Deputy Editor, Kripa Mahalingam asks TR Ramachandran of Visa India, Rajiv Kaul of CMS, Seshagiri Rao of JSW Steel, Umang Vohra of Cipla and Vasanth Kumar of Max Fashion India on how they are tackling the forces of disruption in the business.
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NewsTranscript
00:00 [MUSIC PLAYING]
00:03 Well, today, every industry is going
00:14 through a phase of disruption, either technological or due
00:18 to competition from unexpected grounds.
00:21 So to get a perspective on disruption facing the industry
00:25 and how a company is really tackling it,
00:27 let me invite on stage Mr. Umang Vohra, MD and Global CEO,
00:32 CIPLA; Mr. Rajiv Kaul, Executive Vice Chairman,
00:36 CEO and Whole Time Director, CMS Infosystems;
00:40 Mr. T.R. Ramachandran, Group Country Manager, India
00:44 and South Asia, Visa; Mr. Sesha Giri Rao, Joint MD and Group
00:49 CFO, JSW Steel; and Mr. Vasanth Kumar, Executive Director,
00:55 Max Fashion India.
00:57 Moderating the discussion will be Outlook Business Deputy
01:00 Editor, Kripa Mahalingam.
01:02 [MUSIC PLAYING]
01:05 Welcome, gentlemen.
01:11 Ladies and gentlemen, can we have a round of applause
01:14 for our panel?
01:15 And Kripa, over to you.
01:16 [APPLAUSE]
01:18 Anywhere's fine.
01:19 Hi.
01:24 Rajiv.
01:25 You can probably sit there.
01:26 I'm not--
01:26 [MUSIC PLAYING]
01:28 I can sit here.
01:29 [MUSIC PLAYING]
01:32 [INAUDIBLE]
01:33 [THUD]
01:34 [MUSIC PLAYING]
01:37 Good afternoon, ladies and gentlemen.
01:39 It gives me great pleasure to moderate this next session
01:42 on dealing with disruption.
01:44 Change is constant in today's world,
01:46 and disruption could come from unexpected quarters,
01:49 and more importantly, when you least expect it.
01:52 While technology is driving most of this innovative
01:54 disruptions, pricing wars and regulatory changes
01:58 can also change the landscape of any business.
02:01 To understand better how industry
02:04 is dealing with the constant change and disruption,
02:07 we've put together an eclectic panel of CEOs across sectors
02:12 to tell us more about what possible disruption they
02:14 see in their business today and what they're doing about it.
02:17 Mr. Kaur, I'm going to start with you.
02:19 You manage the largest cash management system
02:24 in the country today.
02:25 And it's possibly seeing the most--
02:28 cash is possibly seeing the biggest disruption today
02:30 in India.
02:31 So starting with demonetization, so what
02:34 do you do when overnight 75% of your business gets affected?
02:38 What were some of the learnings, and how
02:40 are you preparing for the digital transformation?
02:44 That's good enough for a book by now.
02:46 We've got 30 minutes.
02:48 I call it demon to just say one time, right?
02:50 Demon or demon.
02:51 So when it started from being just a crisis, that's all,
02:55 right, it's a national crisis.
02:57 Then we said, [NON-ENGLISH SPEECH]
03:00 We didn't realize it.
03:02 Very soon, it seemed to be something
03:03 which was going to be coming and attacking our entire business
03:06 model and what we stood for and what we did.
03:09 And therefore, it wasn't a thing which
03:11 you got any opportunity to prepare for.
03:13 You were thinking on your feet, and you're
03:15 going to manage it virtually overnight.
03:19 And for us, it was--
03:21 I think for a period of maybe three to four weeks,
03:24 it wasn't 75%.
03:24 100% of business was over.
03:26 We had no business.
03:27 And this is when we actually ramped up our business when
03:30 we heard the prime minister say, we've
03:32 got to do this as a country.
03:33 And we said, 24 by 7, we've got to go and do this.
03:35 We've got to help the country.
03:37 And then we said, there's nothing to do.
03:40 And then we kind of scattered back and figured out
03:42 how unprepared we were and how do we ramp down
03:45 our investments, our resources, and whatnot.
03:47 So I think there are many, many learnings.
03:49 But I think the top of mind for us--
03:52 number one, my learning, personal learning,
03:54 was just learn to be comfortable being uncomfortable.
03:59 You have to be very comfortable to be not comfortable.
04:05 The learning for our team, I think,
04:07 was just simply about making sure
04:10 that we are thinking of the broader picture,
04:13 not for ourselves.
04:14 What is right for the country, and therefore seeing
04:16 what we can do.
04:16 I think we did a lot of work at that time
04:18 to help consumers and our customers and whatnot.
04:21 But keeping in mind a longer term view,
04:23 what is the opportunity for us and what is a threat to us?
04:26 So I think we sort of managed to get by that time.
04:28 In a period of three to four months,
04:30 we went from 100 to zero to back to 70, 80.
04:34 What were some of the things you did?
04:36 Well, for us, what are the things we did?
04:40 So I'm sorry, I need to give a disclosure.
04:43 We are filed for a DRHP, and therefore I'm
04:45 sort of limited in a lot of ways with what I can say
04:47 and I cannot say.
04:48 But for us, it was a lot about simplifying the narrative.
04:53 The narrative was changing and very complex at that time.
04:56 And we were saying, is digital a threat?
05:01 As we think about it, what we have seen,
05:02 we've seen Visa's business at that time
05:05 maybe get threatened by Paytm.
05:09 And Paytm is getting disrupted potentially by WhatsApp.
05:13 So things are moving very fast.
05:15 What Goldsmith said in the morning,
05:17 the change you're seeing today is the least one
05:19 change you'll see in the future.
05:20 And the next day, it'll only get worse.
05:22 I think for us, it was about moving fast.
05:25 We moved very fast.
05:26 We did not get frozen.
05:28 We did not stop.
