are the dynamics overseas? The dynamics of the industry vary from country to country depending upon which stage of development a country is in. We have an expanding business in Europe and I keep travelling to European countries to scout for new opportunities and business interests. In Europe (as in many other developed countries), the lifestyle bike segment is seeing a huge surge, spurred by a growing health consciousness and efforts to make cities bicycle friendly.
How can India work on skill development and remain competitive to be in line with ‘Make In India’ initiative? Skill development is a key cornerstone
COVER STORY UP, CLOSE & PERSONAL How do you motivate your team?
By leading them from the front and having a long-term vision on talent. I try to ensure that their efforts are recognised and valued, even if they do not yield any significant gains in the immediate future.
What’s your passion?
Cycling has become one of my great passions in recent years. I have taken to cycling in a big way and this has helped me radically improve my fitness levels. I make sure I ride 5 to 10 kms every day. Believe me, it is cathartic.
What would be that one leadership lesson you would like to share with us?
Leaders must practice not preach. What you want your team to do, you must first adopt it yourself. of ‘Make in India’ initiative. Central Government must work with state governments to establish a series of skill development centres across the country, preferably in second tier towns and cities where there is a large latent population waiting for opportunities. By encouraging companies and investors to set up manufacturing units in smaller towns where cost of labour is cheaper than in large urban areas, we can retain our competitive edge.
Kindly give a sneak peek into the new launches from Hero Cycle’s stable… Last year, we introduced a new lifestyle biking product line called Hero Sprint Pro, which is aimed at the urban fitness lovers. New products are being added to this product line, which has received a tremendous response in urban India. Recently, we also introduced the Lectro range, which is the first in a series of Hero’s European brand launches in the Indian market. Lectro offers a range of EPAC’s (Electric Pedal assisted cycles) for the Indian market. Our dedicated European brands under the premium category include Ryedale, Denovo, and Riddick. In future, we are planning to introduce these brands into India as well.
You have been creating milestones year on year in terms of performance, production and profits. It seems you are competing with yourself. What’s your ultimate vision and target? Our vision is to spread our presence across the world and turn into a global bicycling major.
Cycling superhighways seems to be an incredible concept. Your views on the same… Uttar Pradesh recently unveiled India’s first cycling superhighway stretching over 200 kms. It is indeed a very good concept which can do wonders on the collective environmental and health conditions of Indians. However, for that to happen, this concept has to be embraced across cities and states. We sincerely hope such initiatives are replicated across India.
With so much happening on the economic front, still we are yet to see the true results. Where do you think, we are lagging and what can be done to achieve the tag of ‘Manufacturing Superpower’? For India to become a manufacturing superpower, we need concerted efforts on multiple fronts. Liberalisation of the FDI regime is a welcome step. We also need to ensure that starting manufacturing
Uttar Pradesh recently unveiled India’s first cycling superhighway stretching over 200 kms. It is indeed a very good concept which can do wonders on the collective environmental and health conditions of Indians. However, for that to happen, this concept has to be embraced across cities and states. We sincerely hope such initiatives are replicated across India.
Do you get time to ride bicycle?
I make sure I do. I have cancelled my gym membership and have entrusted all my fitness routines to the two-wheeler.
What’s your priced possession? My Team. My Family.
What’s your success mantra? Never limit your horizons. Keep outthinking your own self.
How do you manage the worklife balance? By taking holidays with family as and when I can and by shutting down everything official when I am with my family members. I also love to cycle around with the fitness freaks in my family.
units becomes highly easy, and that skilled workforce is abundantly available. Additionally, there is a need for radical improvement in physical infrastructure and concreted efforts to maintain a cost advantage.
Please comment on various initiatives taken by GoI and their slated impact on the economy… The government’s initiatives such as Make in India, Skill India, Startup India, etc., are positive measures that if implemented according to the book can bring about a radical transformation of the economy in the next few years. However, the government has to ensure that the promising initiatives on paper are effectively translated on the ground.
Your views on the impact of soon to be rolled-out GST…
GST has been a much-awaited economic reform that promises to boost economic growth significantly. It would help speed up movement of goods between states, as well as help reduce cost of capital goods. Additionally, it would also bring about a seamlessness when it comes to the taxation infrastructure.
What are the ambitious plans in the offing? We have recently unveiled a Global Design Centre in Manchester, which aims to harness some of the best designers to work on creating new designs and innovations to bring about a revolution in the cycling industry. This is one among a series of ambitious plans that we hope will catapult Hero Group into the global major league in the coming years.
CELERITY • March 2017 | 23
UPTAKE
BUSINESSES MUST PREPARE FOR A WORLD
TRUMPED FOR TRADE Donald Trump’s triumph has brought in worries that his anti-globalisation mantra will spread protectionism around the world, put up trade barriers and curb global economic growth. Nick Miller, Head – FMCG, Crimson & C0, talks about what companies with global supply chains should do.
