GUNNING FOR THE SUN

Sun Pharma’s two-pronged strategy – of making low-priced acquisitions and its cost control mechanisms – enabled it to run effortlessly ahead when others in the sector were panting during FY09!

DILIP SHANGHVI, MD, SUN PHARMA

Once considered ‘destined for greatness’, Wockhardt and Ranbaxy are bed-ridden today when it comes to operational excellence and India’s pharma sector, once considered immune to downturns, stands battered. So is it all bad for the bigwigs in the sector? Not really. Sun Pharmaceuticals has surprised everyone with its mind-boggling performance even in a recession- hit FY09!

Here are some numbers that stand testimony – while most players saw a dip in revenues and profits, Sun Pharma grew its topline by a smashing 27.3% y-o-y to garner Rs.4,272.3 crore, and its bottomlines by another handsome 22.2% y-o-y to touch Rs.1,817.8. So what enabled this $4.5 billion giant to take control in a situation when goliaths around the world were crumbling to the ground? We asked Uday Baldota, VP – Investor Relations, Sun Pharma, about the most critical strategies that help Sun Pharma beat the beatdown and he outlined two of them, “Success at acquisitions and cost leadership…”

True. In the recent past, Sun Pharma has proven critics of M&As wrong, having acquired 14 distressed assets over the years (at low prices) and turning them into profit-churning machines. And these turnarounds, which helped Sun to diversify into new drug segments, are showing signs of being the key drivers of revenues for the pharma major today. For example, when it laid hands on Dadha Pharma (Tamil Nadu), Sun entered the oncology space. With purchase of Milmet Labs, they acquired expertise in the opthalmological space and with Valeant, gained entry into the controlled substances niche. And if its $454 million Taro deal comes through (as per Baldota, “The deal is still on, with some court decisions awaited.”), Sun will get another headstrong entry into the dermatological market.

Besides, Sun has always remained a cost leader in the generics drugs platform. As Baldota reveals, Sun’s net operating margin is a tremendous (43%), which for the other top ten pharma players, is only a modest 10%! Sun also doesn’t believe in over investing in R&D (its R&D budget allocation is only 8% of revenues, while that figure for the industry stands at a much higher 14-15%)! Further, unlike major drug majors, it faces no danger of patent expiry, as Baldota clarifies, “We don’t have any problems of patent expiries as ours is a generics company…” Yes, one can claim that cost-control has been a key reason for Sun’s ultra-superior bottomlines even as the slowdown monster was gobbling-up profitability all around. “Focus on costs has remained a top priority for us (even) in good times…” confesses Baldota. For some, the year gone by looked duller than ever, but we guess that for others, the ‘Sun’ just didn’t stop shining!

Steven Philip Warner

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Painting the skies red...

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When it comes to ‘services’ offered by an aviation company, there’s undoubtedly the ‘red bird’ that scores heavily over the rest... Steven Philip warner talks about what makes this a ‘best service’ reality...

You might have heard tales about the many ancient Indian kings being fanatic proponents of polygamy; and as noted by many historians, these ‘many beautiful ladies’ often became a status symbol for these kings – a sign of great services rendered to the monarchs!

Allow us to move away from ‘all’ matrimonial implications here, but even today, beauty and numbers go hand in hand; take Kingfisher Airlines for instance. The airline, which serves 77 destinations, with its battery of 75 aircrafts, has today become the symbol of top-class (read ‘Real First-Class’) service in the Indian aviation industry.

Type in “Kingfisher Air hostesses” in Google Search, and the first link that comes on your screen reads thus “India’s beautiful Air Hostess leads us to the Promised Land...” That is how closely, this airline associates glamour with service. [And its brand ambassador Deepika Padukone is a living example.] But is it just their charm that helped this airline to make it to the top of the ‘Best Services’ list in the ‘Aviation’ category? Certainly not. 4Ps B&M caught up with Sunaina Paul [name changed on request], who has seen there, done that, when it comes to living to deliver the top ‘Kingfisher service’ promises, made by the ‘king of good times.’ And what we learnt was actually surprising... “For us, ‘safety’ is more important than ‘service’... and even in the final exam [which we have to clear to become a Kingfisher hostess], about 80% weightage is given to safety,” says Sunaina. Moreover, while on one hand, ‘safety aptitude and physical’ tests are conducted externally [by IATA], on the flipside, all tests related to ‘service learnings’ are conducted internally; therefore it is but natural that more importance is attached to safety standards.

Today, Kingfisher prides itself for being a totally service-oriented airline, and has various cabin classes on-flight. On its domestic flights, it has three categories, Kingfisher First, Kingfisher Class and Kingfisher Red. The Kingfisher First category seats are nothing less than a treat, with 48-inch thick soft seats and a comforting 125 degree seat recline. Laptop and mobile phone chargers, steam ironing service and Bose noise cancellation headphones were phenomena unknown in the domestic aviation arena... until of course, Kingfisher Airlines was born 4 years back! Doubling on this, Sunaina proudly recalls, “Kingfisher was the first domestic airline to have an In-flight Entertainment system on every seat, including economy class...” Indeed, there is no dearth of service when it comes to delighting the consumer aboard a Kingfisher Airline. Large DVD screens, latest movies, 16 live TV channels and 10 channels of Kingfisher Radio are what makes for the complete audio-visual package.


