BS Jury: Picking the winners

Photos: Suryakant Niwate
Outstanding achievements in India Inc can hardly go unnoticed when the chairman of India’s largest carmaker chairs a distinguished jury comprising the heads of a leading consumer company, a private equity giant and two marquee management and strategic consultancy organisations, as well as one of India’s top legal eagles, to decide the winners of the Business Standard awards for corporate excellence for 2016.

 

Scale, sustainability, leadership and innovation were the buzzwords that figured prominently during the two-hour-long discussions, where a jury headed by R C Bhargava, chairman of Maruti Suzuki, met to select the best of corporate India. “While the objective assessment of past performance backed by a rigorous assessment of data and documentation is important, the jury, which has a wide experience and deep understanding of Indian industry, were looking at outstanding performance,” Bhargava said.

 

“The selection of winners is a transparent and rigorous process through discussions by a lot of senior business leaders in that room. Business Standard awards have been recognised as one of the finest in Indian business,” said McKinsey Global Co-leader of Analytics Practice Noshir Kaka, a jury member, summing up the mood.

 

The other members of the jury were Marico Chairman Harsh Mariwala, KKR India Advisors CEO Sanjay Nayar, EY India Chairman and Chairman of EY’s global emerging markets committee Rajiv Memani and Cyril Amarchand Mangaldas Managing Partner Cyril Shroff.

 

The task of selecting the winners was a difficult one, as the shortlist across categories had several strong contenders. The jury members agreed that while financial ratios were important for making the first cut, equal importance must be given to individuals who focused on innovation and built real institutions at a time of severe challenges in the external environment. “We aimed to reward innovations that are going on and new business models that companies are adopting,” said KKR’s Nayar.

 

The jury members had obviously gone through the sizeable 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 market capitalisation, 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 was then subjected to intense scrutiny. The agenda was a formidable one: Selecting the Lifetime Achievement award winner, CEO of the Year, Company of the Year, and achievers in other categories — Star Public Sector Undertaking, Star Multinational Company, Star Small and Medium Enterprise, and Start-up of the Year.

 

 When IndiGo Airlines took wing in 2006, it redefined Indian aviation. In its decade of existence, the airline has proved that it is possible to make profits in the aviation business. IndiGo told Indians that there really was something called “on-time performance” and that flying can indeed be made a pleasurable experience. InterGlobe Aviation, the company that flies IndiGo Airlines, came out with its initial public offering in October 2015, and commands a market capitalisation of Rs 30,000 crore.

 

‘Eicher Motors Managing Director and CEO Siddhartha Lal, after having taken the iconic Royal Enfield motorcycle to great heights in India, has moved to London, as he wants to make a mark globally. At the age of 26, Lal became CEO of Royal Enfield in 2000, when it was a struggling product. Four years later, as chief operating officer of the company, Lal decided to divest 13 of the 15 businesses that Eicher was in and decided to put all the money and focus behind Royal Enfield and trucks, two businesses where he believed the group had a genuine shot at leadership. Lal’s bet paid off big time, with Eicher becoming a grand success. It now has a market capitalisation of Rs 66,000 crore.

 

And that was the main reason why Lal was unanimously chosen CEO of the Year and IndiGo, led by founders Rahul Bhatia and Rakesh Gangwal, and president Aditya Ghosh, awarded 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 in their innovative business models.

 

Cyril Shroff suggested that the Indian Space Research Organisation (Isro), which had launched 104 satellites days before the jury meeting, merited an award. The jury agreed, saying that Isro had made India’s space programme a force to reckon with globally. The jury unanimously conferred the Innovative Organisation award on Isro. The space agency achieved significant milestones in 2016 in the domains of vehicle, satellite, applications and space exploration. It has come a long way, having once been supported by Russia, which helped it launch the Aryabhata in 1975. Now it launches other countries’ satellites for a fee. The Mars Orbiter Mission was another feather in its cap.

 

For the Lifetime Achievement Award, the jury discussed several outstanding individuals who have left a deep and lasting impact in India’s corporate history, but quickly decided on ITC’s Y C Deveshwar as the winner. “We decided that Mr Deveshwar should be given the award, as under his leadership, ITC has transformed itself from a company that was essentially selling cigarettes into a diversified company, and its hotel and FMCG businesses are outstanding,” Bhargava said.

 

Deveshwar donned the role of ITC’s executive chairman in 1996. Since then, the company’s net revenues have grown 15-fold and profit after tax 37 times. Total shareholder returns have grown at a compounded annual rate of 23 per cent. The new FMCG businesses, nurtured over the last decade or so, have crafted a portfolio of 25 mother brands. ITC’s non-cigarettes businesses since 1996 have grown 17-fold and registered a net segment revenue of Rs 23,000 crore. Between 1991 and 1994, Deveshwar was also chairman and managing director, Air India. In February 2017, he became ITC’s non-executive chairman, leaving behind an ITC that is very different from the one he inherited.

 

On the Start-up of the Year award, the jury spent a long time debating and most members agreed that they were not too keen to give the award to companies that were burning cash in the business-to-consumer category, chasing customers and revenue at the cost of profits. The preference was for innovative use of technology and original thinking, not copying an overseas model.

 

The jury chose Freshdesk, a cloud-based customer support company, used by several small and large companies to reach their customers via phone, email, chat, website, social networks or mobile apps. The jury liked the fact that the company has a proven model, with strong revenue growth and profits. Memani said, “We were looking at innovative companies which would have a sustained impact over a period of time. Freshdesk, a SaaS (software as a service) company, is creating a real impact helping SMEs become more competitive without having to incur additional costs. Its financial performance is impressive and it is scaling rapidly. Freshdesk stood out in the start-up category.”

 

 There were several candidates for the Star MNC award, and the other jury members were keen to consider giving the award to India’s largest passenger vehicle company, Maruti Suzuki. The jury chairman, R C Bhargava, then recused himself from the discussions on Star MNC, since he is Maruti’s chairman. Memani said, “Maruti has been a true outlier — it started with manufacturing 100,000 vehicles and makes 1.5 million vehicles now. There are very few examples in corporate India where a company has consistently dominated and maintained market share of more than 50 per cent for more than a decade.” He added that Maruti’s contributions to the manufacturing sector in India — efficiencies in production and on the shop floor, and its design thinking — are truly outstanding. 

 

When the jury came to the SME space, they didn’t take any time in picking the Star SME winner — Dr Lal PathLabs — from a long list of names of companies with revenues below Rs 2,000 crore for creating a new category of business with excellent financials. The New Delhi-based medical diagnostics company launched its IPO in December 2015 and its shares are up 80 per cent since then. Said Mariwala: “Dr Lal was chosen for its growth rate, its financials, its successful IPO last year and shareholder wealth creation. It is also paving the way for other players in the industry like Thyrocare and Metropolis.”

 

The jury felt that in selecting the Star PSU, they should go beyond financial metrics and look at the company’s impact on the country. After a discussion on several companies, they zeroed in on NTPC, the country’s largest power generation company. This maharatna’s plant load factor has been consistently better than the national average. Said Nayar, “All of us know that the power generation sector has been plagued with a lot of issues and NTPC has done a fantastic job in refurbishing its existing asset base, improving plant load factor to an incredible extent and bringing down the cost of power for the consumer.”


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