President Donald Trump’s protectionist rhetoric at his Presidential inauguration and his subsequent withdrawal from the Trans-Pacific Partnership (TPP) herald a period where the progress of free trade could well grind to a halt. Businesses with extensive supply chains should therefore take action to insulate themselves against the potential penalties and strident regulation that they could become subject to. At his inauguration, President Trump outlined his intention to pursue an ‘America First’ policy, stating that “We will follow two simple rules: Buy American and hire American.” The first manifestation of this policy was Trump’s definitive decision not to join the TPP – a
24 | CELERITY • March 2017
flagship Obama trade deal encompassing 11 countries in the Pacific rim which, with American membership, would have been responsible for 40 per cent of the world’s trade. The US is currently in the top three global importers and exporter, making it a major driver for global trade. Coinciding with Brexit, which the Prime Minister recently revealed will see
Britain lose access to the single market, and a surge of anti-globalisation and antifree trade sentiment across much of the Western World, Trump’s declarations look likely to augur a period where the various initiatives towards free trade will stutter and grind to a halt and potentially reversing into protectionism. The march towards free trade has
Geopolitical developments can have dramatic effects on the business community, and organizations should be alert to these possibilities. There are ways to insulate yourself from damage and even to prosper in times of change, if you are prepared to unravel the complex implications of these changes and take the right actions decisively and rapidly.
UPTAKE Contingency plans
always been somewhat precarious, with cycles of protectionism generally coinciding with lower economic growth and sometimes with recessions. For example, in the midst of the recession in 2009, the World Trade Organisation reported ‘significant slippage’ in adherence to its free trade principles. However, Trump’s statements and actions so far, as well as Brexit, represent a threat to free trade that is an order of magnitude higher than anything we’ve encountered in recent years.
Made in the World
At a time when ‘Made in the World’ is the norm, this undoubtedly could cause problems for many businesses. Global business loves free trade for many reasons – one is that it allows them to find the most effective and lowest cost supplier for goods. It also allows them to move people around the business on a global scale as they require. These two factors are now endangered. Any restrictions will lead to higher costs of production – and therefore often higher prices, lower sales, and reduced growth. There are steps businesses can take to help protect themselves against these alarming shifts. Businesses have to be dynamic and fast-moving to help alleviate the potential costs of these restrictions.
Many will have complex supply chains, criss-crossing networks extending across the world, and will therefore need to apply some analytical rigour to the task. One of the steps they can take is do more ‘nearshoring.’ This means sourcing and manufacturing closer to end markets, therefore reducing the expansiveness of the supply chain and vulnerability to antifree trade measures such as tariffs. As a matter of good practise, organisations should at minimum carry out final packaging and any product customisation close to their end markets.
Organisations should look for contingencies in differential tax rules in order to reduce the tax burden, as these will not necessarily be affected by any agreements around the transferring of physical goods. Moreover, any kind of trade war or intensifying of trade competition between countries could create opportunities as countries look to compete by differentiating their tax rates. Geopolitical developments can have dramatic effects on the business community, and organizations should be alert to these possibilities. There are ways to insulate yourself from damage and even to prosper in times of change, if you are prepared to unravel the complex implications of these changes and take the right actions decisively and rapidly.
Crimson & Co is a UK based, global supply chain and business transformation consultancy firm. It has an approach and culture that its clients believe is unique. It has recently entered India, in partnership with The Progress Group (TPG). This partnership gives the India team opportunities to create more value for their clients with best-in-class approach and tools in supply chain consulting and supply chain analytics.
WAREHOUSING SPACE LEASING AT OVER 10 MN SQ FT IN 2016 Leasing of warehousing space stood at over 10 mn sq ft in eight major cities and is expected to rise once GST laws get implemented, according to property consultant CBRE. Companies from engineering and manufacturing sector and e-commerce leased 22% while 3PLs absorbed 21% and FMCG firms 17%, of total space transacted in 2016. Highlights from the CBRE survey of leading occupiers of warehousing space: • More than 63% respondents hope decrease in operating costs will enable them to consolidate their smaller facilities into larger ones and expand their footprint around major consumption centres. • About 45% feel that their cost of warehousing operations may decline once the GST comes into play, while around 25% were cautious and felt that it is too early to assess the actual impact. • Location is the most important factor for companies while leasing warehousing space, followed by the real estate cost of leasing space in a particular state/city, the survey revealed. • About 65% of respondents believe that they will need a minimum of 3 to 12 months to align their existing business strategies with the new tax structure. • Consolidation of warehousing portfolios will be the most important strategy for companies in the post GST era, with about to 28% of respondents voting for it, while 23% of companies plan to further expand their operations across the country. • The concept of a mother warehousing hub for a region supplemented by spokes is expected to become more popular in the post-GST scenario, with around 11% of companies preferring to adopt the hub & spoke approach, compared to only 6% now. • The removal of various federal tax barriers and creation of a common market will improve supply chain efficiency and attract more foreign direct investment (FDI). Source: CBRE Survey
CELERITY • March 2017 | 25
PERSPECTIVE
UNION BUDGET AKSHAY DHOOT
KRISH IYER
VIVEK MATHUR
VINAMRA PANDIYA
ANTONY JACOB
SUBTLE YET
2017-18
DINESH AGARWAL
BALANCED BUDGET 26 | CELERITY • March 2017
AJAY LADDHA
SANJEEV BHATIA
