Identifying and

addressing social
problems that
intersect with
businesses
Closing Remarks

Shared Value Initiative

Gurgaon, November 2015

Contents Page

A. Understanding the environment – Economic, political and social 4

B. India inc. at the intersection of shared value and profitable growth 16

This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation.
It may not be passed on and/or may not be made available to third parties without prior written consent from .

© Roland Berger SVII 2.pptx 2

Social Problems and Business Opportunities : An area where India
is showing how to co-exist responsibly and profitably

Ambition
Personal,
Institutional,
National

Environment Businesses Creating profitable

Economic, business opportunities to
Regulatory,
Social SHARED address real social
VALUE
problems appears to be the
Households Government sweet spot for share value
creation

SVII 2.pptx 3
A. Understanding the
environment –
Economic, political and
social

SVII 2.pptx 4
 A India’s growth story

The Indian elephant has learned how to dance – India's GDP has incre-
ased by about 7.5x since 1980, 3 times faster than global expansion
Indexed GDP growth1) [1980 – 2014, 1980 = 1 ]
GDP 1980- 1985- 1990- 1995- 2000- 2005- 2010-
Comments
8
CAGR 1985 1990 1995 2000 2005 2010 2014
India > India’s GDP growth has consistently
India 5.16 5.95 5.08 6.08 6.72 8.31 5.45 exceeded 5% over the last 35 years
7
World 2.67 3.54 2.09 3.46 3.05 2.59 2.65 > Since economic reforms of 1991,
India has achieved the following:
6
– Four-fold GDP growth
– Poverty alleviation for ~225 mn
GDP growth, x times

5
Indians
– Increase in telecom penetration
4 from 6 mn in 1991 (1% penet-
ration) to 915 mn in 2013 (73%
3 penetration)
World – Construction of 45,466 km of
2 national highways between 1991
and 2013 – four times the length of
the total Autobahn network!
1
> Growth has been achieved despite
vagaries of global markets, internal
0 strife, and politics – proof of India’s
resilience
1980 1985 1990 1995 2000 2005 2010 2014
1) All GDP numbers used for calculation are in 2010 US dollars
Source: US Department of Agriculture Economic Research service, Real GDP (2010 dollars) Historical,
available at http://www.ers.usda.gov/data-products/international-macroeconomic-data-set.aspx SVII 2.pptx 5
 A India’s growth story

While its GDP growth has been much below that of China, consider-
ing the 13 year lag in reforms, the difference does not seem so stark
Comparison of GDP growth: India vs. China, 1980 to 2014 [%]
Comparison of India’s 2014 GDP with China’s
Indexed GDP growth 1) [1980 – 2014,1980 = 1 ] 2001 GDP, accounting for 13-year lag 1) [USD m] Comments
25 > China’s GDP has not dipped
below 8% in the 6-year periods
6.12% 2,371 between 1980 and 2014
20
GDP growth, x times

> Chinese GDP has increased by

15 2,097 a factor of 24 since 1980 levels
(compared to 7.5x in India over
10 the corresponding period)
278 > Key success factors of the
88.4%
5 ‘Chinese economic miracle’
has been abundant investment
0 in infrastructure and creation of
1980 1985 1990 1995 2000 2005 2010 2014 India’s GDP India’s GDP China’s a strong export-focused
in 1980 in 2014 GDP in 2001 manufacturing sector
China India time adjusted > India’s 2014 GDP was 88.4%
difference of
12% vs.
of China’s 2001 GDP
GDP 1980- 1985- 1990- 1995- 2000- 2005- 2010- China & India – China’s economic reforms
CAGR 1985 1990 1995 2000 2005 2010 2014 took place in 1978, 13 years
China 9.58 9.80 10.79 9.13 9.76 11.21 7.99 prior to India’s landmark
economic reforms and end
India 5.16 5.95 5.08 6.08 6.72 8.31 5.45 of the License Raj
1) All GDP numbers used for calculation are in 2010 million US dollars

