Business Standard, 19-20/2/2011

Out of the woods: Has Analjit Singh, the perennial start-up man, finally found his groove?

Analjit Singh says he was very excited when a home ministry official called to say that the government had decided to give him a Padma Bhushan, the third-highest civilian award in the country. The response of friends and associates over the next few days overwhelmed him too. “I was surprised to find that so many people were aware of my social and public work,” he says.

But there’s more that sets his pulse racing these days. Max India along with its subsidiaries — Max New York Life, Max Healthcare, Max Bupa and Max Neeman — made a small profit of Rs 38 crore in the quarter ended December 31, 2010, after a long tread in the red. Max New York Life and Max Healthcare, Singh’s two expensive ventures, turned cash-positive during the quarter. Two other businesses, packaging films (a division of Max India) and clinical research (Max Neeman), have been profitable for some time. That leaves Max Bupa, the health insurer, which has just begun operations and is projected to break even only in 2014. Singh expects to close the books for 2010-11 with a profit, as against a loss of Rs 44 crore in 2009-10.

Singh, the perennial start-up man of India, seems to have finally found his groove. He turned 57 in January and says that among his last two New Year resolutions, one is to stay fit and the other, give more time to his family.

* * *

Singh likes to call himself a self-made entrepreneur, though his father was Bhai Mohan Singh of Ranbaxy. Here’s why.

Upon his return from the US in 1982, Singh was put in charge of a new project to make amino-penicillic acid, raw material for the semi-synthetic penicillin that Ranbaxy made. So he set up a company called Max India — M for his father, Bhai Mohan Singh; A for his mother, Avtari Kaur; and X for everybody else.

But the project was fraught with problems: The government was unwilling to give a licence and the technology had to be imported, but there were restrictions on the foreign exchange that could be used for such a purpose. Still, Singh went ahead. The cost of the project was Rs 5 crore, of which the family contributed just Rs 65 lakh. The rest came from loans which Singh repaid over 18 years after the factory started in 1985.

It wasn’t easy. Ranbaxy, which gave Max almost 60 per cent of its business, pulled the plug in 1991, two years after the family separation, when it decided to set up its own plant for raw material. Singh had other run-ins too with his brother, Parvinder Singh, who ran Ranbaxy. To hedge his risks, Singh diversified into penicillin and formulations, and also became a distributor for Upjohn. Over the next few years, he exited all pharmaceutical ventures.

The urge for stable cash flows led him to packaging films and trading of electronic components for telecommunications. Singh’s next stop was radio paging with Motorola. But it was a service business and he had taken a hardware vendor as a partner! He then brought Hutchison Whampoa into the business. And when cellular telephony was opened up, he along with Hutch bagged the lucrative Mumbai circle. But differences emerged between them — Singh wanted to grow a national footprint, while Hutch was keen to stick to Mumbai. So, in April 1998, Singh sold 90 per cent of his stake to Hutch for Rs 549 crore. (The remaining 10 per cent was sold in tranches around 2004.) He then tied up with British Telecom but couldn’t get any licence.

With cash in his pocket, Singh began to think about life afresh. He gave himself a six-month break. McKinsey was brought in for advice. When nothing came out of long meetings, a consultant handed Singh a piece of paper and a pen, and asked him to write his obituary in 800 words — how he would like to be known. All of a sudden, Singh knew what he wanted: Make Max the most admired company in service excellence. (His idols were Naresh Goel of Jet Airways and the Oberois of East India Hotels.) The businesses Singh chose for his new innings in 2000 were life insurance and healthcare.

Detractors didn’t give him much of a chance. Except mobile telephony, Singh had always been in B2B sectors; life insurance and healthcare, on the other hand, have always been highly consumer-centred. Did he have it in him to run these businesses profitably?

* * *

Eleven years later, with profits in life insurance and healthcare within sight, Singh can afford to breathe easy. He can also call himself a rich man. Max India is worth Rs 3,500 crore on the stock market; he owns over a third of that, which puts his wealth at over Rs 1,000 crore. He owns close to 8 per cent in Vodafone Essar, which could be worth hundreds of millions of dollars. (Hutch got Ashim Ghosh and him on board to make the shareholding compliant with the rule that foreign investment cannot exceed 74 per cent in a telecommunications service provider. He stayed put once Vodafone acquired Hutch and some time back, bought Ghosh’s stake as well.) He has put Rs 50 crore in the upcoming campus of Indian School of Business at Mohali near Chandigarh.

Singh agreed to be white knight to the Oberoi family after ITC had bought close to 15 per cent in East India Hotels. The Oberois finally decided to walk to the altar with Mukesh Ambani. Singh does not want to talk about it, but the grapevine suggests that there was a mismatch between what he was prepared to invest and the control he was offered. The two were putting up a hotel together in Dehradun. That alliance too has been called off. Singh, however, continues to own 4 per cent of East India Hotels. But that didn’t set him back for long. These days he is busy planning new businesses with his children — two daughters and a son. “I am totally calm and at peace, and therefore very happy,” says Singh. “I have embraced the principle that all ups and downs are a part of life. Life is not about us — we are about life.”