SAMIR DESAI
PERSPECTIVE Akshay Dhoot, Head, Technology & Innovation, Videocon: We congratulate the Central Government for presenting a growth conducive budget. The overall announcements seem like a cohesive push for holistic economic growth. We welcome initiatives that will give further boost to Make in India in order to make our country a hub of electronic and tech manufacturing. This has been taken care of with announcements like incentivizing local electronic manufacturing up to Rs745 crore by enhancing special policies like Modified Special Incentive Package Scheme (MSIPS) and Electronic Development Fund (EDF). This move would definitely give more sops to domestic mobile handset makers. India is one of the fastest growing mobile markets in the world and it would further
2019 is commendable. Government's steps to promote digital economy post demonetization are very logical and will boost formal economy. Overall, this is a very good budget. Adherence to fiscal discipline, with emphasis on growth, development, increasing infrastructural & rural spending, and encouraging formal economy are key aspects of the budget. Vivek Mathur, CEO, Giftease.com: Overall, the budget stays on the path of fiscal prudence, with no major populist measures or sops. Continuing strong emphasis on digital payments is particularly good for our sector, and necessarily needs to accompany remonetisation. Tax benefits to SMEs and individuals in the lower slabs should have some positive for consumption, but
a foundation of an enterprise and business pro India. Important factors to boost GDP are thought of the Union Budget 2017. Most important elements such as young demographic dividend, skill development, women employability, digital education, transport have been well accounted for. Also, it is reflected that the burden of taxation is more evenly split with all demographies of the society. It is a good year for SMEs, India’s backbone given the direct and indirect reforms announced for them. 5 special tourism zones will enhance MSME development and bolster schemes for employment in textile, transport, agriculture, leather and hospitality sector. The SMEs in pharmaceuticals and logistics are bound to experience accelerated
Like every year, this yearly event holds utmost attention and importance from the holistic economy perspective. But this year’s Union Budget was special for many reasons – it was announced on February 1, deviating from the standard pattern. The most pathbreaking decision of all times was merging rail budget with the Union Budget. Hailed positively by industry at large, let’s hear it from the stalwarts on the perspectives and projections about the fortunes of Indian economy in the year 2017-18… get boost from newly formed trade infra export scheme.” Krish Iyer, President & CEO, Walmart India: The Union Budget 2017 is a game changer and continues to rightly focus on rural, agriculture and infrastructure sector with an aim to give boost to formal economy. The planned investment in these sectors will not only create much needed jobs in the country but also spur consumer spending and boost economic growth. Fiscal deficit too has been contained very well. The continued focus on ease of doing business with several measures such as abolishing FIPB, 'Model law on contract farming', Simplification of Labour laws under four areas – wages, industrial relation, social security and welfare and Safety - augurs very well for the economy. Major income tax relief in the lowest bracket is laudable as it will bring back consumer confidence and boost domestic consumption. The measures announced to boost the manufacturing sector are commendable. Rewarding MSMEs by reducing rate of income tax will further boost `Make in India’; Proposal to set up dairy processing fund will boost food processing while increased allocation to schemes such as MSIPS will boost the electronics sector. Rural sector gets a boost with increased allocation to MNREGA. The agenda for the year to `transform, energize and clean India’ is indeed noteworthy. Government's commitment to lift 1 crore people out of poverty by
I believe the expectations were higher, particularly considering the measures to increase the taxpayer base. In terms of policy shifts, the easing of FDI is positive, but the details and schedules remain to be seen. Vinamra Pandiya, CEO & Founder, Qtrove.com: The overall budget seems to be another big step towards a digital India and it is rightly so! A strong weightage for digital payments is principally good in the long run for the e-commerce sector. Tax relief to SMEs and revised tax slabs for individuals will surely promote more investment, thus helping the economy grow. Policy changes with regards to ease of FDI are extremely encouraging and we are now looking forward to the suggestion made by the expert panel for the implementation of GST. Antony Jacob, CEO, Apollo Munich: The Union Budget 2017-2018 is garnering positive sentiment amongst markets as it addressed the needs of the hour in terms of the farming sector, the rural population, the youth, infrastructure, prudent fiscal management and tax administration for the honest tax payers. The Finance Minister also focused his attention on developing Digital India further by providing incentives for digital payments, i.e., allocation of upto Rs10,000 crore for the Bharat Net project. This will certainly enable more Indians to choose online payment gateways. Dinesh Agarwal, Founder & CEO, IndiaMART.com: The budget 2017 has laid
growth as Healthcare hold high on Arun Jaitley's agenda in the Budget 2017. Ease of Doing Business for SMEs will thrive with push for infra in digital economy, Aadhaarenabled payment systems, m-wallets and digital payments. To increase digital payments acceptance cash purchase and payments for revenue and capital expenditure limited to Rs10000 for businesses is a very good move. Even for individual or personal consumption, a limit of Rs3 lakh has been imposed on cash. Both will help generate more transparency and thus more revenue in times to come. Ajay Laddha, Co-Founder, YMS Mobitech Pvt Ltd: The Union Budget has outlined all the rights steps for the government’s central agenda of Transform, Energise, and Clean India. The lower corporate tax announced will help small businesses become more competitive in the global market while reduction in personal income tax is a step in the right direction to boost the consumption cycle. Increasing number of years from 5 to 7 for tax holiday for startups is also a welcome step. Preempting spate of cashless transactions in the days ahead, announcement of a new payment regulatory board will help in realizing government’s dream of a Digital Economy. Also, curb on cash transactions of over 3 lakh will help in pushback of the parallel economy. P S Choudhary, Head Sales & Marketing, LML Limited: The Finance Minister has announced a prudent Budget with focus on infrastructure, employment and
