Mid-Life Career Challenges for Women

Read Time:17 Minute

Women at some point feel the need to take a break from their career to manage their family. Stepping back is simple. However, returning to the workforce is fraught with many complications. Some of these are systemic. Individual concerns such as a feeling of irrelevance and lack of confidence or readiness to return to work, a break in the learning curve, feeling ‘left-behind’ etc. play an equal role in preventing women from re-joining the work force. So what are the options she may have to rejoin work? How can she go about navigating these? Some important perspectives are shared by Dr Rajeshwari Krishnamurthy, Area Chair Marketing Head – Center for Women’s Leadership, Great Lakes Institute of Management.

I graduated from IIM-A in 1994. I worked in FMCG marketing and sales companies for 15 years. Around 2009, I started feeling the pangs of not being able to do justice to my own role as a mother and to my role as the head of marketing in the organization I was working in. I used to travel a lot, maybe 12 to 15 days a month. My son was hardly five to six years old. I felt that I was shortchanging his needs and putting my needs over his, because he could not have negotiating power or talk back. I thought I was taking advantage of that. Somewhere, I began to feel, “What’s the point in becoming a managing director at 40 if your son is not going to get enough of your time?”

A Break and a New Path

This began to gnaw at me for a couple of years. Then on January 30, 2009, I finally decided to take a break, without understanding or figuring out what I wanted to be doing for the rest of my professional career. I was hardly 36 at that time. I realized that it had to be something that would take forward my experience gathered till then. However, I wanted it on my own terms from a time point of view, because I realized that flexibility is very important for me. I stumbled upon IIT Madras, which was close to my house. I met the Chair Professor in Marketing and I told him my situation. He invited me for a brand management lecture, which I took based on my Nippon Paints experience. The lecture went very well because I used a lot of real-life examples. Students love to hear real-life examples from the industry.

After that, we had a chat, and he suggested that I might consider academics as a career. I was not fully convinced because I thought I had finished my share of academics after IIMA, and I was not looking at doing a PhD or anything. I said, ‘Let me come back.’ Then I travelled across the country and met a few people from different walks of life who had spent about 15 to 20 years in the corporate world before switching to the second part of their professional lives. Our generation had the luxury of having multiple careers thanks to the liberalization and opening of the economy in the 90s.

I met people who had become entrepreneurs and social workers, those who got back to childhood passions and those who took to academia or even politics after a corporate stint. I met about 15 people across the country and started taking notes. I realized that there is not much formal material available on the subject of mid-life career choices. I interviewed them. The story of Dr. Raju Ramasamy, who was then the Dean of Anna University, struck a chord with me because he had worked for 22 years in Railways. He went on to do his PhD at the age of 48 and then shifted to academia. As I spoke to him, academia began to appeal to me for a range of reasons.

It allowed me to take forward what I had learned so far and share it with the younger generation. It was probably less hectic in terms of travel, and I didn’t have to work long hours. Even if I did work long hours, it was more on my terms. There was no nine-to-five commitment. So I went back to my IIT Madras professor, and I told him that I was ready for it. I enrolled in a PhD program in 2010 and finished my PhD in 2014. I did my visiting faculty stint across a few IIMs during my PhD days as I didn’t want to waste the corporate experience that I had picked up. In 2015, I joined XLRI as a full-time faculty where I taught for a couple of years. For the last six years, I’ve been with Great Lakes as a Marketing faculty. This is my journey.

Research Findings on Mid-life Career Challenges

I also wanted to delve into the subject of mid-life career choices from a research point of view. I have distilled my learnings, both as a professional and as a trainer. I used to conduct leadership workshops for middle management women at XLRI for Reliance Group’s middle and top management.

We still think of a powerful man as a born leader and a powerful woman as an anomaly. After receiving similar levels of education, whether it’s from Harvard Business School or Great Lakes, eight to 10 years after graduating from B-school, women just seem to disappear from the workforce. As a result, very few are available for top management leadership. Only 3% of Fortune 500 CEOs are women; just 15% of board seats are occupied by women, and 14% of executive officers are women. Obviously, there is a talent crunch in terms of women’s representation. It is not because of their qualification or competence. It is just that the conditioning and life journey seem to be not very favourable to women continuing with their careers.

According to research, 47% of women take a career break at least once, and 70% never return to work. It is not only a loss for her and her family. It’s a loss for her children because a working woman is a terrific role model for children. It’s also a loss for the nation and the economy.

Reaching the Top

What can women do differently to continue their careers and reach the top? Mid-life is also the time when there are some peculiarities in a woman’s life. She has to deal with her biological clock versus her career clock, and a conflict arises. She is also expected to become a mother, and the baby probably needs her a lot more. That’s also the time when you have to ramp up your energy and presence at the workplace. There are more personal stakeholders in your life. You’re probably married in your mid or late 30s. You have a spouse, in-laws, and children, which also means you’re playing multiple primary caretaker roles.

Society is still tilted towards mothers being primarily responsible for ensuring that there is fresh food on the table or for their primary nurturing role in raising kids or taking care of aged and sick in-laws. The spouse may contribute, but the primary expectation is still from the lady, no matter how talented or accomplished she may be.

The Kaleidoscopic Career Model

The Kaleidoscopic career model is very interesting. It researched men and women who have looked at their careers longitudinally, over a few decades. They found that there is a clear difference between how a woman manages her career lifetime versus men. A woman starts off taking up challenging roles, just like men do. Somewhere around mid-life, a woman wants to balance multiple roles. In her later career stage, she seeks authenticity, which is figuring out what she can excel at and make a mark for herself in her life. However, for men, it is the other way around. They may start off with challenging role-seeking and then, around mid-life, they first seek authenticity and then balance.

There is nothing right or wrong about it. Probably, it has been wired that way. If you’re able to understand it and complement each other’s roles well in your life, then you can find great support from your working spouse. Mid-life is also the time when we start defining what career success means to us. The organization is not going to chart out a career path for very unique cases. It is probably male-centric because there are far higher numbers of men, and therefore the policies are all made with them in mind. Is a male lens even relevant for me to define my career success? All of this leads to you taking far more ownership of your own career, rather than leaving it to HR people.

Aspiration Deficit

When you seek answers to these simple yet difficult questions, there aren’t enough role models, especially senior women mentors in the organization. This results in what is called an aspiration deficit. It means many women simply give up. For them to negotiate, understand, become aware, and upskill themselves becomes quite tedious, especially if they do not have a supportive spouse or a supportive ecosystem at home. They are then considered those who lack ambition, which is a little ironic because if they had a strong support system, they would probably excel and perform better at the workplace.

This is our DNA helix model, which is a favourite of mine. Over time, a woman plays multiple roles, moving between one role and the other, across various situations. On the other hand, if you look at a man’s career, most of the time, it follows a linear trajectory over time. There’s a chance that he will reach a leadership position, if he works systematically at it.

Why is women’s representation in the workplace needed? If organizations are performing well without women, should we even worry? Yes, we should worry for a variety of reasons.

Women make up 50% of the population and are highly qualified, talented, live longer, and accumulate wealth. This means they are increasingly decision-makers at the household level. If you don’t represent them in the workforce, you are missing crucial insights from a decision-maker’s point of view.

We find very few women at the top. They bring diversity of thinking in style and action. Men and women have complementary skills that need to be harnessed together for the long-term growth of any organization. Several studies by leading companies like Catalyst and McKinsey have shown that women’s representation on boards leads to improved financial parameters like return on equity, profit margin, return on investment, higher operating results, and stronger stock price growth. Furthermore, companies have reported fewer bankruptcies, better corporate governance and ethical behavior, more competence in self-development, and integrity. So there is a clear business case for women to be represented at higher levels in the workforce.

Performance in 9 Dimensions

A study was conducted among two sets of organizations. One set had no women in top management, and the second set had three or more women in top management. The goal was to assess the company’s effectiveness across nine organizational dimensions. This was done with a sample of 58,000 people. Companies with women in top management returned better results in capability, leadership, external orientation, motivation, accountability, coordination and control, innovation, direction, work environment, and values. If this doesn’t emphasize the need for more women, what else would?

However, strong external conditioning still exists, and mothers are still expected to bring up children. Career-oriented women are not looked upon favourably. When you get married and have children, you’re expected to stay at home and raise them. If the child does not do well, the mother is blamed. The second thing is our own higher ownership of the role of a mother, and therefore going to any extent to fulfill that.

Altering Brain Conditioning

Is there any difference in brain anatomy between male and female children? There is a book written by Dr. Payal Kumar – “Unveiling Women’s Leadership.” The author claims that the human brain is not fixed but alters through experience and training. The brains of male and female babies have equal structure and patterns, but by the time they reach 20, social conditioning considerably alters everything. There is gender role conditioning, like car driving is for men, baby girls are given pink colour toys, or boys are expected to handle electrical work at home. So much role gendering is at play.

What can women do to alter brain conditioning? First of all, you need to have great cognitive clarity. You need to be around people who have a vision of holistic success with rationale, and more importantly, you must accept the trade-offs that you may have to make. Many women struggle with making trade-offs. The second is focused imagination. Train yourself to see pathways to success in your organization, in the organization you dream of joining, and in the role you want to acquire. Talk to people about it, maybe external mentors and support groups.

You must understand and accept that this is not only your problem but an institutional problem and a nation’s problem. Don’t shy away from seeking mentors. They don’t have to be senior people or women working in your organization. They could be mentors outside your organization or in forums like the MMA Women Business Forum. Seek senior individuals with experience in dealing with such issues who can provide proper counselling and guidance.

Barriers to the Top

Another piece of research was conducted among two different samples – female executives and CEOs, on what prevents women from advancing to corporate leadership. Many times women adopt a victim mindset, which doesn’t help their cause. We are often biased in looking at our own situation in a certain way, whereas the world might not view it that way. In the study, female CEOs felt that lack of significant general management experience or line experience impedes women from advancing to corporate leadership. That’s a significant takeaway.

Women not in the pipeline long enough is another finding. Companies say, “We want women leaders, but where are they? They simply disappear. If only they discussed their problems more and wanted to work through them, something could be done.” Many female executives feel that male stereotyping is a big reason why they’re not advancing to corporate leadership. But female CEOs don’t think this is the reason. There is a clear disconnect here.