So they provide best service, but do the consumers complain still? To this, Sunaina avers, “Well, most of the complaints that we receive are for food types... whereby a non-veg customer has to be handed over a veg platter. And though the catering department is to be blamed for this, we speak out the sorries...” Very frequently, pre flight, the In-flight Manager (IFM, who is the senior-most hostess) ensures that the other hostesses are up to it when it comes to revising their service manuals, and if there arises a service issue on-board, the IFM discusses the problem(s) with the hostess(es). “We are taught to be polite and stern at the same time with passengers,” states Sunaina.

Of course, these service agents have no time for personal life, and the only thing that Sunaina remembers after she’s back from a flight schedule for the day is “crash”! “Also, we are given rosters for 15 days at a time, therefore any plans beyond that will call for a casual leave,” reveals Sunaina. Such is the life behind that charming mask from whom you expect alertness and the very best of service, every time you step onto a Kingfisher flight. No fixed work timings (you could have a reporting deadline at 4 am and you might land back at 12 am the next morning), close to zero social life, and absolutely nil vision beyond 15 days... and yet, they manage to give you the ‘best service’ amongst all other domestic airlines in the country as the survey proves...

Before we exited, we noticed that Sunaina’s charming smile hadn’t faded by even one degree, despite having invested more than 3 hours in incessant expression of her life as an air hostess in a most vivid manner. Perhaps that’s why Kingfisher Airlines is numero uno when it comes to service, for its folks never forget to serve even goodbyes with heartfelt smiles!

Steven Philip

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Mentos zindagi: the way of life

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Ever since its launch in 1999, Mentos campaign has been clutter breaking and hard hitting. Being a youthful and metro-centric brand, the campaign “Aam Zindagi, Mentos Zindagi” induced a tinge of humour and wackiness and inculcated a“Think Different” attitude amongst the youth. Says Namita Gupta, Group Product Manager, PVMI,on the online inititiatives:Mentos Helpline & Mentos Friendsline (which focussed on Mentos Zindagi proposition), “These initiatives were calculated steps toward tapping online audience and building a loyal brand community. The response to both these initiatives has been fantastic & repeat visits to the site have been higher than 50%.”

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Brand: Chiclets

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Chew, err, hum the chewing gum!!
When Cadbury hiked the prices of Chiclets from l0 paise to 25 paise, it anticipated a decline of 50% in sales volume. Unfortunately, the brand sales dipped by 90%. After such a shocker, the company came out with a smashing commercial, which succesfully steered the company through choppy waters. Says an FMCG analyst, “The campaign was brilliant as it turned around the notion of chewing gum as a product...” The commercial, which showed two boys wooing two girls, bagged the MTV ad of the decade award. Its jingle is still very popular.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Sutanu Guru wonders why ‘financial’ years start in April and end in March – not counting for the Ides of March followed by April Fool’s Day...

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Memories have a habit of fading into indulgent nostalgia. And in this age of villains and betrayals, charismatic heroes are so hard to find that nostalgia becomes a handy substitute for a reality check. Detroit feels nostalgic about Lee Iacocca. Microsoft feels nostalgic about Bill Gates as a nerd. Republicans feel nostalgic about Ronald Reagan. Congress workers feel nostalgic about the glory days of the dynasty in India. GE feels nostalgic about Jack Welch. Wall Street feels nostalgic about unbridled greed. And this April, many Americans feel nostalgic about John F. Kennedy (with due apologies to Barack Obama)

And yet, when it comes to fool proof strategies for April, John F. Kennedy will arguably go down as one of the worst examples in history. His Camelot administration was responsible for the notorious Bay of Pigs invasion of Cuba in April, 1961 which ended in both military and propaganda disaster. Fidel Castro ruled Cuba for more than one generation after Kennedy was assassinated and Americans are still trying to count the costs of that April strategy of combating communism with a steel fist. The Congress President Sonia Gandhi too will always remember April as a month she should rather shrug away in embarrassment. For, it was in April, 1999 that her trusted strategic advisors prompted Sonia to stand in front of Rashtrapati Bhavan and show a sign of victory. That ‘strategic’ victory turned out to be chimera. It was an alliance led by Atal Bihari Vajpayee that swept the marketing sweepstakes and won decisive market share in the 1999 General Elections. Of course, unlike Americans with Cuba, Sonia Gandhi didn’t have to wait for ages for redemption and recovery.

In the world of business and marketing, such ‘foolish’ foolproof strategies probably do not change the course of history. But then, they at least end up making history involved in such foolproof strategies. Just think about it for one moment. Have you seen a single new ad on TV, print, outdoor or web of Pepsi. Sure, there was that one about ‘Youngistan’. But honestly, it is already more than half of April, 2009 and have you seen any new Pepsi slogan? Don’t you wonder if it is a deliberate strategy of the soft drink giant? And what could that foolproof strategy be when Coke is going to town with high decibel pitches? read more..

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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