CEOs must make HR more accountable now

Remember the famous opening lines of Dickens' classic 'A Tale of Two Cities'? Much like what Dickens saw in those turbulent times, India Inc is currently seeing 'an epoch of belief ' and at the same time an 'epoch of incredulity'.Inside our companies, we see similar volatility. One month of growth followed by another month of stagnation. Ask any of your sales people - irrespective of the sector you are in - and they will tell you of customers engaged and wanting to buy, but they are not sure the deal will close. You will see managers (in most sectors) moaning over the shortage of talent and skills but who cannot recruit, for there is an unofficial hiring freeze. Ask employees - they all think the job market has picked up a bit and yet, they can't switch jobs as easily as they used to.In such unpredictable times, CEOs must make new demands of the HR function. They must ask HR leaders to help managers, employees and others to cope with uncertainty and ambiguity in newer ways. CEOs will do well to first pause, notice and acknowledge that if times are unpredictable externally, they will be the same internally. So they need to distribute their time equally between handling external agencies (customer, regulatory, shareholders) and the most important internal constituency of their own managers and employees. This is where they must ask their HR leaders to renew employee engagement plans and do a reality check on what's happening on the ground. Chief executives must identify the inertia which usually takes over successful HR programmes,especially if they were crafted during 'good times'. 

Much of India Inc's HR functions are, of late, nicely-branded programmes - usually rehashes of the old welfare regimes. In unpredictable times, these oft-repeated gimmicks fail to fire the imagination of employees and leave them with a depressing deja vu. Unless CEOs demand more realistic and value-adding plans from HR, they will get more of the same. Here are three provocative actions CEOs could ask HR function to deliver in these unpredictable times. 

First, ask HR folks to measure everything they do. If they say, we recruit well, ask them how many of the new hires stayed in the company over two years. Ask if the cost per hire has come down over the past four quarters and at what rate. 

If your HR teams run induction and orientation programmes, ask them to measure their effectiveness in terms of reducing settling-in time of employees (measured as in new hire productivity). If you have been told you must approve budgets for a fun event, ask what the outcome will be. If you are told this will improve morale, ask how, and ask for proof. 

If CEOs engage the HR function to improve predictability of their programmes, it will reduce some degree of unpredictability that the volatile external environment has created.Second, in unpredictable times, your HR function must help you separate your men from your boys. You need to identify the 'long-term horses' (to borrow a phrase from Hindi) and do so 'objectively'. HR departmentsmust in current times re-tool themselves and show the mirror to the leaders. This is no time to hide the warts. 

Good and predictable times allow you the luxury of carrying some passengers. But in volatile times such as these, you will do well to have an HR leader who will tell you (again, objectively) who are the "horses" you should bet on. In the overall softness and socialistic hangover that afflicts most managers in our country, we see more milk of human kindness flowing out of HR departments. 

Used to the good times and believing their jobs create the feel-good in the company, HR departments don't often call a spade a spade. CEOs must ask for a fresh assessment of talent and demand heightened rigour from HR managers. 

The third is the need for building resilience in the company and the people. Ask if resilience is one of the desirable competencies in your company. Resilient people stay steady under pressure, and drawing upon huge resources of optimism, prod and persevere under the most difficult and ambiguous of circumstances. 

Resilient leaders not only cope with confusion but interpret the external environment to the employees in clearer terms. If you as a CEO see resilience in this light you will instantly recognise its immense value. So go ahead and ask your HR leaders to present a roadmap for building resilience in the company as a core competence - for the people and processes. 

We have often heard the adage: when the going gets tough, the tough get going. Intoxicated by a great run of growth, HR functions have not had time to toughen themselves. That is why you see so many cases of employee discontent boiling over. CEOs must demand a new toughness from the HR function. Caring must not be confused with pampering and HR functions must partner with CEOs in managing and defining expectations as opposed to merely catering to and appeasing. 

Well-grounded people engagement programmes with predictable outcomes will be chief executives' best bulwark against the current unpredictable external environment. 

Infosys defers joining dates of 1700 recruits

 Falling margins and an unplanned salary increase have pushed Infosys to embark on a major austerity drive. The details are not clear yet, but it certainly includes a freeze on business class air travel and deferment of joining dates of 17,000 campus recruits.

The IT major's CEO, S D Shibulal, has sent a mail to employees saying that the company's expenditure for the year had risen too high on account of its Lodestone acquisition and salary increase. The mail goes on to say that the cost-cutting measures would be implemented in a phased manner.

A company spokesperson said, "In a tough business environment, Infosys has decided to take certain cost optimization measures. These are necessary for the company to continue making strategic investments and afford the rollout of the compensation increase."