Exclusion from informal networks: In many corporates, there is a lot of informal networking that happens after working hours. Women feel they cannot be part of it due to family reasons, personal time, etc. They may get excluded from key decisions that organizations make.

Inhospitable corporate culture: Many women feel that the level of ambition and aggression is too much for them to handle. It’s important for women to understand what CEOs expect from women executives who want to advance to leadership positions. They are looking for significant general management, broad-based knowledge, and the ability to persevere.

Tougher Barometer

There is research on the career strategies required for women to break the glass ceiling. Women have to consistently exceed performance expectations. This barometer is often tougher for women than for men. Women start with an inherent bias from some leadership quarters that they will give up when things get tough. They may have a backup or a family that is the primary breadwinner, and they are perceived as unwilling to stretch themselves. So it is essential for women to exceed performance expectations to demonstrate their commitment.

Second is developing a style that men are comfortable with. This was surprising to me. I have mostly worked in sales and marketing, which are very male-dominated fields. In FMCG and technology companies where I worked, women were always in the minority. But it’s important for men to see you as one of them. Don’t draw attention to your gender presence.

The third is taking on difficult and high-visibility assignments. These are often called glass cliff assignments, tough assignments given to women to test if they’ll succeed or not. These are challenging even for men, but women need to prove themselves in them to advance to higher leadership positions. Networking with influential colleagues, initiating discussions about career aspirations, developing leadership outside the office, and goal setting are some other factors.

Many of these strategies overlap with what men need to do to advance, but the extent to which women need to do them is often much higher. Women often need to prove that they have serious intentions about their career growth.

The Inspiring Sisters

All of us are aware of Indra Nooyi and Chandrika Tandon, sisters who’ve done well for themselves. Indra Nooyi was a global CEO of PepsiCo, and Chandrika Tandon is the Chairperson of ‘Tandon Capital Associates’ and was a senior partner at McKinsey. They believe that setting a clear goal is a starting point. Many of us don’t do that. We take things as they come, and we’re satisfied with whatever results that follow.

It’s important for women as they advance to raise other women below them. Nobody will understand the situation as much as you do. Take ownership of your career, especially the long stints, which are really your babies. No HR department or organization will understand your nuanced life situation well enough to put together a career strategy for you. Also, be aware of what’s happening around you.

Double Bind

There is a term called “double bind.” Women have a need to be liked, and they also want to be assertive. Men don’t care whether they’re liked or not. This is unique to women. You have to be aware of this. Are you making decisions because you want to be liked? Are you becoming emotional? Are you not asserting your point strongly enough? Are you falling into the trap of wanting to be liked?

Many organizations exhibit tokenism. They hire women leaders to show that they value diversity. Many times, women find themselves under extraordinary scrutiny. This can lead them to overperform or underperform, with tough trade-offs. You can’t have it all at the same time. You may achieve everything over time. So you need to understand the trade-offs you must make.

Confidence Gap

Women often suffer from a confidence gap, regardless of their qualifications or competence. Men who are 75% to 80% qualified may apply for a job with confidence, while a woman who’s 95% qualified might hesitate before applying. Women are often self-critical. They think twice before seeking a promotion or a pay raise. This doesn’t come naturally to them. Women should work on these aspects. They should broaden their business knowledge and not limit themselves to technical know-how.

Looking back, whether taking a break to be with my child, figuring out what I wanted to do with the rest of my life, or writing a book, I realize that everything adds up. You need to ask for help. We are often bad at this. In the last 10 years, I have consciously surrounded myself and befriended senior women I respect and asked for advice. Be adaptable. Play multiple roles in varying hierarchies and different locations. When you enter a new role, it’s like starting a new career. You cannot compare yourself with someone who has been doing it for 15 to 20 years. So be kind to yourself.

Give Time to Bloom

Also, try part-time work before committing to something full-time. Before entering academia, I was a visiting faculty and gave guest lectures. If someone wants to get into full-time social work, I would strongly advise them to engage in community work on weekends to see if it suits them. Never lose sight of your ambition. The timing of what you want to achieve might not be in your hands, but you need to persevere. Resilience and optimism are key. If you have these qualities, you will find your way.

Ela Bhatt, the founder of SEWA (Self Employed Women’s Association), says that feminine leadership is what the world needs today. She refers to Mahatma Gandhi’s non-violence and advocates an approach where organizational growth is based on values, not just hard goals. Inclusivity, not divisiveness, should be promoted. It’s not about favouring a few at the cost of others. Look at the collective aspirations of individuals and don’t set benchmarks for the institution based solely on your own benchmarks. Be open-ended about time. A long-term collaborative network doesn’t operate on the timelines we desire. A butterfly becomes beautiful in its own time. So give it the time it needs. This promotes peace and collaboration over harsh competition. Women have innate strengths. Build on them instead of trying to mimic others. Being yourself is the way to succeed.

Reviving the Manufacturing Sector

Read Time:13 Minute

Every time there is a talk of boosting the nation’s economy, the contribution of the Manufacturing sector gets an undeniable mention and for right reasons. However, the idea of manufacturing has changed over the past decades. These were also the decades when the nation shifted gears, moving away from manufacturing to the multi-disciplined Services sector, starting from IT/ITES to hospital, hospitality and much more, as the mainstay of economic recovery in the Reforms era. What does manufacturing entail now?

We need to move at a transformational growth pace

Mr Sanjeet Singh

IRS, Senior Adviser, Trade & Commerce Economics Finance & Disinvestment, G- 20 Coordination (NITI Aayog)

Manufacturing in India is not only a necessity but also provides a golden opportunity for the country to emerge as a manufacturing powerhouse. We are incredibly fortunate to be in the Amrit Kal, the golden period leading up to the 100th anniversary of India’s independence. A recent study on the multidimensional Poverty Index has revealed that 13.5 crore people have emerged from extreme poverty. Through the provision of drinking water, housing, sanitation, and healthcare facilities, we have overcome the challenges of the past century. Now, we are looking at the challenges of this century and beyond, on a global scale. How can India emerge as a manufacturing powerhouse?

Managing the Skewedness: In the past three decades, we saw a revolution in the services sector, which propelled the country’s growth. Many economists contend that India has progressed from agriculture to services and somehow bypassed the manufacturing phase. This assertion is supported by numbers too. As of 2022, the services sector contributes 55% to our GDP, while the manufacturing sector contributes only 17%. This skewedness was brought into sharp focus when we were hit by the pandemic. The services sector was the very first to be affected, leading to shutdowns and remote work arrangements. Productivity plummeted, particularly in hospitality and travel services. This situation made us realise the necessity of strengthening India’s manufacturing base, all the more.

Securing Jobs: Today, manufacturing contributes around $0.5 trillion, approximately 17% of the GDP. The target we should strive for is $4.5 trillion, equivalent to 22% of the GDP, by 2047. Achieving this goal entails a series of essential steps. If we are to ensure jobs for our people, the manufacturing sector must grow. With a working population of 800 million people, India is projected to add 200 to 250 million people by 2047. While the manufacturing sector currently employs about 50 million people, achieving the $4.5 trillion manufacturing target by 2047 would require an employment potential of 90 million in the manufacturing sector alone. Hence, India must transform into a manufacturing powerhouse.

Bridging the Trade Gap: India’s trade gap has expanded significantly post-pandemic. One primary factor is petroleum products, as India does not produce enough petroleum domestically. Moreover, with the expansion of the Indian economy, a huge consumer boom happened. People needed more televisions, refrigerators, and washing machines. As we did not have sufficient manufacturing capacity, we had to import them, leading to an increase in import bills. Therefore, the manufacturing sector plays a pivotal role in addressing the persistent trade deficit. Achieving self-sufficiency, especially in critical sectors, is crucial.

Electronics constitute a major import category for India. The call for Atmanirbhar Bharat (self-reliant India) by the Prime Minister is not only timely, but also essential. Measures like GST and the production linked incentive (PLI) scheme, which are focused on 14 critical manufacturing sectors, have been implemented to enhance the ease of doing business. Incentives totalling $26 billion have been announced for these sectors, and the results will be seen over the next five to six years.

Focus on Core Areas and 4Ds: India should concentrate on its core strengths in manufacturing, specifically pharmaceuticals, textiles, chemicals, and automation. We must upskill and enable these industries to go big. Challenges related to infrastructure and large-scale export policies need to be addressed. Additionally, emerging areas should not be ignored.

A report from one of the renowned consulting firms highlights that four Ds—demographics, decarbonisation, decoupling, and deglobalisation—will drive India’s growth in the future. Decarbonisation and digitization present substantial opportunities. The shift toward green manufacturing processes opens up numerous possibilities. We have already made ambitious commitments in our Nationally Determined Contributions (NDCs) toward COP 26 and 27. We have allocated Rs 19,500 crore for green hydrogen mission. Solar and other renewable sectors also offer significant opportunities for the manufacturing industry.

Need for Manufacturing Stack: As the world moves toward greater connectivity, India should seize opportunities in areas like aerospace and high-tech semiconductors. Integration with global supply chains, technology transfers, and increased in-house R&D investments are necessary. Our focus on Free Trade Agreements (FTAs) is a pivotal part of India’s growth story. We need to move at a transformational growth pace and not at business-as-usual pace.

Similar to the digital stack, can we envision a manufacturing stack? Establishing smart industrial clusters and interconnected factories can yield high productivity assets with end-to-end value chains and real-time tech-enabled interventions. These factors can substantially differentiate our manufacturing processes.

All these call for skill enhancement. Government schemes for skilling, reskilling, and upskilling have been introduced, but private sector involvement is equally vital, just like we saw in the IT revolution.

Logistics: We cannot discuss manufacturing without addressing logistics. India’s logistic costs in double digits erode industry profitability, efficiency, and productivity. The Prime Minister’s initiative to reduce logistics costs to below 10% (our target is 8%) is commendable. The Gati Shakti initiative, another flagship program, is designed to propel the advancement of India’s manufacturing sector.

ESG Opportunities: ESG sector also holds many opportunities for our manufacturing. Our predecessors and other economies have made the mistakes of polluting the environment while they developed. India doesn’t have to do that. India has committed itself to the green pathways of development. We can now become an example for the world in ESG practices like adopting green bonds and water neutrality. We must take Corporate Social Responsibility in true spirit and create a safe and healthy workplace which protects all stakeholders’ interests. India can become a model for most of the global South, while showing the light to the global North.