Source: USDA, Roland Berger SVII 2.pptx 6

 A India’s growth story

Contrary to China's manufacturing-led growth model, India's growth

has been propelled by services
GDP split by sectors1) , India vs. China [%]

GDP split – India vs. China [2014] Sectoral split in India's GDP Comments
7% 4% 2% > Financing and business services were
9% 14% Agriculture 12% the fastest growing categories in the
20% Indian services sector in 1980, while
9% growth in Industry, mining and
28%
2% manufacturing remained stagnant
26% Industry 9%
43% 15% > Transport, storage and communication
3%
9%
15%
services were the main drivers of
3% growth in the services sector in 2000,
15% while growth in Industry and
manufacturing remained stagnant
> In 2014, export of software services
60% Services 60% was the largest contributer to India's
48% 50%
services sector, whereas Telecom and
39%
software together drive India's global
brand image in services
> India's export of financial services too
witnessed a high growth of 34.4% in
China India 1980 2000 2014 2013-14
Allied services Mining & Quarrying
Agriculture Manufacturing
1) Share to total GDP at constant 2004-05 prices
Other Industry Services
Source: Planning commission database, ADB Economics working paper "The service sector in India", June 2013 SVII 2.pptx 7
 A India’s growth story

Rising disposable incomes combined with falling interest rates and

increasing net domestic savings show a strong consumption story
India Net domestic savings [INR bn], Lending rates [%], PDI per capita1) [INR] and Avg.
amount of debt per household [INR]
Select macro-economic indicators of India Average amount of debt per household [INR]
Percent
INR
Lending interest rate, % 84,625
100 70,000
Net domestic saving, INR bn Rural
90 Personal disposable income per caita , INR Urban
60,000
80
70 50,000

60
40,000
50
30,000 32,522
40
30 20,000
20 11,771
10,000 7,539
10 3,618
661 1,030 1,906
0 0
1980 1985 1990 1995 2000 2005 2010 2015 1981 1991 2002 2012
1) PDI = Personal Disposable Income

Source: RBI, World Bank, NSS reports SVII 2.pptx 8

 A India’s growth story

Further, India's labour productivity gains over the period 1999-2007

and 2008-2011 have clearly outpaced increases in salaries
Growth in wages and labor productivity in Asia, 1997-2007 and 2008-11 (%)
1999-20071) 2008-20111)
15
14 14
45°
13 45°
12
12
11 10 CHI
10 CHI VN
9 8
Real wage growth (%)

Real wage growth (%)

NEP
8 CDA 6 BAN
7 IRA MAC
ISA MON
6 4 MYA ISA
5
2 HK
4 KOR THA
3 NEP SNG 0 SNG
MYA
2 PHL IND
1 BAN ITHA MAC -2
FU KOR
IND
0 PAK HK -4 IRA
-1 SRI
-2 PHL -6
-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13
Labour productivity growth (%) Labour productivity growth (%)
1) China CHI, Cambodia CDA, Indonesia ISA, Islamic Republic of Iran IRA, Republic of Korea KOR, Malaysia MYA, Singapore SNG, Bangladesh BAN, Thailand THA, India IND, Macau
(China) MAC, Hong Kong (China) HK, Sri Lanka SRI, Philippines PHL, Myanmar MYN, Mongolia MON, Nepal NEP, Pakistan PAK, Fiji FIJ
Source: Global Wage Report 2012/13, International Labor Organization SVII 2.pptx 9
 A India’s growth story

India's import and export intensity has also consistently grown over
the last 35 years, comparable with China during the last 5 years
Import/Export Share [1980 – 2014, % GDP]
% of GDP
50
45
40
35
30
25
20
15
10
5
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

China, import Germany, import India, import China, export Germany, export India, export