CELERITY • March 2017 | 27
PERSPECTIVE digitization. While reduction in interest rates has already given an impetus to the consumption cycle, lower personal income tax for income up to Rs5 lakh will put more money in the hands of the common man. Also, airports and air connectivity in smaller towns will further boost economic activities. With measures to stimulate growth, promote the digital economy and provide relief to middle class through affordable housing, this Budget ticks all the right boxes. Sanjeev Bhatia, CEO, Zopo Mobile India and MD, Adcom: The budget 2017 is extremely positive and people friendly. Reduction in direct taxes for SMEs & low income individuals is definitely going to benefit the masses and will really impact the Indian economy in a huge way. The GST is proposed to implement on July 1st, so indirect taxes such as, excise, customs, service tax has not been touched. Manufacturing allocation is good initiative to start off. With such initiatives, India can grow on the charts of GDP. In the direction of making India a Digital nation a needful decision was made, with the focus rightly on digital India the budget also gave boost to
telecom and manufacturing sector through Digital India. Modernization is good for any nation, for a successful and powerful nation fast growth can only be reached with the help of technology. Those portions of India that are deprived from the fruits of technology will now be able to enjoy it. Amol Naikawadi, Joint Managing Director, Indus Health Plus The Union budget is encouraging and well-balanced, as it brings vast opportunities for improvement in rural healthcare. The focus should have been more on healthcare as a whole since majority of lifestyle diseases are on the rise. The initiatives introduced by the government on making healthcare affordable, available and accessible for masses is surely welcoming. Introduction of aadhar-based smartcards for senior citizen to monitor their health and the aim of eradicating Tuberculosis, shows the way ahead for healthcare sector. The transformation of health centres into Health Wellness centres is much appreciated, as the time demands that health has to be looked in wellness form. In long term perspective, promoting the
medical education in India and increasing the seats is a great move in making healthcare available for all. Samir Desai, MD, Cofco Agri India This is a good and progressive budget as it addresses the roots and is in-sync with the aim of the government to build a strong economy in the long run. The absence of expected short term stimulus measure to counter demonetization shows the courage on the part of the government and provides clarity for the way forward. The key focus and increased allocation for rural development, infrastructure and farmers’ facilities such as credit, insurance, e-platforms, etc., would provide necessary impetus to the agri sector. Further, the effort to establish correlation between spot price and derivatives of underlying agri commodity by forming an expert committee is a welcome step by government as this will benefit both the farmers and traders. The boost in agri sector would have a positive impact on per capita income as agriculture is the source of livelihood for a major chunk of rural India population. This in turn would expand consumer demand and shall work favorably towards improving the growth rate of the country. Anjani Mandal, CEO and Co-founder, Fortigo Network: The continuing growth and stability in the economy as reflected by the positive macroeconomic indicators will get a further boost with the infusion of capital in infrastructure, boosting MSMEs post-tax profits (owing to the reduced Income Tax) as well as increased liquidity with the consumer for his spends (owing to reduced Income Tax). As to the road transportation industry, with the growth in economy, any facet of infrastructure development or investment by businesses or an increase in consumption, boosts logistics sector growth. There is no negative element for the logistics segment and several positives to directly and indirectly boost the logistics sector through, (a) higher outlay on Highways; (b) support for MSMEs through a reduced income tax and (c) boosting money in hands of individuals through lower income tax will boost consumption. In addition to the above support to the overall logistics segment, three factors are positive news for a start-up: (a) getting a wider set of businesses to move into the organized sector; (b) the continued focus on encouraging digital payments and support to infrastructure for build-up of digital payments and (c) GST to be implemented in the current year.
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INTERVIEW
PIE GROWING THE
How has been the journey of Anmol Biscuits so far? What does it take to establish yourself among the giants?
In the year 1994 a biscuit manufacturing unit was established at Dankuni, West Bengal. In the next 4 years, a second unit was added to the same plant and by the year 2008, it became a wellknown brand name in many states and citiesAnmol Biscuits, a legacy of Choudhary and Brothers. The proud legacy holder, Gobind Ram Chaudhary, MD, Anmol Bakers Pvt. Ltd, during this interaction offered many facets that went into making Anmol Bakers one of the fastest growing companies in biscuits and confectionary business in India. “Our core emphasis is on healthy, fresh & delicious food,” as he firmly says will take the company to newer strides as they gear up to expand their presence pan-India and subsequently taking on the globe. Excerpts…
The journey of Anmol Group began three decades ago, with a sheer grit and determination of Mr. Choudhary to produce quality biscuits at affordable prices. It is a task to establish ourselves amongst the giants and as a part of the same we are aiming high to become a national player now. We are already working on the same strategy; we had started with a single plant in Kolkata, and now looking forward to stupendous expansion with infrastructure and production facilities growing multifold with factories in West Bengal, Delhi, Bihar and Orissa. Starting with two varieties, today we manufacture over 50 variants of biscuits, cakes and cookies. Today Anmol is a fast-growing company. With big dreams and aspirations, Anmol is continuously and seemingly changing the market, changing products, changing processes, changing the consumer's expectations and changing mindsets at an amazingly rapid pace
What is the USP of your business that set you apart from your competitors?