The joining dates for campus recruits have been deferred for three months from the date of joining that was communicated to them previously. Several people tweeted that their joining dates had been extended to February; some said April.

The Infosys spokesperson said the company would honour all campus offers. The company has introduced an online training programme to keep these new hires engaged till they formally start work. "The completion of this training will not only give these recruits a headstart in their career with Infosys, but also reduce their planned six months training programme at our Mysore campus by up to two months," the spokesperson said.

Anticipating a bevy of queries from thousands of campus recruits for specifics around the deferred joining dates, Infosys has set up an exclusive online chat line. "This will help us address additional queries from them and also help them gather details about our online training programme. This will be in addition to our personal communication and addressing queries through emails," the company said.

There's also a freeze on long-haul business class air travel by its senior executives, including the CEO. "Business class is a privilege available to senior leaders in the company for long haul travel. In our drive to optimize travel costs, the senior leadership has decided to lead by example and forgo this privilege," the company said.

Infosys's operating margin has been dropping consistently for several quarters now. In the quarter ended December 2011, it had a 31.2% operating margin, but this was down at 26.34% in the last quarter. The September quarter alone saw a surprisingly sharp fall of 166 basis points. The salary increase of 6% announced last month, which many believe was done under pressure because rivals had given increments earlier in the year, will increase margin pressures in the coming quarters. Infosys normally announces salary increases in April, but this year it did not do so citing uncertain business conditions.

Why India needs Arvind Kejriwal

Those who call Arvind Kejriwal an anarchist miss the point. Anarchists aim to destroy democracy. They break the law. They subvert institutions. Kejriwal does none of these. We may disagree with some of his methods — i do — but not with his intent.

The intent is clearly right: expose the corrupt, improve governance, unmask collusive politics, and undermine the nexus between businessmen and politicians. All these objectives are noble and necessary. India has for too long been a democracy of, by, and for the few rather than the many. This culture of privilege has corroded governance and created two nations: those who have it all and those who have very little.

In the middle of these two extremes is the small but growing aspirational middle class which forms the core support group of Kejriwal's constituency. It is not large enough to give him many seats in Parliament or even the Delhi assembly once he launches his political party on November 26. But it will give him enough clout to be a disruptive influence.

Disruption can be constructive or destructive. Kejriwal's modus operandi has two principal flaws. One, he exposes alleged corruption scams but does not follow them through to their logical conclusion. He says others (media, public interest litigants, opposition parties) should complete the job. That's not good enough. If you start something, finish it. If you can't , don't start it. No one else, for example, is going to nail the allegations against Robert Vadra, Salman Khurshid and Nitin Gadkari. Public memory is short, public attention shorter. These issues will eventually wither away in India's collusive ecosystem.

Two, Kejriwal often gets carried away by his own rhetoric. Calling Delhi chief minister Sheila Dikshit names does not enhance his credibility. Bitter medicine is necessary to cure a diseased political system but the dose must be delivered in the right measure or it could prove counter-productive . The system, for all its rottenness, has a huge capability to fight back and discredit its detractors. It is easy for it to play victim.

As a politician, Kejriwal needs to articulate a clearer vision than he and his team have done so far. Their manifesto must contain incisive ideas on economic reforms, counter-terrorism , foreign policy, the environment, defence, energy and agriculture. It must also state the team's agenda on reforming our institutions, including giving the CBI autonomy and the EC statutory powers to conduct a monthly public audit of political party funding and expenditure.

If Kejriwal wants to play a serious, long-term role in India's evolving democracy, he must shift from the politics of agitation to the politics of reform.- and that's the bottom line..

Cheers

VG

Unlikely Entrepreneurs-Amazing Success Stories

Judi Sheppard Missett

Jazzercise

The founder of this wildly successful fitness company started teaching dance classes after hanging up her professional dancing shoes. When turnout dropped, she had an epiphany. The women weren’t coming to class to learn the precise steps to a dance, but to lose weight and tone up.

Sheppard Missett picked up the pace, turned up the music, and created a fun class that was soon packed. She trained additional instructors to teach the routines she choreographed, which eventually lead to a franchise deal. The company now has over 7,500 locations worldwide, a clothing line, and an extremely loyal fan base–all from a dance class.

I shall be featuring a few Entrepreneurs who are in all ways - UNLIKELY ENTREPRENEURS...but...AMAZING SUCCESS STORIES.

let's stay KONECTed

Vivek

Dr APJ Abdul Kalam-"Dreams are not those which are seen while you're sleeping. Dreams are those which don't let you sleep."

