“It’s India, not Botswana!”

Chander Mohan Sethi is a Reckitt veteran (he has been with the company since 1984), whose love for its brands, especially Dettol, is evident every time you converse with him. He has ensured an excellent track record for Reckitt Benckiser in India, taking it to various segments on health, personal care and hygiene. His focus on power brands has ensured that brands like Dettol, Veet, Durex, Vanish, Lizol, Harpic became household names especially in urban India. Rural is still a tough nut for the company, where its high price points are proving a deterrent. In this interaction with onkar pandey, Sethi talks about the road ahead for the company in India, and strategic importance that India has in Reckitt’s global roll call.

B&E: Today, Dettol is your star brand in India contributing almost 50% of your revenues. It has successfully extended into soaps as well. How do you look at the brand’s future ahead?
Chander Mohan Sethi (CMS): Dettol has been there for 75 years in India. It’s one of the most trusted brands in India in the health and hygiene segment. Today, it has an 86% market share of antiseptic wash liquid and a 52% share of the liquid hand wash segment. It has crossed the Rs.10 billion annual sales mark by far. But we don’t give much importance to numbers; the consumer is most important.

B&E: What’s the product penetration of the soap category in India?
CMS: Today soaps have a 96% penetration level, but if you take antiseptic soap category where we play, the penetration is roughly about 62%. If you then take Dettol antiseptic liquids, the category penetration again comes to about 70% in urban India, and 40% in rural India.

B&E: You promote Dettol as an antiseptic product, but today it’s being increasingly getting popular as a body wash as well. So how do you straddle the two segments simultaneously?
CMS: There are different products in the area of hygiene that we make. For liquid handwash, we have a different product. Then we have the soap as a personal body wash. Dettol antiseptic liquid is used not just for cuts and wounds but also for surface cleaning, surface disinfection, clothes disinfection in the wash, and even in the water we use for wash. Not just that, even for shaving purposes, it’s used over cuts and wounds if any. So there are different products for different usage. So the point which comes across is that for the health and hygiene habits we follow, Dettol is there at every step.

B&E: How is your rural penetration faring and how are you going about your rural strategy?
CMS: If I take Dettol soap, the total universe of outlets in the country is about 5.5 million shops including paanwalas and mom-and-pop stores. Dettol soap is distributed in 2.3 million stores. And that is between urban and rural. In rural India, we have a 40% distribution reach. Of course, no company is able to reach all the villages. So like many others, we too use the wholesale channel, where we go to more than 3000 towns. In those towns, we have distributors, retails and wholesale operators who act as suppliers to other smaller markets in their vicinity. In terms of business from rural India, it’s different for different products.

B&E: How is the OTC segment faring. What is the business potential you see from it in the coming 2-3 years? What will be your global marketing strategy vis-a-vis Paras?
CMS: Currently, OTC comprises 15-20% of our business, and is an integral and important part of our overall portfolio. It’s one of our strategic growth pillars. As far as Paras goes, these are still early days, but watch the space. We paid Rs.32.6 billion to buy Paras. So it’s extremely important. We are in India to grow our business, and it is an important future growth market for us. Paras products are already in Africa, Middle East region and Bangladesh. So it already has a decent global footprint. And we will help it further with our traditional strengths like distribution in those markets.


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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

How to Build Responsible Business Leaders?

It’s not just character. We also need to avoid ‘moral overconfidence.’

Whenever we see examples of leaders who suffer an ethical or moral lapse, our knee-jerk response is to say there was a flaw in their character, and that deep down, he or she was basically a bad person. That view is part of our larger tendency to sort the world into good people, who are stable, enduringly strong, and blessed with positive character, and bad people, who are inherently weak, frail, or malicious.

In this way of thinking, character is an immutable trait. It’s largely formed during childhood and adolescence, with parents playing a key role. People who adhere to this worldview believe character is something hidden inside each of us, waiting to be revealed during adversity or through careful testing.

In my view, this is really the wrong way to think about it.

Instead, I look at character development in the same way we consider the development of intelligence, wisdom, or subject expertise – as a lifelong process. It’s also not as binary as some observers like to think. The world is not divided into “good people” and “bad people.” Most people have the potential to behave well or poorly, depending on the context.

Most people also overestimate their strength of character – a problem I’ve come to think of as “moral overconfidence.” Consider two famous experiments that highlighted how situation and context affect moral behaviour.

The first is called the Good Samaritan Experiment, and it was conducted by Darley and Batson at Princeton University. They took 67 divinity students and divided them into groups to deliver short talks to other students. Half the students would talk about career prospects for divinity school graduates. The other half would discuss the parable of the Good Samaritan. The speakers were given maps marking the location of the classroom where they would give the talk. Some were told they were running late; some were told they were on schedule; some were told they had extra time.

