You know, many private individuals are going for personalized insurance programs. So, this penetration is leading to more access into healthcare. So, there is affordability. The fourth is the demographics are so bad. And I have to say so bad because this is the call-out moment if you look at NCDs in India. India has the most propensity towards heart disease. One in five Indians will be pre-diabetic. One in four will have a cardiac issue. And we have done 150 million preventive healthcare check-ups. And it's shocking to find that at 30 itself you find fatty liver disease. And this is happening with young adults. So you have 22% of India, it's going to be geriatric India. So, the demographics of it, the young India is really sick and there is a short window to reverse this. You know, so preventive healthcare is going to be 30% of everything, capital allocation, everything that we do will be on preventing India because the risk of that is a 4 trillion dollar cost to the country which we cannot afford.
Okay. No, so stock market is not the only thing we have to be respondent about. There are other things but good education on these issues will help. Just before I go to Mr. Mariwala, one more question. You know, a few years ago we were gung-ho on medical tourism. Is it still as good? I mean, India is way more affordable in healthcare compared to several neighboring countries in Asia and Africa. Is it still very good business? I mean, there's nothing wrong in saying that.
It is very good business. I think, you know, you have your blips. I have to be safe because you have a strong local market. So the 15, you know, some hospitals in Delhi and Bombay get 20% is coming from foreign patients. So, I look at it as icing on the cake. But it's a huge opportunity and we will continue to pursue that opportunity. We saw a 10% growth even this year. And with the war happening, there was hardly maybe a 440 crore impact but really not much of an impact.
Cheaper rupee should have helped.
Yes, a cheaper rupee should have helped. And I think what did not help is the fact that our air connectivity did not catch up with the demand.
Okay. Yeah, that's a separate vertical maybe has to be dealt with. But Mr. Mariwala, you have been there, done that for 40 years, created so many brands that have, some of which have even become international brands. So that's what I would like to know from you. What does one do to take a brand international? Or to create brands?
Yeah, I think first, it's a highly competitive environment. So if you want to create a new brand today, you need a differentiator, something which cuts size with the consumer. And if you launch a me-too product, the chances of success are much, much lower. So I think the key thing is innovation and differentiate. You have to create a very strong right to win. And if I look back at our own portfolio products, almost 95% of our portfolio, we are market leaders because we identified the right niche where we had a very strong right to win. And when you are a market leader, you get economic scale. In an inflationary environment, you have a higher pricing power and you are able to protect your margins even in segments. At one stage we were perceived as a branded commodity player, now we are not. We are more FMCG. But a brand like Parachute, which is our resource-generating engine, the largest brand, the main brand, which is Parachute coconut oil, is coconut oil packed. But in spite of that, we are able to generate very high returns on capital because we have created that brand and created price packs which are 10, 20 ml. So even if a price disruptor comes in, even if 10% or 20% disruption means a 2 or 3 or 4 rupee saving to the consumer, and back it up with a highly emotional connect. So the consumer should be emotionally connected to your brand. So when you do that, then starting with, I strongly believe in focus, do a few things but do them well. So from day one we said that we will be in beauty and wellness. Having said that, what are the opportunities available? So from day one we said that we cannot compete with MNCs head-on in the space of shampoos, conditioners. But we realized that in India, the hair oiling habit is very big, bigger than shampoos at one time. Internationally there are no hair oiling companies. So we have a very strong right to win. So that's how we had a series of number of brands in hair oils and we are market leaders there.
So I think the key thing is innovation, but innovation has to be supported by the right culture. Because innovation does not happen in R&D lab. Innovation happens across the organization, across functions. If I as a brand manager or a sales manager have an idea, I need to talk to other people. What do you think of that idea? I need consumer insights. I think the starting point is consumer insights. How do you get the latent needs which the consumer themselves, they don't know what is the need? So, how do you do insights? How do you identify ideas? How do you discuss it cross-functionally and develop into a proposition? And the biggest deterrent to innovation is the fear of failure. I have seen, especially management graduates, they come with fancy salaries, starting salaries, but they don't want to take a risk because in the beginning of their career if there is a failure, it will reflect on their biodata. So the risk aversion is very high. And in a company where people are afraid of taking risks, innovation will not happen. The biggest deterrent, as I said, to innovation is the fear of failure.
Yeah. But I think there are ways of overcoming that because many times, if the risk is very high in terms of financial, if you are launching a product nationally, you have to spend at least minimum maybe 25, 30 crore minimum launch advertising. It may not succeed. So, and one way to overcome that is to what we call prototype. Do it in a small scale. You can do it in one city. You can do it in one chain of DMart or Reliance or whichever it is.
You know, is it more difficult now? I mean, a question which I want even Manish to jump in. See, when both HUL, Unilever, Marico, you have your distribution centers and the incumbents had an advantage. But now because of digital marketing and because of good infrastructure, both roads, physical and digital infrastructure, can't you be eaten away by a local brand?
You are right. But it's more difficult. Maybe let him answer and I will have my views.