The journey of JMD Oils started from a smalldepartmental store in the residential colony of Ramesh Nagar, West Delhi. Now the store has transformed into the JMD Group, which is worth Rs 1,500 crore. Known mostly for edible oils, the group plans to touch the turnover target of Rs 1,800 crore by 2014.

The company's refinery in Kandla, Gujarat has a refining capacity of 1,000 TDP of edible oil per day. In total JMD group has generated direct employment for more than 3,000 employees. A plan to set up another refinery, of a similar capacity is underway. Established by JR Dhingra, the group is now run jointly by his sons Gulshan, Krishan, Naresh and Sanjay.

The founder, JR Dhingra settled in Gharaunda, Karnal after migrating from Pakistan after partition. It was in 1952 that Dhingra travelled to Delhi on a bicycle from Karnal and started his departmental store in Ramesh Nagar with a partner, who broke away after four years.

The earnings of the store went up from Rs 1,900 per day in 1984 to Rs 3 lakh per day in 1994. It was in 1987 that the family floated the name, JMD Oils and ventured into the edible oil distributorship. "We started with the distributorship of Kabra Agro Industries for their soy bean oil. Then we got the distributorship of the Gujarat Cooperative Oilseeds Growers' Federation (GROFED) in the year 1988.

By the year 2000, the company, still based out of Ramesh Nagar, had established a dealership network so strong that it launched its own brand by the name of 'Lite' (palm olein oil) and 'Good health' (soy bean oil). And then came the reforms in the duty structure on imported oil. "The government increased the taxes on imported refined oil," They started importing crude oil, and outsourced the refining process and sold it under their brand name.

By now, the four sons of JR Dhingra had fully taken control of the business. The company had acquired one of the brands, which it used to distribute. "Vital was a brand owned by Britannia and later on sold to SM Dyechem. In 2004, they decided to set up a refinery of their own. In 2005, the company established their own refinery in Kandla district of Gujarat using German technology and machinery.

It was in 2008 that the company gave up the distributorship of all brands it was working for. "It was all because of backward integration. We set up market and distribution network so that there would be enough customers. The company has not limited itself to edible oil. In the year 2004, the group diversified and set up a plant for packaged drinking water and aerated drinks under the brand name of 'H2GO'. The group also manufactures salt by the name of Good Health, laundry soap, club soda and cola drinks. Today it has a distribution network of 1,200 distributors across the country and 22 depots along its length and breadth. It is celebrating the completion 25th anniversary of its inception.

Quoting former president, Dr APJ Abdul Kalam, Naresh concluded, "Dreams are not those which are seen while you're sleeping. Dreams are those which don't let you sleep."

Cheers

Vivek

LAUGHING BUDDHA CONSULTING- Why??

KONECT INDIA is launching a second brand "LAUGHING BUDDHA CONSULTING" . LBC will purely consult on niche areas like Intellectual property rights, R&D(AR&D,FR&D),niche devices segments like Spine, Pulmonary Valves, Precision Ophthalmology,Oncology and the CRO sector.
LBC(Laughing Buddha Consulting) will usher a new freshness in these segments and will exhibit a never-seen-before consulting practices for the above segments.
Now ..why a second brand...well 2 reasons the first being a clear distinction in the consulting methodology for the segment and secondly..INNOVATION. one needs to constantly innovate. the lesson i learnt from NOKIA. iam a big fan of NOKIA(even now) but from numero uno a few years back to a state of groping-in-the-dark today,if one asks me.. why .. it would be INNOVATION(or lather lack of it). one needs to innovate not only the products but also the brand.a best example MICROMAX mobiles..
KONECT INDIA is purely a mass market brand(we will never dilute it), there were 2 options in front of us 1.we could have gone in to the niche segment with the brand KONECT INDIA 2. Not enter the niche segment at all.
We wanted to enter..no doubt about it.but with KI..not exactly..then we thought another entity-majority felt it would be a mistake(we still dont know if we got it right or we are doing a mistake)but then what is entrepreneurship if you dont take those chances. Then came WHAT NAME..many options were thrown in..KONECT,KONECT PLACEMENTS,KONECTing,etc. I was clear on one thing..NEW SEGMENT..NEW APPROACH,NEW IDENTITY..everything was new..so it will not have anything connected with the old brand(EXCEPT THE OWNER :) ). Hence a radically new name.
so we zeroed in on LAUGHING BUDDHA CONSULTING.

i have been told  : its a funny name for a serious business
My contention     : there is no business such as a serious business or a not-so-serious business.every   business is business..depends on how you do it.

i have been told : do you think it will work ?
My contention    : I don't believe in THINGS WORKING..i believe in MAKING THINGS WORK.

i have been told : Managing 2 brands is going to be difficult
My contention    : Think creatively..it's great fun(that's why we don't have a serious name)

i have been asked : which crazy guy's idea is this
My contention       : I just smile

i have been told  : This crazy idea might just crack it
My contention     :  I just smile

A lot of interactions, lot of thought has gone behind this move.It perfectly suits our long term business plans. I certainly hope ..He has the last Laugh..LAUGHING BUDDHA CONSULTING:).