05:29 It's a simple tip which a tightrope walker has.
05:33 Come walk me on the tightrope, you don't pause.
05:35 You keep walking.
05:37 And we didn't freeze even on the eighth night.
05:40 Eighth night, we are working to figure out a strategy as to what
05:43 we're going to do.
05:43 So I think that is the most first learning.
05:46 The second learning was it's the time
05:49 to make bigger, bolder bets.
05:52 And what those bets are will not be backed up
05:55 with any data analysis or data analytics or big data
05:59 or artificial intelligence.
06:00 It will come from a very strong, intuitive sense
06:04 of what you think is going to happen, at least for us.
06:07 I think that paid big dividends for us.
06:10 Ms. Ramachandran, you are possibly
06:13 causing some of the disruption in Mr. Kaur's business.
06:16 And I want to understand the whole digital drive
06:19 that we have in the move to cashless economy.
06:23 And he talked about how Paytm is disrupting your business
06:26 to a certain extent.
06:28 So what are your possible disruptions that you see?
06:30 And how are you getting ready in terms of to take it on?
06:36 Thanks, and great to be here.
06:38 And good to see a lot of old faces in the audience.
06:41 So hi, everybody.
06:42 Firstly, I think one of our primary core objectives
06:51 is that cash needs to be disrupted.
06:53 So I'm sorry about that, Rajen.
06:55 It's nothing personal.
06:56 I don't think it's personal anymore.
06:58 It's a national mission right now.
07:00 It's not a personal thing.
07:03 But here's the deal.
07:06 I think it's inevitable if you look at the context of India
07:08 where there's only 9% of cash of personal consumption
07:13 expenditure, 1.4 trillion.
07:15 9% is digital.
07:16 But that's sort of growing at an exponential pace
07:24 post demonetization.
07:24 And to Rajiv's point, the sort of cash withdrawals
07:30 which came down have gone up, but not
07:32 to the level at which they were pre-demonetization, which
07:35 is sort of great news, I think.
07:37 Secondly, I think digital is going
07:39 to disrupt payments in a very significant way
07:42 if not already done so.
07:44 I'm just going to give you three instances and then shut up.
07:48 Number one, I think the way all of us pay
07:51 is going to be very, very different.
07:53 And very many industries are going
07:54 to get wiped out in the next two, three, five years' time.
07:58 So all of us are used to paying with mobile phones
08:01 today, with the plastic or whatever it is.
08:04 But think about ordering coffee from Alexa.
08:10 Think about contactless payments.
08:12 Think about payments which is connected
08:14 in the IoT of things.
08:18 So in 2020, it's expected that there'll
08:19 be about 7 billion mobile phones on the planet.
08:22 But that's not the story.
08:23 The story is that there'll be about 20 billion
08:26 connected devices, 20 billion connected devices.
08:29 About 75% of those will be payment enabled.
08:32 So your car, your refrigerator, your prescription pills,
08:37 retail.
08:40 The rapidity at which it's going to flow through the ecosystem
08:44 is going to be remarkable.
08:45 And I think the advantage for all of us sitting in India
08:47 is that we are leapfrogging many of these trends.
08:50 We are not necessarily five years behind China
08:52 or 10 years behind the US.
08:54 We are, in fact, in many of these things,
08:55 in real time payments, for example,
08:57 India's far ahead of probably 90% of the world.
09:03 And so this thing is only going to get real.
09:05 And the last thing I'd say is from the retail perspective,
09:09 I mean, there are going to be no cashiers in a few years
09:12 from now.
09:13 Think about that.
09:14 Think about facial recognition and artificial intelligence.
09:16 And you walk in, and you buy your goods,
09:18 and walk out in the store.
09:19 It's, by the way, live in Seattle today.
09:20 It's not science fiction, right?
09:22 Think about what that do to jobs and employment
09:25 in that sort of that sector.
09:27 So I think it's a very fundamental visceral trend
09:30 which we are seeing ripple through the ecosystem.
09:33 B2B, for example.
09:34 Vaidyanathan spoke about blockchain.
09:37 Think about what that does.
09:39 If blockchain were to be applied in the city of Mumbai,
09:42 think that what that does to a sub-register's office.
09:44 Suddenly, the parallel economy in the SRO vanishes overnight.
09:50 If you have decentralized ledgers.
09:51 So these are gigantic mega trends.
09:54 And it's living, breathing, sitting in the middle of it.
09:57 And you don't realize how apocalyptic it is.
10:01 Speaking of retail, Ms. Vasant, you've
10:04 said you feel disruption is something, as you see,
10:08 a way of doing it differently.
10:10 And e-commerce has had a dramatic impact
10:13 on every aspect of retail, be it pricing, be it product
10:17 availability and convenience.
10:19 So how are you responding to those changes?
10:21 And what are you doing to stay ahead of the curve?
10:26 Firstly, the word disruption itself,
10:29 you treat it as a disruption when
10:32 you are not familiar with that.
10:34 The more you are familiar with how the industry is changing,
10:37 you will no longer treat it as a disruption.
10:40 You need to embrace it.
10:43 There is a new way of customer shopping fashion,
10:46 new way of browsing fashion.
10:48 You should recognize that.
10:50 As an organization, it's important to also reorient
10:54 so that you can address the customer needs
10:57 with the current needs in a better way.
10:59 Of course, the e-commerce has changed the whole paradigm.
11:04 They bring into the industry a vast variety of technologies
11:10 and a way of fulfillment.
11:13 One advantage we have is we have a fairly large retail
11:17 network with the customer base, understanding them and all.
11:21 Investing more in understanding the customer needs,
11:24 understanding their pain points, and address it
11:27 in a manner where we integrate technology and experience.
11:30 So that's where we get into the omnichannel, wherein
11:32 we are able to marry both.
11:34 The more and more you do, the more and more
11:36 you need to change your organization also,
11:38 because the old way of doing things are no longer valid.