No, I think first of all, I think it's a more even playing field. I keep on telling people, whenever we talk about a local brand, sometimes we sort of make it a tier-two brand, which is not right. We have regional brands which are really, really, I call them insurgent brands. Because they are the challengers. And I think that is the new reality that you cannot create a moat around investment and distribution. The moat now has to move on to better digital marketing, better consumer insights. So yes, I think it's a challenge for all large companies, whether local or multinational, on how do we get that agility, the speed of consumer response. How do we get the consumer back into the center of what our core businesses is supposed to be. I think that's important.
Let me add. First of all, until about five years back, this was perceived to be the most defensive sector. You needed a huge distribution infrastructure, 20 lakh, 30 lakh outlets, get big advertising money. So we thought we are sitting very high until all the D2C brands started coming in. And I must say thanks to Indian entrepreneurs, the number of D2C brands which have been launched is un-enumerable across all sectors. So naturally it's a threat to FMCG. Can they take away share from you? It's also an opportunity. So at one level, as an organization, you have to ensure that you don't get hit by the threat. At the same time, can you either invest in D2C brands or acquire D2C brands? So we have actually looked at it from an opportunistic point of view. And I think we are the most acquisitive FMCG company in the D2C space. We have made something like seven acquisitions last three years. And doing well. But remember one thing, this D2C business is very different than FMCG business in terms of agility, innovation, speed of response, digital marketing. And it has to be managed differently. So we have kept the digital business in a different part of Marico in terms of location, in terms of talent, much younger talent. And we of course have best practice sharing, but it's worked out very well. Our aspiration is to be the largest D2C player in the country over next two, three years.
Oh, that's good to hear. But that also explains what one, what do I call that, a sociologist economist was telling me that, you know, when we tried to relate earnings growth of our big companies with GDP, seems to be on an even keel. But earnings growth last eight quarters we saw mid-single digits. Perhaps the difference is that our storied companies have given away market share to unbranded or unlisted brands and that may explain perhaps the divergence. Actually, I was preparing for this event. I was thinking about even what I am consuming. There are brands like Sweet Kaaram Coffee. I have never used it say four, five years ago. But it has made its way. Some kind of ragi noodles was on our, I forget the brand. But you know, the old brands have given place on the shelf to others. So that is clearly a challenge. Not for overall India growth but certainly for listed companies. Now let me come to another thing, resilience. Over the past five years at least, in fact even older, but definitely over the past five years, storied companies have been shaken. There was COVID and then there was geopolitics. Suddenly tariffs, you don't know what your raw material is going to cost and logistics, things are not getting shipped on time. How, Manish, would you tackle resilience? How does the company build both growth and resilience?
Yeah, I think, you know, two years back you used to think COVID was the biggest thing, then this current crisis came. So I really admire the way companies in India have, you know, built that operational muscle to operate under any circumstance. There could be a bandh tomorrow, the metro could be closed because of riots. And I think that's something we have an advantage because we have lived through this evolution. But if I have to take a step back, I keep on telling people that one of the most often asked questions to me is when are you taking a pricing? And I keep on saying this, that especially during a crisis, if you really want to be resilient, the voice of your consumer has to be much louder. That's at the heart of creating a more resilient org because the consumer feedback is always what takes you in the right direction. Besides that, there are a few areas where orgs have built muscle. One is of course in terms of agility, supply chain is a very good example. Second, the need to be financially very, very disciplined is critical. And I strongly believe that underlying all these attempts should be a mindset where you accept technology as your biggest lever for responding to such crisis. I think these three things can actually coupled with the entire thing of the consumer voice. That is what makes an organization far more resilient.
Fair point. It should and it should percolate.
Absolutely. Right. So it's a cultural thing. Yeah.
What about you, Sunita? It must have been hell, COVID.
Yes. But we always said, you know, you should find an opportunity in a crisis. The first impact of COVID is you are not looking at opportunity. You are looking at human life. And you want to do your best because you really want to save it. There is a shortage of from oxygen to medicines to everything. So, developing alternate supply chains. So, you know, I think for us, Apollo is like a family. We work with the Navy SEALs culture of having where we trust everyone to pick up parts of what need to be done to make sure that the service to the patient is never compromised. Whether it's a sisters working together or it's the whole team. So, what we learn from that is the opportunities that emerge is something that we continue and grow today. So, it was very valuable. The first thing we did is that, you know, we took hotels and transformed them into hospital rooms. And therefore we almost, we added 40% new capacity. Is the learning from that? And then we moved into homes. So, when we moved into homes, we learned so much about remote care. And today we manage about 20,000 people at home. We manage 100 nursing homes, ICUs. And we manage nursing homes across the world. Because of what we learned. We learned how to monitor, to use technology to monitor patients at home. So that they don't have to come to the hospital. We learned about how alerts, you know, that to the alert system, we can send. So, we have home care where we can send doctors and nurses to look after their immediate needs. And the clinical outcomes of those patients are tremendous. So, the how to manage people outside of the healthcare system was a very valuable learning. Because now we are really leveraging that learning across India, to nursing homes as well. And I think the third is of course digital. What we did digitally. We were planning the launch of 24/7. Yes. So we did the launch. Maybe a 70% finish, not finished. You know, it was 70% done. But with that, all those, and we had the, we were building the clinical intelligence engine, which had 40 years of data where your Indian demographic data, where we could pick up, we learned from symptoms. What would be whether they had COVID or not. We developed heat maps in certain territories where we started stocking medical, you know, we stocked medicines in those areas and, you know, use that to treat people, to make them come to the hospital for care or treat them at home. So I think the learning of using digital and a part with being AI, the fact that we are a very human-centric organization. So teamwork and that we are learning every day from best practice. So every week we had a GAPIO, which is a physicians of Indian origin from across the world. So we were sharing, we printed 24 new clinical protocols during COVID period and shared them with the whole industry. So I think for the continuous learning organization and I think that builds resilience because you know what is the next step.
