Dr. Asha Krishnakumar, Divisional Manager Ashok Leyland, emphasized on CSR at DoMS IIT Madras.

Corporate Wisdom forum of DoMS IIT Madras invited Dr. Asha Krishnakumar, Divisional Manager Ashok Leyland for a talk on Corporate Social Responsibility (CSR).

The distinguished guest started with asking the fundamental question of “what is CSR?” She quoted Friedman and said motive of organizations is to make profit for the stakeholders, then why go for CSR? Tracing the history of CSR she said at the end of 19^th century many corporations in Europe and US had set up 100s of philanthropic trusts. CSR was seen as capitalism with a heart. During last 2-3 decades, with increasing globalization CSR has gained augmenting popularity. Now many theory exists in favor and against of CSR.

Discussing the global CSR scenario, Dr. Asha said that it all primarily started with bad press. Organizations like Dow Chemicals, Enron and Nike etc. were battered by press for their unethical business practices. Many customers shunned Nike after discovering that it employs child labor in developing countries. So as a part of damage control activity, these companies started focusing on CSR in a big way. They have started cleaning up their supply chain and many big global retailers like Conron, Ikea & Bodyshop who source glassware, brassware etc. from India, are working with NGOs to improve the lives of children. Now “No Child Labor” logo is a coveted one.

Dr. Asha elaborated on types of CSR activities which are- cause promotion, corporate social marketing, community volunteering and socially responsible business practices. She also revealed that now we have many CSR watch dogs & CSR monitoring institutions in form of Dow Jones Sustainability World Index, Social Accountability 8000 (SA 8000) etc. All these factors have led to an increased activity in CSR space across the world. For example Vodafone transferred money through text messages to those without bank account in Kenya; Honda took road safety initiative in China & Japan; HSBC focused on education & financial literacy classes and Sony initiated recycling programs & electronic drop boxes.

Talking about the Indian CSR scenario, Dr. Asha said though India moved slowly towards CSR, now Indian companies have started to wave the CSR flag. Now the mind set is changing from “Why should I do it?” to “How should I do it?” The reason could be that the pressure for CSR is building up now and also companies now think CSR looks great on company mission statement and value codes. The CSR in the country has evolved over a period of time from “adhoc charity” to “allied charity” to “focused charity”. Now strategic philanthropic is also taking shape. For sustainability and good returns on CSR spending, well defined processes need to be put in place. Social objectives need to be clear, measurable and linked to the economic goals of the organization. ITC’s e-chaupal initiative was one highly successful model which linked the CSR to its core business. It has been found that CSR helps organizations in enhancing brand value, credibility, giving competitive advantage, increasing customer loyalty & community trust and motivates employee.

Dr. Asha then expounded on CSR initiative at Ashok Leyland. CSR at Ashok Leyland is very structured and involves socially relevant activities to build trust among employees, community and stakeholders. Many focused groups and initiatives have been taken up to engage employees and their families in form of SHGs (Self Help Groups). Organization has been doing activities like HIV/AIDS awareness, afforestation drive, and relief operation during natural calamity, coaching for poor school students, driver de addiction centers etc. Company has also started a green initiative wherein it implemented a green supply chain management which includes reduction, recycling, reuse & substitution of materials.

In the end Dr. Asha concluded by saying that “CSR is not only about doing good for the society, it makes sound business sense also”.

Vishal Chourasiya

Rajeev Karwal, Ex-President & CEO, Consumer Durables Vertical of Reliance Retail Expounds on the Future of Retail in India at DoMS, IITM

The CEO Connect forum of the Department of Management Studies (DoMS), IIT Madras invited Mr. Rajeev Karwal, Ex-President & CEO, Consumer Durables Vertical of Reliance Retail to share his valuable insights and enlighten students about the present scenario and future prospects of the Retail sector in India.

Starting off a session marked by sharp comment, he candidly talked about his own experience with heavy traffic and jams in metropolitan cities. Mr. Rajeev Karwal emphatically said that organized retail in India has miles to go before it revolutionizes the common man’s life. He backed this argument by saying that today a typical metro was plagued with poor road infrastructure, transport services and scarcity of land. In the face of such challenges you can’t expect a typical family of four which rides a two-wheeler to travel small distances on vehicle-infested and pot-holed roads.

However, according to him, the organized retail revolution has begun to slowly find its feet in India. Big Bazaar, Pantaloons and Reliance Retail have begun in earnest. But they have to invest heavily in areas such as infrastructure, technology, training and in-house advertisements. Such activities typically shave off portions of returns giving back only about 5-6%. Giving them a tough fight are the good old kirana stores, who are well entrenched in the nooks and corners of the country and don’t need the same investments. They are also not bound by any obligations that a company has towards its stakeholders and the stock markets.

