India’s largest agro-chemicals company, Rallis, pulled back this year from the brink of a

precipice. From a loss of Rs31 crore in 2000-01, the company posted a tidy Rs45 crore profit
in 2001-02.

A large part of the credit for this turnaround goes to Rajeev Dubey, who joined the company
as CEO in September 2000. He brought with him three questions, namely, Who and where
are we? Where do we go from here? How do we go? The ultimate aim — effectiveness and
efficiency of resource utilisation — had to lead to profitable growth.

Mr Dubey posed these questions to all the company’s stakeholders and experts to get the
inside and outside view. Cross-functional teams, including staff from pesticides, fertilisers
and seeds, aided by the Tata Strategic Management Group, went into the field to meet
employees, dealers, farmers, policymakers, distributors and even domestic and multinational
competitors.

These meetings helped identify and evaluate the business environment, key strategic issues
as well as Rallis’s strengths and areas for improvement. They also helped in understanding
areas of opportunity such as biotechnology, and the implications of the World Trade
Organization and intellectual property rights for the company’s future growth.

Diagnosis time
This diagnostic study, conducted in September-October 2000, turned the spotlight onto the
problem areas of the company. These included inefficient asset utilisation, absence of strong
shared values, weak customer orientation, intuitive decision-making as opposed to being
analytical, insensitive approach to people-related problems, and a lack of transparency.

Armed with the results of this study, the management embarked on a strategic planning
exercise. "We first needed to put in place a coherent business strategy," says Aruna Bhinge,
head, strategic planning.

The company used the Tata Business Excellence Model (TBEM) framework to give direction
to its strategy. "TBEM is like a magnetic compass," explains Mr Dubey, "constantly guiding
you in the right direction. It’s diagnostic, not prescriptive. It questions every process within
the organisation and helps bring method to madness."

The ‘method’ in this case was the decision to focus on five points:

 Sharpen and revamp the product/business portfolio

 Improve cash management
 Introduce new products
 Reduce costs throughout the value chain
 Strengthen controls and business processes
The company developed the corporate balanced scorecard in order to
implement and monitor the strategy at all levels. It also cascaded it down to
the frontline personnel through key result areas (KRAs). These areas had
both qualitative and quantitative measures. For instance, a fixed number of
farmer and dealer visits were added to sales targets and collections.

Setting it right
The company’s soul-searching resulted in the formulation of three concrete initiatives:

 TBEM Safal (strategic actions for absolute leadership) in sales and marketing.
 TBEM Prerna (propelling Rallis towards excellent results now and always) in
manufacturing.
 TBEM Pragati (people-related actions for growth and achievement through
transformation and involvement) in human resource development.

Under TBEM Safal, countrywide restructuring was undertaken and systems set up in
distribution, depot management and proactive selling. Costs were reduced on a war footing
in every task, be it travel or sales promotion. The decision-making process was made more
systematic and less intuitive. Formal systems were set in place to ensure the roll-down and
roll-up of strategies to ensure that operational targets stayed aligned with them. Targets
were fine-tuned to focus on collections, and individual accountability was ensured at all
levels.

The results of these measures are seen in the numbers. Discounts and promotion costs are
down, so are debtors and bad debt. Volumes are up and the sales mix is richer.

Chipping manufacturing costs

The company decided to keep hammering away at costs. TBEM Prerna, which was begun
with that intention, is an exercise that will continue into the future.

The initiative helped cut costs at all levels of manufacturing, through processes like yield
improvement, solvent substitution, improving procurement logistics, value engineering and
improving throughput, all of which led to major recurring annual savings.

Leaner, but not meaner

The organisation went through mergers, divestment, closure of non-performing units and
financial restructuring.

To rationalise assets, Rallis sold its pharma division in 2001. It also sold its property in
Andheri, Mumbai, for Rs133 crore to Tata Consultancy Services. More such sales are in the
offing to cut flab and garner funds to retire some of the company’s debts.
Managing cash from operations was critical to the company’s profitability. Financial
restructuring, undertaken on a war footing, reduced debt from Rs663 crore in December
2000 to Rs445 crore in March 2002. Working capital requirement was brought down from
Rs287 crore on March 31, 2001, to Rs186 crore a year later.

Credit management and debt control were two major exercises. "To improve its receivables,
the company is in the process of identifying dealers who can be financed directly from the
banks. This will help bring down working capital and improve cash availability," says
Soumen Mitra, vice-president (finance).