Okay. Yeah, I guess this passing over of knowledge is extremely important. Down to every level of the organization. Mr. Mariwala, you know, again, once again, you know, for you resilience will mean a lot more because in over 40 years of boardroom management you must have suddenly, copra, coconut oil not available or becoming too expensive. What is the mantra for resilience?
So I think first of all the world has changed very, very fast in the last few years. So I have not seen this space of change, whether it's geopolitics. And the bigger change is going to come out of technologies. Confluence of technology. We are just started that AI journey and I think the pace of change, the magnitude of change is going to be huge. So, I think the first thing is the role of top management is to get the right outside in. To know what is exactly happening in the area of technology, what are the disruptions which are impacting your business. So, the need to get the outside in is very critical for top management. Having done that, I think ultimately a lot of internal discussions have to happen in terms of alignment with the top team and down the line. In terms of the impact on the business, how can you leverage these disruptions from an opportunity point of view. And I think the whole roadmap has to be created and that roadmap may change over a period of time, over a few months also because the pace of change is so fast. So I think the organization has to be top on top of these changes to manage disruption and convert those disruptions into opportunities and not look at it only from a threat point.
Okay, so it's not just the foot soldier or the intern who has to, you know, be quick at learning multiple skills, you are saying the winds of change should blow into the boardroom first. Changes are coming in, even consumer habits, especially after COVID, things like natural, organic, all these have just accelerated the concern for health. So I think you have to go on tracking the trends and most of the trends earlier they are coming from the West but now they are also coming from the East, especially from Korea, you know, whether it's food or cosmetics.
[Sniffing sound]
Yeah. So as someone said, learn, unlearn and relearn, perhaps starts at the top and not necessarily only for the foot soldier. Okay, since all of you have referred to technology, just give me a little more about how you all are using technology. It's not just AI, it's digitalization, everything coming together, e-commerce. So Manish, how do you handle e-commerce? Is it taking away or is it abetting you? Likewise, AI, is it taking away, making life difficult for you or is it actually able to put the right brand in the right showcase at the right, you know, visibility for consumers?
No, I think for me, it's quite simple. Technology always helps. I think it's never about, it's more about the change management. So when people talk about AI, I mean, some version of AI has been there, you know, it starts with heuristics, went on to machine learning. So, it's just that the computing power gets better and better, and therefore the algorithms get stronger and stronger. I think, I have come back to CPG after 10 years. That 10 years I spent in a technology company which was pretty much at the forefront and I saw what technology can deliver. And for me, I have say in India 10,000 people who work for me. If today their workload is say 40-50% busy work which is Excel sheet management, data management, and 50% impactful work, I would want it to be 10-90. And that 40% technology can take it up very, very easily across the entire end-to-end cycle. And that's how I look at technology because it's that one lever which can give me non-linear growth. So.
Okay. Sunita, what about you? Has it been useful and will it get even more useful in being able to gauge a patient? So many parameters you are able to handle because of technology. Or is it the other way around? You know, a kind of a moral challenge. That perhaps the human eye is not looking at everything? And it's a chatbot or a machine or a computer that is analyzing. Do these dilemmas come in? Is technology clearly a winner? By the way, I must say that your home service is excellent. I was a personal beneficiary for an old relative of mine in Chennai. But anyway, that apart, technology really helped. We just clicked and somebody went to my relative in Chennai and attended to her in all in some 1200 rupees. So it really worked. But tell me, is technology to what extent a boon and to what extent... Can talk for 5 minutes on that but I am not because you are only eight minutes left. So, let me just say three things about technology. The first is it's definitely making life easier for our nurses and our doctors because, you know, there is ambient listening. They no longer have to take long notes and there is, you know, there is the nurse prompt. So, in terms of clinical care and the work that the nurse has to do, her job is made easier because now she can spend more time with the patient. And it's the same with the doctors. They have less work to do, the back office work. And they have time to spend with the patient. The second level of technology is really the ease of discharge. Everything that's happening with the billing. The using the AI for the insurance. To make sure that our billing is absolutely correct. So faster discharge process which would benefit the patient. The third area is something that we have been working on for a long time. Which I said before as a clinical intelligence engine which has all of our data lake for 40 years. So we have a longitudinal data. And this could answer about 70% of the queries that come, you know, if you have a, you are able to dial in our telecons. It can answer about 80% with a 98% level of accuracy. So, even if you hire really, you know, doctors who have just graduated from college, they can work with the AI that we have emanated from the clinical intelligence engine to understand symptoms, make a diagnosis and prescribe medicines. So, this is a very simple, what we are working with Microsoft. We have done the cardiac scoring. We are able to reverse heart disease. So many exciting things that are happening with technology that are going to benefit the patient and the organization in the long term. But what I want to say is that for us AI, it's not just artificial. It has to be authentic intelligence. Because we want the doctor with his wisdom. We want him to spend more time with the patient. And we want the nurse to spend more time with the patient.