Taking companies moving out of China lightly would be a mistake

Mr. A Viswanathan

President, Delphi TVS Technologies Ltd

The topic for discussion is reviving the manufacturing sector. In the last two decades, manufacturing has consistently ranged from 13% to 17% of GDP. So, I would like to focus on revving up the manufacturing sector, aiming to accelerate it to even greater heights.

Capitalize now: Thanks to the geopolitical situation, we find ourselves in a unique position to leverage the current environment. However, many experts feel that this window may not remain open for too long. We need to quickly capitalize on the significant opportunity before us, without assuming that everything will naturally come to India. We face competition from countries in Asia, Mexico, and Eastern Europe for the opportunities emerging from China’s shifting landscape. Taking companies moving out of China lightly would be a mistake, as many are rapidly establishing their presence in various countries.

Learning from other sectors: First and foremost, we must explore how we can manufacture and export more value-added products. Certain sectors are successfully exporting a substantial number of value-added products, and we can apply lessons from these sectors. I’m well-acquainted with the auto components sector, which stands out as one of the export stars among all sectors. We export 25% of our production, primarily to advanced regions like Europe and North America, serving demanding Original Equipment Manufacturers (OEMs) with top-notch quality. This journey has spanned the last two decades for the auto components sector.

An influential factor that propelled the auto sector was the collaboration between the Auto Component Manufacturers Association, leading auto component units, and OEMs. This entire ecosystem dedicated considerable time to this endeavour. They enlisted Japanese experts in lean manufacturing and Total Quality Management (TQM) to educate our employees and workers on the latest and best manufacturing practices. This transformation greatly enhanced the sector’s competitiveness. We must extrapolate insights from the auto components sector and apply them across other sectors.

During my recent visit to Israel, I observed the close collaboration between academia, industry, and the government in driving innovation. Israel, though small in size, excels in producing some of the best technologies. While they don’t manufacture cars in Israel, they are at the forefront of cutting-edge technologies in the automotive sector. If they can achieve it, so can India.

Activating Overseas Missions: Whenever we announce capital investments through press releases, a dozen overseas embassies contact us to inquire about the equipment we intend to purchase and how companies in their respective countries can collaborate with us. Similarly, I believe Indian missions abroad can play a more proactive role in promoting Indian exports.

Anti-Dumping: Significant dumping occurs across various sectors by Chinese companies. In India, we must furnish sufficient information to the government to support anti-dumping measures. The European Union has recently altered its approach. Upon receiving preliminary information, the burden of proof now shifts to the exporting company. Chinese exporters must now substantiate that their actions do not amount to dumping.

A universal solution doesn’t apply to every sector. We must approach each sector individually, examining its specific challenges and opportunities, to facilitate its growth.

The government deserves recognition for its efforts over the past five to ten years in improving the ease of doing business. However, work remains to be done in areas such as environmental clearances and the Factories Inspectorate. Addressing these aspects will further enhance the ease of doing business.

The prime thrust area for us should be the Total Factor Productivity

Mr Easwaran Subramanian

Partner, Deloitte Touche Tohmatsu India Pvt Ltd

The intriguing aspect of the manufacturing sector is its 3x multiplier impact. If anyone invests 100 crores, it potentially generates downstream investments across all elements of the value chain, amounting to approximately 300 crores. This sector has the capability to create both economies of scale and economies of scope. All other sectors create only one of these, either scale or scope.

Total Factor Productivity: The prime thrust area for us should be the Total Factor Productivity, currently ranging from 2 to 2.5%. In contrast, China’s rate is double this figure. Total factor productivity can enable us to leverage the dimensions of digital maturity present in India. One must make a visit to the US to appreciate how digitally mature we are! Total factor productivity encompasses not only labour but also all assets and resources at our disposal.

Our government aspires for our Global Value Chain (GVC) participation to reach 10%. At present, we stand at just one-fifth of that from a trade perspective. A higher target implies heightened competitiveness on the global stage. Simultaneously, this approach provides us with the benefits of interacting with global customers and gaining deeper insights into their needs. It’s not merely about internal efficiencies but also about learning from the best in the market.

Look end-to-end: Often, we fail to examine matters from an end-to-end value chain perspective. For instance, we think that semiconductors are entirely new to us. But a closer look reveals that nearly every global semiconductor company maintains an R&D center in India, employing thousands of people. Every Indian software services company plays a role in the value chain. In essence, we possess the entire ecosystem in several critical dimensions of the value chain. Our next step is to extend this influence further downstream. Our policies are conducive to this progression. Our companies must shift their focus towards end-to-end solutions instead of niche products and innovations.

A change in mindset is also needed. While the government has undertaken numerous actions, it’s equally crucial that the broader industry ecosystem comes together, similar to what the automotive sector has accomplished. Industries must involve themselves in the complete value chain. Every sector must consider the end-to-end value chain and derive benefits accordingly.

Q&A Session

How do you rate the competitiveness of Indian companies compared to the rest of the world over the last few years?

Sanjeet Singh: Let me put it differently. When we seek greater market access through RFPs and consult the industry, the first reaction we often encounter is, “Don’t do it. There’s no need for this agreement.” The second reaction is, “Don’t allow foreign players in.” Of course, there are a few aggressive players who encourage competition and market access for others, but this third category remains small. How can we find a way out of this? Is it a matter of changing our mindset? Is there over-dependence on government support across sectors? We’re reaching out to trading partners like UAE, Australia, Japan, Korea, and G7 nations. The government’s goal is clear: aggressive engagement. We want industries and associations to share technical or other barriers they face and how we can assist them.

Regarding engagement with our overseas missions, our Prime Minister has given clear directives that they should proactively seek opportunities and convey them down the line.

Our import duties are lower than in many advanced manufacturing countries. If duties are rationalised, won’t this significantly boost local manufacturing?

Sanjeet Singh: I’m unsure which specific sectors you refer to. However, we receive inputs from a diverse range of people. Some want reduced duties, while others favour increased duties. For instance, take the steel sector. When a steel export duty was imposed, many sectors immediately requested its removal, claiming it was too high. However, MSMEs urged against its removal. We must discern whether we discuss a manufacturing intermediate product or a final product. What’s the volume of import and export? How much value addition is involved? The government will evaluate these aspects. I fully agree that transparency and uniformity in approach are crucial—whether to retain, increase, or decrease duties.

What support, do you think, MSMEs need?

Viswanathan: MSMEs require two things. First, expert inputs and association support. In the automobile sector, we supported MSMEs through capability enhancement programs. Over time, they’ve scaled up. Second, they need help with capital funding, which remains a major concern for many MSMEs.

Easwaran Subramanian: The PLI benefits large companies but has a multiplier effect on MSMEs. Large companies can align with MSME clusters, irrespective of the sector they are in.

When discussing PLIs, are we violating WTO rules?

Sanjeet Singh: No, PLI was designed to be WTO compliant, and it is. It would only violate WTO rules if we stated we support exports. We promote production. What companies do with their production is their choice. If exporting yields a better price, they’re welcome to do so. There’s no restriction on that. Thus, there’s no question of violating the WTO.

How can we enhance the quality of our manufacturing in the coming years?

Viswanathan: Generalizing quality issues across the manufacturing sector isn’t correct. Some areas require quality improvements. This journey requires time; it’s not an overnight process. First, we need the mindset for superior quality and a commitment to achieve world-class standards. After management commits, training everyone down to the workers is vital. Gradually, with training, quality will improve.

Is the manufacturing sector prepared to adapt to changing consumer demands and preferences effectively?

Easwaran Subramanian: Consumers now demand instant gratification, influenced by last-mile companies. Flexible supply chains are necessary to meet this demand. Transparency, especially in end-use pricing, is growing. The next evolving trend is consumers perceiving products as their own from order to delivery. Traceability is the key. Companies must explore end-to-end product tracing, which requires technology for scalable implementation.

Why should we learn from China in managing our capacities and capabilities?

Sanjeet Singh: I’m not labelling anyone as a devil, but we can learn even from the devil and those we might not fully agree with. I’ve interacted with China during my tenure in the commerce ministry. They possess commendable practices that we can adopt. For instance, about 15 years ago, China decided to gain control over IPs, well after integrating into global supply chains. Presently, in 29 out of 36 fields, including computer technology, electronic machinery, and digital communication, China leads in filed IPs in 21-22. Their patent filings surpass the rest of the world. While debate exists about their patents representing true innovation, should we not learn something from China?

REAL ESTATE: Unravelling the legal framework, technology & compliance requirements

Read Time:19 Minute

Real Estate, being the second highest employment generating sector, holds significant importance in India, which is poised to become the third largest construction market in the world. However, this sector faces numerous challenges and issues.

Mr K Vaitheeswaran, Advocate and Tax Consultant:

In the pre-RERA period, there was rampant misspelling and wrong selling by a set of people. Of course, there were brilliant, genuine players across the industry, but the sector got a very bad name because of some unscrupulous and unorganized players. There were inordinate delays in delivery, issues of non-conformance to specifications, diversion of funds collected for the projects, and so on. Therefore, the Parliament felt that we need a law that completely regulates the sector, though there have been constant debates as to why you should need a law for one specific sector.

The objective of RERA is to create an authority for the regulation and promotion of real estate; bring in efficiency and transparency in the sale of real estate projects; protect the interest of consumers; and establish an effective adjudication and speedy dispute redressal mechanism. It applies to the whole of India except Jammu and Kashmir. When the law was being mooted, the Minister for Urban Development said that the real estate bill seeks to form a happy alliance between buyers and developers and that it addresses the complexities of the sector by putting in place a regulatory mechanism.

There are many developers who are guided by principles and ethics. That is why these companies are shining better. There are thousands of players in the real estate sector compared to only five or six players in the telecom sector. That was the justification of the minister for having a regulatory mechanism exclusively for the real estate sector.

RERA covers the development of land into plots or apartments as the case may be. A building may consist of apartments, which also includes the conversion of existing buildings into apartments. Redevelopment also comes under the Act. So it is important to understand that it is not just for a new project. According to RERA, the promoter is responsible, liable, and accountable. If you’re not developing for the purpose of selling, then you would not qualify as a promoter. A development authority such as a Cooperative Housing Society is also identified as a promoter.