On the way to the distant classroom, the students encountered a man lying in a doorway, eyes closed, groaning. The question: would these students stop to help the injured man, or keep walking? Remember, these weren’t just any students—they were divinity students, who aimed to spend their careers helping people. Also remember, half of them were about to deliver a speech on the Good Samaritan who stopped by the road to help an injured stranger—the exact scenario that they were encountering. Overall, just over 40% of the students stopped to offer aid. Among those who were running late, just 10% stopped. Of those who were preparing to talk about the Good Samaritan parable, 53% helped the man. The lesson most people draw from this: even among a group of students, you might expect to possess above-average measures of “character,” a high number behaved poorly when placed in the moderately stressful situation of running late for an appointment.

The second research is the so-called Milgram experiments, conducted at Yale University in the early 1960s. Subjects were placed in the role of a teacher who’s asked to help a learner – really a paid actor – to memorise sets of word pairs. Teacher and learner were placed in separate rooms, but they could hear each other via a speaker. Each time the learner made a mistake, the teacher was instructed to turn a dial to administer an electric shock to the learner. With each mistake made, the voltage was increased. In reality there was no shock being administered, but as the voltage went up, the actor began screaming in pain and banging on the wall. Many of the teachers expressed discomfort giving the shocks, but they were told it was an essential part of the process, and they should continue. Despite their misgivings, 65% of the subjects kept administering the fake shocks to the maximum 450-volt level. Milgram’s research, which was motivated in part by his desire to understand why so many lower-level soldiers helped implement the Nazi Holocaust, offers powerful evidence that obedience to authority – in this case, the person in charge of the experiment – is a powerful force. People will do abhorrent things if they’re directed to and made to feel like they’re just following orders.

While both the Good Samaritan and Milgram experiments highlight humans’ propensity to engage in poor behavior in specific circumstances, it’s worth pointing out that in each experiment, a fair proportion of people did the right thing, even under pressure. The trouble is, people wildly overestimate their own strength of character, and far more people assume that they’d be in this “good” group than really would be. When I teach MBA students or executives about the Milgram experiments, I always ask them to raise their hands if they think they’d have stopped delivering shocks, despite the admonition to continue. At least two-thirds of the people say they’d have had the courage to stop – and in some groups, 80% believe they’d have behaved well. In reality, the experiments suggest that only one-third would behave responsibly.

Behavioral finance has taught us that more people are far too confident about their investing prowess, and the same is true in ethics: most people exhibit moral overconfidence; they overestimate their own strength of character in the face of pressure or temptation.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

“There is pressure on Indian banks to consolidate”

Dr. Rupa Rege Nitsure, Chief Economist of Bank of Baroda talks to B&E on whether Indian banks are ready for tough days ahead

B&E: Is the Indian banking industry in a position to grow and survive if the economic scenario deteriorates further and if recession strikes the Indian and global economy?
Dr. Rupa Rege Nitsure (DRRN): In the global context, India is the second fastest growing economy (vis-à-vis other large-sized economies) and has a well-balanced economic structure. It is not highly dependent either on foreign financing or foreign demand, as some other countries are. And its banking sector is well capitalised and enjoys a c. Moreover, the Reserve Bank of India did demonstrate a high degree of flexibility and responsiveness during the last global financial meltdown. So even if the economic scenario worsens, our banking industry and its regulators are in a position to handle the situation well.

B&E: But NPAs are a concern – you cant deny that. How serious a concern are NPAs for Indian banks at this point of time as per you?
DRRN: Banks always see some growth in their NPAs during cyclical downturns and that cannot be ruled out this time also. However, no alarming signals are visible as of today. The Indian banking industry’s gross NPAs stood at 2.3% during 2010-11 and rating agencies & banking analysts expect this to grow by 3 percentage points in the current financial year, which is quite reasonable in the current phase of high inflation and interest rates. So honestly, NPAs are not a big concern.

B&E: Do you believe that new banking licenses can play a significant role in achieving complete financial inclusion?
DRRN: That may not happen automatically. The RBI will have to actively administer in order to ensure that new private banks play their contributory role in the mammoth task of financial inclusion. Without an active policy intervention, this “objective” cannot be met. Going by the experience so far, it is a misnomer to think that unbanked areas and disadvantaged sections would be served by the newest of the private banks.

B&E: At 20.2%, Bank of Baroda has posted a reasonable y-o-y rise in profit during the last quarter, which amounted to Rs.10.33 billion along with a 23.6% rise in net interest income. But considering that forecasts for the Indian economy is appearing more and more discouraging by the month, on what note do you expect to end the current financial year?
DRRN: Given the bank’s well-diversified domestic and international loanbook, modest exposure to sensitive sectors, relatively higher proportion of low-cost (CASA) deposits, good traction of fee-based income and lowest incremental delinquency ratios (in the Indian banking sector) for the past several quarters, we are confident to end the current financial year successfully, and consistent with our past performance.
B&E: NPAs don’t worry you. Even a slowing economy doesn’t. Then what does? Isn’t there something which Bank of Baroda is concerned about?
DRRN: The bank does not have any concern intrinsic to its own operations. But uncertain economic situation and volatility in financial markets are enough concerns for any banking entity to remain vigilant and responsive to early warning signals. So we are not immune to turmoil in the macroeconomic scenario – both domestic and global. No one entity is.