No, I agree with you. I mean, we use AI, I mean, much more together data before we go to an unexpected conference is something. And the kind of hallucinations I can see through, you know, there is Sri Lankan data thrown for Indian questions, etc. Hallucination at your end can be killing?
No, no, no. And the scary thing is that people do Google and Google is based on American reference systems. Whereas ours is, you know, Indian, Indian demographic data. So, they could be vastly different.
Okay, actually I believe we have only five minutes, so I am not going to give you the technology question. Mr. Mariwala, it was the favorite part of the mandate given to me is interesting stories from your lives that you would want to share. Were there times when you want to give up as a young man? You know, I don't know if, I have met you when you were actually, Mariwala, you were a paper trader in Kanumur House in Masjid. I was a cub reporter in Economic Times when I have come to you. Then you have become this hugely successful entrepreneur. What are the doubts that come? What are the doubts, you know, the self-doubt at any point time? Any story that you want to regale us with? I mean, I can have multiple stories but we don't have time for story.
One and half minutes.
I think just to add a little bit more on technology because I think I don't think we can cover stories, it will take little longer. But I think the technology roadmap for an organization evolves because of the fact that technologies themselves are changing very fast. And number two, as you sit down and say that, okay, ultimately you have to prioritize in an organization. Which are the technologies, which are the functions you want to attack because you can't do it across the organization. For example, when we started a digitization process, I am talking of many years back, 8, 10 years back, we said the sales is a critical area where we want to improve our efficiencies. Just a very small example, now we have multiple sales reps, hundreds of sales reps going in the market and they have to visit say 30 outlets. They were doing randomly on their own depending on routing in terms of their own preferences. Now we have a fixed route. So it actually just makes it far more effective, you know, because they are saving time. We know exactly where the sales rep is working in the market because many of them are working in small villages. So I am just giving one example, you know. So, I think the technology evolves and the roadmap evolves. And in today's context of AI, we are using more in the area of marketing. You know, can we make ad films? Normally it costs what, 30-40 lakhs, right? At least. You can do it within a few lakhs now. Especially not the A-class ad films but somewhere which is... Yes. Yes. Like we do it all the time. Not A-class but it communicates an explainer or a concept. I agree with you. Just a word, I mean, if all three of you can take it. All of you are saying that technology is making each of your people more productive. Jobs is not your worry.
No, I mean, you referred to it earlier. I am saying if I talk about us, right now there are things for which we still need human beings. So when you set up a factory, you need people to construct it. You need people. I think the growth which we are seeing, the volume-led growth, that is in a very small way for us at Nestle, that will create more jobs. But I think it's more about getting people more productive and letting the heavy lifting, the Excel sheet mapping to be done by the machines. That's how I.
Let's go, people. You don't see that as a... No, I am in touch with the company, it is doing really well right now so I don't see that as an issue.
More of relearning and productivity.
Okay, I don't want to miss this question for you, Manish. You know, your experience is really fascinating. Unilever and then Amazon and then Nestle. From all these three, what would be one or two big lessons that you can tell us?
So, on a slightly lighter note, CPG companies and tech companies are chalk and cheese. Okay. They are complete chalk and cheese. I was trained to do presentations all my life. And then I joined a company where there was no presentation. There is no PowerPoint. Amazon, no PowerPoint. And then I have to relearn it now because I am back to CPG. But I think I have been blessed. I think a lot about managing people and managing things at scale is what I learned that leave...
As for two decades, Amazon, I learned the entire consumer centricity. I have never experienced that, you know, how important the consumer is to what you do and the part of technology. And I am getting to use both of this now with NSL, so I have been lucky in that sense.
Yes, there comes a point when we start thinking about the company and not the consumer. And this is a very, very big, it's a much bigger lesson. So you are saying it as AB. It is something we should never ever forget.
Ah, Sunita, actually, more interesting. I would want something of your experience. Father with daughter, four daughters who have taken the hospital places. Ah, did dad ever regret not having a son or I mean anything? Ah, is there a women story you want to share or did it never ever matter to you that it was a woman? It's just was a job to be done. Any event you want to tell us about a promoter turned professional company?