Talking about the size of the organized retail market in India, he said that it is just about $238 bn big, which is less than the revenues of $ 351 bn of that of Wal-Mart. So there of course lies immense potential in this sector but the demands that it places on the operant companies are immense. Describing a typical mall, Mr. Rajeev Karwal said that it would need at least one major anchor in the form of brands such as Shopper’s Stop or Big Bazaar, a food court or chains such as McDonald’s, Pizza Hut or Haldiram and movie theatres. However there was a shortage of such anchors since many preferred to set up their own shops in the face of high rental prices at malls, resulting in agonizingly long times to reach a semblance of break even.

Mr Rajeev Karwal emphasized that organized retail isn’t about putting together retail in an organized looking place. Just setting up snazzy shops with great looking interiors doesn’t qualify you as an organized retailer. You need to give the customer what he or she demands. Despite so many requirements you need to give low prices at good quality. While many players like Reliance Retail have made decent attempts at extracting the maximum value out of the supply chain, they still fail in providing the personal touch that the Indian consumer demands. He asserted that is where the kirana store owners score. They are ready to drop by to your house to give you a bottle of cold drink every time a guest drops by. They know you favourite brands. They are willing to give you credit. Through relationships built over the years, they provide you peace of mind and product guarantee and replacement. These are the survival tactics of the kirana store owners at work, determined old timers who will leverage upon old practices and still innovate and fight to retain their traditional customers.

Sharing the difficulties that organized retail faced, Mr. Rajeev Karwal said that the back-end supply chain operations were of prime importance. They also require lots of cash as the farmer would need to be paid for 2 seasons of crops before a company could be assured of a steady supply. In contrast, organized retail in developed nations required brand owners and product manufacturers to fund organized players. Such features make the challenges of the Indian market unique, for which retailers must innovate to stay and grow. Mr. Rajeev Karwal said that the cause of organized retail is also not being helped by different and inconsistent policies framed by different governments at different times. In addition, the sector needs foreign investments, an important input that still doesn’t find favour with the powers-that-be.

Confidently claiming the market share of organized retail to be very low, Mr. Rajeev Karwal said that it would be at least 10 years until it would reach 20% of the entire retail pie. That was because product manufacturers would not give up on sales avenues in the form of traditional neighbourhood kirana stores and would woo them more aggressively than the organized players.

However, the scope of growth for organized retail was humongous as there was tremendous confidence and momentum in the market. That is because today the consumer is looking at an entire experience, something that the retailers know about and are working on. Hailing the popularity of mobile phones in India, Mr. Rajeev Karwal stated that their numbers had grown faster than Internet connections and credit cards. Enabling shopping by promotions through such a medium or offering credit or debit through such a route would revolutionize the retail sector in the coming times.

With the stage being opened for questions, students posed their queries. Answering a question about the future of online organized retail, Mr. Rajeev Karwal opined that the average Indian consumer was very value conscious. He or she likes to compare various offerings and touch and feel each of them before making a choice. Online shopping not only blocks the consumer from doing that but also is helpless in the face of limited Internet penetration and the low trust it evinces.

On being queried about the potential of the rural retail sector, he said that there were a thousand unorganized retailers who were supplying goods without being recognized on government papers. This ensures that the rural economy provides cheap goods without worrying about the excise and sales tax and VAT. But still organized retail’s stronghold was the variety it offers to the urban consumer.

When quizzed about the emergence of private labels by organized retailers, Mr. Rajeev Karwal replied that these were the tactics of firms to cut off established brands from the reach of the consumer as they offered low margins. He said that private labels can be created at low costs and thus provide higher margins as well as brand recognition for the retail brand.

At the end of the session, Mr. Rajeev Karwal said that retail giants, though growing, still had miles to go before they can confidently say that they have acquired the faith and trust of the Indian consumer. Till then, the kirana store owner shall rule supreme. Finally, speaking in context of his new venture, Milagrow Business & Knowledge Solutions, he signed off by saying that with strong fundamentals, great ideas and ample opportunities at their disposal he would urge the students of DoMS IIT Madras to become entrepreneurs like him and explore the possibilities that the retail market is offering today.

Kunal Lal

DoMS Interface Team

Class of 2009

Twenty Fifth Endowment Lecture held at DoMS, IIT Madras

Department Of Management Studies, IIT Madras had the honor of hosting the twenty fifth endowment lecture in association with EFSI (The Employers’ Federation of Southern India). Mr. K Pandia Rajan, Managing Director & CEO Ma Foi, was the chief guest of the evening.