Anmol Bakers enjoys three decades of relationship with its customers. with more than 34 variety of biscuits, Anmol Bakers provides its customers a wide range of biscuits. To produce quality biscuits at affordable prices across all sections of consumers is the biggest USP of our product that has taken Anmol to new heights.
As you are mainly centred in Eastern part of the country and now have started expanding in North & West as well. What were the logistical challenges that you faced and how
did you overcome them?
We aim to have a strong presence panIndia. With this vision, we are expanding our reach to niche northern markets also. We started our journey in Northern FMCG market in 2001. At that time, our distribution network was limited. It took
us three years to make our presence felt. Since inception, Anmol Bakers has seen several ups and downs. Before setting up a plant in Greater Noida, Uttar Pradesh, I was running a bakery business in Kolkata with my father and three brothers. Shifting to the north, however, proved to be quite
From creating new flavors and tastes to getting the state-of-the-art machines to improve quality production, Anmol Bakers proved to be not just a factory where biscuits are made but a place where food connects straight to your heart. CELERITY • March 2017 | 29
INTERVIEW challenging as the company faced many challenges. First, the business skills that I had learnt in Kolkata were of no help due to the different nature of the two markets. For instance, the attrition rates are much higher in the north. Also, the company's demand for staff was three times more than in Kolkata. Then, the consumption patterns of biscuits were different and so the competencies required for sales, marketing and distribution functions varied between the two regions. Furthermore, both markets are different in terms of product preferences. In the east, the per capita annual consumption of biscuits was almost double that of the north's five kg. So, for the first four years, Anmol Bakers grew at around 25% but in the following years, the growth began to taper off. As a result, the company turned its focus on reducing production costs to protect profit margins. Initially, we hired consultants to fix the problems that existed in the sourcing and inventory management. But it didn't work. Later, we only started looking for solutions. We shifted to a lean manufacturing process. Anmol changed its raw material sourcing methods. Take the sourcing of milk powder, for instance. About five years ago, the company would order 10 tonnes of milk powder every fortnight. This was changed to five tonnes a week, thereby reducing the working capital requirement and also the overall interest cost that Anmol would bear on bank loans. Historically, we used to follow this practice of placing large orders assuming that buying in bulk was cost effective for us. But when I analysed, I could see no benefit in it. The next target was to rework inventory management systems for finished products. Earlier, the company's sales team would make predictions about demand and production planning was done accordingly. This resulted in retailers getting products with a time lag. Today, Anmol maintains a minimum stock level at all its warehouses. We used to store finished products worth about Rs8 crore at our warehouses. This has been brought down to Rs5 crore now. We were able to free up capital that was stuck in our warehouses. In addition, the retailers get fresh products and the amount of wastage has been reduced. We cannot predict sales. None of our products at the retailers' level would be older than two months as against four months before.
How complex is the food supply chain and how are you managing it efficiently? Our food supply chain is very strong. We use fresh material to make our biscuits. You will not find our material stale. Our
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Our food supply chain is very strong. We use fresh material to make our biscuits. You will not find our material stale. Our core emphasis is on healthy, fresh and delicious food. core emphasis is on healthy, fresh and delicious food.
According to you, in order for a product to be successful, what are the ingredients that need to be taken care of? The company is focussing on the freshness quotient of its biscuits. We have increased the cycle time of our stock to 80, which means the biscuits the retailer have are made by us at the most 2-3 days ago. The advantage is that, taste of the biscuits is appealing to the customers and there will be fewer rejections from the marketplace.
You cater to the international markets as well. How different are those territories and what supply chain models have you adopted for distribution in other parts of the world? Beyond geographic boundaries, Anmol exports a wide and exclusive range of Biscuits to Asia, Africa, Europe, Middle East and Caribbean Islands. Anmol is certified with FSSAI, GMP, HALAL, APEDA and Food Safety Management System - ISO 22000: 2005. We are also a Government Recognized Star Export House.
You have stepped into your father’s
business legacy. How difficult it has been to carry on the same mettle?
There have been challenges in carrying forward the legacy. During my father’s time, technology was not that much advanced but the growth was actually very high. At this moment when technology is there, our growth is slow. With a loyal customer base, distribution network and channel partners, we are trying our best to keep increasing our market share. There was a time, when we realized our sales are not matching up to our targets and then the company arrived at the decision to mend our marketing strategies or else the company would be in jeopardy. Our marketing team started working on making our presence on the social media platforms more visible and vibrant. We created a corporate video that reached millions of people and is a testimony of our world-class quality and hygiene. We worked on content designing and developing. The company had its makeover done and we are back in the safe zone, thankfully!
What are the crucial learnings and experiences you have gained throughout this journey? I have learned a lot from everyone whether competitors or digital world. Earlier we did not concentrate on the media but now we are spending our money on advertising and brand building. We are keeping a close tab on the changes happening in the food industry so that we can align ourselves
INTERVIEW accordingly and gear for the growth times ahead.