Let me make this more interesting. There is a German literally a genre called 'Bildungsroman' where the protagonist builds an industry. So, we were fortunate to be part of the Chairman's vision and I think, you know, we had our own visions along the way on how to grow the company. But he has a protagonist. No money. I mean he has money, but not enough to build not just one healthcare institution. His dream was multiple. And we had to make 50 visits to Delhi because corporate healthcare was not recognized. No funding was available from the banks. First corporate to get listed because we needed the capital. And then to onboard doctors to believe in a system of corporate healthcare and then to get the public to trust an organization, a hospital which is not a trust, which is not a government but a corporate. I think these challenges made us better people. And I think that like the protagonist, you reach a stage where you think, okay, I have done it, but we have never really done it because there is the next so much left to be. Yes. And I think that's been my journey. And I think as a woman, the one thing that we have learned is, as an entrepreneur, have the knowledge, use it like a man who would do, but also I have that culture of nurturing organization in people.
Okay. That's good to hear. Mr. Mariwala, last word from you. Ah, I tend to think that my generation was extremely lucky. My first salary was 3000 rupees and I never thought that salaries will go into crores. By the time you... do you think the best of India's growth story was that period, last three decades? Or do you have the stomach to say that better is yet to come?
I think looking at the environment, looking at the entrepreneurial drive in the country, in urban areas, rural areas, from non-business families, I am very optimistic about the future because India has to grow fast. And there is this much the government can do. Ultimately the private entrepreneurs have to drive India to a higher growth trajectory. To me, I think we are sitting on a very good wicket in terms of so many people creating a lot of wealth. Of course, there have been failures and there are bound to be failures. But if I look at compared to the past, I think the future seems brighter.
That's a great note to end this conversation. The perspective from on the boardroom is that we are sitting on a very good wicket. Thank you very much Mr. Mariwala, Sunita and Manish.
Thank you. Thank you so much.
Of an Urban Company and therefore our growth across these, I would say, would continue to be very healthy. But you are still putting up a 2 crore capex plan, right? So, clearly you are seeing a mix of the premium and the rural grow very well.
No, absolutely. I am saying if you look at the last two years, the capex was upwards of 2000 each year, we will continue to do it. We are putting up the 10th factory at Orissa. So, we are very, very clear that the growth story is there. And we do 98% of our own manufacturing, which is why we need to keep on investing. So yeah, that goes to show that we are putting money where.
Okay. Well, ah, Sunita, you know this morning one of the statements making the headlines is one of your ilk, another entrepreneur saying that Google after producing a profit of 160 billion last year has yesterday announced plans to raise 80 billion through a secondary issue of shares. I mean, and last quarter also they posted 62 billion in profits. Now that is capex. The Mr. Uday Kotak is asking where is India's capex story? Now what would you answer to that?
I would say, Uday, I have to have a meeting with you because at Apollo we are investing 8000 crore in building out new, in building out a network of healthcare systems for India. And why are we doing so? I think the why is more important than the fact that we are just building the network of primary, secondary, tertiary care hospitals and a digital ecosystem that connects everything. The why is because there is a structural demand. I think Manish spoke about demand. There is a structural demand for quality healthcare. The WHO report says that you need three beds for every thousand people. We are currently at 1.5 and I am being optimistic here. So, you need 2 million beds. And if you think of what we currently have, we have about 19 lakh beds out of which 67% is in the private sector. Of the 67%, only 12% is organized beds. So, organized beds are the ones that are accredited where you know the clinical outcomes are all measured. And if you look at corporate health, because everyone says, oh, you have so much competition, we last year there were only 50,000 corporate beds and then there would be 70, 70 is nowhere near enough to serve a... and even the 1.2 lakh not enough to serve India's middle class. So, I think there is a need and I hate to say the word opportunity because you are dealing with human lives. I think there is a basic need. There are three other factors driving this need. The second of course is, you know, is the whole fact is the affordability. Now, it has changed dramatically. I think we have to be thankful to the government. Two years ago they lowered the tax. So there is 25 lakhs of disposable income in every house. So in the emerging middle class, they lowered GST, they removed GST on insurance. And with that the penetration of insurance is dramatically changed. You can feel it. I can feel it. It's moved. So our payer mix is moved from 35 to 45. There was a 9% growth in volumes just last quarter coming just from insurance. So definitely, you know, we are making healthcare more accessible and I think that's also the government's mandate. So maybe 70% of India is covered through either a government insurance program or you know they are picking up corporate insurance programs and you know many private individuals are going for personalized insurance programs. So this penetration is leading to more access into health. So there is affordability. The fourth is the, you know, the demographics are so bad. And I have to say so bad because this is the call out moment. If you look at NCDs in India, India has the most propensity towards heart disease. One in five Indians will be pre-diabetic. One in four will have a cardiac issue. We've done 150 million preventive healthcare checkups. And it's shocking to find that at 30 itself you find fatty liver disease. And this is happening with young adults. So, you have 22% of India with its going to bariatric India. So, the demographics of it, the young India is really sick and there is a short window to reverse this. So preventive healthcare is for us, you know, is going to be 30% of everything, capital allocation, everything that we do will be on preventing India because the risk of that is a 4 trillion dollar cost to the country which we cannot afford.
