Higher costs are eroding our competitive edge: Shanghvi

High inflation rates are causing India to lose its competitive cost advantage, said Dilip Shanghvi, MD, Sun Pharmaceutical Industries.

“The challenge is how to grow businesses in India in such a way that this advantage is not lost,” said Shanghvi, speaking at the valedictory session of the sixth annual Indian Management Conclave, in Hyderabad.

The event was organised by MBAUniverse.com in partnership with the Indian School of Business (ISB), Hyderabad.

“If we look at China, it has been able to contain inflation for the last 25 years, so that it can maintain its competitiveness. We have so many policies, like NREGA (National Rural Employment Guarantee Act), which only increase incomes without direct supply of product, which leads to direct inflation. How do we manage our economic policies in such a way that we can leverage our competencies in producing better products and be internationally competitive,” he asked.

Growth of Sun Pharma Elaborating on the growth of Sun Pharma, Shanghvi, the second richest Indian after Reliance’s Mukesh Ambani, said: “In 1990 I had realised that to be successful in the pharma business we had to invest in research and also internationalise our business. But we were also clear that to do well outside of India we had to be big in our own country.”

“So we invested in critical drivers of success in the pharma sector. We evaluated many businesses that were successful globally; they were good at research, manufacturing and quality and were great at getting products registered in global markets. These were four critical parameters on which global businesses were successful and we consciously started benchmarking ourselves on these lines.”

Emphasising that Sun had a value-based approach to growth, Shanghvi advised the assembled academics to stress on values and ethics.

“Only organisations that have the right values and ethics at their core survive over the long term. B-schools must create managers and leaders who put adherence to values ahead of corporate success,” he said.

Emulating global values Shanghvi said that successful global companies talked about three critical components in their success: people, customers and shareholders. He said Sun too had laid the same emphasis all along.

“I read management books later and intuitively realised that what we were doing was right,” he added. “As we become a larger company we have more challenges. There was a time when we had 500-600 people and I knew all employees and their families personally. Now we have 30,000 people and we have to use technology to maintain a personal connect with the workforce,” he said.

The two-day event concluded with the presentation of the IMC Awards, which identify, document, and recognise the best case studies by Indian B-school students on various themes.

IMC award winners The winners were felicitated by Shanghvi at the IMC valedictory session.

Theme: Making industry-institute partnerships work — Gold: Xavier Institute of Management, Bhubaneswar; Silver: NMIMS University, Mumbai.

Theme: Attracting ideal participants — Gold: Jaipuria Institute of Management; Silver: Great Lakes Institute of Management, Chennai.

Theme: Innovations in teaching methodology — Gold: SPJIMR, Mumbai; Joint silver: BNM Institute of Technology, Bengaluru and Vignana Jyothi Institute of Management, Hyderabad.

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