Watch this space for more.

Cheers
Vivek..

From an IIM-A professor to a sadhvi

Subhashini Kaul, 41, who has authored several books and international papers, has renounced everything to lead a life of a 'sadhak' in a tiny apartment in Pune. Her husband Nitin, who headed human resource management at one of the biggest retail firms in the country, too, has renounced worldly allures and turned a fakir, sleeping at railway stations in different cities. 

In 2008, Kaul, who passed out of IIM-A in 1993, had filed a sexual harassment complaint against a faculty at IIM-A. The gender committee investigated the allegations and in its report in 2009, ruled against the charges levelled by Kaul. 

"It's not because of any incident that I turned a sadhak... but started feeling that all the effort one puts in the materialistic world to get ahead isn't worth it and God directed me to another way of life," said Kaul, who has worked with leading corporates and was on the advisory board of the International Congress on Pervasive Computing and Management. 

After resigning from the job in 2009, Kaul returned to Mumbai and started a consulting company with her husband, whom she married in 1998. The couple ran the company for some time before deciding to sell off their house in Mumbai and live an isolated life. 

"I moved to Pune and we hardly speak. I meditate for more than 10 hours and have forgotten everything of my past," said Kaul, who is now connected to a few friends. 

"That was a monkey world where everyone was in the rat race to get ahead. But I blame no one for the happenings in my life. I have pulled out from all relations. Now, I dance when I want to and sleep when I feel like it. An atheist earlier, now I feel closer to God," said Kaul. 

The faculty member Kaul accused in her complaint had vanished under mysterious circumstances from Devprayag in Uttarakhand last year and is still missing. 

lets KONECT: Nothing Big-JUST DID IT..:)

lets KONECT: Nothing Big-JUST DID IT..:): Thank you all the  MRs ABMs RBMs ZMs NSMs Plant heads/Plant HRs HR Managers and more importantly all the HR managers/HR executi...

Nothing Big-JUST DID IT..:)

Thank you all the

•  MRs
• ABMs
• RBMs
• ZMs
• NSMs
• Plant heads/Plant HRs
• HR Managers
• and more importantly all the HR managers/HR executives who didnt give us a chance to do magic.

we owe it to you...

Thank you from the bottom of our heart.

from the team

Vivek

A lay milkman from Haryana who made millions

(Excerpts from his interview in Economic times)

Dr Anil Jindal, born to a milkman's family, is one of those selected businessmen who are able to turn their vision into reality. From delivering milk door-to-door, the man was able to build an empire worth over Rs 500 crore. 

Jindal's dream - the SRS Group (an acronym for Sab Raho Saath) has an annual turnover of Rs 3,500 crore. His companies have over 3,000 direct employees and create indirect job opportunities for a workforce of around 2,000 people. 

SRS now has presence in various sectors such as, gems and jewellery, realty, entertainment, retail, food and beverages, hardware and healthcare. He still holds the distinction for giving Haryana its first multiplex -SRS Cinemas-which became operational in 2004 in Faridabad. 

EARLY STRUGGLE 

"Initially, I used to help my father by delivering milk to customers whose homes were falling on my way to college," recalls Jindal. 

After completing his post-graduation in commerce, Jindal started his coaching business, which clicked instantly. Soon his coaching centre crossed 100 students. Jindal was earning more by coaching students and wanted to take it up as a full-time job. 

"I had no option but to agree to his decision because at that time he was earning much more from his coaching than my milk busine Being a businessman, I appreciated his decisionand allowed him to go ahead," recalls his father, GS Jindal, who hired someone to replace him in the milk business. Thus began the younger Jindal's entrepreneurial journey. 

"In 1985, I decided to enter the financial solutions business with a seed capital of Rs 10 lakh-my savings," says Jindal. "I started with vehicle finance and later on diversified to all kinds of financial intermediaries. That's how my first company BTL Investment Ltd. came intoexistence," he says. 

THE BEGINING 

Post 1985, Jindal started buying land from his savings, which was a blessing in disguise. "By the beginning of the year 2000, my firm had a land bank of around 40 acres," says Jindal, and adds, "By the end of 2000, there was a rise in finance business as some more competitors came into the fray, this gave birth to unhealthy competition and recovery became difficult." 