Source: World Bank database SVII 2.pptx 10

 A India’s growth story

FDI as well as FII flows have grown significantly since 1991, with a
cumulative inbound FDI /FII of nearly USD 0.5 trillion since 1993
India FDI & FII inflow [1993 – 2014, USD bn]
USD bn1) FDI inflows by country & Sector, cumulative 2000-20152)
60 Services
Mauritius
55 36.0% 17.0%
Singapore
50 13.0%
Others 45.0% 10.0% Construction
45
9.0% UK
40 6.0% 5.0% 7.0%
23.0% 7.0% Telecommunications
4.0% 6.0%
35 Others Japan Computer hardware & software
6.0% 5.0%
30 Drugs & Pharma
USA Netherlands Chemicals 3) Automobile
25
20
15
10
5
0
(5)1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(10)
FDI inflow in India FII inflow in India 4)

1) USD billion at current prices and current exchange rates 2) For period Apr 2000 to Jan 2015 3) Except fertilizers 4) INR/USD exchange rate = 60 has been used

Source: Department of Industrial Policy & Promotion, UNCTAD, SEBI SVII 2.pptx 11
 A India’s growth story

Moreover, India’s outward FDI performance has been impressive –

and has grown by 30x since the period 1990-99!
Overview of India’s Outward FDI (OFDI) and Inward FDI (IFDI)
Indian OFDI 1961-2014 [USD mn] Comments
102,850
> Outward FDI in India increased
significantly post-2004 due to
37,224 – key policy relaxations, e.g.,
ceiling on outward FDI was
removed, state-owned
enterprises were
32 87 152 3,351 encouraged to invest abroad
(e.g., oil and gas companies
1961-69 1970-79 1980-89 1990-99 2000-07 2007-14
like GAIL and ONGC)
Indian OFDI and IFDI [USD mn]
– restructuring activities of
50,000 large Indian conglomerates
40,000 in the 1990s had generated
large cash reserves, which
30,000 they used to acquire
international companies
20,000
> Knowledge-intensive industries
10,000 such as pharmaceuticals,
0
information technology, and
automotive dominated outward
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Inflow Outflow
FDI during the period 2004 to
2010
> SVII 2.pptx 12
Source: UNCTAD, The Rise of Indian multinationals, Roland Berger
 A India’s growth story

After two challenging years1), the Indian economy now shows signs
of recovery – including falling inflation and declining interest rates
India – key macroeconomic indicators (1/2)
GDP growth rate2) [%] Inflation – WPI annual change2) [%]
10.9 10.8 10.4 10.3 10.0
9.0 9.4 9.7 9.5
7.1 7.7 7.7 7.5 7.6 7.3
7.8 7.5 7.9 8.6 8.8 8.9 8.2 7.8 6.7
7.7 7.5 7.0 5.0 4.8
6.1 5.8 6.1 6.9 6.1 6.6 3.9
6.0
5.3 5.5 5.3 1.6 1.4
4.5 4.8 4.4 4.8 4.7 0.5

-1.8 -2.3
-4.5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 153) 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 154)

India industrial production (% YoY growth rate) Bank repo rate [%]

15

10

-5 5

Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr- Apr-
08 09 10 11 12 13 14 15 08 09 10 11 12 13 14 15

1) As a result of the global economic crisis and policy paralysis of the previous government; 2) Refers to Financial Year i.e. Q1 (Apr-June), Q2 (July-Sep), Q3 (Oct-Dec) and Q4 (Jan-Mar)
3) Estimated GDP 4) Includes July and Aug. data
Source: MOSPI; RBI, IMF; Press; Economic Advisor of India; Ministry of Finance, India; DIPP; Roland Berger SVII 2.pptx 13
 A India’s growth story

Further, the trade deficit is narrowing, fiscal deficit is on the decline,

and FDI inflows are on the rise
India – key macroeconomic indicators (2/2)
Foreign trade [USD bn] Debt and fiscal deficit [% of GDP]

150 75 8
Exports Imports Trade Deficit National debt Fiscal Deficit
70 6
100
65 4
50 2

0 35 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY09 FY10 FY11 FY12 FY13 FY14 FY152)
09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15

FDI Inflows1) [USD bn] INR vs. EUR exchange rate

13.4
12.3 85
9.9 9.5 80
8.7 8.3 8.9
7.4 7.2 7.5 75
7.0 6.5
6.0 6.4
5.2 5.6 5.0 5.8 5.2 5.0 5.1 5.7 70
3.4 3.8 65
2.5
60
55

