Credibility is crucial

Written by M Sarita Varma | Updated: Jan 14 2013, 08:31am hrs
Hindustan Latex Lifecare (HLL Lifecare), a public sector company wedded to the business of stopping births, has now started giving birth to new business units of its own. Its latest subsidiary is HLL Biotech Ltd, set up to bring to life a R594-crore Integrated Vaccine Complex (IVC) in Tamil Nadu.

After a slew of big-billed diversification projectshospital chains, diagnostic clinics, hospital management centres and MRI centresthat catapulted its compound annual growth rate during 2003-2010 to a high 35%, Hindustan Latex had officially rebaptised itself as HLL Lifecare, fresh logo, value charter and all. It crossed R1,000 crore business in 2010 and earned a mini-ratna tag. By the current plans, it is likely to net R10,000 crore business by 2020.

In the public sector, one can decide to just pull along, be resigned to drowsy career prospects or choose ambitious growth targets. We chose the second option and watch the difference we made to affordable healthcare, says M Ayyappan, chairman and managing director, HLL Lifecare, in conversation with FEs M Sarita Varma.

From being the nations Nirodh factory, HLL Lifecare has grown into a total healthcare solutions provider. Now condom is only 58% of your total business. Would that mean HLL Lifecare is losing its grip on the contraceptive business, its core competency

Not at all.. Actually, quite the opposite, is happening. Today HLL Lifecare is the worlds only company that offers anything and everything in contraception, from condoms to intra-uterine devices. From 600 million pieces of condoms in 2003, the company has brought up the sales volumes to 1,600 million pieces in 2012.

We target to sell 4,000 million pieces by 2020. As a company, with a market presence in more than 115 countries, we have plenty of offers to peg up our export-share, like a recent giant order from Brazil. After the success of our flagship brands like "Moods" condom, enough demand was there to beef up our export revenues. But then, we are limited by the public sector commitment to devote 75% of our condom products to the government of India. Since, this is an assured market, this commitment is an advantage as well.

Hasnt the product diversification grown out of the ambit of contraceptive business

Thats true. HLL is involved in the manufacturing and marketing of a wide range of hospital products like blood collection bags, hydrocephalus shunt, surgical sutures, tissue expander, ayurvedic, personal hygiene products, vaccines and diagnostic kits.

Last month, we have floated a wholly-owned subsidiary, HLL Biotech Ltd, to execute the R594-crore Integrated Vaccine Complex (IVC) project in Tamil Nadu.

The first phase of the IVC, which will come up at Chengalpattu, will be completed within 36 months. We have also started onsite work on the 100 acres. With an annual capacity of 585 million doses, it will manufacture pentavalent combination (DPT plus Hep B plus Hib), BCG, measles, Hepatitis B, Human Rabies, Hib and Japanese Encephalitis (JE) vaccines in the first phase.

The state-of-the-art WHO-pre-qualified facility, the first of its kind in the public sector, will also have the capacity to manufacture futuristic Meningococcal, rotaviral, dengue and pneumococcal vaccines in its multi-bacterial and multi-viral facilities to meet any epidemic or pandemic situations.

We have just completed revamping of the public sector vaccine manufacturing unit, Central Research Institute (CRI), at Kasauli in Himachal Pradesh. The central government has also entrusted HLL with the task of revamping Bacillus Calmette-Guerin (BCG) Vaccine Laboratory, Guindy, and Pasteur Institute of India (PII), Coonoor, with an outlay of R217 crore.

It seems you are targetting business volumes mainly through healthcare services rather than products. Was it planned that way

The services business evolved because of the credibility factor, earned through quality products. In the contraceptive business, too, credibility is the king. Thats how we set up a services division. This division is involved in construction management, procurement consultancy and diagnostic services. HLL has completed several superspeciality hospital projects at Thiruvananthapuram Medical College, Bangalore Medical College and Salem Medical College, with a R125-crore outlay for each and JIPMER, Pondicherry, with an outlay of R545 crore.

The company has diagnostic clinics as well as MRI centres across India. At present, our hands are full with hospital infrastructure development and project management business to the tune of R6,000 crore. Overall, we are planning to earn R10,000-crore business by 2020.

You are setting up a chain of of Lifespring Hospitals in partnership with US-based Acumen Fund. Although affordable family healthcare is a worthy social cause, isnt setting up hospitals throughout the country a tall task

Life Spring Hospital and Hindustan Latex Family Planning Promotion Trust (HLFPPT) have separate CEOs and are managed by separate boards.

HLFPPT, one of largest social marketing organisations in India, employs about 700 people. Life Spring Hospitals has set up about 12 hospitals so far. This initiative targets setting up 100 hospitals in far-flung parts of the country by 2016.

Transformation is the toughest game for a PSU chief. It could not have been easy. How did you handle the HR challenges

It was not easy. But it was not tough either, especially if you are game for participative management. I had sought Ernst & Youngs help in coming out with a vision for exploring the growth targets of the company. When we finalised the plans, this was shared with employees, since winning the team trust was important.

Credibility is the most crucial factor, if you ask me. If you scrupulously stick to fair practices in recruitment, the system of recommendation and trade union threats will slowly back out. I once had the experience of about 27 recommendations to manipulate a bunch of inter-unit transfers, from civic body councillors, MLAs. MPs and even from a couple of state ministers. I had to call a meeting of my unions, telling them to work out a formula of say, X councillors are equivalent to one MLA and Y MLAs are equivalent to one MP, etc. The other option was to heed the professional evaluation. Very soon, the unions relented to professional evaluation. Gradually such pressures waned.

We get each officer, including myself, to sign a value charter promising 3Ts (trust, transparency and teamwork). To keep the motivation level high, we have a corporate song, which is sung loud, by holding hands together, in explicit manifestation of teamwork. We have an H2H (Heart to Heart) mailbox initiative, both virtual and physical, where any employee can voice his criticism of the company to the chairman, in strict confidence.