Fortunately in the year 2004, there were some realty projects coming up in Faridabad, which escalated property prices. "The realty developmental projects resulted in skyrocketing ofproperty prices in the region and suddenly the land which was priced a few lakhs became worth a crore," reminisce Jindal. 

Around the same time Jindal went abroad and got familiarised with the mall culture. "I studied its effect on the local economy and retail market," recalls Jindal. And soon Jindal decided to enter the retail and realty business and by the end of 2004, he opened SRS Cinemas in Faridabad. 

FURTHER GROWTH 
By 2004, Jindal was convinced that he needed to diversify to sustain his business."I realised that the retail market was the growth engine of the future economy. Hence, we started designing and marketing jewellery," says Jindal. Today, around 60 percent of the turnover of our company is generated from this segment. 

"Out of an annual turnover of around Rs 3,500 crore, about Rs 2,100 crore comes from our jewellery business. Apart from this, we have presence in realty, entertainment, retail, food and beverages, hardware, healthcare and financial services." 

About thirty percent of the annual turnover is generated from SRS' realty business. "We generate around 30 percent of our annual business (near Rs 1,050crore) from our real estate segment while the entire group is generating around 5,000 job opportunities." 

Elaborating about his business potential, Dr Jindal says, "We have 33 screens in place at our multiplexes in Faridabad, Gurgaon and Indore. We have food courts in Faridabad, Gurgaon, Noida and Sonipat." 

Besides all this, SRS Group has a land bank of around 500 acres in Faridabad, Palwal, Rewari, Panchkula, and Karjat (in Mumbai). 

Recalling the listing of his company on the Bombay Stock Exchange and NSE, Jindal says, "Our SRS Ltd IPO got listed in August 2011 at NSE and BSE. It generated around Rs 203 crore which I think was one of the major achievements because the successful listing of the IPO is an indication that people have faith in our firm."

Why I admire Dr. Habil Khorakiwala, Chairman, Wockhardt

I have admired Mr Habil Khorakiwala, Chairman, Wockhardt much before i came in to the consulting business. I used to read about him in the business magazines. what struck me initially were 2 things one was the name and secondly was his beard.(very well groomed, well maintained..i could draw a similarity with the beard of Mohamed Khan (Chairman of nexus Advertising). Any ways as time went by and i got in to consulting business- by providence i chose to expertise in the Pharmaceutical space- I wanted to work for Mr khorakiwala..it took me 5 long years before i made the crack. Infact my first BD trip to Mumbai..my first visit was to Wockhardt.I had to meet some one in the HR and over my hour and a half of wait( waiting was not a problem- bcos the lobby is quite imposing and they have good reading material for the visitors)i was supossed to meet some one but ultimately met some one else after 3 changes in names.There was nothing much to write about the meeting..t what struck me was i was more passionate about wockhardt as a vendor than the person sitting opposite to me who was a employee. But then my exictment could not be tramples by a non-motivated,lazy and a absolutely non inspiring employee. We (i and my colleuge) took a break and went to the basement to the canteen..on our way I saw a Merc ..it has a jacket hanger inside..and was standing in a separate closure..i assumed it would be Mr Khorakiwala's car..i just went around the car ocassional toching it..my colleuge was quite confused with my behavior..he asked me.."are you ok"..i just looked at him and told him THIS MUST BE SIR'S CAR&"IAM FEELING GREATNESS"This must have happened about 5 years back..as i i read the  interview today..the feeling just came back.."I FEEL GREATNESS"(his greatness). My salutes to my first entrepreneurial Hero. and thanks for inspiring me till date. I work for Wockhardt as a vendor..trying very hard to break open in to a system and do greater things..its a ongoing battle. I once told one of the HR executives.."you work for wockhardt..I work for Mr Khorakiwala..she asked me.."what's the difference?"..i looked straight in to her eye and told he"YOU WILL NEVER UNDERSTAND..BECAUSE I FEEL GREATNESS..I EXPERIENCE IT.

Excerpts from the interview

Hard work pays off for Wockhardt: Habil Khorakiwala, Chairman, Wockhardt

Habil Khorakiwala, 70, chairman of generic drug maker Wockhardt, says that the company's near-death experience has taught him lessons that he hopes will last generations. 

"We have decided not to touch derivative instruments. Some bankers still come to us with such products. I tell them, I don't want to risk my organisation in my lifetime or in my children's lifetime," says the septuagenarian chairman, much chastened after foreign exchange losses three years ago that almost drove his company into bankruptcy. 

As a result pharma multinationals were hovering around for easy pickings, hoping to scoop up a firm that happens to be one of the fastest growing generic drug makers in India. 