Okay. No, so stock market is not the only thing we have to be respondent about. Other things, but I guess good education on these issues will help. Just before I go to Mr. Mariwala, one more question. You know, a few years ago we were gung-ho on medical tourism. Is it still as good? I mean India is way more affordable in healthcare compared to several neighboring countries in Asia and Africa. Is it still very good business? I mean nothing wrong in saying that.
It is very good business. I think, you know, you have your blips. I have to be say fortunate because you have a strong local market. So, the 15, you know, some hospitals in Delhi and Bombay get 20% is coming from foreign patients. So, I look at it is icing on the cake. But it's a huge opportunity and we will continue to pursue that opportunity. We saw a 10% growth even this year. And with the war happening there was hardly maybe a 40 crore impact but really not much of an impact.
Cheaper rupee should have helped.
Yes, a cheaper rupee should have helped. A cheaper rupee and I think what didn't help is the fact that our air connectivity did not catch up with the demand.
Okay. Yeah, that's a separate vertical maybe has to be dealt with. But Mr. Mariwala, you have been there, done that for 40 years, created so many brands that have, some of which have even become international brands. So that's what I would like to know from you. What does one do to take a brand international? Or to create brands?
Yeah, I think first, it's a highly competitive environment. So if you want to create a new brand today, you need a differentiator. Something which cuts ice with the consumer. And if you launch me-too products, the chances of success are much, much lower. So I think the key thing is innovation and differentiating. You have to create a very strong right to win. And if I look back at our own portfolio products, almost 95% of our portfolio we are market leaders because we identified the right niche where we had a very strong right to win. And when you are a market leader, you get economic scale. In an inflationary environment, you have a higher pricing power and you are able to protect your margins even in segments. At one stage we were perceived as a branded commodity player. Now we are not perceived that, we are more FMCG. But a brand like Parachute, which is our, what you call our resource generating engine, the largest brand, the main brand, and which is Parachute coconut oil, is coconut oil packed. But in spite of that we are able to generate very high returns on capital because we have created that brand and created price packs which are 10, 20 ml. So even if a price disruptor comes in, it's even if a 10% or 20% disruption means a 2 or 3 or 4 rupee saving to the consumer. And back it up with a highly emotional connect. So the consumer should be emotionally connected to your brand. So when you do that, then starting with, I strongly believe in focus, do a few things but do them well. So from day one we said that we will be in beauty and wellness. Having said that, what are the opportunities available? So from day one we said that we cannot compete with MNC head-on in the space of shampoos, conditioners, but we realized that in India the hair oiling habit is very big, bigger than shampoos at one time. Internationally there are no hair oiling companies. So we have a very strong right to win. So that's how we had a series of number of brands in hair oils and we are market leaders there. So I think the key thing is innovation, but innovation has to be supported by the right culture because innovation does not happen in an R&D lab. Innovation happens across the organization, across functions. If I as a brand manager or a sales manager have an idea, I need to talk to other people. What do you think of that idea? I need to do consumer insighting. I think the starting point is consumer insighting. How do you get the latent needs which the consumer themselves, they don't know what is the need? So, how do you do insighting? How do you identify ideas, how do you discuss it cross-functionally and develop into a proposition. And the biggest deterrent to innovation is the fear of failure. I have seen especially management graduates, they come with, I mean, fancy salaries, starting salaries. But they don't want to take a risk because in the beginning of their career if there is a failure it will reflect on their biodata. So the risk conversion is very high and in a company where people are afraid of taking risk, innovation will not happen. The biggest deterrent as I said to innovation is the fear of failure.
Yeah. But I think there are ways of overcoming that because many times if the risk is very high in terms of financial, if you are launching a product nationally, you have to spend at least minimum maybe 25, 30 crore minimum launch advertising. It may not succeed. So and one way to overcome that is to what we call prototype, do it in a small scale. You can do it in one city. You can do it in one chain of D-Mart or Reliance or whichever is, you know. Is it more difficult now? I mean a question which I want even Manish to jump in. See when both Nestle, Unilever, Marico, you have your distribution centers and the incumbents had an advantage. But now because of digital marketing and because of good infrastructure, both roads, physical and digital infrastructure, can't you be eaten away by a local brand?
You are right. But is it difficult? Let him answer and I will have my views. I think first of all, I think it's a more even playing field. I keep on telling people when we talk about a local brand, sometimes we sort of make it a tier two brand, which is not right. We have regional brands which are really, really, I call them insurgent brands. Because they are the challengers. And I think that is the new reality that you cannot create a moat around investment and distribution. The moat now has to move on to better digital marketing, better consumer insights. So yes, I think it's a challenge for all large companies, whether local or multinational, on how do we get that agility, the speed of consumer response? How do we get the consumer back into the center of what our core business is supposed to be? I think that's important.