11:41 You have to digitize your processes,
11:44 enable the front end staff to use technology in selling,
11:49 connect through social media with end consumers,
11:53 encourage your own company senior management
11:57 to interact directly with the consumers,
11:59 collaborate, bring in more partners who can help you
12:03 through technology and the product.
12:05 So you change the organization.
12:07 You also understand more about the new needs of the customers.
12:11 And you go about addressing it in a manner which
12:13 is going to be more futuristic from a customer point of view
12:17 and the company point of view.
12:19 So instead of treating it as a disruption,
12:21 you see it as a new way of consumption,
12:23 new way of doing things.
12:25 And you also change along with.
12:27 That's how we see it.
12:28 And that's a way forward for any successful organization.
12:32 Right.
12:34 Mr. Vodna, when Zipla introduced the anti-AIDS drugs in 2001
12:39 for less than $1 a day, the treatment,
12:41 you were the disruptor.
12:43 And you got the world's attention.
12:46 Today, you are viewing disruption differently.
12:50 And what about the change?
12:51 And how are you viewing it?
12:52 And what are you doing?
12:55 So as I sat at this panel, it was a little funny.
12:58 We had e-commerce.
12:59 We had payments.
12:59 And I was like, wow, maybe I'm at the wrong panel here.
13:02 Everyone's getting disrupted.
13:03 Yeah.
13:04 But let's start with a definition
13:07 of how could disruption happen in health care?
13:11 I think fundamental to disruption
13:13 is that you either have new users
13:15 or you're satisfying patient needs better.
13:18 We don't have users.
13:19 We have wellness and we have patients.
13:23 And I think for us, that obviously mandates
13:25 that we look at the totality of the experience.
13:27 We talk about diagnosis.
13:29 We talk about pill delivery.
13:32 You mentioned e-pills and pill delivery.
13:35 And we talk about compliance.
13:36 And I think that's what we think is going to disrupt
13:41 the markets of the future.
13:43 And it's difficult to describe pharmaceuticals in the manner
13:47 that cash and payments and e-commerce can be explained.
13:53 But I'd like you to imagine a scenario where you wouldn't
13:57 have the privilege of booking doctor appointments in time.
14:02 And you wouldn't have the privilege and the ability
14:06 to necessarily get your medications in time.
14:09 And I think that's what we're solving for.
14:11 A, who are the set of patients who don't
14:14 know their set of conditions?
14:16 B, they're not able to book appointments in time
14:18 because that reality is going to come to India.
14:20 It's already there in the US.
14:21 It's coming into India now.
14:23 Because just the primary load of people who need treatment
14:27 is going to just be so high that it's
14:29 going to be very difficult to find the doctors to treat you.
14:32 So I think where our model of disruption
14:35 is probably to equip people to manage their own conditions
14:41 a lot better.
14:43 It's about their diagnosis.
14:45 It's about how they treat themselves.
14:48 And it's about the active monitoring.
14:49 So a little like if you all run today,
14:52 I think 50% of the people who actually work out in gyms
14:55 today have their own things that they keep entering
14:58 in the phone about how much they ran,
15:00 what how many calories they burned, what their weight was,
15:03 et cetera, et cetera.
15:04 And there is this ability to manage your own treatment
15:08 paradigm, which is what we're trying to bring in
15:10 through nicely connected sensors for you
15:13 to monitor your health, your blood pressure,
15:16 if you're a respiratory patient, your ability to breathe.
15:19 And I think that is what we are focusing on.
15:21 I think the dollar a day was a need of the hour
15:25 then because a lot of people could not afford treatment.
15:30 And that's why we're dying.
15:31 And that's why we took this imperative to make sure
15:33 that we got a dollar a day.
15:35 To get a dollar a day means a lot, many other things.
15:38 People can afford medication.
15:41 It's really about how we enhance the experience for them.
15:45 Mr. Seshugirpi, you probably have the most challenging job
15:49 to do when it comes to manufacturing.
15:52 In a global industry, there's global factors
15:55 like at play, demand, supply.
15:59 And then India had inherent competitive advantages
16:03 that we had low cost labor.
16:04 We had access to raw materials.
16:07 And all of that built our industry to a certain extent.
16:12 But those competitive advantages are quickly vanishing.
16:16 And with the help of technologies,
16:18 other manufacturers, even in developed markets,
16:21 tend to have better cost of conversion.
16:23 So how do you manage to compete, A,
16:26 with people who are leveraging technology better?
16:30 And two, what kind of regulatory changes
16:36 you have to deal with in terms of how
16:37 did that move to electric cars or move
16:40 to lighter cars which are more fuel efficient?
16:44 How is that going to impact your demand for steel?
16:49 Too many questions.
16:52 So we are in the steel industry.
16:53 Today we are an 18 million ton steel company.
16:57 And we are competitive.
16:58 So if I really look at it, the journey of the last 20 years,
17:02 there are a lot of disruptions which have happened.
17:05 But still we are competitive means
17:07 there are certain advantages or certain competitive strengths
17:09 we have developed as a part of the business model.
17:12 Whether those competitive strengths,
17:15 like low conversion cost-- we are the lowest in the world.
17:19 $115 is the conversion cost from iron ore to finished goods.
17:23 Similarly, we are very good in completing the projects
17:27 within the time and within the cost.
17:29 So our capital allocation is very, very good.
17:32 And we have a very good product mix.
17:34 So these are certain competitive advantages
17:36 which made us today what we are.
17:40 As regards to today, the kind of changes which are happening
17:44 and whether these competitive advantages will
17:47 make us to remain as competitive in the future,
17:49 if that is the question.
17:51 You look at what happened in the last few years.
17:53 Even the last month, if you look at it.
17:56 Steel, if I have to produce, I need raw material.
17:59 That is iron ore.
18:00 Iron ore is available in India.
18:02 Because it is available in India,
18:03 we invested a huge amount of money in steel plants.