Why is RERA significant today? A builder talks to a consumer through advertisements and people are lured by them. Now RERA says that no advertising or marketing or booking or selling or offering or inviting to purchase by a promoter can happen unless the project is registered with RERA. In the ad, the consumer can look at the RERA Registration number. If you go to the RERA website and feed that number, you will get the entire details of the project. The biggest advantage is transparency for consumers as every data about the project can be seen on the website.

Taking Care of All Stakeholders

Where the development is in phases, each phase is considered a standalone project requiring registration. In case there is an ongoing project where the construction certificate is not issued at the time of the commencement of the Act, registration must happen within three months. An application for registration is very comprehensive. RERA takes care of the consumer side and the builder side. It helps the consumer in getting the right product. The developer must give all the information in the application, which is very comprehensive and requests for authentic information and data.

RERA has an adjudicating process. Let us say an order is passed. You can appeal against the order to the adjudicating authority and escalate it to RERA appellate tribunal. RERA must publish and maintain a website of records for public viewing of all projects listed. On the website, you can see everything about the project and also about the promoter. You can know their past history, about delays or deficiency in development and delivery. RERA maintains a database for public viewing and enters names and photos of promoters who are defaulters. Even a real estate agent cannot sell a project that is not registered, and the agent must also be registered.

RERA’s Teeth

RERA get its teeth when somebody lodges a complaint. It can also, suo moto, call a promoter if it comes across discrepancies or default. It can also help the promoters, when there is a default by the allottees. It has all the powers of a civil court under the CPC plus it has the power to issue interim orders. It can issue directions, and such directions shall be binding on all concerned. The consumer can knock on the doors of RERA if something that is promised is not delivered.

RERA registration presupposes that the promoter has got all other approvals in place. The promoter must provide the development plan and details of all the facilities being offered. The location details of the project with clear demarcation of land dedicated to the project along with boundaries must be provided. They are now bringing more technology into it whereby it’s getting absolutely transparent. The entire land of the country is going to be mapped.

RERA has brought a new concept of carpet area. It is the living area in an apartment and excludes common areas, walls, and balconies. The promoter must give a declaration that he has the legal title to the land on which development is proposed.

Handling of the Funds

RERA says you must finish the project within the time you commit. The most important and interesting aspect of RERA is that 70% of the amount realized for the project has to be deposited in a separate account in a scheduled bank. This is where it ensures that funds received for one project are not misused for another purpose. Therefore, this is a very powerful and effective tool.

You can withdraw money as and when the percentage of completion increases, and for that what is required is a certificate by an engineer, a certificate by an architect, and a certificate by a chartered accountant to the effect that the withdrawal is in proportion to the percentage of completion of the project. The accounts have to be out within six months or at the end of every financial year, and the statement is required from the CA to the effect that amounts collected for a particular project have been utilized for that project and withdrawal is in compliance with the proportion to the percentage of completion. This places all the more responsibility on the Chartered Accountant certifying a project.

30 Day Deadline

RERA registration is not required when the land to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed eight, including all phases. Also, if you have obtained a completion certificate prior to the commencement of the act, you don’t come under RERA. The Act also says that the authority, within a period of 30 days from the date of receipt of the application, must either grant registration or reject the application. Once registered, the authority shall provide a registration number, login ID, and password for accessing the website. If there is a failure to grant the registration or in the case of failure to reject the application within 30 days, it shall be deemed to have been registered. This puts pressure on RERA to issue registration.

You can always extend your project timeline if you’re able to demonstrate force majeure conditions that affected the project. During the COVID time, a lot of people were able to get the extension. RERA themselves voluntarily granted an extension. If a registration is revoked, the authority will debar the promoter from accessing the website in relation to that project and specify his name in the list of defaulters, display his photo, and also inform RERA in other states. This is very, very dangerous. So you can’t afford to missell, and you can’t afford not to deliver.

No major additions or alterations to the approved and sanction plan can be done unless you get the written consent of at least two-thirds of the allottees, other than the promoters.

RERA can direct the bank holding the project account to freeze the account and take further action to facilitate remaining development. But if you look at it practically, RERA’s aim is not to stop a project. Their endeavour is to ensure that the project is completed. They go out of their way to see how a settlement can be arrived at, involving the landowner, consumer, and developer, as the case may be, and in some cases, all three are involved.

Inherent Conflicts

In the real estate business, stamp duty registrations are state-specific. Unfortunately, RERA is a parliamentary law, and there are some inherent conflicts in respect of registration as per the state-level practices and what is stipulated by RERA.

Also, you cannot collect more than 10% of the cost of the apartment unless you enter into a written agreement for sale and register the agreement. Nobody wants to register a sale agreement. The construction agreement must be mandatorily registered. While the law stipulates that the promoter must get insurance for the title, it is impossible to get title insurance from an insurance company. These are some of the failures of the Act.

RERA uses the word completion certificate. In most states, there is no completion certificate. They have an occupancy certificate in some states, but CC is a concept even in GST, but CC doesn’t exist in most parts of the country.

Penalties

If a promoter does not register the project, a penalty of up to 10% of the estimated cost of the real estate project can be levied. If that order is violated or even after the order, registration is not done, it can lead to imprisonment for up to three years. That is the kind of power that RERA has. For false information or giving controversial information in the application, the promoter can be levied a penalty of up to 5% of the estimated cost of the real estate project. These are all the consequences, which a real estate agent and a promoter face for failure to comply with the order or direction of RERA. There is a penalty every day, which may be cumulatively extended up to 5% of the estimated cost. These are all quite stringent and strict penalties, and the pressure is to make you comply.

The Challenges for Promoters

Where do promoters mess up? They over-promise and under deliver. They promise delivery dates which are practically not possible. The biggest challenge in real estate projects is funding. After complying with all requirements, they need funding. If NBFCs get into a problem, it impacts the real estate market immediately. Banks have a very vague approach to real estate projects. Some of the banks are very encouraging, and some of them are extremely discouraging. So funding is a huge challenge. What is the solution?

Old loan settlement, IPOs, and REITs are new solutions that are coming into the market. Of course, overseas investors can always walk in with non-convertible debentures. The second major issue is the inventory of unsold buildings, even after complying with all requirements. If we look at unsold stock in terms of units and apartments, in Q4 of 21-22, in Chennai, the unsold stock was 75,064 units. In Q4 of 22-23, it was 74,008 units. There is always a significant pileup of unsold stock that the builder deals with, and substantial money is lost here.

There are always so many pain points in the real estate business. The prerequisite for RERA registration is comprehensive planning and obtaining permission from several authorities. All of these lead to a huge increase in cost. Delays in obtaining permissions and NOC from other agencies can affect the registration. Then there is litigation. If somebody files a petition and a court admits it, it’s the end of the story. RERA could have been a single window, but it has become an additional window.

Impact of RERA

Today, all states and UTs have notified RERA, except Nagaland. 32 states have set up the RERA authority, and 28 states have set up their appellate tribunal. Regulatory authorities of 30 states have operationalized their websites. So far, 1,08,208 real estate projects have been registered so far, and in Tamil Nadu, 16,640 projects have been registered. The number of agents registered is 77,525 agents, of which Tamil Nadu’s share is 2,870. A total of 1,11,098 complaints have been received, and the maximum complaints have come from Uttar Pradesh.

To conclude, the real estate sector is in for good times, thanks to the transparency that RERA has brought in.

Technology & Sustainability in the Real Estate Industry

Ms Pavitra Sriprakash, Chief Designer and Director, Global Design Studio of Shilpa Architects

Typically, in an architectural or real estate project, the architectural work happens before we break ground. A lot of the tech tools that I manage or work with on a daily basis happen to be at the design stage. Right now, we are experimenting with AI and Blockchain. We were fairly early adopters of trying to work with BIMs (Building Information Management Systems), but AI and Blockchain are things that are much newer, even for us. So we’re dabbling with tech, once the project is tendered.

When it goes into implementation, we find that there are many construction methodologies of new technology, which are prevalent in the market today. These help in making buildings faster and more efficiently, in monitoring them better, and in giving real-time data as to what’s going on site versus what’s planned on the design front. Finally, operations and maintenance of buildings are highly tech-enabled nowadays, which can help in maintaining the building, throughout its lifecycle.

MIVA, GFRC and 3D Modulars

On the construction side, we have technology such as MIVAN, which is aluminium formwork that helps people construct faster. Many developers embrace this, because this is a very easily repeatable format and can help people cut down their construction time. We also have GFRC panels, 3D modulars, and precast.

We are able to come up with climate-sensitive, geo-sensitive, and culturally sensitive designs that help us create a more sustainable product. Thanks to digital marketing, visioning of approved projects becomes a lot easier now. We work with the metaverse and gamified realms, and as everyone has predicted, the better you are at playing games, the easier you will find getting work done. Real-time game engines are coming into the space of architectural design and visioning. So if I can dream it, I can probably get it translated into a digital image. Rather than 2D plans, such digital images delight a customer.

We use AI tools to tell us things like how much daylight is coming into the building; are we planning enough lights or are we planning enough ACs? All these can be simulated and given to us in real-time data. You can use ChatGPT to figure out the description of the building and use it in the AI for the design of the building. We tend to run into a lot of budgeting and cost overruns, and value engineering at design is important.

You can manage complex and large projects by loading all the information that exists in a very transparent space, for everyone to be able to access. So we can do things like having smart contracts, enforcing the project scope, eliminate processing fees, etc. Basically, we’re looking at rapid construction, and time is money. We use Glass Fiber Reinforced Gypsum (GFRC) panels. This is basically like a drywall system. It can be pre-loaded and made into a panel offsite. It can be brought and quickly assembled. Modular and precast systems have been around for a while. The other one is the light gauge steel frame.

MIVAN is a commercial brand name for aluminium formwork. What this means is that every floor of a building can be made into a mould and poured with concrete. Once this is done, you can take it to the next level. As long as every floor of the building is the same, you can use MIVAN beautifully. It cuts down the curing time, and it doesn’t have to be 21 days per floor to move to the next level. It’s really a rapid way of constructing.

Monitoring through BIMS

The next part is monitoring the work that is going on at the site. We have many new apps that are coming up, which help project managers to track the project, monitor the attendance of workers and their efficiencies. You can track everything remotely. You can have an integrated design project where all team members sit in various parts of the world, but they’re still able to track that one project. We’ll also tie into the part where the auditors come in, making payments and managing the budgets. The digital twin technology is tied in with both BIMs and the modelling software. A digital twin using AI-based visualization software is loaded completely with the data of the building to be constructed, but it exists virtually.

Some of the new products tend to harness renewable energy from either solar sources or from people walking on them. Sensor-based intervention for water efficiency has been around for a while. Now we are pushing this envelope to control the environment of the entire building. We have temperature monitors, humidity sensors, and CO2 monitoring systems. All these things can be linked to the Integrated Building Management System or IBMS. This then functions with the digital twin, dishes out data about the actual efficiencies on a daily basis, and helps you manage the dashboard.

Ms M Samhita, Managing Director, Ela Green Buildings

Sustainability relies heavily on technology today. People often get confused when we talk about a sustainable building. They think it must have red brick or rammed earth or something like that. But today, we build millions of square feet in a span of a year or less than that. In that scenario, technology becomes very critical to bring in concepts of green, efficiency and climate-responsive design. For sustainable buildings, there are three phases we must look at—design, construction, and operation.

There’s a lot of push from the global market as well as our country’s leadership to achieve net zero. We’re working on green and climate-resilient buildings. Just one or two initiatives in a building like rainwater harvesting will not suffice. We need a holistic approach. We have rating systems and tools to define green buildings. The rating systems have been in place globally for a while. From the early 2000s, India slowly started adopting green building rating systems. Today, we have billions of square feet that are certified green. We have the Indian Green Building Council (IGBC) and LEED, which is Leadership for Energy and Environmental Design. The new ratings focus on the environment and also the people using the space, because that has raised more concerns post the pandemic, on building health and safety.

The next important part is Codes. In fact, India did not have an energy code for buildings until recently. It was in 2007 when the first code was developed by India. Not all of the entire country is following codes. While the rating system is a voluntary approach, compliance with codes is mandatory.

Optimisation from Modelling

There are many tools that are available today for airflow modeling and other energy-efficient design. Tamil Nadu has notified the energy conservation building code made by the Bureau of Energy Efficiency. It is still not included in the combined building rules. The implementation is still pending. It is important for designers to incorporate that.

We have many case studies of how various tools have helped us. We designed a small building of about 30,000 square feet in Nungambakkam, Chennai. We worked closely with the architect, and he asked us to come up with suggestions. Very rarely does that happen for us as consultants. Normally the design is frozen, and we are expected to work backward. We created the energy model, did a couple of iterations—one with the solar canopy and without a solar canopy, worked out various cases with high-performance glass with shading devices and without shading devices, with regular bricks and with concrete blocks and so on.

In all, we did nine cases. We could bring down the consumption from 954 megawatt-hours per annum in the worst-case scenario to 459 megawatt-hours per annum in the best-case scenario. Considering the cost involved, we settled for an optimum solution whereby we could achieve 620 megawatt-hours per annum. In the energy bill, Rs.4 lakhs was saved every month. This is the kind of impact that an energy simulation tool can give us.

Waste Management

100% of construction waste can be diverted or recycled, and it can be managed properly on-site. There are simple ways in which we can do it. One is, prior to construction, how do we ensure that the site can be prepared in such a fashion where we minimize pollution control, where we don’t have to trouble the other neighbouring sites? During construction, waste management and resource optimization are important. You can buy treated water from neighbouring sites and use it for spraying on the roadway, so that you don’t generate too much dust.

Using precast and dry construction/factory-made panels that are coming now, we can reduce waste. All this must be planned at the design stage, because the structural elements are fixed at the design stage. We can engage recycling agents and vendors who can reuse the waste materials generated on-site.

What gets measured only can get improved; otherwise, we don’t know where we stand. So technology has become very important here. We’re looking at a data-driven approach to enhance performance, and the most critical path is having a building monitoring system, where you can monitor not only energy or water consumption but also CO2, humidity, temperature, occupant well-being, satisfaction, and so many other parameters. Through continuous monitoring, we will be able to plug the leakages and improve the performance when there’s a shortfall in performance. We can even calculate how much of GHG emissions can be reduced as a result of the interventions.

In the Technical Session-3, CA V Prasanna Krishnan gave a presentation on the various GST issues in Real Estate sector. CA L Srikaanth, in Technical Session-4 spoke on the Accounting related aspects of Real Estate. In the Technical Session-5, CA T G Suresh gave an insight into Direct Taxes scenario in the Real Estate.

The Issue of Water: Technology, Partnership & Approach

Read Time:12 Minute

This panel discussion is a continuation of last month’s cover story, “How to Make India Water Resilient?” The panelists were: Ms. Mridula Ramesh, CEO of Sundaram Climate Institute; Mr. Ravichandran Purushothaman, President-India Region, Danfoss Industries; Mr. J Srinivasan, Distinguished Scientist from IISC Bangalore; and Mr. Muthiah Murugappan, CEO of EID Parry (India) Ltd. Mr. N K Ranganath, Former Managing Director of Grundfos Pumps India Pvt Ltd., moderated the session.

Mr N K Ranganath: There are about 600 to 700 million people in India who face a water risk or have very poor access to water. If we don’t take action now, by 2030, 40% of India will have zero access to water. The demand currently is anywhere between 650 to 675 billion cubic meters. It’s expected to double to about 1500 billion cubic meters by 2030. India is moving up the economic scale; we are industrializing and urbanizing at a phenomenal rate. We have an average rainfall of 1200 mm per year. But there is huge variation. In some areas, it’s less than three millimeters per year while in some, it is 11,000 mm per year.

There has to be a holistic approach to water. Water for agriculture, water for industry, water for human consumption and water for animal consumption is all one water. We must see how we can effectively share water. The Jal Shakti ministry is an effort in the right direction. But sadly, water is state subject and we have six or seven ministries handling water. We have almost 4000 trillion cubic meters of rainfall precipitation, of which about 2000 is usable. The rest goes here and there. The second issue is storing this for a rainy day or should we say, non-rainy day? The potable water is reducing.

We need to go local and give equitable access of water to all the stakeholders in each area. We know that one-third of India is drought prone and one-tenth of India is flood prone. Two thirds of India has contaminated water. These are all facts. All that we can do is to start reversing this contamination. 80% of India’s water is used for agriculture, 10% for industry and 10% for human and animal consumption. We are profligate in the use of water in agriculture. As compared to Vietnam and Indonesia, we produce half the quantity of rice for double the quantity of water per hectare. 10% savings in agricultural water is 8% savings in India’s water consumption. It is almost 80% of human consumption for India.

The central government has taken tremendous efforts and invested heavily for water management. They have also come up with a composite water management index which is a brilliant way of stating how well each state is doing. Gujarat and Kerala are right at the top and Tamil Nadu is about six or seven. It’s not about the quantum of water but how well they manage water. In Chennai, 4000 cubic meters of raw sewage is let into the Cooum. They don’t have the money to put up the treatment plants. We have to find a way of doing it under the PPP method, like what is happening in the Namami Ganga scheme, etc.

We consume more groundwater than China, US and Israel put together. We also have borewells in each house. We need them because the government is not giving us enough water. Sewage waste is perhaps the greatest source of water. Our cities are now going for recycling and Tamilnadu is doing quite a bit of work. I went and saw some of these. They’re doing tertiary treatment and sending water down to the industry.

Let me put some questions to our panel. Mr Muthiah, you have a food-based industry. You make alcohol out of it. In your community and the industry, what are the issues that you’re facing? Is there a buy in from the community to work with you?

Mr. Muthiah: Seasonality impacts the business and the business model. In the hotter months, water is not available. Rainfall varies across years. We wanted to stem that. We actually didn’t start with the sugarcane business. We started with the algae business, which is the other realm of foods. We worked on the watershed around the areas of Sivaganga. The local community did get involved but we had to engage them, educate them before getting them involved.

We had to bring in the funding from our own CSR initiatives because it’s a very arid region and the communities were not really prosperous to come out and support such an initiative. This work gave confidence to us and to a lot of members of the sugarcane sourcing team here. We’ve expanded this activity into the sugar cane belt, where the issues are even graver.

First, there was the issue of seasonality around running the factories with a sugarcane belt. Sugarcane is a water guzzler. Of course, it’s lucrative for them. We have age old irrigation practices where sugarcane farmers flood the fields and they believe it’s the best way to irrigate the crop, where in reality, they deplete the water table. To address this, we’ve expanded into the sugarcane areas as well. In our sugar cane business, we touch close to 200,000 farmers. There’s captive CSR funding available, but then we had to go out and start broad basing this funding. We’ve got good support from the local farming community.

We currently manage about a billion and a half liters of water and the aspiration is to touch 10 billion in three years. We serve marquee FMCG customers like Nestle, GSK and Mondelez. All of them want to participate in these initiatives.

Mr. Ranganath: I’m from a farming background and I know it’s very difficult to change farmers. You have to weave in their traditional knowledge with the new digitalization efforts that have happened. How did you gain acceptance?

Mr. Muthiah: Very true. We follow a progressive farmer concept. Progressive farmers are those farmers who work to stem the ‘flooding of fields’ irrigation concept. We work with agri-tech companies who have IoT based smart irrigation solutions. We use these farmers as advocates, to speak to the larger farming community.

Ms. Mridula: Demand management is lacking in India. There are startups who are taking it on. We have signed up with one of them. They work on precision irrigation using IoT. But startups working in isolation will never solve the problem. Partnership is the name of the game. As the Waterman of India, Dr Rajendra Singh, says, indigenous wisdom is the key to solving India’s problem. The Community Connect has disappeared in cities. We need people to come up with innovative ways to solve it. One of the startups I know, puts a robot down the borewell to see how it’s working and how to rejuvenate dead borewells.

Mr. Ranganath: Are these startups scalable?

Ms. Mridula: 100%. Five years ago, electric mobility was a joke. Today, the angel investors want to invest in EVs. That is what will happen to water also.