B&E: The bank’s total business expanded by 23.9% (y-o-y) to Rs.5.45 trillion in Q1FY2012. Doesn’t such a financial performance set you thinking of plans for further business expansion? Also, how do you plan to retain the current margin levels?
DRRN: The bank’s business focus in the past few years has been “Sustainable growth with a focus on quality”. Hence, the key focal point for us is to give an acceptable “Return on Average Assets” to all our stakeholders, than concentrate on and worry about “size”. We have been managing our profit margin well through better Current Account-Savings Account (CASA) mobilisation, prudent pricing of retail term deposits, efficient pricing of loans and minimisation of credit costs.

B&E: How important is the retail banking business to Bank of Baroda? How much does retail banking contribute to the bank’s annual revenues?
DRRN: For any bank in a country like India which has a strong demographic profile, retail banking is a major growth driver. In the bank’s domestic credit book, the share of retail loans has always remained between 18.0% to 20.0% for the last seven-eight years. The yield on retail advances is also relatively higher and to that extent it is definitely a strong value proposition. However, given the Bank’s thrust on “diversification”, the Bank has avoided the temptation of growing aggressively in any one direction. So we may not become the biggest retail players, but we will definitely be amongst the strongest in this respect.

B&E: Which sectors will play a role in accelerating the growth of the Indian banking industry in near future?
DRRN: The Indian banking industry will see good growth opportunities in agriculture & agro-based industries and in sectors like pharmaceuticals, food processing and services, in near future. However, from a long term perspective, the infrastructure sector will continue to be the main growth driver.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Weird open sky policies!

Millions in this world are still condemned to live without a roof on their heads. Rather than blaming it on destiny, it’s time that the ‘haves’ did their duty more proactively

“The human right to adequate housing is the right of every woman, man, youth and child to gain and sustain a safe and secure home and community in which to live in peace and dignity.” The Universal Declaration of Human Rights on adequate housing for everyone has been generously accepted by every country and has been a part of many constitutions; but unfortunately, it has not been accomplished effectively in practice. There is a global housing crisis here and now, and we are not talking about the vagaries of the real-estate market.

The most widespread and shameful phenomenon is forced eviction or the removal of people against their will from their homes or property, which is sought after by the government and private developers. These people either become homeless or move to remote or slum areas. However, people living in slums and informal settlements are particularly in danger from forced eviction. Currently, more than one billion people live in slums across the world. More surprisingly, United Nations has projected that more than two billion people will live in slums by 2030. In Nigeria alone, more than two million people have been forcibly evicted from their homes since 2000. Around seven lakh people lost their dwellings in a single mass eviction campaign called Operation Murambatsvina (“Operation Drive Out Rubbish”) in 2005 in Zimbabwe. The Central American Council on Housing and Human Settlements (CCVAH) revealed that around 43% of the 43 million inhabitants of the seven countries in Central America – Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama – lack decent housing.

But the problem is not limited to only poor and least developing countries in Africa and Central America. Rights to housing have been ignored in developing countries (like India & China) as well as developed countries (like US). As per UN-HABITAT, there are 3 million people live without adequate housing in the European Council. HUD’s Homeless Assessment Report to Congress exposed that there were 671,888 homeless persons in the US in 2008. In recent times, migration has become a serious problem throughout the world. As a result, almost 200 million migrants have faced discrimination in housing.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

A Rs.15 billion rich NGO!

BCCI should be taxed as it is no more a national sporting body

It might sound absurd that the world’s richest sporting authority needs tax exemption. That’s the state of affairs at present with the Board of Control for Cricket in India (BCCI). In a request to the Indian government, the board demanded that it be recognized as an NGO and given some tax waivers.

However, if one goes by numbers, BCCI is one of the richest sporting bodies of the world today and mints tremendous wealth through various commercial and private tie-ups. The IPL franchise model is a crying instance of how BCCI is now more of a commercial organisation rather than a board to promote sports in the country. The board is now more concerned with its own bottom line rather than the cause of cricket and cricketers. Even in the recent past, BCCI has not started any coaching centres, awareness programs or training camps to promote the game and has not constructed any sporting complexes either. As a matter of fact, tax exemption for BCCI was withdrawn in 2007 as it was observed that the board was no longer a body working for national sporting interests.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri 
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting