STRONG PRODUCT PORTFOLIO

Strategic Overview
• Eight brands feature among • Most brands are either
top 100 OTC brands No. 1 or No. 2 in their
respective markets
• Product categories include
skin care, antacid, intimate • Joint Venture with
range for women, child well-being Allergan (India), leader
and baby care, pain management, in ophthalmology
oral care, gut health, respiratory,
gastrointestinal and lifestyle • Adding products
problems organically and

Management Discussion & Analysis

inorganically
S I G N I F I C A N T M A R G I N E X PA N S I O N

• Most products in the Company portfolio

have healthy gross margins and once the
fixed cost leverage kicks in, it will rapidly
add to the bottom line.

• The Company made a conscious choice

over the last few years to reinvest
profits into scaling the business and its

Board & Management Profiles

distribution network, in line with its aim
to be among the top three OTC players in
India by 2020

–– Addition of products to leverage the

distribution network and aid fixed cost
amortisation resulting in higher margins

–– Asset-light model through third-party

manufacturing has maximised
competitiveness and lowered

Statutory Reports
manufacturing cost

–– Higher variable compensation for

sales staff keeps overheads low and
incentivises higher performance
P O T E N T I A L T O R A P I D LY
GROW REVENUES –– The business is making conscious efforts
to reduce its supply chain costs by
• Successful integration • Tap e-commerce, rural, exports reducing CFA count, providing optimal
of acquired portfolios and alternate opportunities level of service at lower cost. The
to further enhance distribution expenses are expected to
revenues • Investments in technology and database, come down further.
Financial Statements

to serve customers promptly and provide

• Continue to add customised solutions –– Aggressive use of Digital to reduce cost
products both of communication reach
organically (including • Adoption of the digital platform to target and
brand extensions) and influence consumers. Build digital assets to gain
inorganically consumer attention and generate brand pull

• Efficient execution and

operational excellence

Annual Report 2017-18 | 79

Operational Performance Restructuring
Acquisition Apart from the operational activities, the business underwent
an internal restructuring.
During the year, the Company successfully completed
acquisition of Digeplex and its associated brands catering
• India Consumer Products has grown by roughly 8.5
to the gastrointestinal (GI) segment. GI market in India is a
times in size since its launch in 2008, but to achieve the
~`13,000 Crores1 market. Products sold under Digeplex brand
next level of growth for FY2020, the business required
names are digestive enzymes used as remedies for digestive
a different approach. Taking this into consideration, the
disorders, accumulation of gas in stomach, gastric problems
business conceptualised the idea of segregating itself
and supplement treatment of pancreatic diseases. Digeplex
into four autonomous divisions – General Trade, New
is a good fit for the existing product portfolio of PEL in the GI
Products, Kids Well-being & Modern Trade – single P&L
segment to further consolidate the Company’s position in the
was restricting potential maximisation of each vertical.
OTC market and boost business.
• Each of the verticals have distinct requirements and are
Note: 1. As per AIOCD October 2017 data, the Gastrointestinal market in India addresses the
constipation, diarrhoea and appetite stimulant categories
unique in terms of their customers, infrastructure, talent,
SOPs & processes, management approach and client
relationship management.
Launches during the year
• Each vertical has its own marketing and sales team
PEL launched/ re-launched a few products/ brand extensions focused on growing its portfolio of products, with
– Lacto Calamine Facewash and Face scrub, Little’s separate P&L responsibilities and targets. Reorganisation
Thermosensitive Silicon Sipper, Little’s breast pump, Sloan’s pain of business has brought increased efficiencies in terms
relieving spray, Jungle Magic Garden Sciencz, etc. of faster decision-making and accountability, increased
focus on addressing consumer needs and enhanced
control on operations, costs and resources.

“The shift in the consumer mindset, driven by the propensity of self-medication and the increasing
purchasing power, is driving demand for the OTC market in India. In the past few years we have
been in an investing mode, adding marquee brands to our portfolio. Regulatory changes in the
OTC segment presented a challenging year for the sector and the Company. During the year, we
launched/re-launched 8-10 product extensions across categories – a first in the history of the
Company – and strengthened the gastro-intestinal offering with the acquisition of Digiplex and its
associated brands. We are confident that this combined portfolio will help us achieve our 2020
vision of being one of the top three OTC companies in India. We will continue to invest in external
growth opportunities, which may include smaller bolt-on acquisitions of niche product categories
that will propel us closer to our goal.”

NANDINI PIRAMAL
Executive Director, PEL

80 | Piramal Enterprises Limited

Using analytics to improve operational effectiveness
training on the go. The tool offers customised training
Analytics has become instrumental for making decisions in

Strategic Overview
interventions, increased training touchpoints and progress
sales and operations. The segment now uses analytics in
tracking. Sarathi won awards at the World HRD Congress in
a wide array of activities ranging from fixing sales strategy
two categories – Best use of mobile learning and Best use of
at field level to making people development programmes
Technology for Training.
for reducing talent loss. The four-member team works with
different functions to identify problem areas and builds
Further, the Business IT team has developed a unique route
appropriate solutions.
tracking (GPS tracking) application which allows the sales
hierarchy to visualise and track movements of the field force
Today, the sales team uses a proprietary ‘Sales
personnel in real-time. The IT team is now using an e-biometric
Recommendation Model’ built by the analytics team that
authentication system (E-KYC), which would be used at the
helps in selling the right product at the right value to the right
time of hiring. This will improve the quality of hires and the
store. These recommendations have been designed using
turnaround time.