18:07 So in 2011, for instance, in the state of Karnataka,
18:12 because of environmental pollution which was happening,
18:15 the Supreme Court suddenly said from tomorrow
18:18 there is no iron ore mining in Karnataka.
18:20 So mining ban, which has happened.
18:22 When you invested 50,000 crores, and the next day
18:25 if regulatory change or judiciary directive,
18:29 if iron ore is not available,
18:30 you have to manage the situation.
18:33 We thought it is one of the factors,
18:35 one of event which has happened.
18:37 We thought at that time, we tried to manage.
18:39 We came out of the problem.
18:40 How we have come out of that issue, I'll just explain to you.
18:44 After that, we have seen in Orissa, two months back.
18:48 So they said all these mines are closed from tomorrow.
18:51 If you don't pay huge amount of fines,
18:54 iron ore is not available.
18:56 By that news itself, whether iron ore is available or not
18:59 is a second issue.
19:01 The prices, iron ore prices went up by 30, 40%
19:04 in the domestic market.
19:05 You have to manage that volatility.
19:07 Just a few days back, you must have seen
19:09 Goa iron ore mining ban.
19:10 So the point which I am saying is today,
19:13 environmental law is becoming so strict.
19:17 Either it is asked by the society
19:20 or by the government or by the customer.
19:23 Because of that, there is a huge amount of pressure
19:26 on the industry in sourcing.
19:28 Not only you, you have to ensure that your supplier
19:31 is complying with these environmental restrictions
19:34 and he will be able to supply the raw material
19:36 by complying with those conditions.
19:38 So this is one big challenge or big disruption
19:41 which we are seeing by way of a change
19:44 in the environmental regulations that are happening
19:47 in India and also across the world.
19:50 So therefore, when we have to operate the steel plant,
19:54 if such disruptions happen,
19:56 where you are getting raw material source
19:58 in your supply chain suddenly disappears,
20:01 then how do you manage, how do you produce,
20:03 how do you meet your customer requirements
20:05 is one challenge which we have seen,
20:08 which a disruption which we have seen in the past
20:11 and we managed it and we continue to work on that,
20:14 how do we do it.
20:15 The way we did in the case of 2011,
20:19 we have a 10 million ton steel plant
20:21 and then iron ore is not available within 24 hours.
20:26 Then what we could manage the situation,
20:29 one is imports, getting iron ore
20:31 from outside the state of Karnataka.
20:34 The second is we identified iron ore already mined
20:38 and available with various mines nearby our plant,
20:42 which cannot be used by other steel plants.
20:45 Because we went ahead and invested
20:48 in one beneficiation plant.
20:50 Beneficiation plant is nothing but very low grade iron ore
20:54 which cannot be sold in the marketplace.
20:55 We can take that and then beneficiate it
20:58 to high grade and use it.
20:59 Iron ore mining ban has happened,
21:02 but this iron ore already mined could not be sold,
21:04 that was available.
21:05 Our intention was to reduce the cost,
21:08 so we invested large amount of money
21:10 in beneficiation plant, which was ready.
21:13 Then we went to the court and we said
21:14 this iron ore is available, no mining is required.
21:17 Please permit us to use this item, which is waste material.
21:21 So court has permitted us, so we could source that
21:24 and run the plant and keep the plants operating.
21:27 So keeping that in view, what could happen in future
21:31 if such events happen, how do we manage the situation?
21:34 We went for slurry pipelines.
21:36 We went for alternate sources of getting iron ore.
21:39 That is how we managed this type of situation
21:42 that may arise in future, so we can handle that.
21:46 We have seen several displacement threats,
21:49 which we have seen in the past,
21:50 like China dumping steel into India.
21:53 That also we could manage in the past.
21:56 Now the issue remains is this competitive strength
21:58 of conversion cost that is getting displaced today,
22:01 that is because of technology.
22:03 For instance, labor cost of J.W. Steel is $16 per ton.
22:09 These are the worlds, maybe I should say it is the best.
22:12 Same thing if you compare, when I want to compare
22:14 with any European company or any US company
22:17 or any Asian company other than China,
22:20 then it is almost two, three times more.
22:24 So because of technology, now this conversion cost advantage
22:28 or the labor cost advantage is disappearing.
22:31 If that disappears, then I have to be relevant
22:33 to my customer, I have to be cost competitive.
22:35 So what is that we can do in order to reduce our cost
22:38 further, thereby I will be able to compete
22:41 in the marketplace.
22:43 So to address those issues, we have taken a lot of steps
22:47 in our process innovations and empowering
22:52 the total cost management digitally.
22:54 So one or two examples which I can give it to you.
22:57 For instance, we take the power from the grid
23:02 or from long-term PPS we have signed with one company
23:05 and take the power.
23:07 So when you take the power, if you are not able
23:09 to use the power, again balance power you have to
23:12 again inject into the grid.
23:14 But that is free.
23:15 In Maharashtra if you see, when you buy the power
23:19 and if you're not able to use it and it goes back
23:21 to the grid at free of cost, that cost is 100 crores
23:25 we are losing per annum.
23:26 So we thought there is a way of reducing this cost.
23:31 Then digitally is there any solution?
23:34 If we have to say there is a 15 minute cycle,
23:35 every 15 minutes you have to tell your generator
23:38 this is what I'm going to use in the next 15 minute cycle.
23:41 So you only produce that much and inject.
23:44 Thereby I will be able to match my requirement
23:46 with the total drawdown of the power.
23:49 So digitally we found a solution.
23:52 Now we are able to say that the generation
23:55 and the demand is matched by way of a digital solution.
23:59 We could save almost now 50% of the total waste
24:02 which we have done.
24:04 Same solutions in the case of logistics.
24:06 Like that there are various ways where we are able
24:08 to reduce our costs and be relevant.
24:12 Then at the same time substitute material.
24:14 If you look at roofing for instance,
24:17 earlier asbestos was used.
24:18 Now steel is a better material.