Highlight some of the packaging innovations incorporated in your business? Every step of the manufacturing process is quality controlled and cautiously taken care of. Best care is given to procurement of best quality ingredients like flour, sugar, refined vegetable oil/palmoline oil, slimmed milk/powered milk, butter and flavouring agents. Each Process is automated to ensure least human intervention and highest standards of hygiene. Also, there is a complete control and monitoring on the raw material preparation, dough mixing and sheeting, cutting moulting, baking & cooling and packing process. Logistics and handling is given special care because that’s one of the crucial elements of the entire value chain.
With the government’s recent policy announcements, how do you perceive Indian economy as far as business conducive environ is concerned? Biscuit Industry faces a few challenges such as government regulations, demand supply chain, rising prices of flour maida, the major ingredient, and other raw materials such as oil, fat and eggs, and the price sensitivity of the market. The biscuit category has seen rapid growth in the last few years. Along with this, the implementation of packaging standardization norms appears to be the big challenge.
How has demonetization impacted you and what are the measures to
UP, CLOSE & PERSONAL YOUR STRENGTHS: My knowledge and a passion to keep on learning YOUR HOBBIES: Reading and updating myself YOUR IDEOLOGY: I believe in honesty & discipline and giving enough space to all my employees
opt to weed out the challenges?
Demonetisation has impacted almost all the sectors; we also suffered due to that. Our production is 25-30 per cent less as consumers are spending less on bakery item purchases. We had to resort to cut production at that time.
feature of Union Budget to stimulate investment and boost economy. However, it has failed to abide by the government’s earlier fiscal deficit target. Now the Fiscal Deficit target for next three years has been pegged at 3.2%. He further stated that Infrastructure remains a vital sector for India’s growth story. Total investment of Rs3,96,135 crore for infrastructure in budget 2017 is a right initiative as it will reinforce the industry.
What are your expansion plans and strategies for future? We have just inaugurated our Bhubaneswar plant last month. We are trying to capture pan India. We are doing well in West Bengal and UP, so we want to give our best to whole world. With a firm hold in the market, today Anmol is heading
Today, Anmol maintains a minimum stock level at all its warehouses.We used to store finished products worth about Rs8 crore at our warehouses. This has been brought down to Rs5 crore now. We were able to free up capital that was stuck in our warehouses. In addition, the retailers get fresh products and the amount of wastage has been reduced. How has the recent Union Budget 2017-18 fared according to you?
Finance Minister, Arun Jaitley has announced the 6% increase in FDI flow; forex reserves at $361 billion. On allowing foreign investors to invest in India will be very positive for India’s Capital market as it will open up a big opportunity for the global citizens to participate in emerging markets and take advantage of the India growth story. Rebate of 10% to 5% on income tax would give a rise to personal disposable income, this is an attractive
towards becoming one of the top-most biscuits and confectionary producers of India. I feel your present shows you the direction towards your future. We are working every single day to improve our production, technology and popularity in the market, the amount of hard work our entire team is doing cannot be explained in words – from regular training to technological upgradation, from quality check to daily R&D and continuous innovation, well, you name it.
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GAMECHANGER
GOLDEN
REVOLUTION IN F&V SUPPLY CHAIN
In India, only 10,000-12,000 refrigerated trucks are on-road, out of which hardly 1000-2000 are engaged in transporting cold store/imported fruits & vegetable and zero in transportation of fresh Fruits & Vegetables (F&V). There is a significant opportunity to transform the horticulture sector with deployment of unique cold chain logistics model. Sensing the pulse of the market, Rivigo has developed a logistics model to create value in the F&V segment.
O
ver the years, horticulture has emerged as one of the potential agricultural enterprise in accelerating the growth of economy. Its role in the country's nutritional security, poverty alleviation and employment generation programs is becoming increasingly important. Fruits and vegetables account for nearly 90% of the total horticulture production in the country. India is now the second largest producer of fruits and vegetables in the world and is the leader in several horticultural crops, namely mango, banana, papaya, cashew nut, areca nut, potato, and okra. At present, horticulture is contributing 24.5% of GDP from 8% land area. On account of significant production increases in horticultural crops across the country, a Golden Revolution is in the offing and India has emerged as a leading player in the global scenario. Honourable Prime Minister Shri Narendra Modi has a dream – doubling up of farm income by 2021. Innovation in post-harvest management and distinctly agile cold chain transportation would contribute significantly towards fulfillment of that dream. Today, owing to the inefficiencies in supply chain network, around 18-20% of horticultural produce gets wasted. Inefficient supply chain creates three types of challenges: z Physical wastage – In products like green chillies and tomatoes, 15-20% of the product gets wastage at various stages – at source as well as at destination mandi. z Value wastage – When farmers do not get the desired price for their produce either due to lack of access to potential markets or due to price