* * *

The urbane demeanour apart, Singh has done some serious course-corrections in the healthcare and life insurance business — which have caused some pain as well — to turn them profitable. After the Insurance Regulatory & Development Authority clamped down on the margins on unit-linked insurance products, Max New York Life turned towards traditional products which offer better margins. Such products now make up 85 per cent of the company’s portfolio. “We went into the trenches for five months and totally revamped our strategy,” Singh says. Cost rationalisation, including manpower, was done across businesses.

In Max Healthcare, categories like oncology and minimal access surgery were added to the portfolio. Business also came from the addition of a full range of tertiary care. From here, Singh wants to drive scale. (Warburg Pincus and International Finance Corporation have bought close to 30 per cent in Max Healthcare.) On the anvil are four new hospitals in Dehradun, Bhatinda, Mohali and New Delhi which will double Max Healthcare’s capacity to 2,000 beds. Apart from the usual cost advantages, scale, says Singh, also brings in accountability.

Instead of a national footprint, Max Healthcare has consolidated in and around Delhi and is only now spreading into North India. “Our patient-base is 1.1-million strong, we get 250,000 footfalls every month, and we have 1,200 doctors,” says Max India director (corporate development) Mohit Talwar. “We are among the largest hospital chains in Delhi and our average occupancy is around 70 per cent.” Still, Singh is aware that profit margins in healthcare are low, though the sector is immune from business cycles. “If you want to make super profits, you shouldn’t be in healthcare,” he says.

But have his companies delivered on service excellence? “Amongst private players, we have the best record in medical outcome, average length of stay, occupancy and infection,” says Singh of Max Healthcare. More steps are afoot. Habib Rehman, the former ITC Hotels honcho, has been appointed to the Max Healthcare board to prime the hospitality piece of the jigsaw.

At the group level, Singh has brought in Prashant Hoskote from Mashreq Bank in Dubai as vice-president (quality and service excellence) of Max India. Till now all his companies measured quality parameters like customer satisfaction and loyalty, complaint management and processes with their own yardsticks. They will now be scored on the uniform Max Performance Excellence Model. Every CEO will be given target scores regularly. “What this has done is escalated quality into every CEO’s KRAs (key result areas),” says Hoskote. “Every board in its meeting gives at least an hour to quality.”

* * *

With business growing in size, Singh has taken steps to improve governance. Nine independent directors have been appointed on the four boards: Max India, Max New York Life, Max Healthcare and Max Bupa. “I didn’t know seven or eight of them,” says Singh. According to him, executive-search specialist Egon Zehnder helped him zero in on the attributes required for the directors and then helped him find such people.

Singh, of course, is the chairman of Max India. To maintain his independence, he does not sit on the board to protect the interests of the family. Instead, his family has appointed Ashwini Windlass, one-time head of Max India, to represent its interests — just like Warburg Pincus and Goldman Sachs have appointed directors to safeguard their interests. If the family has an issue, it is raised by Windlass and it may be answered by Singh!

The staff that helps the family with its new ventures, paperwork, treasury operations, tax returns, and so on is not drawn from group companies — they are on the family’s payroll. Their space inside the Max India office in south Delhi has been taken on rent by the family from the company. Singh holds three structured shareholders’ meetings with his business partners, New York Life and Bupa, without the aid of company executives so that the principal shareholders speak in one voice in board meetings.

It sure has been a long journey for Singh.

http://www.business-standard.com/india/news/outthe-woods/425681/

*Though off-topic v at VRIDHI thought that it’s an useful article for all…

What causes stress?

Stress is caused by the body’s instinct to defend itself. This instinct is good in emergencies, such as getting out of the way of a speeding car. But it can cause physical symptoms if it goes on for too long, such as in response to life’s daily challenges and changes.

When this happens, it’s as though your body gets ready to jump out of the way of the car, but you’re sitting still. Your body is working overtime, with no place to put all the extra energy. This can make you feel anxious, afraid, worried and uptight.

What changes may be stressful?

Any sort of change can make you feel stressed, even good change. It’s not just the change or event itself, but also how you react to it that matters. What may be stressful is different for each person. For example, one person may not feel stressed by retiring from work, while another may feel stressed.

Other things that may be stressful include being laid off from your job, your child leaving or returning home, the death of your spouse, divorce or marriage, an illness, an injury, a job promotion, money problems, moving, or having a baby.

Can stress hurt my health?

