Financial Express

“Ease of doing business should not mean reduced compliances”

A sense of urgency on the use of resources sparingly riding on top of a growing awareness on the calamitous consequences of climate change, is leaving gas-guzzlers with little choice than to go green.

At a time when many countries across the globe are coping with an unprecedented energy crunch triggered largely by the war in Ukraine, arguments in favour of a refreshed approach to using resources sparingly may seem more convincing than ever before. A sense of urgency on this riding on top of a growing awareness on the calamitous consequences of climate change, is leaving gas-guzzlers with little choice than to go green.

For us at Financial Express, the timing could not have been more appropriate to have experts and thought leaders engage in a series of conversations on the ESG (Environmental, Social and Governance) imperative for businesses. Each of these are being led by Mukund Rajan, someone who is arguably the go-to guru in this space. Chairman of ECube Investment Advisors, a first-of-its-kind platform created in 2019 to catalyse Environment, Social and Governance (ESG) changes in Corporate India. Prior to this, Mukund Rajan has held a number of senior executive positions through his 23-year career with the Tata Group, where he served as the first Brand Custodian of the Tata Group, Chief Ethics Officer, Chairman of the Tata Global Sustainability Council, and Member of the Group Executive Council at Tata Sons. His third book, “OUTLAST – How ESG Can Benefit Your Business”, co-authored with Dr Colonel Rajeev Kumar, has just been published by HarperCollins and is one that argues that a focus on ESG by businesses can only help thembuild resilience, gain competitive advantage and achieve greater returns in the long run.

In each of the FE Conversations on the ESG Imperative, Mukund Rajan engages with leading industrialists and thought leaders. After a very insightful session with Naina Lal Kidwai, chair, India Sanitation Coalition and also the former president of the Federation of Indian Chambers of Commerce &Industry (FICCI), Mukund Rajan’s interlocutor this time is Krishna Prasad Chigurupati, chairman and managing director of Granules India, a leading Indian manufacturer of some of the crucial first line of drugs to deal with pain, fever and diabetes.

Krishna Prasad, having entered the pharma industry in 1984, built one of the largest pharmaceutical companies in the world by volume, including one of the largest tablet manufacturing capacities in the world.

Granules India is today synonymous with well-known medication products like Paracetamol, Metformin and Ibuprofen.

Beyond Raising Money

The conversation has been amazing with some great takeaways and a bounty of what Mukund Rajan calls “quotable quotes” (SEE CHOICE SNIPPETS). “Today, if people want to raise money at a reasonable price, they have to follow the ESG principles and that has got people thinking on ESG and having started the journey, many people are realising the benefits of ESG,” says Krishna Prasad. He hopes, it is going to become an activity not just for raising funds but also one that is a way of life for people.

COVID & After

“COVID,’’he says, “has really woken us up. Nobody could ever imagine that disaster of this scale can ever hit us. But this has been an awakening and the world has changed so much. Unless we act today and do so in an urgent manner there are going to be more and more disasters. Speed is of essence today and while the social and governance components of ESG are very important, environment remains the key.”

On the crucial question of how much of this focus on ESG and the environment, helps or hinders the cause of Indian pharma that is constantly under scrutiny, especially from the overseas regulatory bodies and the attendant compliance costs. “Compliance always helps a company,” says Krishna Prasad.

He says, “we at Granules have given GMP (Good Manufacturing Practices) compliance great deal of importance always and I am proud to say that we are one of the few companies which never had any such issue with any of the leading overseas regulatory bodies. If all compliances are built into the design of a system, then they need not be really expensive.”

ESG, he feels, should be the pillar of any business philosophy or strategy. And, it is not just pharma, it applies to any company or business.

ESG &Ease of Doing Business

Rajan raises the issue of an apparent contradiction in looking for improving ESG performance while at the same time seeking different or reduced compliance or disclosure requirements and therefore seeks to know how the two agendas were converging. On this, Krishna Prasad has a rather plain and simple view: “I think ease of doing business does not mean reduced compliances. They need to there but there should be reasonable expectation and it should not be such that people cannot follow.”

On the priorities at Granules, Krishna Prasad says, “for us business growth and ESG are interlinked.All the three elements of environment, social, governance are important. He says, “we have no choice but to focus on reducing our carbon emissions and as far as we are concerned, we are trying to is make all our plant as much carbon efficient as possible. While retrofitting these plants is not always possible and the only thing one could do is bring in some energy efficiencies and one of the things we have done and are close to implementing is greater reliance on green energy as that alone can help reduce carbon emissions.”

Cutting Down To Grow More

He then goes on to say that “we are working with companies that are good on energy storage systems so that there is 24-hour green energy supply. Other than this, all our new plants, he says,“are going to be based on innovative thinking on processes that can also help bring down costs by cutting down reactions, energy needs, reducing the use of many reagents. Some of them have been around in other industries but perhaps not in pharmaceuticals.”

For instance, he refers to flow chemistry as against batch wise production, biocatalysis (use of enzymes or natural substances in chemical reactions) was there too but not practiced widely in pharma and the latest is organocatalysis (where the rate of chemical reaction is increased by use of organic catalysts) and we have to embrace them and set up centres for excellence for these and try and learn more and implement them and, he says, we are already beginning to see some benefits.

After all, following the right technologies and producing least amounts of waste is only ideal, he opines. At the end of the day, carbon footprint is to him, just waste produced and if that is reduced efficiencies go up.

On the road ahead for his company, Krishna Prasad says, “our focus for the next decade is to concentrate on environment while not neglecting other areas. “The environment has become a passion for me in the past few years and I am learning a lot,’’ he says. On the social side, it is about skill development of people. For instance, he explains, “we pick up children from villages who have passed their class 12th and train them at an academy that we have for them and them job-ready or even get to pursue higher studies. And needless to say, attention on governance is crucial.”

Shareholders & Stakeholders

On How it is all feasible financially, he says, “instead of accumulating cash in the books and serving the shareholders alone, companies also need to get more mindful of the other stakeholders for an organisation – like humanity for instance and try and serve them too and do this by channelising money into improving the production processes and it is not something that companies cannot absorb. All of it will help long-term sustainable growth.”

Krishna Prasad refers also to the snarled supply chains globally and how Indian companies, which at one point in time were self-sufficient in pharmaceuticals are today linked to the external supply of key starting material and drug intermediates. But then, he does feel, “India has to capability and the ability to change all this. We have to start with base materials and easily available basic materials and use different types of chemistries to cut down manufacturing steps and perhaps can help us do away with the need for some of these drug intermediates. And when it comes to certain critical drug intermediates then master the technologies and make them at global scale.”

His plea to the government is really around taking steps to “incentivise innovation by providing tax concessions, then things will evolve faster but in any case, I can see that there will be lot of self-sufficiency in India,” he says.

The ESG landscape, as Mukund Rajan, sums up,”is changing swiftly in India and there are several ways in which forward-looking businesses can leverage their capabilities to shape the market and gain competitive advantage. Business as usual will not be an option going forward and there will be a clear reset thanks to the new ESG paradigm.”

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