24:21 So we went and said galvanized sheets
24:23 if you use for roofing.
24:25 In fact it is not only healthier, it gives a long life
24:30 and the replacement is maybe 20, 25 years.
24:33 Therefore you should use for roofing galvanized sheets.
24:36 So we started giving the galvanized sheets to the customer.
24:39 So most of the northeastern states today,
24:42 asbestos not used, galvanized sheets are used.
24:47 Then in order to facilitate that,
24:49 when somebody wants to use galvanized sheets,
24:51 he wants nuts, he wants bolts,
24:52 he should know how to fix it.
24:54 So that was a service we attached
24:56 while giving the galvanized sheets in the retail market.
24:59 So that has gone up.
25:01 Then zinc prices gone up substantially
25:03 because galvanizing demand has gone up, sheets gone.
25:06 Then we introduced galvalume, aluminum coating,
25:09 relative to zinc.
25:11 So therefore there's always ways and means of reducing cost.
25:15 It can't happen because there's a disruption
25:16 happening in the marketplace.
25:18 So you have to find new ways of managing the cost
25:21 and then finding new solutions
25:24 to be relevant and competitive in the market.
25:27 - Mr. Kaul, when you were up against a national mission
25:30 to go cashless, what is your strategy long-term
25:35 to kind of battle that?
25:36 And how do you see the digital drive
25:40 kind of impacting your business?
25:41 What are you doing to get ready for that when that happens?
25:44 - That's what my board wants to know.
25:47 So I think, I just want to set context to this
25:50 in a couple of different ways.
25:52 The one is, I get the theme, doing more with less,
25:55 and all of these are very important for all of our businesses
25:57 this is what you do to survive nowadays.
25:59 But for us, I think you need to define
26:02 what business you're in, in the long term.
26:05 Now you ask me a question, what is long term?
26:07 So I have a five year long term, I have a 10 year long term.
26:09 Unfortunately like some of the business leaders,
26:11 I don't have a 50 year long term today.
26:13 But I have a five and 10 year long term,
26:14 and the five year long term for us is,
26:16 nothing really has changed.
26:17 We've had a step function shift when I look at the data.
26:21 And trends are back to what they were at a different pace.
26:25 Cash is back to 98%, it's growing 12% a year,
26:28 it was growing 12% a year earlier.
26:30 Cash and delivery and e-commerce are 60%,
26:32 it was 60% before.
26:34 But am I getting comfortable with that?
26:35 No, I'm not.
26:36 I'm assuming there will be a shift at a rapid pace,
26:38 and how do we get ready for it?
26:40 And our vision was about, how do you make cash available
26:45 anytime, anyplace at the lowest cost?
26:48 And we've been working to bring down our operating cost
26:52 to now the lowest in the world.
26:54 And I don't mean comparing it to the US,
26:56 I'm saying comparing to Nepal, or Bangladesh,
26:58 or Sri Lanka, comparing to developing economies,
27:00 we have brought down our unit cost of delivery to the lowest.
27:03 We think that is important to stay competitive.
27:06 Now if consumers someday see a big need
27:08 to move into a digital form of payment,
27:10 we have a business, that's fine.
27:12 But I think a lot is said about digital inclusion,
27:16 or financial inclusion through digital means.
27:18 I think I question the, you know,
27:20 disruption is cool, it's sexy.
27:23 You have to ask and question the common narrative,
27:27 because somebody should ask the question.
27:28 And my point of view is, is digital payment a bogeyman,
27:33 or is it a leprechaun?
27:35 You know, it's like, I'm sorry, you know,
27:37 I hope I don't insult anyone here,
27:39 but a lot of fintech companies,
27:42 (speaking in foreign language)
27:45 That's the big danger, right?
27:46 Now, I don't know what will happen to them,
27:47 we'll figure it out, right?
27:49 My point is, what is the real India need,
27:52 and how do they transact, will not get influenced
27:55 by pumping in billions of dollars into technologies.
27:58 We'll see how consumer behavior changes.
28:00 So our five year plan is very, you know,
28:03 very clear in our head, which is,
28:04 we want to be the biggest in what we do.
28:06 We are large, we have 25% share,
28:09 we think the market will get to triple our business
28:11 in the next five years.
28:12 The 10 year view is where we think that our reason
28:16 for existence will be very different than what it is today.
28:19 And that will be about solving and adding value
28:22 to our primary customers, which is banks,
28:24 and helping them solve problems
28:26 which they're not able to do themselves today.
28:29 So you know, today it is, let's say,
28:30 how do you make the whole cash cycle efficient?
28:32 So we're starting doing a lot of work with the regulators
28:35 and policy makers on how do you make
28:37 the cash cycle more efficient.
28:38 We're saying, India can manage with lesser cash.
28:41 We don't have a problem with that.
28:42 We just think there's a big opportunity
28:44 in making the cash cycle more efficient,
28:45 and we want to drive that efficiency and automation.
28:49 The second is when, you know, look at India and banks,
28:51 the outsourcing they do is so primitive still,
28:54 given the need, we think that will change
28:58 and will go beyond just cash,
28:59 which is tougher for them to manage
29:01 into a lot of business functions.
29:03 And we would love to be the leader
29:05 in outsourcing of financial services,
29:06 whether it's to an NBFC or a housing finance company
29:10 or to a bank.
29:11 So therefore, what we are doing now
29:13 is we are starting to accelerate our investments
29:16 for the 10 year long term plan.
29:19 We are, of course, accelerating the investments
29:21 for the five year plan, but we're also saying
29:23 we need to take five to 10% of profits
29:25 and invest it now for the 10 year plan.
29:28 - Right.
29:30 Mr. Ramchandran, would you, I mean,
29:33 how do you kind of, he believes that, you know,
29:35 digital payments may not be the big disruption
29:39 that he needs to be worried about.
29:41 So how do you see that playing out?