Stress can cause health problems or make problems worse if you don’t learn ways to deal with it. Talk to your family doctor if you think some of your symptoms are due to stress. It’s important to make sure that your symptoms aren’t caused by other health problems.

Possible signs of stress

· Anxiety

· Back pain

· Constipation or diarrhoea

· Depression

· Fatigue

· Headaches

· High blood pressure

· Insomnia

· Problems with relationships

· Shortness of breath

· Stiff neck

· Upset stomach

· Weight gain or loss

What can i do to reduce my stress?

The first step is to learn to recognize when you’re feeling stressed. Early warning signs of stress include tension in your shoulders and neck, or clenching your hands into fists.

The next step is to choose a way to deal with your stress. One way is to avoid the event or thing that leads to your stress–but often this is not possible. A second way is to change how you react to stress. This is often the best way.

Tips for dealing with stress

· Don’t worry about things you can’t control, like the weather.

· Prepare to the best of your ability for events you know may be stressful, like a job interview.

· Try to look at change as a positive challenge, not a threat.

· Work to resolve conflicts with other people.

· Ask for help from friends, family or professionals.

· Set realistic goals at home and at work.

· Exercise on a regular basis.

· Eat well-balanced meals and get enough sleep. 

· Meditate.

· Get away from your daily stresses with group sports, social events and hobbies.

Why is exercise useful?

Exercise is a good way to deal with stress because it is a healthy way to relieve your pent-up energy and tension. It also helps you get in better shape, which makes you feel better overall. Meditation is a form of guided thought. It can take many forms. You may do it with exercise that uses the same motions over and over, like walking or swimming. You may meditate by practicing relaxation training, by stretching or by breathing deeply.

Relaxation training is easy. Start with one muscle. Hold it tight for a few seconds then relax the muscle. Do this with each of your muscles.

Stretching can also help relieve tension. Roll your head in a gentle circle. Reach toward the ceiling and bend side to side slowly. Roll your shoulders.

Deep, relaxed breathing (see the box to the right) by itself may help relieve stress. This helps you get plenty of oxygen.

If you want more help treating stress symptoms, ask your family doctor for advice.

The opinion poll, conducted on the eve of the Congess-led United Progressive Alliance (UPA) government’s first anniversary in its second term, rated Orissa chief minister Naveen Patnaik as the second best performer, with only 1% fewer votes than Modi

Mint 20/5/10

Gujarat chief minister Narendra Modi has been the best performing head of a state government in the last one year, according to a survey by NDTV news channel with GfK Mode, a market and social research firm.

The opinion poll, conducted on the eve of the Congess-led United Progressive Alliance (UPA) government’s first anniversary in its second term, rated Orissa chief minister Naveen Patnaik as the second best performer, with only 1% fewer votes than Modi.

Interestingly, chief ministers belonging to the main opposition Bharatiya Janata Party (BJP) dominated the top five list of best performers with Patnaik, who belongs to the Biju Janata Dal and Assam chief minister and Congress leader Tarun Gogoi being the exceptions.

While 85% of the 34,277 respondents across the country chose Modi, a BJP leader, as the best chief minister, Patnaik got 84%. Madhya Pradesh chief minister Shivraj Chauhan and Chhattisgarh chief minister Raman Singh got 77% and 73%, respectively. Both belong to the BJP. Gogoi was the favourite of 76% of the respondents.

According to the survey, 44% of the respondents said they were worse off in the UPA’s second term, compared with its first. However, almost 70% were satisfied with Manmohan Singh’s performance as Prime Minister. A majority of 55% of the respondents were in favour of Congress general secretary Rahul Gandhi becoming the next prime minister. The poll suggests that Congress chief Sonia Gandhi is more powerful than Singh—63% of the respondents thought so.

Home minister P. Chidambaram, who has been under attack for his handling of internal security in the wake of stepped-up Maoist attacks, is rated as a high performer with a score of 61%. Finance minister Pranab Mukherjee’s performance was applauded by 59% of the respondents. However, 62% said they had been affected by inflation measured at 9.59% in April.

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel’s parent) are breathing easy you can’t be farther from truth.

Nokia confessed that they all but missed the smartphone bus. They admit that Apple’s Iphone and Google’s Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow’s personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question – "who is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won’t compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?"

The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today’s competitor. Today’s competitor is obvious. Tomorrow’s is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no.

Remember, if there is one place where Newton’s law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC’s price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film’s competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment) . Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don’t remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast …or…. be breakfast"! That sums it up rather neatly.

—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management Bangalore. He is an M.Tech from Indian Institute of Technology, Madras and a post graduate in management from IIM, Bangalore.

Nine half-literates are produced by our colleges, by Nasscom’s numbers, for every graduate of passable quality. What is Nasscom’s solution to this?