Prof Srinivasan: Often people blame climate change for all our problems. Every Indian city must recognize that they cannot afford to be careless about water conservation. Take Bangalore, for example. It is a very poor example of a city built on a hilltop, nowhere near a river and is growing in size. It takes water from Cauveri, which is 100 kilometres away. Now there are plans to take water from Sharavathi River, if you can believe it.

We need to look at conservation and managing the water demand. There is no place in India where water is in plenty. Delhi has the highest per capita water consumption. To me, the first lesson is that urban areas should be leaders in water conservation and controlling water use, because they are the ones using water much more than the rural areas. Of course, agriculture is a major issue. But I don’t see any easy solution in agriculture. As many have pointed out, farming community not going to change that easily. They say, ‘The urban community wastes water and why blame us?’

Mr. Ravichandran: I represent Danfoss, a company which is into energy efficiency and electrification. We do a lot of work both at the factory and political level. In one of the delegations I was in, one of the MPs asked me, “What business are you in?” I said, “I’m in energy efficiency” “Oh, you’re making LED bulbs,” he retorted. It struck me that LED bulbs have made a big impact. How do we take the water tanks to the politicians as the LED bulbs? This is a very important message. We must sell the story of LEDs differently for water. To me, fixing water is fixing tanks.

I come from an agriculture family. Urbanization has driven us away from farming. We have a 50 acre campus in Chennai. When we signed the MOU with the government, they agreed they will give X kilo liters of water per day. When we started operating in 2013, we were 1300 people in the campus. We were spending 165 kilo liters of water per day. We thought that this was too much of water and water is on our balance sheet. We couldn’t find a good solution.

Later, in 2017 or 18, we ran into a startup with young boys and they measured where we were spending our water. We focussed on three mantras: reduce, reuse, and renew. I have lived in Germany for many years, along the Rhine River. Germany treats its water six times before it lets it in the river. Reuse of water is nothing but recycling water. For regeneration, we need to work around the communities. We picked up the villages around Vembakkam, which is a small village of 60,000 people. They never knew they had a lake. We found it out through the Irula community that was living around the periphery of the lake.

We went into the mission mode on cleaning up the lake through the Collector. We had to find houses for the Irula community. We had to find the lake and demarcate it. We engaged with an NGO from Hyderabad, and today we have cleaned the lake. It is about one acre in size and in the last five years, it has brought livelihood for 50,000 people. We need to bring social transformation on ground. I agree with Dr. Rajendra Singh’s message that neither the government nor the industry can fix it. Community has to be caught on board. Community engagement is very important. We need to educate and partner with the community. That’s the second message. The last one is, we all need to reduce our own consumption. We need to be ambassadors of water and energy, otherwise we will be leaving a very, very poor planet for our next generation.

Ms. Mridula: During the survey done by us in Madurai on water, we asked people, “Why are you not acting?” They said, the government should do it which is a shorthand for saying, ‘I don’t want to act.’ Once they realize the power is in their hands, people begin to act. Second, we have become disconnected from our past ancestral wisdom. We have forgotten about it, especially in our cities. So education of what is to be done is very important.

Mr. Ravichandran: Five years ago, we were consuming 165 kilo litres of water in the campus every day. Then we got the team that put the entire IoT solution and we started measuring. We just didn’t stop with that. We started educating our entire community of 1300 people in our company that we are consuming so much amount of water. They came up with many ideas. For instance, one person pointed out that when we served Sambar Rice (Sadam) in the canteen, water consumption was more. We tweaked that and made it as Bisibelabath and water consumption came down. Even small things can bring in a lot of change. If we reduce the water pressure in our houses, a lot of water can be saved. School children must know about conservation practices. So the short term solution is to reduce, reuse and renew. In the medium term, we must look at all our tanks. In the long term, we must look at the feasibility of connecting canals and rivers.

Prof Srinivasan: It is good to talk about water conservation in text books but in India theory and practice are different. We have not merged the two. Every school must measure the amount of water they consume and document it. Then the awareness will increase.

Mr. Ranganath: One good example is a competition organised by Indian Green Building Council for schools on greening. Quite a few students have focused on water and they’re being funded to do the job. They actually execute it.

Mr. Ravichandran: We have two different Indias now—the urban India and the real Bharat. Migration and urbanization have divided India. The urban part is 50% and the rural part is 50%. We need two different approaches to solve the water problem. The urban centers require deployment of technology. Not many of us know that Koyambedu in Chennai has a sewage treatment plant and it’s an energy positive plant, which means it does not consume energy. It generates and uses its own energy.

Technologies are available on how to solve urban problems. Of course, they are all coming from outside of India. We must innovate with startups and do it in an Indian way, at an Indian cost level. The second thing is to look at the real Bharat which is about $1.2 trillion economy. If we can put water back into the Bharat, I’m sure there will be a lot more opportunities for the Bharat to grow.

Mr. Ranganath: We must get all the stakeholders to work together. We must change focus from merely doing activities to creating the required impact in a sustainable manner. For example, I was working on a program in which we revived a few lakes and we thought we had done a great job. Everybody was very happy. One year later, they were back to where they were earlier because what they were like nobody’s lakes. The locals did not take them. So we changed our business model and sat with them for two or three years to get their commitment. We also had to look at the larger community around, who had more money, and we got them involved. We have little pockets of excellence in India. We need to tie them together.

Trading in Indian Rupees: Reach & Outreach

Read Time:15 Minute

Trading in rupees has a wider reach and has triggered expectations. India has begun working out arrangements for this purpose, with close to 50 nations. Will this lead to a clash of currencies in Asia, and what could be the consequences, especially for India and Indian businesses?

Mr N Sathiya Moorthy

Convener, Policy Matters

When we talk of trading in Indian rupees, many questions arise. How good is it as a policy? Are we ready for it? About 30-40 years back, the rupee global trade collapsed for various reasons. There is a news report that says that the BRICS currency is being revived. Will it work and where does it fit into our idea of trading in rupee? Occasionally, there is also the realisation of India having to trade with our neighbours in a common currency and it could be rupee. For instance, Sri Lanka because of their current economic crisis, have said that they want to trade in Indian rupee. They have allowed Indian travellers to go there and do business locally in Indian rupee. But this is only at the individual level.

In trade terms, there is a totally different picture. 15 years back, the Sri Lankan President of the day said, “Let us have a common currency or let us do business in Indian currency.” Around that time, Maldivian President also agreed to that. I read that Bangladesh was also not unwilling to consider it, if we could evolve something. Indian currency is acceptable in both Bhutan and Nepal. But we wanted to wait, watch and proceed.

Mr M R Sivaraman

Former Revenue Secretary, Govt of India & Former Executive Director, IMF

There was a trade agreement between the Government of India and the Government of the then Soviet Union in 1953. It led to the establishment of the rupee-ruble trade with India. Article 6 of that agreement states that all payments between India and the USSR described in Article 7 may be made in Indian Rupees. Article 7 states that all payments of trading goods and other transactions will be carried out in Indian rupees. This was there with all the Soviet Union Bloc countries like Hungary, Bulgaria and Romania. The rupee-ruble rate was then fixed at 34 rupees to a ruble, which was at least three times more than the market exchange rate.

What to do with Rupee?

In this agreement, there was an article 8 which said that any balances in the rupee accounts maintained by the State of Bank of USSR with the RBI or with authorised commercial banks will be convertible on demand into Sterling. That was the initial position. But thereafter it also changed because we didn’t have enough dollars or sterlings. Then started all the problems.

We started buying a lot of equipment from Russia- mostly military equipment, heavy earthmoving equipment and various kinds of machinery. Russia used to buy detergents, soaps, pharmaceuticals, some chemicals and consumer items. The rupee balances with Russia started mounting and it reached a stage when Russia did not know what to do with the rupees. After the collapse of the Soviet Union, Russia said that we’ll go back to normal foreign exchange hard currency transactions.

Now we import a lot of oil. We very quickly entered into the rupee trade agreement. Russians also wanted to show they have some friends in the Ukraine war. But then they realized that all these billions of barrels of oil which we import, get paid in rupees and they wonder what to do with the rupees. The talks have stalled and are not progressing anywhere. Because of sanctions, we can’t send to Russia anything except engineering goods which are manufactured in India and Russians don’t want that from us.

When Nehru turned down a request

Sri Lanka or Bangladesh is slightly different where we have a huge trade surplus with them. Bangladesh exports over $2 billion a year to India and we export about 10 to $12 billion. How will the Bangladesh find the rupees? These are complicated issues. I get the feeling that Reserve Bank of India was pushed into it. If you look at the history of the Reserve Bank of India, in 1961, H V R Iyengar was the RBI Governor and he wrote to Mr. Nehru that the rupee trading arrangement was going to fail and requested not to push it. When confronted with his letter by the Department of Economic Affairs, Mr Nehru turned it down, saying it was a political decision.

There are 18 currencies in the world, which are freely convertible. A freely convertible currency means that there are absolutely no restrictions by anybody on the use of that currency. Australian dollars, New Zealand pounds, Singapore dollars, Kuwaiti dinar, UAE dirhams are all convertible currencies. Interestingly, Kenyan shilling is also a convertible currency. I spent 40 years in finance. From my experience, if we are going to do something, we must do it the whole hog. Don’t leave it for any interpretation by any clerk or undersecretary or somebody sitting there, because then the entire scheme will collapse.

SDR: A Basket of Five

The International Monetary Fund has got a unit of account known as the SDR. Its value is based on a basket of five currencies. The Chinese renminbi was added in 2016. The US dollar, euro, British pound sterling and Japanese yen are the other currencies. The SDR or special drawing right is a unit of account in which the International Monetary Fund carries out transactions. There is a formula by which these currencies are put into the basket and their exchange rates are also fixed. Although renminbi is not a freely convertible or a freely usable currency, it is still a part of the SDR and it can be given only for capital account transactions. The Central Bank of China has put some restrictions.

In the years 1940-42, John Maynard Keynes, the father of modern economics suggested the creation of a currency known as bancor for use in all international transactions but the proposal was not accepted.

If our currency has to become global, we must be a very big trading nation. The United States does international trade of about $6.6 trillion; China does $7.4 trillion. In the case of India, last year, we touched $1.4 to $1.5 trillion. It’s not a small amount. We are a large trading nation if imports and exports are taken together. But our merchandise trade gap is huge. We export $460 billion and import around $700 billion. The countries whose currencies are freely tradable, more or less balance their merchandise trade.