The program started with welcome note by Mr. Shaji Varghese, President EFSI. He briefly touched upon the history of EFSI, which was setup in 1920, immediately after ILO (International Labor Organization) was setup in Geneva. EFSI was the first organization for employees dealing with issues like labor policies and labor management. The Endowment Lecture was started in 1970s, in association with Humanities Department of IIT Madras. This was followed by Presidential Address by Prof. TT Narendran, who in his hallmark style recalled the early years of Endowment Lecture. Prof. Narendran welcomed the Chief Guest and stressed upon the importance of HR in today’s dynamic job environment. He also introduced the topic of the session i.e. ‘Changing Nature of Work & Employment’.

The stage was then handed over to Mr. K. Pandia Rajan, chief guest of the event. Mr. Pandia Rajan has a B.E Honors from Coimbatore and a MBA from XLRI Jamshedpur. He founded Ma Foi, which currently has 1750 professional across 100 locations. Mr. Pandia Rajan started with recalling that this was his third lecture at IIT Madras in last one year and how much he loves coming to the campus again and again. He posed a very thought provocative question of ‘Who am I? An employer, an employee, owner, entrepreneur or something else?’ He explained how he is a bit of all, depending on the situation and in today’s dynamic world the distinction between all these is vanishing. He revealed a deal, he just signed before coming for the event, with Achimasala, a SHG (Self Help Group) of about 700 women with a turnover of Rs 280 Crore. The deal pertains to door to door marketing of Achimasala products and Mr. Pandia Rajan was very excited about how he would be helping many women in upgrading their living standard. He admired the ShaktiAmma initiative of HUL which covers 50000 villages as of now and ITC’s e-Chaupal which covers one seventh of rural areas in the country.

Mr. Pandia Rajan used Wheel of Migration as a framework to explain current dynamic scenario. The four planks of the wheel namely Migration of products and services, Migration of talent, Migration of capital and Migration of business processes precisely explain the various dynamics of today’s enterprise. If US blocks H1B Visa, more and more jobs will be outsourced to India. If UK blocks nurse visas, more and more patients will start coming to India for treatment leading to what is now famously known as health tourism. Hence, this link between migration of talent and business processes is creating many different business models.

Mr. Pandia Rajan also touched upon how attitude and mid-set towards HR as a stream is fast changing. He took example of a famous HR & BPO company named Exult Inc., which in 2000 reached a valuation of $1 million with just one single employee and just one client. Later on it was acquired by Hewitt Associates. VCs (Venture Capitalists) today are lining-up to invest in good ideas unlike old time when many good ideas died for lack of fund. People have now started asking ‘What is your business model?’ instead of simply business which was the case earlier. The entire scenario of entrepreneurship is getting redefined. Mr. Pandia Rajan raised the issue of transience & transition by sighting the decreasing longevity of employment. Nobody today is talking about life long employment. The options available today are plenty and have increased many folds.

Mr. Pandia Rajan shared a very interesting anecdote that, while inaugurating his 100^th office at Hong Kong, the room had 112 people of 50 different nationalities. This is the extent to which the world has globalised. He also stressed on the fact that now the perception of India in the world is changing. India is no longer a punishment posting destination instead an Indian stint is now a requirement for the CEO Job. As an individual we are living in a very exciting time. We have an opportunity to be at the very top. He cited one issue that is really holding back our Country is that of labor laws. Country has 176 conflicting labor rules which are proving to be a major roadblock for the country. Interestingly labor ministry has the highest attrition with 9 labor ministers changed in last 10 years. Mr. Pandia Rajan ended the lecture by stressing on need of labor law reforms.

By:

Vishal Chourasiya

DoMS Interface

Dr. Bharat Balasubramanian of Daimler AG Addresses Students at the Department of Management Studies, IIT Madras

It was a new quarter at the Department of Management Studies, IIT Madras and it was a new corporate honcho who took out time to address its students and impart wisdom from his enterprising career. So it was Dr. Bharat Balasubramanian, Vice President, Group Research and Advanced Engineering, E/E, IT and Processes of Daimler AG whom the student came in droves to listen, under the auspices of the Corporate Wisdom forum.

Dr. Bharat Balasubramanian started by introducing himself. He is an IIT Bombay alumnus who went to Germany in 1974 after graduation. He joined his present employer in 1977. He said that joining Daimler AG was a conscious decision on his part as he wanted to work in a hard core engineering field rather than go to the US or to the IIMs for further studies, as his batch mates did.

Dr. Bharat Balasubramanian gave a description of various units of Daimler AG as well as Daimler-Benz and various cars, trucks and vehicles that these premium brands make. He spoke of the challenges the company is facing, in the face of other premium brands and worthy competitors such as BMW, Audi and Volkswagen. Daimler AG and Daimler-Benz today are working on delivering better cars that give more value to the customer who chooses to go with their brand. This posed great engineering challenges in areas such as fuel injection systems as well as fuel quality, he emphasized. To counter them, he showed how his company was actively engaged in research and development projects. The Mercedes-Benz brand is a first-rate brand that stands for class, comfort and safety. So today the company was working hard to come up with technologies that gave top notch comfort as well as safety. For this purpose, the company has zealously invested in quality improvement processes.