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15

1) High FDI in Q4 2012 due to US $7.2 billion Reliance Industries-British Petroleum (BP) deal and in Q1 2012 due to investments held up in the previous year 2) Estimate

Source: RBI, IMF; Press; DIPP; Roland Berger SVII 2.pptx 14

 A India’s growth story

The new government has created a positive momentum in the

country and is expected to drive the development agenda
Key reforms undertaken under new Modi-led government
Infrastructure Development
> Revival of Special Economic Zone (SEZ),
streamlining the Public Private Partnership
(PPP) models and creating Infrastructural
Investment Trusts (InvITs). Highlights include
‘100 smart cities’ manifesto and Diamond
Quadrilateral rail network
> Sardar Patel Urban Housing Mission:
Proposed scheme endeavors to build 30
million houses by 2022 for the economically
weaker sections
> Digital India: Development of relevant
infrastructure for National e-governance
Liberalization
> Liberalization of FDI in defence production,
railway infrastructure and insurance
> Bilateral diplomacy and neighbours first policy - > Implementation of Goods and
Meetings with South East Asian leaders to lay
the groundwork to plan an active role in Asia
> FDI in Defence has gone up from 26 to 49%,
with more investment allowed on a case to
case basis
Small Investment Reforms Skill Development
> Re-introduction of Kisan Vikas
Patras: Providing safe and secure
investment avenues to the small
investors
> Sukanya Samriddhi Account:
launched with sole objective of
financial planning for the marriage of > Unnat Bharat Abhiyan: Launched
Girl Child
> MUDRA Bank Yojana: Bring stability
to the microfinance system through
regulation and inclusive participation
> Pradhan Mantri Jan Dhan Yojana -
Rolling out bank accounts for every
household
Procedural Reforms
Services Tax (GST) set to be
implemented towards tax
rationalization
Insurance Reforms
> Pandit Madan Mohan Malaviya > Pradhan Mantri Suraksha
National Mission on Teachers and Bima Yojana: Personal
Teaching: To ensure a coordinated accident policy
approach so as to holistically
> Pradhan Mantri Jeevan Jyoti
address the various shortcomings Bima Yojana: Provides risk
relating to teachers and teaching
cover in case of an untoward
incident
with an aim to connect institutions of > Atal Pension Yojana: The
higher education, including IITs,
investors will be able to get
NITs and IISERs, etc. with local pension of INR 1,000 to INR
communities to address
5,000 per month, at the age of
development challenges
60 years
> SWAYAM (Study Webs of Active-
Learning for Young Aspiring Minds):
Programmed Professors of centrally Rationalization of
funded institutions like IITs, IIMs, institutions
central universities will offer online
courses to citizens of our country > Creation of Special
Investigative Team (SIT) to
Manufacturing focus unearth illegal money stashed
in tax havens
> Make in India- Major new national
program designed to transform India > Replacing Planning
into a global manufacturing hub Commission with a new
institution

Source: Secondary research, Roland Berger SVII 2.pptx 15

 A India’s growth story

The long-term forecast is positive – in terms of real GDP, India is

expected to jump to #3 position by 2030
GDP growth and GDP per capita 2010 vs. 2030
GDP
growth [%]
11
10
9
8
7
6
5
4 India
3 Brazil
US
2 Russia
1 China Germany
0
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

GDP Per capita [USD]

GDP size in real terms GDP 2010 [USD} GDP 2030 [USD]

Source: Goldman Sachs BRIC Report; World Bank; Roland Berger Analysis SVII 2.pptx 16
 B Innovative India Inc.