AI Threats for Software

Mr Raghuram Rajan, former RBI Governor has suggested that India should focus its attention on exporting services. In the case of services exports, there is a problem. Right now, we have been doing software services and we are slowly advancing into other areas, but the entire software area is getting transformed to artificial intelligence and quantum computing is coming in. We have to do a tremendous amount of research in artificial intelligence to be relevant. China is spending on developing a high-grade chip to two nanometers. India has already designed 5 nanometer chips in Hyderabad and it has gone to TSMC for manufacture in its current design but we have no manufacturing facility yet.

Indian rupee has been depreciating in the last few years. Other global currencies have not depreciated to that extent. The exchange rate has to be stable and there should not be any restrictions on the movement or use of currency anywhere. Our merchandise trade also has to improve. Then only, we can attempt to make Indian rupee global, but unfortunately, we have not done it so far.

Dr Sanjay Kumar

Partner – Public Policy & Tax, Deloitte

In the world, you will find that there is a complete dominance of the US dollar. 90% of all foreign transactions are done in the US dollar; 50% of the global trading invoice happens in dollars; 60% of the global reserves are in dollars. So, whatever others do, the dollar still remains as strong as ever. The next one in row is the Chinese currency. Their economy moved to $17 trillion and there was a larger trade. The space occupied by the Chinese renminbi has moved from 2.2% to almost 7%. European Euro has been on a decline, though very marginally. Indian rupee is on the ascendance from 1% to almost 1.6% But it’s not yet there. Brazilian rial is almost the same. To think of a Euro or US Dollar decline in the recent future seems tough at the moment, based on the numbers that is coming through.

India’s Journey in Promoting Rupee

Look at India’s journey from 1950s to 2022. In the 50s, India traded oil from Iran and that was in rupee. In the 60-70s, India signed several trade agreements with the Soviet Union and Eastern European countries to trade in rupee. In 71, India signed a bilateral trade agreement with Nepal. In 2000, India signed an FTA with Sri Lanka. In 2012, India again signed an agreement with Iran to conduct oil trade in rupee, bypassing the US dollar and US sanctions. In 2017, we signed an agreement with Bhutan and in 2022, RBI has permitted banks from 18 countries to open Special Vostro Rupee Accounts to permit rupee trade.

Each of these things have happened in bits and pieces and not in a very continuous manner. There has not been a thrust towards the rupee trade. And largely one of the reasons is the difference in value between what we export and import. Only 5% of India’s imports originate from the US and 15% of our exports go to the US and that is largely in the services sector.

Singapore and UAE Reap it All

India gets only about 10 to 15% on the cost from the GICs (Global in-house companies or back offices as we normally call them) though, in terms of numbers, 54% of the GICs exist in India. What is holding it? Do they not consider us as important players in the economy? Do they think that we are not capable? The answer is they can’t take whatever money that they receive here. If they want to take it, there’s a lot more restriction and the two island nations on either side of the Indian peninsula-Singapore and UAE are getting benefitted out of it, as they have such a free economy. You can move out and can come in and they offer a lot more protection. They have no taxes or reduced taxes. Most of the global companies have the second layer or intermediate level layer in those places. The work of the GICs will happen here. The IPR will all be sitting in those places—largely in Singapore and not in India. They fear that our patent offices are leaky and therefore move everything to Singapore.

Russia recently suspended rupee trade negotiation because they have 40-billion-rupee reserves. They are pressurizing us to pay for oil in Renminbi. The world needs to have more confidence in our economy. We need to have a lot more trade going from us and a lot more economic growth. We have not been able to breach 7% for a really long time. That remains one of our major concerns.

Dr Suresh Babu

Professor of Economics, Department of Humanities and Social Sciences, IIT Madras & Adviser to Economic Advisory Council of Prime Minister

We started RBI’s trade settlement mechanism in July 2022 and by December 2022, we saw the first settlement of foreign trade in rupee with Russia. These are baby steps and over a period of time, we want to have the rupee as a global currency. That 18 countries have agreed to trade in rupee-some big and some not very big ones- is a good first step for us.

Towards De-Dollarising

There is a kind of thinking to de-dollarise the international market, because of the constant threat of global economic slowdown. Our game plan is to try and turn this into an opportunity. What the Chinese did some time back, we are trying to do it in a different way. This is the background in which we started this exercise. As there has been a strengthening of the dollar over time, imports have become expensive for many countries in the world. So, there could be an incentive for some of these countries to de-dollarise and we want to entice them with rupees. We are not making it as an alternative to dollar.

The idea is that a reliance on Indian rupee, away from US dollar, could mean some respite for some of these countries and if not now, over a slightly longer horizon of time. The immediate decision on rupee trade settlement was taken in the backdrop of the geopolitical tensions and the current global economic currents, including the US sanctions on the use of dollar for transactions with both Iran and Russia, who are very important trading partners of India. There is also a continuous weakening of Indian rupee. The move was expected to reduce the pressures of India on our foreign exchange reserves. That’s the broad macroeconomic objective which we had.

Arresting Rupee Decline

India is a net importer, especially in terms of manufactured goods. The rupee was one of the worst performing Asian currencies in 2022, that had a fall of around 10%. By using rupee for international trade sanctions, it was anticipated that it would help protect the flow of dollars out of India and also slow down the depreciation of the currency. We don’t have tall claims for that and the idea was to have some intervention. There was also the crude oil import from Russia, which we are capitalizing on. The idea was that if we can have a rupee settlement mechanism, then we could actually save around $30 billion outflows, even if there is a partial rupee settlement and it would help our foreign exchange reserves.

When we went into this decision, there was a 17% drop in the exports to Russia. The trade deficit with Russia was widening and we had to do something. The widening of trade deficit was because there was a delay in the payments that we were receiving from them because of the international sanctions against Russia. In this backdrop, we thought we can have this settlement mechanism, which will be beneficial to both the countries.

18 Countries Given the Nod

Now 18 countries have been permitted by the RBI to open Special Vostro Rupee (SVR) accounts. The bank of a partner country may approach an AD (Authorised Dealer) bank in India. This AD bank will then seek the approval from RBI with the details of the arrangement and subsequently approval from the RBI is granted to this bank. Trade settlement will happen in Indian rupee.

The best definition of an international currency has been given by Chinn and Frankel in a fantastic paper published in 2008. The function of an international currency is in terms of the store of value; medium of exchange and a unit of account. We know that any currency has these functions but governments as well as private actors should be able to use this international currency for all transactions. It should also become a kind of local currency. Our wish or dream, in the years to come, is to make rupee as an international currency.

There are some benefits in rupee invoicing with some trade partners such as Russia, Saudi Arabia, Nigeria, UAE where India is a larger importer. There is potential for exports as well. There is a possibility for India to enter into contracts with these countries because we have an unfavourable trade balance with them. If we can settle it in rupees, there is a possibility that India might benefit and that is the idea that we are pursuing this.

60 SRVs in 7 Months

In a very short span of seven months, we have 60 Special Rupee Vostro (SRV) accounts, which is not a very small number. India has a large trade deficit with eight countries: Botswana, Germany, Guyana, Malaysia, Myanmar, Oman, Russia and Singapore. With all of them, we look at how we can push our rupee trading and it could be mutually beneficial.

A very interesting research was done by the State Bank of India research group and it showed that there is a change happening globally in the trade of oil and commodities. Some countries are in favour of settling in Hong Kong dollar or UAE dhiram. If we can get somewhere close to that, there is a possibility that Indian rupee might also be accepted globally for settlements. The BRICS countries tried to de-dollarise. It gave an opportunity for China to push its agenda. It could also be an opportune moment for India to encash. But we have a long way to go.

The Challenges

When our trading partners have depreciation of their currency against dollar, it might not be appealing for them to do rupee trading. Bangladesh, Turkey and UK have depreciated against dollar by more than 10%. Turkish Lira depreciated almost 94% against the dollar. There is also a need for a much more sophisticated financial system in India, if we want to push for a global currency. We have to develop both regulatory mechanisms as well as depth in our financial markets.

Finally, when we look at this whole effort to internationalize currency, we find that it could affect the service sectors, because if we try to push this agenda of de-dollarization beyond a point, the US might not be very happy with that and might retaliate. Then the first hit for us would be service exports. We have to be extremely careful in pushing this agenda.

Taking Care of 3 Issues

Three issues have to be kept in mind in taking up rupee trading mechanism:

Bilateral trade equilibrium
There is a possibility that it could lead to macroeconomic imbalance and lead to a situation where India’s trade deficit is financed with surplus investments of trading partners, which might go to government securities and treasury bills. Inflationary tendencies might push us into a very difficult situation, if we don’t have a comfortable exchange rate management policy.
We are fighting in an era of global trade protectionism and geopolitical rivalries. It is very difficult to push rupee further in a situation in which every country is trying for a protectionist trade policy. That puts a limit on us.

What the CEO Wants You to Know

Read Time:13 Minute

Mr Ram Charan, author, in discussion with Ms Sangeeta Shankaran Sumesh, Business & Leadership Coach; Mr Mukund Kasthuri, Regional Director-Asia, Flexco; and Mr Senthilkumar Sivaswamy, MD, Benteler Automotive.

Ms Sangeeta Shankaran Sumesh: The crux of the book is about three things: Understanding the building blocks of money-making; where should one focus for business growth; and how can one contribute to the business growth, irrespective of the department or function that one is in? According to the author, the most successful business leaders never lose sight of the basics. The ability to apply the universal laws of business is business acumen.

Money making has three parts: Cash Generation, return on assets (ROA) and growth. ROA is the combination of velocity and margin. To these three, add the customers and that becomes the core of any business. Velocity describes the speed, the turnover or the movement. When a company can’t generate enough cash, it tends to borrow, but if they borrow heavily and do not correct the problem, they have trouble in repaying the loans and can become bankrupt. Companies must focus more on productivity. CEOs with good business acumen have a close connection with their customers.