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volatility. e.g. in HP, 2000T of cherries get produced, which all get dumped in Azadpur Mandi at sub-optimal prices. The actual demand of Delhi NCR would be 1500T. Growers don’t take the risk of sending the produce to distant markets like Chennai, Bengaluru due to high transit time. z Working capital blockage – When growers/traders have to access distant markets, e,g, Guwahati to Chennai or Himachal to Cochin, 12-15 days of working capital gets blocked, due to the transit time. In a season of 2-3 months, therefore a farmer/trader can rotate money only 4-6 times. That becomes a deterrent for them to send products to distant markets. In India, only 10,000-12,000 refrigerated trucks are on-road, out of which hardly 1000-2000 are engaged in transporting cold store/imported fruits & vegetable and zero in transportation of fresh F&V. In comparison, roughly 5,00,000 trucks are engaged in transporting perishable long distance. There is significant opportunity to transform the horticulture sector with deployment of unique cold chain logistics model. Rivigo has developed just the right logistics model to create value in the F&V segment. Rivigo has got 2 unique features in its operating model to serve the F&V segment: Unique ‘Driver Relay Model’ that
reduces transit time by ~50%: Rivigo has successfully developed and deployed at scale the unique ‘Driver Relay Model’ for long distance transportation. In this model, drivers change after every 250300km. The drivers change over at our pit-stops and then return to original point by driving back the return cargo, thereby returning home the same day. This has fundamentally altered the driver lifestyle. The benefit of this model is the dramatic improvement in transit time. Vehicles travel 22-23 hours a day due to driver changeover, therefore 800-1000km of travel gets covered per day, 3x that of typical trucks. Delhi to Bengaluru is done in 2.5 days, Delhi-Guwahati in 2.5 days… etc. For perishable transportation, this brings in a unique capability to connect growers to markets that they were not accessing earlier. Temperature integrity system: In India, there is a lack of trust in temperature integrity of the refrigerated transportation. There are many instances of drivers switching off AC in transit to save fuel cost. In the Rivigo model, since driver changes over every 250300km, the risk gets eliminated. In addition, a cutting-edge technology has been deployed to deliver best-in-class temperature integrity. There are 2 parts to it – a. Real-time remote temperature monitoring: All vehicles have GPRS
In refrigerated transportation, Rivigo’s big focus from the beginning has been fresh fruits & vegetable segment. Every month, 3000-4000 MT of fruits & vegetables is transported in refrigerated vehicles, thereby enabling farmers to get higher yield and reduced wastage.
GAMECHANGER based temperature monitoring system. The proprietary technology sends automated alerts in case of any temperature violation which the 24x7 temperature monitoring team acts upon and co-ordinates with the field team to take immediate action. b. Remote temperature management system: This is an industry first solution called ‘Remote Temperature Management’. Here temperature of the running vehicles can be set/ altered remotely from a mobile App. This provides 2 unique advantages: Î De-risks temperature abuse by drivers completely: A qualified central team would set the temperature remotely of all vehicles. Î Enables graded temperature setting protocol: A unique challenge with F&V handling through reefers is ‘Chill injury’ that happens at the destination point when the products from AC environment (13 degree) are suddenly exposed to ambient temperature. Similarly, water-condensation takes place on the produce (e.g. in tomato, apples, etc.). This is perceived to be of poor quality. The remote temperature management system would eliminate this problem altogether. This system enables changing the temperature of the running vehicle remotely and bring it near ambient 6-10 hours before the destination point, thereby avoiding the risk of chill injury.
Success stories
In refrigerated transportation, Rivigo’s big focus from the beginning has been fresh fruits & vegetable segment. Every month, they transport 3000-4000 MT of fruits & vegetables in refrigerated vehicles, thereby enabling farmers to get higher yield and reduced wastage. Specific example of fresh F&V handling done are: • Cucumber, green chillies and jack fruits from Guwahati to Delhi: Rivigo is connected with the growers in the Barpeta and Kharupetia area. Earlier they used to sell their excess produce at throw away prices. They got the growers connected to the traders in Azadpur mandi and enabled these fresh produce reach in excellent quality. The biggest success came when growers decided to tap distant south markets like Chennai and Bengaluru. Rivigo demonstrated to the farmers that they can reach these places from Guwahati in 3 days’ time, same time in which they used to reach Delhi. They moved more than 500T to these markets and benefited from the price arbitrage opportunity even after factoring in the transportation cost. The farmers saw the benefit of moving
through refrigerated transport and are extensively using the service. • Green chillies from Azadpur Mandi to Vapi and Vashi Mandi: Rivigo transported ~500T of green chillies in the period of June to August through their reefer vehicles and covered the distance of Delhi to Vapi in 23 hours. By transporting in reefers, the customers reduced wastage by 20-30%. Earlier they used to do panic selling at lower price when the full produce was not sold the same day. With Rivigo, they could take the risk and keep in reefers till the next day, thereby getting higher yield. • Fresh apple from Himachal (Theog, Narkanda, Solan) to pan-India: More than 1000 MT of fresh apple were moved this year through Rivigo reefers. It was a first-time experience for the industry. Typically, fresh apple is moved through open trucks whereas cold store apples are moved through
Innovation at every step
Through its unique model, Rivigo has demonstrated rapid adoption of reefer transportation by the perishable segment. • Business model is focused on improving logistics: The entire effort is to keep making cold chain logistics more agile, reliable and accessible for improved adoption. • Rivigo has developed temperature protocol for more than 30 products: Proprietary temperature guideline for more than 30 commodities have been developed considering the uniqueness of Indian condition (breakage of cold chain at destination).