While the resilience of the Indian economy is encouraging, the growth

of India's top 50 companies has been nothing short of spectacular
Consolidated Revenue of India's Top 50 companies in 2014, CAGR 2005-2014 [%]
Sr Revenue Revenue Sr Revenue Revenue
Company CAGR Company CAGR
No FY05 (INR bn) FY15 (INR bn) No FY05 (INR bn) FY15 (INR bn)
1 India Oil Corporation Limited 1,334.07 4,495.09 13% 26 Bank of India 71.77 479.63 21%
2 Reliance Industries Limited 665.97 3,754.35 19% 27 JSW Steel* 70.35 460.87 21%
3 TATA Motors 195.33 2,627.96 30% 28 Bank of Baroda 80.44 460.18 (2014) 21%
4 State Bank of India 545.36 2,572.89 17% 29 SAIL* 325.69 457.11 3%
5 Bharat Petroleum Corporation* 638.57 2,380.87 14% 30 AXIS Bank 23.28 438.44 34%
6 Hindustan Petroleum Corporation* 652.18 2,066.26 12% 31 Chennai Petroleum Corporation 162.96 418.66 10%
7 Oil and Natural Gas Corporation 597.47 1,608.95 10% 32 Wipro* 72.36 416.35 19%
8 Larsen & Toubro 597.47 1,608.95 10% 33 Petronet LNG 19.45 395.00 35%
9 TATA Steel 159.99 1395.04 24% 34 Mahindra & Mahindra* 76.96 389.45 18%
10 Hindalco Industries 101.05 1,042.81 26% 35 ITC Ltd 76.39 365.07 17%
11 TATA Consultancy Services 97.48 946.48 26% 36 Union Bank of India 57.36 356.07 20%
12 ICICI Bank 169.17 902.16 18% 37 Motherson Sumi Systems 7.81 350.32 46%
13 Essar Oil* 6.37 832.06 63% 38 TATA Power Company 49.55 343.67 21%
14 NTPC 235.16 806.22 13% 39 Grasim Industries 94.10 328.47 13%
15 Coal India Ltd 298.87 741.20 12% 40 Vedanta* 14.09 325.02 37%
16 Adani Enterprises 150.05 645.82 16% 41 HCL Technologies 33.51 321.44 (2014) 29%
17 Mangalore Refinery and Petrochemicals 206.93 574.77 11% 42 Idea Cellular 27.95 (2007) 312.79 35%
18 HDFC Bank 37.31 574.66 31% 43 Hindustan Unilever 110.61 (Dec 2005) 308.06 11%
19 GAIL* 135.91 567.42 15% 44 Bharat Heavy Electricals* 106.86 301.83 11%
20 Bharti Airtel* 79.03 554.96 22% 45 IDBI Bank 33.59 297.20 (2014) 27%
21 Punjab National Bank 103.88 548.84 18% 46 Ruchi Soya Industries 39.08 283.09 22%
22 Infosys Ltd 71.29 533.19 22% 47 Central Bank of India 61.44 283.03 17%
23 Maruti Suzuki 110.33 508.01 16% 48 Hero Motorcorp 100.86 (2006) 275.85 12%
24 Housing Development Finance Corporation 36.89 483.16 29% 49 Aditya Birla Nuvo Limited 3,1.89 265.16 24%
25 Canara Bank* 91.16 483.00 18% 50 Indian Overseas Bank 47.51 260.77 19%

Overall, India’s top 50 companies have grown at a combined CAGR of 21% between 2005 and 2014! 1) Standalone company revenue
Source: www.moneycontrol.com, Economic Times, Roland Berger SVII 2.pptx 17
 A Innovative India Inc.

India Inc.'s innovation focus and need to differentiate has come

about as a result of its need to compete in higher margin businesses
Comparison of China vs. India on competitive advantage
China India
Country-specific > Strict labour law
> Historically, Indian
companies have not
advantages (CSA) regulations competed on cost alone
> Good pool of talent as weak government and
(E.g., land, natural resources, infrastructure impact cost
labour, location, climate etc.) competitiveness
negatively
Government-specific > Poor physical > In this environment, a
infrastructure purely operational
advantages (GSA) > Inconsistent, ineffective excellence, low cost
(E.g., physical infrastructure, human manufacturing strategy is
government policies insufficient as CSA and
capital, educational systems, quality
of governance reflected in policy > Ranks low on Ease of GSA prevent Indian
Doing Business companies from achieving
making and execution, etc.) the same cost position as
their Chinese counterparts
Firm-specific > Professional management > Innovative, higher
margin businesses are a
advantages (FSA) > Clear focus on becoming
best-in-class in knowledge- must for survival
(E.g., firm-level assets and intensive industries > Successful Indian
companies have had to
capabilities that contribute to overcome significant
competitive advantage) challenges in terms of
CSA and GSA

Source: Competitive Advantage of Emerging Market Multinationals, Roland Berger SVII 2.pptx 18
B. India inc. at the
intersection of shared
value and profitable
growth

SVII 2.pptx 19
B Innovative India Inc.

