BS Annual Awards 2015 : Vivek Chaand Sehgal, then 18, started his business career as a silver merchant in the early 1970s, launched Motherson along with his mother in 1977 to manufacture power cables and then graduated to auto component manufacturing six years later. A little over two decades later (it was listed in 1993), the company’s revenue has grown at a breakneck speed – from Rs 10 crore to Rs 34,600 crore in FY15. Profits have been growing at a compounded annual growth rate of 35 per cent, resulting in super shareholder returns. Motherson has 42,000 employees in India and another 30,000 in other parts of the world and manufactures spare parts used by almost all the famous cars globally.
In 2000, Siddhartha Lal was all of 26 when he took over as the chief executive officer of Royal Enfield. Four years later, as chief operating officer of Eicher Motors, Lal took a momentous decision – he decided to divest 13 of the 15 businesses that Eicher was in and decided to put all money and focus behind Royal Enfield and trucks, two businesses where he believed the group had a genuine shot at leadership. The bet has paid off big time, with Eicher becoming one of the most profitable auto makers in the world. After making Royal Enfield an iconic brand in India, Lal, now managing director & CEO, has relocated to London to make his mark globally. Eicher now has a market capitalisation of over Rs 40,000 crore.
Outstanding achievements like those of Sehgal and Lal can hardly go unnoticed when the chairman of India’s largest car maker chairs a distinguished jury comprising the heads of a private equity giant, two marquee management and strategic consultancy organisations and one of India’s top legal eagles to decide the winners of the Business Standard awards for corporate excellence for 2015.
While scale, sustainability and visionary leadership were some of the buzzwords that figured prominently during the two-hour-long discussions here on Monday, R C Bhargava, chairman of Maruti Suzuki and head of the jury, put things in perspective. “While an objective assessment of past performance backed by rigorous assessment of data was important, my distinguished colleagues in the jury also looked carefully at the winners’ ability to deliver in future,” Bhargava said.
And that was the main reason why Sehgal was unanimously chosen the CEO of the Year and Eicher Motors, headed by Lal, as the Company of the Year. Several names came up for discussions for these two coveted awards, but what tilted the scales in favour of the duo was the confidence of the jury members that their business models were sustainable.
“We looked carefully at success that can endure,” said McKinsey India MD and McKinsey Inc director Noshir Kaka, a jury member, summing up the mood.
The other members of the jury were – KKR India CEO Sanjay Nayar, EY India CEO and Country Managing Partner Rajiv Memani and Cyril Amarchand Mangaldas Managing Partner Cyril Shroff who said he came across some “great stories” of corporate excellence during the meeting.
The task of selecting the winners – in a year when slowdown was the main theme – was in any case a tough one, but the five-member jury managed to make it look simple by often engaging in friendly banter among themselves to lighten things up a bit. That of course didn’t stop them from cranking up the strictness quotient a level higher. All of them agreed while financial ratios were important for making the first cut, equal importance had to be given to individuals who focused on innovation and built real institutions at a time when the challenges in the external environment were severe. “We chose companies that stood out at a time of economic turbulence through constant innovation to create customer delight and shareholder wealth creation,” said Nayar.
The jury members had obviously gone through the 350-page information docket, containing details of the candidates shortlisted by the Business Standard Research Bureau on the basis of top line and bottom line growth and other financial criteria, including returns on net worth and capital employed.
The stage was set for the jury meeting when Bhargava began the process by asking members to shortlist two candidates from each category – each of whom were then subjected to intense scrutiny. The agenda was a formidable one: selecting the Lifetime Achievement award winner, CEO of the Year and Company of the Year, and achievers in other categories – Star Public-Sector Undertaking, Star Multinational Company and Star Small and Medium Enterprise. Two new categories were added this year in tune with the changing corporate and social landscape – Best Start-Up and Public Institution.
The dominance of automobile companies among the winners (half the eight winners were from that sector) led to a lively discussion on whether the Indian manufacturing sector is finally getting its place under the sun.
Lifetime Achievement Award
The jury discussed several outstanding individuals who have left a deep and lasting impact in India’s corporate history, but didn’t take much time in choosing Bajaj Group Chairman Rahul Bajaj as the winner. “He built a company that is outstanding in all respects – be it financial metrics or brand image. Who can forget Hamara Bajaj? Besides, he has played an important role in public life and has always been outspoken. We are indeed privileged to bestow this honour to him,” Bhargava said.