Mint 31/10/09

Can India’s high growth continue? No. Last year India produced goods and services worth $1.2 trillion. This is around Rs50,000 per Indian. Of this, 54% came from services, 29% from industry and 17% from agriculture. Services include trade, transportation, hospitality, mobile telephony, and software and outsourcing. Industry means things such as manufacturing, mining and energy.

Of every 100 Indians, 60 depend on agriculture. The Indian farmer is unproductive. We are self-sufficient in agriculture, but what this means is that 60% of the population feeds 100%. So each farmer grows food for himself and less than one other person. America is also self-sufficient, but farming families are only 1.3% of population. To sustain growth, half a billion Indians will need to do something other than agriculture. But what?

China dominates industry, and India is a star in services.

Seventy per cent of India’s growth comes from services. Ten years ago, Wipro’s turnover was $150 million. Today it is $5 billion, TCS is $6 billion and Infosys is $4.5 billion. Software and outsourcing is only 7% of India’s GDP, but contributes 2% of overall growth. Soon this will become 3%. The IT-BPO sector is great: not polluting, not much bribing needed, and, because it’s urban, each job creates three indirect jobs.

One strategy to sustain 8% growth is to make the sector big enough, fast enough so it cancels out the unproductive parts of our economy.

But that isn’t going to happen.

Wipro employs 95,000, Infosys 105,000 and TCS 143,000. Of the Fortune 500, only Wal-Mart in America adds more people annually than either Infosys or TCS.

Last year Infosys hired 28,231 people, including 18,000 graduates paid Rs3 lakh a year. This year they will hire 20,000 at Rs3.25 lakh. Infosys is hiring though there isn’t enough business. We know this because 30,000 people at Infosys are “benched”. So why are they still hiring? And why raise salaries? Because they cannot find competent people. Infosys spends twice as much as its American competitors on training: 4% of revenue.

Nasscom says software firms reject 90% of college graduates and 75% of engineers who apply for jobs because they are not good enough to be trained. This year Infosys increased its training of employees to 29 weeks. That’s seven months of training. Why do they need so much training? And why is the quality of applicants so poor? Because the educated Indian is only half-literate.

Nine half-literates are produced by our colleges, by Nasscom’s numbers, for every graduate of passable quality. What is Nasscom’s solution to this? It wants government to boost college enrolment from 10% of those in secondary school, to 25%. Nasscom knows this will only increase the number of job applicants, not the quality, but there’s no other solution.

India produces 3 million graduates, but Nasscom says next year will see a shortage of 500,000 graduates, because incompetents will swamp the rest.

We must remember that passable quality in most call centres isn’t a high standard. Only common sense and elementary language skills are needed, just like in journalism, another area where the problem of quality is visible.

India has more English news channels than America and England. As demand for journalists has grown, supply has turned poor because in India quality thins out quickly. NDTV started with a high proportion of people who attended expensive colonial institutions, such as Sanawar’s Lawrence School, in the studio. But its correspondents—those who report from the field—are half-literate, though they work in English.

Indians survive in English because of our reliance on stock phrase and cliché. If you were to read the transcript of an NDTV or CNN-IBN programme and edit out stock phrase and cliché, little information of value would remain. This is remarkable because the journalist’s trade is information.

What explains this reliance on tired language? Two things: The first is that none of us really has a feel for English because it’s foreign. Most Indians educated in English cannot write a paragraph without error.

Second, this inability to present information comes from an inability to process it sequentially. This is a flaw of primary education and no media school or style guide can correct it.

English newspapers have the same problem. Their solution is segregation: The Anglicized upper-class mans the desk, reshaping the materiel that the half-literates bring in. A similar, classist solution has been arrived at in television, because there’s really no other way.

It is wrong to assume that the problem here is merely aesthetics. The desk’s job includes debriefing, because the reporter returning from an assignment often does not understand what he has witnessed. The majority of Indian reporters will fail to answer in one line the question: “What’s your story?” They must be escorted back through the event so that something coherent can be drawn out.

The question is: Why are so many Indians half-literate?

Nasscom says India’s “focus should be on improving the quality of graduate and postgraduate out-turn” by “enhancing capacity…policy deregulation and nurturing clusters of research institutes”.

Wrong solution: The problem is primary education. Fixing this is not possible for decades, because quality schooling comes from institutions, not buildings, as Tagore said.

And institutions are founded on commitment.

Till 20 years ago, when no money was to be made in primary education, there were only four English schools in Surat, a city then of 1.5 million. Lourdes Convent run by Carmelites, St Xavier’s run by Franciscans, Seventh Day Adventist run by Presbyterians, and Sir JJ run by Parsis.

Hindus, 90% of the city’s population, founded none, though we are quite good at building temples.

Today, when education is decent business, there are 40 schools in Surat. But these are only buildings; those who go through them learn little.

Prosperity for a billion people will not come from making policies and letting everything else fall into place. We will learn that soon.