Innovation funnel
The company also looked at its entire product portfolio, with the aim of sharpening its focus.
The product and business portfolio was rationalised. Since the introduction of new products
was identified as a critical success factor, Rallis took a hard look at its process of developing
new products.

Research and development of new products can be very costly. And if the end result is not
satisfactory, it means all that money down the drain. To avoid this, Rallis set up a rigorous
project-management process for new product development, based on the ‘innovation funnel’
model.

All new product ideas have to go through this funnel where they are evaluated on specific
criteria at four levels — opportunity, feasibility, capability and commercial viability — before
further development is continued. Thus, time and effort are not wasted on unviable projects,
and the products pipeline is kept energised fully. In the last two years, five new products
have been launched.

‘Innogate’ and empowerment

Over the last two years, Rallis has undertaken an extensive exercise in organisational
dynamics. "Along with a lot of HR initiatives, the spotlight was on communication, de-
layering and empowerment," says Mr Dubey. All the HR initiatives were clubbed together
under TBEM Pragati, and a robust performance-management system was put in place to
reward achievers in a fair and transparent manner.

Mr Dubey is quite clear that no initiative, regardless of how good it is, can succeed without
the enthusiastic participation of people in the company. It is this belief that inspired
‘Innogate’, an Intranet-based programme under TBEM Prerna, that was created as a
platform for employees to come forward with new ideas and suggestions on how to improve
the company’s products, services and processes. All the ideas are evaluated on a 10-point
scale, with rewards accruing to the person whose suggestion is implemented.

As is inevitable in every restructuring programme, the company had to undertake the painful
exercise of shedding a large part of its workforce. Almost 950-odd people from an original
workforce of 3,300 are no longer part of Rallis. Of these, nearly 300 were part of the
pharmaceutical business that was sold off.

Manthan — meeting stakeholders

A unique initiative that has helped Rallis build relationships is called Manthan. Two-day,
large-scale, interactive process workshops were held in seven locations. At these
workshops, the senior management met with about 1,500 people, covering all categories of
stakeholders: workers, customers (farmers and dealers), suppliers, competitors and
shareholders.

Manthan served as a platform to communicate the company’s strategy, and allowed dealers,
customers and farmers to freely voice their difficulties and concerns to the senior
management. An important takeaway of this programme was the company’s vision and
mission statement, in addition to functional and locational action plans for strengthening the
bottom line.

It also led to the birth of the 4-S movement (sampark – sambandh – satrupti – santushti), a
revolutionary multi-disciplinary approach to product promotion in rural India, where factory
workers, research and development scientists, and head office staffers joined the sales and
marketing force in the villages.

Quality and IT
To carry these initiatives forward and to consolidate them, three more projects have been
initiated in the past six months.

 TBEM Sankalp — TPM with six sigma.

 TBEM Saransh — E-connectivity and ERP / SAP.
 Project Arjun — an intensive six-day training programme for all sales and marketing
personnel.

Rallis sees information technology as a facilitator in enhancing the effectiveness of

communication, analysis and, hence, business processes. The initiatives taken to achieve
these aims include:

 Improvement in the flow of the management information system.

 Company wide connectivity through email and an intranet.
 Launch of the company’s website (www.rallis.co.in).

A quantum leap forward in IT will be the implementation of SAP, which is going to start in
November 2002.

The way ahead

While consolidating the gains made over the past two years and strengthening its business
processes, policies, structures and measures of performance, the company is clear that ‘one
eye should be on the next step, the other on the horizon’. The Rallis roadmap of the future
has three horizons:

Horizon 1: The company plans to consolidate its hold on pesticides, rationalise

manufacturing facilities, and merge the group’s pesticide businesses while building its
speciality business in fertilisers. It plans to grow rapidly in seeds.

Horizon 2: Expansion continues, embracing contract farming and knowledge services.

Exports too are poised to expand rapidly. Other areas, like public health, household
insecticides, urban gardening, animal health, irrigation and farm equipment, may be
considered

Horizon 3: Rallis reaches for the stars with possible forays into biotechnology, genomics
and bioinformatics.

While business processes and organisational structures are necessary, they are not enough.
Finally, it is the human will and spirit that breathe life into the organisation. "It is the people
who drive change," says Mr Dubey. "The turnaround of Rallis is the story of commitment and
the drive to succeed exhibited by 2,300 people in the company."

Speaking of people and life at large, Mr Dubey adds, "All our actions should satisfy the
criteria of truth, compassion and a sense of service (satya, prem and seva)." Inspired with
this philosophy and motivated by a strong commitment to moving forward together, Rallis
has little reason to fear a return to the red.