Intersection of social problems and business. What does it imply ?

In our belief some of the major themes in this journey evolve around;-

1. Redoing Products, Services – Making them more relevant to social needs

2. Deriving a new and more relevant definition of productivity – Linking productivity

to many more objectives than commercial value add

3. Creating local industrial competence clusters – Building local ecosystems of

excellence

4. Creating scaleable impact – Expanding impact at multiple levels and in a multitude

of ways.

5. Linking economics with social progress – setting the context of business and
rooting it in overall developmental agenda for the society

SVII 2.pptx 20
 B Innovative India Inc.

There are several examples that have done the above well at
multiple levels not only domestically but also internationally, across
a variety of industries

1 GE Ge has leveraged technology, innovation and a deep understanding of consumer needs to create the low cost
Medical Devices ECG machine for markets like India taking healthcare delivery to millions more in an environment where
service delivery is localised, easy, cost effective and maintainance free.
2 Godrej Consumer Godrej Consumer Products Ltd has championed science and technology to drive innovation and create
Products Ltd.: market-disruptive products; it has adapted products from its global businesses and localized them with the
FMCG help of consumer insights, local suppliers, and an innovative and dynamic R&D organization

Maruti Suzuki: With its efforts in extensive rural marketing, frugal engineering, building a profitable and efficient supplier base
3 and strong customer relationship management, Maruti Suzuki has maintained its market leadership position in
Automotive
India for 3 decades. Moreover, it has overtaken its parent in terms of valuation; it accounted for 33% of
Suzuki’s auto revenue & 55% of EBIT in FY15
4 Mahindra Rural A prime example of a successful business built on the principle of shared values via leveraging its strong
Finance: parentage, understanding of customer priorities, development of local sales force, and customized credit-
Financial Services appraisal and collection mechanisms

5 Vaatsalya: Customer focussed and asset-lite-no-frills-low-price-hub-based model focusing on a core set of specialized
Healthcare Services services, Vaatsalya's operating model can be applied in Western markets where concerns about increasing
healthcare costs are growing

Source: Secondary reports, Roland Berger SVII 2.pptx 21

 B Innovative India Inc.

Godrej Consumer Products Ltd has championed science and techn-

ology to drive innovation and create market-disruptive products
Case Study: Godrej Consumer Products has championed science to drive innovations
Focus on
Chemistry and
science of
ingredients
Analysis of testing
and validation
processes
Continuous improve-
ment of R&D processes
to reduce time to
market & increase
flexibility
Using ingredients
after detailed
understanding
The team ensures that
the raw materials stack
up against the function-
al requirements of the
product prior to usage,
e.g., reusability,
interactions, etc.
Driving R&D to Hiring technical Adopting ideas and
small innovations experts & other technology to suit the Godrej innovations
HR efforts Indian consumer &
price point
Drive small Technical track of Create new markets
innovations employees Focus on untapped mark-
Focus on continuous Apart from hiring the ets & disruptive ideas – it
and small standard management adopts technologies from
> Godrej’s hair color
improvements, so as to employees, Godrej its global acquisitions and sachet was borrowed
become faster and hired at higher salary, localizes these to disrupt from its Argentinean
more agile technical experts such the market and drive business and localized
E.g., rather than testing as polymer chemists, volumes
flavor & fiber experts, with the help of local
hair color via human With the help of in-house
hair trials, the team etc who would provide qualitative R&D, and suppliers
developed multi fabric "out of the box" thinking partnerships with local > Godrej’s Good Knight
strip testing that are Other HR efforts suppliers to drive Fast Card was adopted
easy and fast to use Compensation of R&D efficiency, Godrej has from its Indonesian
and allow reproducible teams was modified, successfully adapted
testing and formula international products to business via partnership
cross-functional teams
optimization across a were set up, all to drive suit the Indian consumer with suppliers to drive
range of colors innovation down cost

Source: Secondary research, Roland Berger SVII 2.pptx 22

 B Innovative India Inc.