Customer vs. Consumer

There is a difference between consumer and customer. The CEO must try to understand the needs and the wants of the consumer because they are the ones who consume the product or service. Many of the processes like logistics, discounts, merchandising, shelving are geared towards customers, who are the intermediaries. When you don’t get the margins that you want, talk to your customers and understand what is missing and work on it.

Growth of a company has to be profitable and sustainable. A company may be growing in sales, which is great but if the margins are dipping, then it is not good. So, leaders need to be focused on consistent, predictable and profitable growth. Companies must also focus on adjacencies. Nike sell shoes, which is what they’re known for. They also sell athletic apparel. This is an example for adjacencies. It’s important for a CEO to understand the company’s total business and get a holistic picture of the company. A smart CEO always has three to five top business priorities, which helps in money making.

More than money making, the leader must look at the P/E ratio (price earnings ratio). It is the ratio of the share price of the company to company’s earnings per share. Higher the ratio, the more wealth you can create for your shareholders. By creating wealth, it’s not just the shareholders but also the employees get benefited.

A leader must harness the efforts of the people, expands their personal capacity and synchronise them, so the business gets the desired results. It’s important to have the right people in the right job. When there are differences of opinion, go ahead and confront people. People who do well in a job also need attention. We think that the people who are star performers don’t need coaching. But it is the other way around.

By coaching your team members, you help them to identify their blind spots and do things better. Feedback needs to be honest and direct. Coach people on the behavioral skills and also about the business aspect. To give the example of Walmart, Sam Walton, the founder, introduced a social operating mechanism (SOM). They would meet regularly and discuss, compare with competitors their pricing strategy, merchandising, consumer behavior and trends and talk about the best practices. If CEOs have to deliver, they have to master both the business side and managing the people.

Mr Mukund Kasthuri: Fifty percent of my time goes in talent management. It starts with having the right people on the bus. Then we need to ensure they have the behavioral capabilities related to that job and the right attitude. They must have initiative, hunger and passion for growth. Passion, focus and clear communication are the three aspects which will help one grow in an organization and not politics. Understanding the expectations of the job, clarifying beforehand, then going after those things and getting feedback at a regular frequency will help them to develop management or business acumen.

The customer is the one around which everything is centered. You have to create value for the customer. I can relate velocity to inventory turnover ratio in our business. We must have a ratio of 3 to 3.5, so we don’t have non-moving stock. What stock to keep is the biggest challenge most of the CEOs face. The business model has changed slightly from B2B to B2C. The CEOs need to be abreast with technology. They have to make the right investments to make sure that the return comes faster.

Mr Senthilkumar Sivaswamy: In our automotive industry also, velocity is the inventory turnover. We need working capital to run our business. For each product, parts or the models that we are manufacturing worldwide, we need working capital. Before starting the project, we have to look at our suppliers and their payment term. We need to decide the inventory and come up with the budget for the working capital. We need to optimize the inventory turnover, for the for the whole lifetime of the product. Last week, I was in our Jeep plant in Portugal where we use Just In Time (JIT) concept. Normally, our product involves 10 parts. But in the jeep plant, we’re doing the complete model and it involves nearly 200 to 300 parts. Some parts we do and some parts we buy. We have to optimize the flow of the material, so that we keep the inventory low, so our gross margin will increase. The gross margin is very important in keeping the profitability or the earnings of the company.

Ms Sangeetha: In a company that’s not asset heavy, how will you work on Return on Assets?

Mr Mukund: We set up a company in Dubai. We did not want to make heavy investments. So, we went with the lease model. We went for third party logistics, rented office space and wanted to keep everything on a very low variable rather than have a fixed cost model. We invested on people. People are also an asset and an investment. Coaching helps people to increase their capability. We must try to work on the strengths of the people, rather than trying to change them. In all the IT companies, people are the assets. To retain people, we must provide a very good workplace culture, give them the freedom to operate and remuneration, which is in line with market trends.

What are your thoughts on managing the working capital?

The best is to have negative working capital. We followed that model in India when we started the company. We get maximum credit from our suppliers and take advance from our customers. This is the best mechanism to operate on negative working capital, because cash is king.

What are some of the good initiatives for maximizing the shareholders’ value?

Mr Senthil: We manufacture automotive parts which are relevant for both IC engines as well as e-mobility. We see a jump in the sales of electric vehicles compared to last year in India. By 2030, there is a prediction that 80% of two wheelers and 30% of cars will be e-vehicles. In Europe also, it’s growing faster. In India, we need to develop the infrastructure. We now have a gap from our products. So, we need to find alternative products. We need to move from the IC engine parts to e-mobility. For example, we are now offering rotor shaft and the cooling plate for the battery. Since 2017, we are into e-mobility in a big way.

We have also formed a separate company where we develop the autonomous vehicle. Benteler will release soon the autonomous vehicle called ‘People Mover.’ We have got the order and we are working with more than 100 suppliers. We will be releasing the prototype in the US. We’ll be releasing it in the market in 2025. I mean to say that if there is a gap in our earnings, we need to stay relevant in the market and be customer centric. If there are no customers, we don’t get any revenue. We have to see the trend in the market. Everyone wants to join a company or be in a company which is growing. That gives them energy and it’s also a psychological thing. That is how we can really increase the shareholder value.

A smart CEO is always in touch with the customer. How different is it for a B2B business and a B2C business, being in touch with the customer, knowing their behavior, patterns and the trends?

Mr Mukund: We are in B2B segment. Our customers are our dealers and distributors. Our consumers are steel plants, power plants, cement plants or whoever is using the product. The CEO will not be successful, if he (she) sits in a boardroom. He must lead from the front and must have a plan to visit the actual users and find out what exactly they are looking for. If he understands that, he can go back to his engineering, tweak the product or go for new product development to retain the existing customers, before going after new customers. It’s far easier and cheaper to retain existing customers than to acquire new customers. Being in touch with the customer is basically the same, whether it is B2B or B2C.

How should a CEO educate his team on the importance of price earnings ratio?

Mr Senthil: Everyone in the company should know about their price earnings ratio. The team has to understand that the PE ratio is a combination of the profit margin that they are getting on the investment and the velocity. They must know how to increase the velocity, the gross margin and the return on investment. Otherwise, PE ratio will come down and eradicate the shareholder value.

What are some effective ways to design the priorities for the business?

Mr Mukund: The first thing we look at is profitable sales growth. It has to be sustainable and consistent. This is a must, whether you operate in an existing market or go into a new market. The next priority is to reduce expenses, so that the margins and operating income increase. The priority of the business is to retain customers who are giving a higher value. Ensure that you have the right people who can delegate and execute, depending on which position they are in, to drive the business. Inventory turns ratio is an enabler for increasing the margin. Each CEO has to break down a problem into smaller bits and then attack those smaller bits, rather than looking at the whole problem as a big one and getting overwhelmed. A CEO cannot do everything on his own. He needs the right team. Collaboration among people is a basis of business.

Q&A

How can organisations match the skills with the roles and how can they improve that?

Ms Sangeetha: It’s important to leverage on the strengths of the people. You don’t expect a fish to fly. We must find out whatever each person is capable of, their natural talent and the skill. It’s important to make use of that. The person is also happy and passionate doing it and you get the most out of your people. It creates a win-win. Even the best people need to be coached. When somebody is doing well, we don’t pay much attention to them. Coaching is not just performance review, but helping them people to scale up to the next level, identify their blind spots, encouraging them to deliver their best and maximise their potential.

In maximization of profit, in a scenario where there is one customer who is willing to pay 100 and a repeat customer who’s willing to pay only 80, what will be the recommended option?

Mr Mukund: It’s cheaper to retain an existing customer than to acquire a new one. I would go with the repeat customer. Of course, I would love to have a combination of 100 from a new customer and 80 from a repeat customer. The overall mix has to be profitable. If not, you need to learn how to exit.

What should the CEO focus on: Profit, process, people or product?

Mr Senthil: It should be all. First of all, it is profit. To increase that, he must increase the velocity and gross margin using the people. The CEO should be the leader of business and also the leader of people.

In spite of ensuring all the KPIs, employees face increasing demands from CEOs. How can the employee meet these expectations?

Mr Mukund: The biggest problem, I believe, is matching KRA (Key Result Areas) and KPI (Key Performance Indicator). It is in the job description where most companies go wrong. When employees don’t get recognised when they meet the KPIs, they get upset. It’s a question of balancing aspiration and reality. I think, the right feedback is not being given throughout the year for the employee to change. If he/she can course-correct, it should not happen just at the end of the year appraisal. Feedback is supposed to be a continuous process. The employee must touch base with the manager at least three, four times in a year, so that he has enough time to course correct.

Who is important- the customer or the consumer?

Ms Sangeetha: The CEO or the business has to cater to the needs of both. The consumers tell you what they want. You can know their behaviours and the trends in your business through the customers. So, both are important.

Mr Mukund: In America, the distribution is the key. So, the customer is more important there. In every other country, I would go with the consumer, because I can create the customer who is the middleman who takes it to the consumer. It depends on where you’re operating.

What makes a salesman to achieve the targets on a regular basis?

Ms Sangeetha: Whatever your customer needs, you must address that in your selling process. Then you can become a winning salesman.

Mr Senthil: The CEO must give incentives to the salesman who aligns with the priority of the company. If the salesperson is selling with a low margin and if it is not aligning with the priority of the company, it’s not good. If we increase the top line, the revenue is increasing. But we should see the bottom line as well. Sometimes if we increase the top line, then we tend to reward the sales team. If the sales is not generating cash, it’s not good for the company.

Mr Mukund: A successful salesperson must have focus and passion and must connect with the customer. If you want to be continuously successful, you have to go in front of the customers, engage with them and understand them. You’re the only person standing in front of the customers who shoot bullets at you. You must know how to protect yourself and convince them that you have the best product.

Which is the best approach for a CEO to choose a successor- from within the organization or from outside?

Ms Sangeetha: Ssuccession planning is very important and essential. There is no hard and fast rule. It can be internal or external, but the most important thing is having the right person in the right job with the right capabilities and business acumen. He must know the business priorities and have the right skills. That’s what matters.

Will there be a difference in the expectation from a CEO depending upon whether it’s a pyramid or flat organization?

Mr Mukund: I don’t think so. The business priorities and the requirements of the owners and the stakeholders are the same, irrespective of whether there is a pyramid structure or a flat structure.