In April 2008, Khorakiwala, who founded Wockhardtin the early sixties, the company was then known as Worli Chemical Works, announced its first ever loss, due to a mark to market loss of Rs 581 crore on account of the huge devaluation of the rupee even as in the same year sales grew 35% to Rs 3,593 crore. 

On Friday, when ET met him, a day after he completed a Rs 1,280-crore deal with Danone for Wockhardt's nutrition business, a confident Khorakiwala spoke candidly of his past troubles which are now behind him. Over the last two years, Wockhardt's debt-equity ratio has come down significantly from a high of 5.5:1 to 1.9:1, which will be below 1 after the money comes in from Danone. 

The stock has seen an exponential rise, jumping almost 200% in the last one year a sign, analysts say, investors have started re-rating the company. 

Acknowledging the role of his immediate family and his top management team for standing by him as he struggled to steer the company back into profitability, Khorakhiwala is certain that the turnaround is complete as a series of sales of non-core assets that included hospitals and the nutrition business helped pare debt even as core operations improved. 

Generics, the core business, has consistently delivered, even during its troubled years post 2008. 

Its Ebitda margins over last three years have thus showed a consistent rise. In 2011-12, it was about 31%, while in the previous year it was 24%. In 2009-10, it was 18%. 

Wockhardt has about 70% of its sales accruing from overseas, mostly the US. Hedging is par for the course for companies with forex exposure. TCS, Infosys hedge as a matter of routine. 

"We deliberated. We have a large portion of our business coming from overseas. It is neutral for us and we are not managing currencies. You burn your hands once then it takes time to recover," he says. A business runs on its inner core and inner strength, he says and for Wockhardt the only challenge was the "financial challenge", and therefore could be resolved. 

"We never had a business challenge. We remained very focused," Khorakiwala said. 

BDO Haribhakti Group chairman Shailesh Haribhakti says Khorakiwala always maintained his equanimity."Habil Khorakiwala was calm and composed in our first meeting in early 2009. He clearly understood the problem and told us that the only way to come out of the crisis is by improving operating performance and getting rid of non-core assets. This is what he did and today Wockhardt is a great turn-around story," says Haribhakti. 

During the troubled years, its stakeholders held faith. The suppliers allowed Khorakhiwala more leeway, extending his credit while he ensured that all his employees got their salaries on time. 

"Not once did any of our employees get their salaries reduced or delayed by even a day," Khorakiwala says. To plug the loopholes in the finance team, which almost wiped his company, Khorakiwala took some tough measures including changing the finance team. 

During those difficult days, all eyes were on costs. "We reduced the operational costs everywhere," he says. It was not by belt tightening alone. "Wherever there were inefficiencies, people themselves took action." Thus, Wockhardt managed to prune costs in the manufacturing area by 10-15%, by pruning one layer of people from the five layers tuned into the manufacturing arena. 

For a year, Wockhardt decided to freeze hiring and costs were pruned in sales and marketing organisation. "If you see my balance sheet of last three years and see the balance sheet before the crisis, you'll see a reduction in expenses today," says Khorakhiwala. 

"Khorakiwala is an extremely sharp person. He has piercing insights about business. He is also a very tough person, because it is not easy to run a company when you have debtors hounding you every day. He could have cracked up and sold the company, but he didn't. Khorakiwala has taken risks and that has paid," said Sujay Shetty, head of Life Sciences at PwC. 

Khorakiwala says his organisation was reinvented, as people found a way to manage with fewer resources. Around the same time as the foreign exchange losses exploded in its face, the R&D wing was working on a range of products in several areas. 

Fortunately, some of these products in the pipeline have started to materialise. Metoprolol, the cardiac drug got the nod from USFDA. In anticipation of the nod, Khorakiwala took a huge bet by building an inventory and thus could at once supply to US drugstores when it received a nod from the regulator. 

"We created inventory in advance before we got the approval. So when the opportunity came, we took the advantage. It was a risk but the upside was significant," he added. "We took a call, including keeping R&D and drug discovery processes (that cost money) intact. It's a big call. Usually that (R&D spends) is the big casualty," when companies are in trouble. 

The company's corporate debt restructuring was painful after some creditors, notably hedge fund QVT which had invested in its foreign currency convertible bonds, dragged them to court. 

The value of shares had fallen and the bondholders wanted the money back. The company offered shares, which was rebuffed. Had they taken it they would have been rich now, says the chairman of the company which has seen the stock price gain over 250% this year. Wockhardt is paying QVT and others in installments.

The US business is growing at a brisk pace. In the US, Wockhardt in 2011-12 notched up revenues of $370 million as against $230 million in 2010-11. In 2009-10, sales in the US was just $120 million.