Mahindra’s Rural Finance business is a prime example of a

successful business built on the principle of shared values
Case study: Mahindra Rural Finance is driving prosperity and respect in rural India
1 Building trust: Leverages the good reputation of Mahindra
1 Finance by getting past customers of Mahindra Finance to
interact with prospective Mahindra Rural Finance customers
Building trust
2 Understanding customer priorities: Develops an in-depth
understanding of the rural customer’s priorities to redefine product
offering – smaller principal amounts, flexible payment terms, etc.
Trust 2
6 3 Relationship building: Recruits sales force from the local
Mahindra Understanding community who become brand ambassadors and reach
Income models
Acquisition
Customer
appraisal

Rural priorities potential customers through word-of-mouth and concept selling

and Risk
Credit

Assessment Housing 4 Customized collection processes: Encourages timely loan

3 repayment via provision of further loans, collects cash & uses
Finance technology to minimize pilferage, trains sales & collection
Relationship
building manpower to accurately gauge credit worthiness and
Collections repayment capacity of customer
5 Creating customer databases: Builds customer databases
5 4 leveraging know-how of sales force to know financial situation of
Creating customer Customized customers, reschedule loans, offer attractive loan rewards, etc.
databases collection
6 Risk assessment: Develops reliable estimates of potential
earnings / repayment via income models based on customer
profile & farm; further performs formal assessment via
proprietary software

Source: Secondary research, Roland Berger SVII 2.pptx 23

 B Innovative India Inc.

Vaatsalya's operating model can be applied in Western markets

where concerns about increasing healthcare costs are growing
Case Study: Vaatsalya provides quality healthcare to semi-urban areas efficiently
1 Core set of specialized services: Focus on time-sensitive,
high priority services for which travel is unfeasible, e.g., intensive care
Core set of facilities, neonatal care, nephrology, etc.
specialized 2 Integrated marketing effort: ATL & direct marketing efforts
services customized to target customer segments, e.g., radio campaign,
HR-friendly telephone helpline, door-to-door visits, referral bonus, tie-ups with
policies government insurance programs, etc.
Marketing
awareness 3 Strong customer focus: Focus on customers via stringent
feedback mechanisms and increased operational efficiency, e.g., use
Vaatsalya of IVRS1) based booking system, customer satisfaction surveys,
Business detailed KPI tracking, etc.

Investment-lite
model Strong 4 Cost-efficient and investment-lite model:
> With a network of 15 hospitals Vaatsalya creates value by
model customer focus improving price negotiations with vendors and standardizing
operating procedures
Focus on cost- > Capital expenses for land are avoided by leasing the land;
efficiency moreover, Vaatsalya operates in semi-urban areas such as Hubli,
Bijapur etc., where rentals are low
> Investment are tailored to keep costs low. In tier II cities. Without
land cost (about 30% of the total) the company invests about INR
0.3 million for instruments etc.

Core value proposition: A for-profit chain of hospitals and clinics in India 5 HR-friendly policies: Attractive compensation structure to
which strives to provide quality healthcare in semi-urban and rural areas incentivise doctors to relocate to small cities, provision of greater
autonomy and control to doctor staff, rotation of key medical staff
1) Interactive voice response system

Source: Secondary research, Roland Berger SVII 2.pptx 24

So what does this tell us about the intersection of social needs and
business solutions
Summary

1. Listening to the customer and appreciation of the gap is critical

2. Local solutions for local needs which are relevant

3. Innovation in approach, ability to leverage technology and

driving efficient product definitions is critical

4. Bottom line is both profitability as well as social relevance

Source: Roland Berger SVII 2.pptx 25