Okay. Mr. Mariwala, let me add. First of all, until about five years back this was perceived to be the most defensive sector. You needed a huge distribution infrastructure, 20 lakh, 30 lakh outlets, need big advertising money. So we thought we are sitting very high until all the D2C brands started coming in. And I must say thanks to Indian entrepreneurs, the number of D2C brands which have been launched is unimaginable across all sectors. So naturally it's a threat to FMCG. Can they take away share from you? It's also an opportunity. So at one level as an organization you have to ensure that you don't get hit by the threat. At the same time can you either invest in D2C brands or acquire D2C brands. So we have actually looked at from an opportunistic point of view. Okay. I think we are the most acquisitive FMCG company in the D2C space. We have made something like seven acquisitions last three years. And going well, but remember one thing, this D2C business is very different than FMCG business in terms of agility, innovation, speed of response, digital marketing and it has to be managed differently. So we have kept the digital business in a different part of Marico in terms of location, in terms of talent, much, much younger talent. And we of course have best practice sharing, but it's worked out very well. Our aspiration is to be the largest D2C player in the country over next two-three years.
Oh, that's good to hear. But that also explains what I call that person is? A sociologist economist was telling me that, you know, when we try to relate earnings growth of our big companies with GDP, anyway seems to be on an even keel, but earnings growth last few quarters we submit single digits. Perhaps the difference is that our storied companies have given away market share to unbranded or unlisted brands. And that may explain perhaps the divergence. Actually I was preparing for this event. I was thinking about even what I am consuming. There are brands like Sweet Karram Coffee. I have never used it say four-five years ago, but it has made its way. Some kind of ragi noodles was on our, I forget the brand. But you know the old brands have given place on the shelf to others. So that is clearly a challenge. Not for the overall India growth, but certainly for listed companies. Now let me to another thing, resilience. Over the past five years at least, in fact even older, but definitely over the past five years storied companies have been shaken. There was COVID and then there was geopolitics. Suddenly tariffs, you know what your raw material is going to cost and logistics, things are not getting shipped on time. How Manish would you tackle resilience? How does the company build both growth and resilience?
Yeah, I think, you know, two years back we used to think COVID was the biggest thing, then this current crisis came. So I really admire the way companies in India have, you know, built that operational muscle to operate under any circumstances. There could be a bandh tomorrow, metro could be closed because of rains. And I think that's something we have an advantage because we have lived through this evolution. But if I to take a step back, I keep on telling people that one of the most often asked question to me is when are you taking up pricing? And I keep on saying this that especially during a crisis, if you really want to be resilient, the voice of your consumer has to be much louder. That's at the heart of creating a more resilient org because the consumer feedback is always what takes you in the right direction. Besides that there are a few areas where orgs have built muscle. One is of course in terms of agility, supply chain is a very good example. Second, the need to be financially very, very disciplined is critical. And I strongly believe that underlying all these attempts should be a mindset where you accept technology as your biggest lever for responding to such crisis. I think these three things can actually coupled with the entire thing of the consumer voice. That is what makes organization far more resilient.
Fair point. It should end its triplet.
Absolutely. So it's a cultural thing. Yeah.
What about you Sunita? It has been hell, COVID.
Yes. But we always said, you know, you should find an opportunity in a crisis. The first impact of COVID is you are not looking at opportunity. You are looking at human life. And you want to do your best because you really want to save it. There's a shortage of from oxygen to medicines to everything. So, developing alternate supply chains. So, you know, I think for us, Apollo is like a family, we work with the Navy SEALs culture of having where we trust everyone to pick up parts of what need to be done to make sure that the service to the patient is never compromised. Whether it's sisters working together or it's the whole team. So, what we learn from that is the opportunities that emerged is something that we continue and grow today. So, it was very valuable. The first thing we did is that, you know, we took hotels and transformed them into hospital rooms. And therefore we almost added 40% new capacity. Is the learning from that, and then we moved into the homes. So, when we moved in the homes, we learned so much about remote care. And today we manage about 20,000 people at home, we manage 100 nursing homes, ICUs. And we manage nursing homes across the world. Because of what we learned. We learned how to monitor, to use technology to monitor patients at home. So that they don't have to come to the hospital. We learned about how alerts, you know, that to the alert system we can send. So we have home care where we can send doctors and nurses to look after their immediate needs and the clinical outcomes of those patients are tremendous. So the how to manage people outside of the healthcare system was a very valuable learning because now we are really leveraging that learning across India to nursing homes as well. And I think the third is of course digital. What we did digitally. We were planning the launch of 24x7. Yes. So we did the launch. Maybe a 70% finish, not finished. You know it was 70% done. But with that all those and we had the, we were building the clinical intelligence engine. Which had 40 years of data where your Indian demographic data where we could pick up, we learned from symptoms. What would be whether they had COVID or not. We developed heat maps in certain territories where we started stocking medicines in those areas and you know use that to treat people, to make them come to the hospital for care or treat them at home. So I think the learning of using digital and a part of being AI, the fact that we are a very human-centric organization. So teamwork and that we're learning every day from best practice. So every week we had a GAPIO which is a physicians of Indian origin from across the world. So we were sharing, we printed 24 new clinical protocols during COVID period and share them with the whole industry. So I think for the continuous learning organization and I think that builds the resilience because you know what is the next step?