Archaic labour law returns to haunt Indian IT sector

The software industry in India's technology capital, which has been a beneficiary of benign government neglect, is concerned that the malevolent gaze of arcane rules and regulations may be falling upon it.

Employers in Bangalore, home to some of the world's most prominent software companies, are worried that a law made applicable to IT companies starting this year has the potential to cause them severe headaches at a time the young industry is going through its worst phase.

IT companies have enjoyed exemption from this archaic law - the Industrial Employment (Standing Orders) Act, 1946 - for more than a decade.

"This is a retrograde step. This law belongs to the 19th century and does not take into account the ground realities of a globalised world," said industry veteran TV Mohandas Pai, a former member of Infosys' leadership team who was instrumental in getting the earlier exemption.

"Originally, the exemption was secured to stop harassment from the labour department and the inspector raj."

IT companies worry they will be made to comply with what they believe are complicated and unnecessary procedures, be exposed to 'inspector raj', and end up encouraging union activity in a sector that has been largely free of labour groupings.

The law mandates companies to "define with sufficient precision the conditions of employment" and make these conditions known to employees by posting them "on special boards to be maintained for the purpose at or near the entrance through which the majority of the workmen enter the industrial establishment". Moreover, these so-called "standing orders" must be approved by labour unions or staff representatives.

This, companies fear, could be an invitation of unionisation.

"It will only encourage non-performing employees to cite the law in order to create the scope for a preventable unionised approach. We are part of the IT industry and like every organisation in our industry, we have formulated our own working norms, guidelines and practices which are based on the spirit and purpose of fulfilling more than what the law is meant for," a spokesman for mid-sized IT company Infinite Computer Solutions said.

Exemption from the standing orders was a carrot that the government used to attract investment from Indian and multinational software companies, which now employ more than a million professionals in Bangalore alone. The software industry is the fastest-growing segment of Karnataka's economy and contributes to nearly a quarter of the state's GDP. Software exports from Karnataka make up over a third of total software exports from India and in 2011-12, Karnataka exported Rs 1.3 lakh crore worth of software services.Smaller and mid-sized IT companies are the ones that are beginning to see the effects of the exemption end right now as they are being contacted by the labour department for certification of standing orders. Many of them were not even aware of the changed circumstances. 

Zenotech promoter challenges FIPB nod to Daiichi Sankyo

The minority shareholders led by founder promoters of Zenotech Labs, now controlled by the Japanese drug firm Daiichi Sankyo, have moved the Andhra Pradesh High Court challenging the validity of foreign collaboration approval issued by India's Foreign Investment Promotion Board (Fipb). 

Daiichi had in October 2008 acquired majority stake in the Hyderabad biopharmaceutical firm through taking over India's largest drugmaker Ranbaxy Laboratories, which owned 47% in Zenotech. 

Jayaram Chigurupati, Zenotech's founder promoter, who still owns around 25% stake, contends that Fipbdidn't comply with the regulation that mandates the board resolution of Zenotech for foreign collaboration. He has questioned the validity of the Fipb approval toDaiichi Sankyo that paved way for the foreign entity to buy 20% from Zenotch's public shareholders. The Japanese firm, along with Ranbaxy, now owns 67% in Zenotech. 

In a petition filed before the AP High Court, Jayaram argued that Fipb cannot grant approval for foreign equity participation in an Indian company without the mandatory board approval of the Indian company supporting induction of foreign equity. 

"The very purpose of the mandatory guideline is to prevent large foreign companies from taking over existing Indian companies with sole intention of killing local competition and protecting domestic industry. As this was not adhered to by the Fipb, Zenotech has suffered huge losses and its minority shareholders, who now hold 33% in the company, suffered prejudice, " Jayaram told ET from the US over phone. 

Jayaram has urged the Court to set aside the Fipb approval and direct Daiichi Sankyo not to exercise its voting rights in Zenotech and any other steps to change ownership structure during the pendency of his petition. 

The Fipb approval, Jayaram alleges had adversely affected the performance of Zenotech ever since Daiichi Sankyo assumed control. He said the operating funds of Zenotech were completely exhausted due to 'deliberate mismanagement' of Daiichi Sankyo. Salaries were not paid to the Zenotech's employees in a timely manner, forcing the key personnel to leave the company, leading to loss of valuable resources. 

"Several projects of Zenotech have come to a complete standstill and the new management has failed to capitalize on Zenotech's USFDA approval for injectables manufacturing facility due to lack of operational funds. Consequently, there has been a significant fall in the share price of Zenotech from a high of over Rs 157 in December 2007 to around Rs 30 now, a huge loss to minority shareholders," said Jayaram. 