reefers. Rivigo demonstrated the quality advantage of moving through reefers. Customers at the receiving markets found the product to be superior in terms of crunchiness and appearance. The growers were also happy that this helped them reduce the labour cost at loading (effort of tarpaulin tying, etc., goes away). • Pointed gourd from Kolkata (Bongaon, Gopalpur) to pan-India: Rivigo moved 250 MT of this commodity last year to cities like Bengaluru and Mumbai. Pointed gourd is a commodity that is mostly produced in Kolkata only. They’ve found it difficult to access distant markets like Mumbai and Bengaluru owing to transit time. By transporting in refrigerated vehicles and making them reach in 50% lesser time, Rivigo could make the farmers get better yield from these markets. • Kinnow from Abohar (Punjab) to panIndia: Kinnow is a high yield variety of citrus fruit grown in Punjab. Kinnow deteriorates rapidly post-harvest and needs to be kept in cool temperature at 4-5 degree to reduce spoilage. A recently conducted survey by ISB reveals the post-harvest losses of 28% in the supply chain from orchard to retailer when the produce moves from Abohar to Bengaluru. Rivigo focused a lot in educating growers and traders to deploy their refrigerated vehicles, resulting in becoming the largest deployers of reefer vehicles in Punjab this year, transporting more than 2000T of Kinnow in the season.
CELERITY • March 2017 | 33
MANUFACTURING SUPPLY CHAIN SUMMIT - 2017
A TRAILBLAZER
Integration, digitization and customer centric approaches are the three fundamental aspects of GenX supply chain that resonated well during the recently held Manufacturing Supply Chain 2017 by KamiKaze B2B Media. Offering insights, real-life solutions to challenges and award winning success stories, the summit was successful in capturing the essence of smart supply chains. A report…
I
t was all about smart manufacturing & smart supply chain at the recently held two-day conference ‘Manufacturing Supply Chain Summit 2017, by KamiKaze B2B Media. Held between February 21 – 22, the summit witnessed a heady mix of speakers, panelists and attendees from key verticals. During the power-packed two-day schedule, it was all about speed, efficiency and cost competitiveness to gain leadership position. With a strong lineage of speakers such as Antony Prashant, Director – Strategy & Operations, Deloitte Touche Tohmatsu India LLP; N P Tripathi, Sr. Director – Global Operations Excellence & Regional Manufacturing Asia, SC Johnson; Deepak Sharma, VP – Supply Chain, Indus Towers Ltd., Somnath Chatterjee, Head – Procurement & Logistics, ITC Ltd., etc., it was just not about gyan, the deep dives that involved focussed interactive sessions kept the audience engaged and aided in enhancing their decision making abilities at workplace.
Key takeaways
In his opening remark and as a moderator to the panel discussion, ‘the future of smart manufacturing’ Prashant initiated the conference on a very intriguing note. He highlighted 4Vs – velocity, volume, visibility and variability that drive supply chain efficiency in any company. Throughout the conference, the agenda of digitization and smart supply chain took the centerstage. During a panel discussion on supply chain in the era of disruption, Vishal Dhawan, VP ASEAN & India, JDA Software Pvt. Ltd., highlighted, "Disruption is the New normal and technology is a catalyst that is fueling this disruption. Companies that are ignoring the waves of disruption face the
34 | CELERITY • March 2017
danger of being non-existent whilst those who see this as an opportunity to adapt and innovate are not only staying relevant but also thriving to ride the wave with new business models and market segments. In all this chaos, supply chain is starting to emerge as a strong strategic weapon to help customers differentiate, become more customer centric, drive better operational efficiencies and be agile to face the disruption." SMACTRY – Smart Factory – another interesting term that was coined by the experts during a panel discussion. The second day of the conference was loaded with industry best practices and success stories shared by globally leading companies. Session on ‘Integrating digital supply chain enterprise’ highlighted the crucial importance of not only enterprise wide but industry wide integration to be closer to consumers and deliver what they want just-in-time.
The awards night
Day one of the conference was followed by an awards ceremony. Drum Café created excitement through their interactive performance. Audience were provided drums and they also drummed in perfect tandem with the performers. Many companies walked away with awards in various categories. The high-octane night ended with cocktails and dinner.
Inspiring success stories
Great teams learn to avoid problems from the painful experiences of their peers while adopting best practices and outsidethe-box thinking from those who have taken great risks to blaze new paths. On these lines, award winning success stories were presented by leading companies such as Indus Towers, Flipkart, Dr Reddy’s Laboratories and Navin Flourine. These case studies helped companies in analyzing their improvement areas and offered them approaches towards streamlining supply chain operations in their organizations. Elated with the positive response, Harish Bhatia, Project Managing Director, KamiKaze B2B Media, informed, “It has been our endeavor to bring together the thinkers and the doers together on one platform. I am delighted to see the kind of connect the 6th edition of Manufacturing Supply Chain Summit has been able to establish throughout the course of two days. The constructive acclaims have boosted our confidence to keep on organizing such events and become a growth enabler.ʺ All in all, the 6th Annual Manufacturing Supply Chain Summit infused fresh thinking on the opportunities and challenges facing manufacturing executives, as well as provided an ideal environment to discuss best practices and trends in global markets, quality, supply chains, talent issues and more.
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