Okay. Yeah, I guess this passing over of the knowledge is extremely important down to every level of the organization. Mr. Mariwala, you know, again, once again, you know, for you resilience will mean a lot more because in over 40 years of boardroom management you must have suddenly copra, coconut oil not available or becoming too expensive. What is the mantra for resilience?
So I think first of all the world is changing very, very fast in the last few years. So I have not seen this pace of change whether it's geopolitics and the bigger change is going to come out of technologies. Convergence of technology. We are just started that AI journey and I think the pace of change, the magnitude of change is going to be huge. So, I think the first thing is the role of top management is to get the right outside in. To know what is exactly happening in the area of technology, what are the disruptions which are impacting your business. So, the need to get the outside in is very critical for top management. Having done that, I think ultimately a lot of internal discussions have to happen in terms of alignment with the top team and down the line. In terms of the impact on the business? How can you leverage these disruptions from an opportunity point of view. And I think the whole roadmap has to be created and that roadmap may change over a period of time, over a few months also because the pace of change is so fast. So I think the organization has to be top on top of these changes to manage disruptions and convert those disruptions into opportunities and not look at it only from a threat point of view.
Okay, so it's not just the foot soldier or the intern who has to, you know, be quick at learning multiple skills. You are saying the winds blow, winds of change should blow into the... changes are coming in even consumer habits, especially after COVID things like natural, organic, all these have just accelerated the concern for health. So I think you have to go on tracking the trends and most of the trends earlier they were coming from the West but now they are also coming from the East, especially from Korea, you know, whether it's food or cosmetics.
Yeah. So as someone said, learn, unlearn and relearn perhaps starts at the top and not necessarily only for the foot soldier.
Okay, since all of you have referred to technology, just give me a little more about how you all are using technology. It's not just AI, it's digitalization, everything coming together, e-commerce. So, Manish, how do you handle e-commerce? Is it taking away or is it abetting you? Likewise AI. Is it taking away, making life difficult for you? Or is it actually able to put the right brand in the right showcase at the right, you know, visibility for consumers?
No, I think for me it's quite simple. Technology always helps. I think it's never about, it's more about the change management. So when people talk about AI, I mean some version of AI has been there. You know, it starts us with heuristics, went on to machine learning. So it's just that the computing power gets better and better and therefore the algorithms gets stronger and stronger. I think I have come back to CPG after 10 years. That 10 years I spent in a technology company which was pretty much at the forefront. And I saw what technology can deliver. And for me, I have say in India 10,000 people who work for me. If today their workload is say 40-50% busy work which is Excel sheet management, data management and 50% impactful work. I would want it to be 10-90 and that 40% technology can take it up very, very easily across the entire end-to-end cycle. And that's how I look at technology. Because it's that one lever which can give me non-linear growth. So okay.
Sunita, what about you? Has it been useful or will get even more useful in being able to gauge a patient? So many parameters you are able to handle because of technology. Or is it the other way around? You know, a kind of a moral challenge. That perhaps the human eye is not looking at everything. And it's a chatbot or a machine or a computer that's analyzing. Do these data come in or is it...
Technology is clearly a winner. By the way, I must say that your home service is excellent. I was a personal beneficiary for an old relative of mine in Chennai. But anyway, that apart, technology really helped. We just clicked and somebody went to my relative in Chennai and attended to her in all in some ₹1200, so it really worked. But tell me, is technology to what extent the boon and to what extent?
I can talk for five minutes on that, but I am not because you have only eight minutes left. So, let me just say three things about technology. Okay. The first is it's definitely making life easier for our nurses and our doctors because you know there is ambient listening. They no longer have to take long notes and there is the nurse prompt. So, in terms of clinical care and the work that the nurse has to do, her job is made easier because now she can spend more time with the patient. And it's the same with the doctors. They have less work to do the back-office work and they have time to spend with the patient. The second level of technology is really the ease of discharge. Everything that's happening with the billing, using the AI for the insurance to make sure that our billing is absolutely correct. So faster discharge process which will benefit the patient. The third area is something that we have been working on for a long time, which I said before as a clinical intelligence engine which has all of our data lake for 40 years. So we have longitudinal data. And this could answer about 70% of the queries that come. You know, if you have our UR able to dial and our telecons, it can answer about 80% with the 98% level of accuracy. So, even if you hire really, you know, doctors who just graduated from college, they can work with the AI that we have emanated from the clinical intelligence engine to understand symptoms and make a diagnosis and prescribe medicines. So, this is a very simple... what we are working with Microsoft. We have done the cardiac risk scoring. We're able to reverse heart disease. So many exciting things that are happening with technology that are going to benefit the patient and the organization in the long term. But what I want to say is that for us, AI, it's not just artificial. It has to be authentic intelligence. Because we want the doctor with his wisdom. We want him to spend more time with the patient. And we want the nurse to spend more time with the patient.