The Zenotech stock on Monday gained 4.95% at Rs 32.85 on BSE, the day the exchange's Sensex lost 129 points at 17,391 points. 

The Zenotech minority shareholders led by Jayaram have been opposing the change in management control of Zenotech and had moved several regulators and legal forums including Fipb and Company Law Board (CLB) earlier. Jayaram made the going miserable for Ranbaxy when it appointed its nominees on the board of Zenotech and attempted taking control over the management and operations. For long, workers went on strike and the operations were stalled. Claiming that several key records, assets and books of accounts were missing, Ranbaxy had initiated criminal proceedings against Jayaram and others. 

Jayaram, in his latest petition said, he met the finance minister in September challenging the Fipb approval. On the minister's advice, he had appeared before Fipb in February this year and submitted objections against the 'impugned approval', which, he accuses, was granted in violation of the guidelines. 

According to Zenotech founder, Fipb complied with the requirement of obtaining no-objection letter from the joint venture partner of Daiichi Sankyo (Ranbaxy) but not from Zenotech in which the Japanese firm was making foreign investments. "This is a blatant violation of the Fipb regulations and no reasons have been given whatsoever for departing from the same." 

Jayaram, who claims to have recently managed to obtain the File Notings on the Fipb file concerning the approval in question, has submitted to the Court that the file notings clearly showed that an approval from the Zenotech board was sought in accordance with the guidelines but was never received by the Fipb.

Poonawalla group acquires Dutch global vaccine company

Serum Institute of India, the flagship company of the over USD 1 billion Poonawalla Group vaccine company, Wednesday announced the acquisition of Bilthoven Biologicals of the Netherlands, a company official said.

Through the acquisition, the Poonawalla Group will get access to technology and expertise for making the Salk injectable polio vaccine.

This first overseas acquisition by the Poonawalla Group will also provide the Group and Serum Institute an important manufacturing base in Europe with access to the important European and US markets.

"This acquisition will significantly strengthen our position in the global vaccines market, while giving us access to the technology and production facility of Injectable Polio Vaccine (Salk), which is the only logical solution available to the world for the eradication of polio," said Cyrus Poonawalla, Chairman of the Poonawalla Group and Serum Institute, while announcing the acquisition.

"More importantly it also gives the Poonawalla Group an important operational and strategic beachhead in Europe and the US, with the important manufacturing base in the Netherlands. This will also significantly enhance our earlier offerings in the paediatric vaccines segment," he added.

Bilthoven Biologicals is located in the city of Bilthoven near Amsterdam. The manufacturing facility is spread over 20 acres and employs over 200 people. The facility has a manufacturing capacity of over 20 million doses of vaccines in a year and the company sells these vaccines to Europe and developing countries.

Sharing the future outlook for the company, Adar Poonawalla, Executive Director of the Poonawalla Group said that the group is committed to investing over Euros 70-80 million over the next three years to augment the infrastructure and enhance the manufacturing capacity of the Bilthoven's facilities.

"India Medical Equipment Industry: Defying Global Recession"

Comprehensive report on medical equipment industry in India

Markets(http://www.researchandmarkets.com/research/acc344/india_medical_equi) has announced the addition of GlobalData's new report "India Medical Equipment Industry: Defying Global Recession" to their offering.

India Medical Equipment Industry: Defying Global Recession

Summary

Our new report - "India Medical Equipment Industry: Defying Global Recession", explores the medical equipment industry in India. The medical devices industry in India was valued at $2.7 billion in 2008. Driven by increasing awareness and affordability coupled with an increasing patient pool, the market is forecast to grow by 12% annually for the next seven years to reach $6 billion in 2015.

While the ongoing global recession continues to hurt businesses around the globe the medical devices industry in India is expected to come out unscathed. The fact that the Indian medical devices industry, so far, has remained insulated from the global recession can be attributed to several ongoing trends. Firstly, the demand for healthcare in India is not tied to consumer discretionary spending. Secondly, an affluent and aware patient population in India continues to demand improved health services. Finally, the fact that the corporate hospital groups in India are responding to the demand by building up new healthcare infrastructure should ensure that all stakeholders in this industry continue to benefit.

Scope

• Insights into market sizing and top level data on the medical equipment industry in India
• Analysis of the key recent trends and factors driving the growth of the market
• Review of key factors enabling the medical equipment industry in India to resist the economic recession

Reasons to buy

• Develop business strategies with the help of specific insights from GlobalData on key events within the medical equipment industry.
• Gain a strong understanding and analyze major trends in the Indian medical equipment industry.
• Identify growth opportunities within the medical equipment industry in India.

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