He said that Daimler-Benz also had a R&D centre in India. He described about the initial challenges of setting up a new division outside of Germany as the company’s employees were wary of the unit taking away jobs from them and how initially the results were not up to the mark. That’s when he decided that the unit needed to fix the problem of kill the unit. Dr. Bharat Balasubramanian then worked hard at convincing the powers that be that if the company let go of this opportunity then someone else might pounce on it. He went for a Board of Directors revamp. Also as it was the Mercedes-Benz brand that was better known and respected in India, the unit was renamed as the Mercedes-Benz Research Center to make its presence felt as well as attract the best talent.

After listening to such an interesting career progression and its accompanying challenges, curious students poured in with their questions. On being asked how he managed the progression from a total R&D professional to a managerial role handling so many units, Dr. Bharat Subramanian said that the transition was an easy one. However, he had his share of challenges. As a part of the senior management he had put forward a thesis that the company change its focus. Initially 90% of the efforts were concentrated on the engineering side and only 10% on management. He suggested that Daimler AG give 40% efforts towards engineering, 30% towards processes and the rest towards management. This was unacceptable to a number of engineers at the company as they were adamant that the present setup was good enough and they were managing very well. After a lot of convincing on the management’s part, the employees were trained over a period of 3 years in management aspects such as sharing one’s vision with one’s team and working with an inter-disciplinary team as well as process aspects such as TQM. This process lasted 3 years at the end of which the management as well as the trained employees appreciated that the training helped them perform their job better.

On being quizzed why Mercedes- Benz didn’t have a great presence in India, Dr. Bharat Balasubramanian accepted that India was a small market for his company. He said that there was a big market for different segments of cars in India and their quality and price aspects were very different from premium brands as that of Mercedes-Benz. So the company would need to differentiate on this respect and come with a different car. In contrast, Europeans expected the same technologies in each car segment and were also very conscious of differentiating between the segments. That’s why Mercedes-Benz had a greater market in Europe than in India, he explained.

Answering question on the split between Daimler and Chrysler, Dr. Bharat Balasubramanian said that the relationship was set up because the company wanted a foothold in the US. However, Daimler AG was a premium brand player while Chrysler was a volumes player. The synergies that the two wanted was not really found as despite the tie-up, both operated as different units and reported profits individually. The combination also had massive cultural issues. Moreover, Chrysler, along with other American automotive giants such as GM and Ford, didn’t really attract the best talent. In contrast, the best engineers in Germany vied to work with each other to work for a company that produced a car such as Mercedes-Benz. So there was also a talent dissonance. To top all these, the brands didn’t match. Mercedes-Benz didn’t want to dilute its brand with the Chrysler association while Chrysler wanted to a brand of the masses; this resulted in a totally ineffective brand strategy. This taught the company a very important lesson – if you want synergies to come from an association you must share the same platform of operation. Even when 2 years ago when it became clear that a split was needed, there was no retrenchment possible in Chrysler as was the norm in the US automotive industry. Finally a majority stake of the holdings was bought by Cerberus Capital Management.

Commenting on the Tata Group’s famed attempts to make the 1 lakh car, Dr. Bharat Balasubramanian said that European car makers wouldn’t make such a car for their customers. He said that in this case Tata’s strategy was to attack the 2 wheeler segment users and give them a safer option than an open vehicle to travel with their entire family. However, such a car wouldn’t pass the crash tests that are a very important regulation to be met by European carmakers. In fact, two wheelers such as motorcycle have their own market in Europe as they command a distinct respect as a stylish way of travelling. Due to such intricacies involved, he surmised that the European customer wouldn’t fall for such a car.

In the end, Dr. Bharat Balasubramanian said that he felt that engineers from institutions such as the IITs were moving more towards sectors such as IT and Software Services rather than hard core engineering. To have a Mercedes-Benz come from India it was important that the best brains flocked to the automotive sector.

Kunal Lal
DoMS Interface Team
Class of 2009

From the horse's mouth - Gyan from the alumni

When someone, who was there in the place you are currently in, and has reached the places you want to be , talks about things to watch out for, it is the time to listen!!!

As a part of the Alumni Cell initiative, the students of First and Second Year met Mr.Rohin Mahajan, an associate consultant from Mindtree Consulting. Rohin, an alumnus from 2005 batch shared his experiences in DOMS and about the skills needed, once we are out in an organisation.

The one hour session was highly informal and interactive. Rohin talked about what is expected in an organisation. He also spoke about the advantages we, as DOMSians , can exhibit and intiatives we need to take in the organisation.

The session gave students insights on what we need to do in the years in DOMS and outside DOMS to get the extra mileage.