An MBA from Harvard Business School, Bajaj built Bajaj Auto from scratch during the licence-permit raj days and steered the company during the days of economic liberalisation. The overriding business strategy was simple, as he himself has said during countless interviews – “Take care of the customer. If you cheat him, give him bad quality, charge him more than you should, he will not buy and you are in trouble.”
Despite his publicly expressed reservations about Bajaj Auto exiting the scooters market, he allowed his son, Rajiv, to choose the path of making Bajaj Auto a motor bike manufacturing company.
Start-up of the year
That the Jury spent the maximum time on choosing this award is evident from the fact that as many as 16 names came up for discussions. While everyone was impressed with what each of them has achieved so far, the jury members finally zeroed in on innovation as a key metric and selected Ola Cabs for the award. “Ola scored very high on innovation and changed the business segment through a transparent business model,” said Kaka.
Led by CEO Bhavish Aggarwal and co-founder Ankit Bhati, Ola started in 2011 and has so far raised $1.3 billion from marquee investors such as Tiger Global and Softbank, among others. The app-based taxi aggregator has taken on global giant Uber and claims its users can book over 350,000 vehicles, including taxis, auto-rickshaws and metered taxis in over 102 cities. That’s not all. Ola has expanded its service in some cities to offer food delivery from restaurants. In March, it acquired local rival TaxiForSure for $200 million and formed a global alliance with Lyft, Didi Kuadi and GrabTaxi to offer rides on each other’s platforms across the globe, collectively taking on Uber.
Star MNC of the Year
From start to finish, Abbott India’s name was on top of everyone’s list as the company has emerged as one of the fastest growing pharmaceuticals companies in the country.
With key business segments showing high double-digit growth, Abbott’s revenue in 2014-15 grew an impressive 25.7 per cent and net profit was 44 per cent higher compared to the annualised figures of the previous year. While it has best-sellers such as Brufen and Digene, three of its products feature in the top 10 domestic products by sales in the last 12 months ending October. Abbott also has a portfolio of over 400 branded generics in India and launched 24 new products in 2014-15.
Star SME of the Year
Moving to the small and medium enterprise (SME) space, the jury discussed a long list of names with sales of less than Rs 1,000 crore, but Cera Sanitaryware, led by Chairman & Managing Director Vikram Somany emerged the winner. “Cera has maintained discipline in financial metrics and gained market share from big multinationals and strong domestic incumbents by creating an enduring brand,” EY’s Memani said.
Cera’s revenue CAGR during the past three years has been over 37 per cent, much above the industry average of 12-14 per cent. The main thing that seems to have worked out in favour of Cera is its strategy to adapt to changing consumer preferences and position the company as a bathroom solutions provider instead of just sanitary ware. The investment in brand-building and customer satisfaction is paying off big time, the jury felt.
Star PSU of the Year
This was the easiest to decide as the number of candidates able to meet the criteria was the smallest, leading to some discussions in the jury about the future of government-owned companies. The final choice was Container Corporation of India (Concor), which the jury said, has played a stellar role in the development of container cargo transportation in the country.
What differentiates Concor from its peers in the sector is its infrastructure with a handling capacity of three million 20-feet equivalent containers (TEUs). Though the segment has seen volumes shrink because of the slowdown, the cash-rich Concor has been able to finance its ongoing capex of Rs 6,000 crore through internal accruals and will set up 15 multi-modal logistics parts in various parts of the country by 2017.
Public Institution of the Year
Since it was a new awards category, the jury spent some time on defining the metrics and decided that the honour should go to an independent institution which has been involved in advocacy in an area of public concern and has made a significant impact. After a lot of deliberations, the Centre for Science and Environment (CSE) led by Sunita Narain was declared the winner for its outstanding quality of science and relentless efforts to improve the country’s environmental standards.
The public interest research and advocacy organisation became a household name in 2003 after it released a study that colas sold in India contained residue of pesticides. Though the global cola giants contested the findings, a Joint Parliamentary Committee endorsed CSE’s demand for a strong public health agenda for food and water. It has also done some seminal work on the need to prevent further degradation of natural resources as a large part of India’s population depends on it for subsistence.