29:44 And, you know, how, you talked about
29:46 a lot of connected devices and, you know,
29:49 the options for payments becoming a lot more,
29:51 you know, a lot more options for the consumer.
29:53 But the basic habit, you know,
29:55 the biggest challenge would be a habit change
29:57 and how would you kind of overcome that?
29:59 - No, I agree.
30:01 I mean, so both internally and externally,
30:04 I think I agree with Rajiv,
30:06 the role of technology is overstated,
30:08 but also I think the human factor
30:10 is oftentimes understated, right?
30:12 So you're dealing with a cliffhanger of a cultural change
30:17 from an external perspective.
30:21 And I think if you ask all the panelists around this stage,
30:24 they will tell you that the hardest thing to do
30:26 is to rewire employee mindset.
30:29 Reskill, retool, upskill,
30:33 because what was relevant from a skilling perspective
30:37 a decade ago is absolutely irrelevant five years out,
30:42 but that doesn't mean that those valued employees
30:44 suddenly become redundant, right?
30:47 I think the onus is on us as leaders
30:49 what we can do to recognize the vulnerability,
30:53 accept it, not deny it,
30:56 and say, what can we do thoughtfully and sensibly
30:59 as management to lead our employees in a direction
31:04 that, you know, you made the point
31:07 about not being afraid of disruption, but embracing it.
31:11 Right, so how do you sort of prepare your employees?
31:14 I think it's a very, very important management subject,
31:17 which is oftentimes not spoken about as often as it should be.
31:23 So I'd say dealing with culture externally
31:26 and dealing with employees internally are super critical
31:30 as we sort of transition this bridge.
31:33 But how would you work around consumer habit change?
31:36 What would drive that into?
31:39 I think the cool part about being a platform business,
31:42 and Visa is very much a platform business,
31:44 so whether you're in the music sort of trade,
31:47 you're in the medicine trade,
31:48 you're in the apparent trade, I don't care.
31:50 But if you're a platform,
31:53 you benefit and often struggle with the network effect, right?
31:59 Somebody's got to create it and somebody's got to use it.
32:01 So whether it's chicken or egg, whichever came first,
32:03 I mean, you're in a poultry farm,
32:05 so there are chicken and there are eggs, right?
32:07 And both of them coexist.
32:09 But when both of these things come at the same time,
32:11 it's a beautiful thing.
32:13 And just managing that network effect of, you know,
32:15 the more places you can use digitally,
32:17 the more valuable digital credentials becomes for a consumer.
32:20 And the more consumers pay digitally,
32:22 then merchants think that they need a digital option to accept.
32:26 So it's a sort of thing, you know,
32:29 it's like watching your nails grow.
32:30 You don't really know when it grows,
32:32 but suddenly you look down on your nails
32:34 and they're overgrown after a week, right?
32:35 So it's one of those things that network effects
32:38 are just amazing things,
32:39 but the starting friction is a big challenge.
32:43 And, you know, that's what many companies are grappling with.
32:46 But once you get over that first gear hump,
32:49 it's a marvelous runway.
32:51 Right.
32:53 Mr. Bora, if talking about, you know,
32:54 he talked about the culture change
32:56 and how you bring about external and internal.
33:00 Moving from a generic company to kind of looking at disease management
33:05 calls for a lot of change, right, from, you know,
33:08 top level management thinking to write down
33:10 to how you're reskilling your employees
33:12 and how you want to.
33:14 So what kind of changes are you bringing about in your company
33:18 to kind of make that transition where you're moving from generics
33:21 or to, you know, making generics to kind of making,
33:27 you know, more specialty drugs
33:28 or even moving ahead to disease management?
33:31 So I'm going to step aside a bit.
33:33 I don't think we'd like to conventionally follow generic and specialty
33:37 because I think we're really after an unmet need.
33:40 Right. So there's an unmet disease need of a patient.
33:44 And that's the pivotal thing around which we're solving for.
33:47 And if we do solve for that, we disrupt and everything else.
33:51 So if that's a given, and I like what he just said,
33:54 because I was going to mention something similar.
33:57 I think the change has to start with me first.
33:59 If I run the organization and I'm going to ask the organization
34:02 the same questions about what did we do on sales?
34:04 What did we do on top line?
34:05 What did we do on how are our immediate health term indicators
34:10 looking like?
34:10 I don't think I'm going to get the kind of disruption
34:13 energy that we need in the organization.
34:15 So the change is about asking the right questions.
34:19 The change is about bringing in the right people,
34:21 because I think when you deal with disruption,
34:23 you have to have a skill set in your organization that's OK with ambiguity.
34:28 Not all answers can be solved or answered today,
34:31 especially if you're looking five years, 10 years out.
34:33 You need people who are comfortable with ambiguity.
34:36 Right. And that's the type of people we're trying to bring into the disruption effort.
34:39 People who can deal with ambiguity.
34:43 What we're also doing is many of the things that we'd like to see
34:46 disrupting the regular health care chain are not going to be innovations from inside.
34:51 They cannot happen because our dominant logic in our organization,
34:55 we're a pills business.
34:56 Our dominant logic will kill it.
34:58 Right. So I think what we're trying to do is start,
35:00 you know, we just recently started our own Shark Tank,
35:03 right, where we're saying, OK, we're going to crowdsource ideas.
35:06 These ideas may be from within our organization or outside.
35:10 And we'll try and see how many of these we can fund.
35:12 But they have to have a storyline that brings in to how we deliver health care.
35:16 So I think we're trying to hire the right people or, you know,
35:20 repurpose the right people, people who have high levels of ambiguity,
35:24 of ability to deal with ambiguity.
35:25 And then we are trying to enable the organization to things like the Shark Tank,
35:28 to things like facilitative processes.
35:30 We're trying to find the right sponsors.
35:33 What kills disruptive thinking is the lack of,
35:37 it's always a great guy with a great idea.
35:39 But if you have a wrong sponsor, that idea is killed.
