Fortune India TheNext500: Making the Big League

The heads of different industries, during Fortune India's 'TheNext500' event and award ceremony today, shared their ideas and insights on what it takes to make it into "The Big League" of companies in India, their expansion plans, and territories they are eyeing to tap into.

Aseem Joshi, CEO, India Business, GMM Pfaudler, talked about factors that play role in chemical and pharma sectors, saying the company is dependent on the CAPEX cycle of its customers. "So a big part of being successful in this space is to know the pulse of the industry and figure out when you need to invest in capacity building and when you really need to hunker down and be more focussed on margin and cost side of things."

He said the company has been fortunate to have tailwinds behind, with strong growth in the pharma and chemical industries over the past decade-and-a-half. “And given the current geopolitical situation, and with the inflection point India is reaching now, there is a lot of room for growth.”

Joshi says over the last five years, the company has consciously invested in capacity in India. “We have grown from 1 to 3 factories in India, 16 globally, and that was because we knew there was growth happening in India and we expect that'll continue."

He says the company focuses on where to put capital on. "We first think about where our customers' industries are going and what the requirements are. Based on that, we assess whether we need capacity or technology. We have invested in both."

Joshi added that it really comes down to what customers need and what they will need. “Not just hearing what they'll need today but anticipating what they'll need in the future."

Manish Dabkara, Chairman & MD, EKI Energy Services, on what is driving growth at the company, and reasons for the sudden jump in revenue, said the company is into the carbon credit business. “One carbon credit is one tonne of CO2 emission reduction from the atmosphere, which is an environmental commodity. There are various different markets where we exit -- one is international voluntary carbon markets, which got a very good base after 2015. During 2018-19, a high demand came from cryptocurrency companies looking to become carbon neutral."

He also talked about areas where the company is focussing on spending. “Many emerging fields are there in our industry, one is the Mandatory Emission Trading Scheme, which the government recently declared, wherein for many big-size emitters for each sector, the government had declared a benchmark, wherein if you emit more than that specific tonne of CO2 equivalent, you'll get cap over the emissions."

Dabkara added: "This specific, mandatory, carbon-compliance market, which is going to get implemented will definitely reopen new avenues for us."

Dabkara also talked about additional avenues that the company aims to tap into. “Article 6 of the Paris Agreement says if any nation will not be able to meet their net zero goals, they are allowed to buy carbon credits from other nations, maybe developing nations or developed nations."

Roopwant Singh (IAS), MD, Gujarat Mineral Development Corporation, also talked about factors that propelled growth at GMDC. "We had two very critical years. There was a huge demand for the products we produced. Before that, we were not able to ramp up production. The team rose and we ramped up production, and priced our product depending on capacity so it gets absorbed. A lot of hard work and smart work."

He also talked about considerations of the company behind capital allocation. "A mining company will not be able to make money unless it spends. If you want to grow fast, you'll have to spend aggressively."

Singh added: "A business case is made and we just move ahead. Our Capex plans for this year are Rs 3,000 crore. Whatever we did in the past is based on lignite, we have now moved into coal. The capacity that'll come from coal is going to be two-and-a-half of what we have in lignite."

Sanjay Sehgal, President, Vanity Case Group of Companies & Hindustan Foods, in giving a sense of what's happening at Hindustan Foods, said the company started off as one factory, one product company, but owns 27 factories now. “And this has happened over the space of the last 10 years. We are the largest, diversified, and trusted FMCG contract manufacturer for both domestic and international brands."

Sehgal added: "Over the last 10 years, if you look at what's really happened at the macro level, a couple of things propelled the growth of the FMCG sector, so we are a subset of that. What impacts FMCG, impact us? So it's really mapping of what's driving growth in FMCG and that's growth for us."

Sehgal said the company today is the largest manufacturer of ice cream in the country as well as of liquid detergents.

Sehgal added the company looking at adjacent businesses for growth, where it could get into, and the portfolio that it has identified is over-the-counter pharma. "We are not looking at the sterile end of it but we are looking at where we could use existing competencies, experience, and understanding, and therefore, use it in OTC pharma."

Vishal Mehta, Founder, Infibeam Avenues, talked about the disruptive fintech industry in India. He says current growth in the sector is “staggering and extraordinary”. "In 2016, we processed 5,000 crore transactions in a year. We take a small fee on every transaction. For every hundred rupees, we make 7 paise. Just because the volume of transactions grows, our revenues grow. Last year, we did 4.5 lakh crore transactions, which means what we did in the whole year (back then), now we do in three days."

Mehta says trust is very important in this industry. “Second is pipeline; real-time payments and real-time settlements. India is so far ahead on the curve as compared to any other country, thanks to UPI and some other initiatives the government has taken so you (companies) can innovate on top of it."

On making most of the current wave, Mehta says: "We run a brand named CCAvenue. If you have made an online transaction, you would have come across a payment gateway called CCAvenue. We build software, specifically for the government like e-marketplace, it's conceptualised and built by us."

On continuously adjusting to changes in the industry, Mehta said Infibeam had earlier acquired a company that did not have a license. “And (we) realised that everyone in India does not have a point-of-sale device but every merchant has a mobile phone. So why not allow every merchant to use an app and start accepting payments with just a tap."