35:42 Right. So we're trying to find the right sponsors for these innovation.
35:45 It's not just the disruptive thinkers.
35:47 It's about people who can foster this collaboration and this thinking.
35:51 So I think those are some of the things that we're starting.
35:53 But then, you know, it has to start first with us.
35:56 If we run organizations, then we need to change first
35:58 to enable this change in the rest of the place.
36:01 - Prasanna Kumar, when you talk about short-term goals versus long-term goals,
36:06 as a CEO, you always have to, you have the balance of meeting your short-term,
36:10 you know, targets of profits and revenue growth.
36:13 And then you look at long-term, you know, the change in the business model
36:17 and how you want to kind of stay ahead because of using technology.
36:21 So how do you balance that out and what kind of investments are you making
36:26 in technology or to kind of, in the omnichannel?
36:31 - Yeah, this is a dilemma which every organization faces,
36:35 particularly the incumbent who is having market share to protect.
36:42 What we do is we have two separate buckets.
36:44 One is the existing business, which from a brick and mortar,
36:50 you have to change to omnichannel.
36:53 And then you have e-commerce wing, which has to build its business
36:58 purely in the e-commerce.
37:02 Both have different goals.
37:04 Clearly, the current business has to deliver productivity
37:07 and transform into an omnichannel.
37:09 So we have to get the current as it's wet better, take out costs.
37:14 Again, going back to what people talked, digitization is the key.
37:20 Through the analytics, through the process recrafting,
37:25 we'll be able to take costs out and then make the organization
37:28 more productive, more nimble, more open to outside influences.
37:35 At the same time, get the right talent for the e-commerce wing
37:39 so that they can participate in the new way of doing business,
37:44 which is the digital way of consuming.
37:47 So over a period of time, this will get married into one way,
37:50 which we believe is the omnichannel way.
37:53 So we need to do parallelly, one for the short term,
37:55 another for the long term, and ensure both the goals are different,
37:59 but then converge towards a common goal over the next five years.
38:06 -Seshagiri, how are you leveraging technology to kind of remain competitive?
38:11 And what are one or two things that you're doing to,
38:16 either in manufacturing or supply chain, that can help you stay competitive?
38:23 -Technology side, that way we have identified manufacturing
38:28 and supply chain plus the sales and marketing.
38:33 So we are using now technology to improve these three areas
38:37 and reduce the cost and to be competitive.
38:40 So we are working on several projects in that direction.
38:43 And at the same time, using technology to service the customer better.
38:49 So in that, we have introduced recently one product called OTIF.
38:55 So in this, what happens is when a customer gives an order,
38:59 let's say for 1,000 tons of steel, there are different grades.
39:03 We produce 28,000 tons of-- 28,000 grades of steel in the company.
39:09 Whereas when an auto customer gives an order,
39:11 it is not that everything is one grade, it's different grades.
39:15 Generally, the plant, what they do is that when they're producing steel,
39:19 which is volume driven, their productivity is high.
39:23 So they produce that grade and they supply to the customer.
39:26 So if the 1,000 ton order is there, they supply 800 tons.
39:31 They say we have supplied to the customer.
39:32 Balance 200 is not supplied.
39:35 So they are high grade, number one.
39:37 It takes more time.
39:38 Productivity comes down.
39:40 Therefore, the plant focuses on producing volume.
39:44 So we have to shift that volume to value going forward.
39:48 Then we introduced to monitoring of the-- when order comes,
39:52 how do you ensure that one time in full, 1,000 tons is supplied at a time
39:56 to them?
39:58 So in that, once we started introducing, after that,
40:00 when we did a customer survey, there is a huge amount of rating upgrade
40:04 which has happened.
40:06 Once we introduced, we know that each customer, their full order
40:10 is complete or not.
40:11 That itself has given a very good outcome to us.
40:16 Because we are at 71%.
40:18 When we introduced this, we were at 41%.
40:21 So there is a huge improvement which has happened.
40:23 So using technology and monitoring these factors.
40:26 Similarly, when order comes to us, then which
40:29 there's several locations are there, several mills are there.
40:32 There are 66 variables where it can be produced.
40:35 It was done manually earlier.
40:37 Now we are using technology to do that.
40:40 So there are different methods by which we
40:43 are using the technology to become relevant and competitive.
40:46 Mr. Kaul, in this constantly changing world,
40:49 does it even make sense to have a five year and 10 year kind of mission?
40:52 Of course, yes.
40:59 I think we-- before this crisis hit us, I think
41:04 we had a three year, four year plan.
41:06 I think we had one vision.
41:08 We have a clear vision.
41:09 And I'm very clearly saying that's the five year vision.
41:12 That's not the 10 year vision.
41:13 The 10 year vision is something we're working on.
41:16 What I did want to share a little bit here to digress from what you said
41:20 is a lot what happens during crisis.
41:23 And I know a lot of leaders in this audience
41:26 have gone through many crisis.
41:28 And how companies deal with it is unfortunately
41:33 very dependent on what the leader does of that company.
41:38 I have been very fortunate, extremely lucky.
41:41 I met Marshall four years ago.
41:44 Then met him again three years ago, two years ago, today.
41:48 With that motivation, I signed up with a coach.
41:50 I think that helped in many ways the way we responded to different crisis
41:56 and how we do.
41:57 And I urge everyone to make sure they are a little more connected
41:59 to the broader world and take help.
42:03 So I think, absolutely, I think you've got to have a very clear view of how
42:07 you define your business.
42:09 And I think is one reason why we are still surviving and doing all right
42:14 and still growing is that we have a very clear idea of what
42:18 our business is all about.
42:20 And we just only have to juxtapose the long term and the short term trade-offs
42:24 and make some of those bets somehow.
42:26 The good thing, as Vaidya said, it's a world.
42:29 Where capital, thankfully, is available far more readily.
42:33 It's not good for me necessarily because FinTech is getting a billion
42:35 or two billion dollars.
42:37 But the capital is available for strong entrepreneurs and strong teams to grow.
42:44 And, you know, there will be a place for everything in the world.
42:47 India, thankfully for us, I'm so lucky I'm in India because the opportunity,
42:51 because again of what Vaidya said, because of lack of penetration,
42:55 is still so phenomenal that there is enough room to grow for the five years.
42:59 Ten years, I think, we've got to figure out what are the backup plan.
43:02 Right.
43:03 And Mr. Ramchandran, when you have technology and all the additional
43:08 payment providers have access to the same technology,
43:11 how do you then differentiate?
43:13 How do you make a difference?
43:15 No, I think in a context of differentiation is not dramatically
43:19 different from what you would do in any legacy industry, right?
43:23 The notion of customer trust becomes super important.
43:26 For example, in the digital era, we all know that India is still at a very,
43:30 very nascent stage of digitization.
43:33 And one false step on data privacy and cybersecurity can be sort of one step
43:38 forward and three steps back.
43:41 And so it's not sexy, it's not cool to speak about what happens behind the
43:45 curtains in terms of making sure the integrity of the overall sort of pipe.
43:50 And the billions of dollars that we spend on making sure that data privacy is
43:56 sacrosanct and cybersecurity is sort of kept centered on front of things is not
44:01 funny, right?
44:04 And so differentiation even, you know, to what earlier speakers mentioned about
44:09 bunch of money chasing entrepreneurs, it's a quality of execution that sort of
44:13 differentiates one versus the other, which is why the VC hit rates are what they are.
44:18 And I suspect that's not going to be dramatically different,
44:22 irrespective of the business model disruption or people disruption or
44:25 technology disruption.
44:27 The fundamentals of running good governance, of focusing on the basics and
44:30 creating value proposition to customers is absolutely what's going to in fact
44:35 separate the men from the boys and create that sort of distinction of the leader
44:39 from the rest of the pack.
44:41 If it was important yesterday, it's going to be uber important tomorrow.
44:45 >> So when you talk about speciality and
44:50 disease management, in terms of how are you addressing the white
44:56 spaces in your portfolio, how are you going to look at kind of
45:01 augmenting your capabilities when it comes to moving up to disease management?
45:06 >> I think we're looking at the patient funnel and
45:11 we're looking at where in this journey of somebody being a patient and
45:16 somebody seeking care, what are those inflection points where we can add the maximum?
45:21 At times, they're about discovering new methods of diagnosis, right?
45:25 At times, for example, there's a lung test.
45:28 A lot of us go for our annual health checkups and we have this pulmonary function
45:31 test where they ask you to blow and then they see everything, right?
45:35 Those metrics that come in.
45:36 We're trying to make that simpler because that's a very difficult test to do, but
45:39 it's being made simpler because this is again keeping an unmet need of a patient in mind.
45:45 They shouldn't be going for these tests every nine months.
45:48 They should be doing it possibly every two weeks.
45:51 And how do you facilitate that?
45:52 So that's one end of the spectrum.
45:54 The other end is really to figure out what can finally cure, right?
45:59 What medicines do we have that can finally cure because we exist to cure people.
46:04 And I think, so we're using technology,
46:06 we're looking at various things down the patient funnel route.
46:09 This really starts with, again, I keep going back to it, what is the unmet need?
46:14 We don't program ourselves to disrupt.
46:17 We program ourselves based on an unmet need that a particular patient has.
46:21 And I think that's what's centrally driving our innovation thesis.
46:24 >> But just last final word from all of you.
46:30 One thing that is on your mind when it comes to dealing with disruption,
46:34 what's on top of your mind and what keeps you up at night?
46:38 [BLANK_AUDIO]
46:43 >> I think I find it very exhilarating and fun.
46:47 It's a moment of extreme learning under stress.
46:52 Keeping on your toes to just track what everybody in India is trying to do in
46:56 this entire space is a fascinating learning.
47:00 And it's something you need to survive and to do good at.
47:04 So it's good learning.
47:06 >> Mr. Amshaduddin?
47:07 >> No, I completely agree.
47:08 I think it's one of the best times to be alive in humanity.
47:13 If you think about the rapidity of change which is happening in healthcare and
47:17 retail and everything around you see in the world.
47:19 I mean, I literally feel like a kid in a candy shop.
47:21 I mean, there's so much to do and so little time and
47:24 so many avenues that one could be pursuing.
47:27 And yes, there's uncertainty and there's ambiguity, but
47:30 that sort of 10% of it, 90% of it is just a whole boatload of fun.
47:36 And just get used to sort of floating with it, I guess.
47:40 >> Mr. Vassi?
47:41 >> Two things which are challenging.
47:44 One is building leadership capabilities down the levels of the organization.
47:50 And the second thing is going for
47:54 an approach of collaboration with partners and not try to do everything in-house.
48:00 So these are the two things which are big challenges which we wish to surmount.
48:06 >> Mr. Vora?
48:06 >> So for me, it's just the thrill of providing care to so
48:10 many families that suffer because of diseases.
48:14 But I would have to say that I am most concerned about two things.
48:17 I'm concerned about relevance, right?
48:20 Would we ever be relevant?
48:21 Would we continue to be as relevant as we are today in the future?
48:24 And I worry about whether our talent seizes the opportunity
48:28 that the marketplace offers.
48:30 So those would be two things that I would be concerned about.
48:33 >> Mr. Ishwar?
48:35 >> In our company, whenever we open our laptop, it comes better every day.
48:40 So therefore, it is the culture which we wanted to develop.
48:43 Disruptions continue to happen either through technology or
48:45 regulation or competition from any source.
48:49 It's a bettering our work than what we have done yesterday.
48:54 I think that is what keep us going.
48:56 >> Okay, that's about all the questions.
48:59 Thank you so much for the presentation.
49:01 >> Thank you.
49:03 >> [APPLAUSE]
49:06 [MUSIC]