Management Discussion & Analysis

'predictive analytics'. Our frontline sales force accesses this
intelligence to sell better via a mobile reporting app. The
Revised Consumer Influence model
analytics team also helped design trade promotions to push
sales and optimise marketing spend. This operating rhythm The business is increasingly leveraging the digital platform to
will continue in the future. reach out to its consumers. Digital is better both from cost
and consumer reach perspective than the conventional media.
Increased use of technology in Operations Considering the increased usage of internet mobile and other
similar digital platforms, the Company is adopting a digital
The Company has developed a unique sales training platform
approach to target and reach its consumers.
‘Piramal Sarathi’. The tool can be used both through the web
and as a mobile application and helps field teams experience

Board & Management Profiles

Statutory Reports
“FY2018 was a challenging year for the OTC Industry with the introduction and roll out of GST. We
initiated a programme to educate and help our channel partners transition to the new regulatory
environment. We also streamlined our internal processes, aligning with the new regulatory
requirements, to achieve better efficiencies, thereby creating a sustainable advantage for the
Financial Statements

long term. Keeping in line with our changing consumers, we have aligned our marketing strategy
to reach the new age ones by leveraging digital in place of traditional media. During the year,
we also harnessed technology to help our business become agile and smart in decision-making
across functions. The initiatives that we have put in place will help us capture market share and
strengthen our OTC business in the coming years. ”

KEDAR RAJADNYE
COO, India Consumer Products

Annual Report 2017-18 | 81

 Financial Performance
The Company’s performance was impacted by GST implementation during the year. Revenue was at `346 Crores for the year.

REVENUE PERFORMANCE (in ` Crores)

Consumer Products
9-year CAGR ~18% 537 537

426
357
313
271
220
177 196
375

124
346
261
243
209
170
138
128
125
76

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Consumer Products Allergan JV Total Revenue

82 | Piramal Enterprises Limited

 Way Forward

Strategic Overview
Over the last two years, the business has invested significantly in various growth levers. The Company’s strategy of expanding
the product portfolio and distribution network has worked well and the Consumer Products business is evolving into a strong
player in India’s OTC market.

STRATEGIC PRIORITIES FOCUS AREAS

Management Discussion & Analysis

• Continue to grow organically

Build Strong Brands • Launch new products and brand extensions and have aggressive plans to
increase new products business reach initially to all the towns with 50,000+
population
• Acquire leading brands or brands with potential to become #1

• Improve reach to match complete product availability on time and reduce

stock-outs
Wide Distribution Network

Board & Management Profiles

• Tap e-commerce, rural, exports and alternate opportunities

• Build scale of business

Leverage Scale
• Improve media effectiveness with scale

Strong Execution • Continuous execution focus

Capability
• Consistent improvement

Statutory Reports
• Addition of new products or brands will leverage the domestic distribution
Asset-light network, and help aid fixed cost amortisation resulting in higher margins
Supply Chain
• Use Digital aggressively to reduce cost of communication reach

Financial Statements
 Healthcare
Insight and
Analytics
—
PEL’s Healthcare Insights & Analytics
business, Decision Resources Group,
is the premier provider of healthcare
analytics, data & insight products and
services to the world’s leading pharma,
biotech and medical technology
companies and enables them to take
informed business decisions.

84 | Piramal Enterprises Limited

MARKET OPPORTUNIT Y Go-to-market approach based on customer need
Through a combination of internal innovation, technology
The healthcare market today faces enormous changes and
and data investments, and inorganic growth, DRG has brought
challenges. The increasing cost to bring drugs and medical

Strategic Overview
together capabilities in research, analytics, technology, and
devices to the market, an ongoing shift in focus from volume
consulting that address some of the most complex issues facing
to value and efficacy of treatments, ongoing and greater
the healthcare industry today. In an effort to better engage our
regulatory scrutiny, and a tidal wave of digital healthcare
customers and create a more cohesive offering for our clients,
data have resulted in an increased demand for high-quality
we have reorganised the business into verticals that centre on
information and analytical decision support tools and
the core customer needs addressed by the business, to help
services. Healthcare-focused companies, more than ever,
customers understand their markets, optimize access to their
require current, relevant, and easily accessible solutions that
treatments, and engage their customers.
progressively leverage multiple data sources and analyses to
enable key business decisions.
DRG's Business Model
DRG provides business information services in the life

Management Discussion & Analysis

sciences, provider and payer industries, competing in an
CLIENTS
addressable market in excess of USD16 billion: ASK
WHERE HOW DO HOW DO
DO I INVEST? I GET PAID? I WIN?
DRG's Addressable Market Size
(USD Billions)

HEALTHCARE
SERVICES LIFE
PROVIDER PAYER TOTAL
SCIENCES Research Custom Consulting
SOLUTION Learning
AREAS & Data Data & & Managed
THROUGH Products Analytics Services
Market Research 3.0 0.3 0.5 3.8

Board & Management Profiles

Consulting Services 2.7 0.6 0.8 4.1

Data & Analytics 4.5 2.4 1.5 8.4 WE HELP

CLIENTS
(PHARMA, Understand Optimise Engage
Total 10.2 3.3 2.8 16.3
MEDTECH, the Market Access Customers
PAYER &
PROVIDER)
DRG's products and services are built around proprietary and
industry-leading data assets and algorithms, complemented

Statutory Reports
Depending on client need, DRG answers these questions
by an in-house team of subject experts, therapy area
through research and data products, custom data and
analysts, data scientists and strategy consultants with deep
analytics services, consulting and managed services.
industry knowledge. Through a combination of organic and
In FY2018, DRG created the concept of vertical leaders
inorganic growth as well as innovation, DRG has evolved and
who lead commercialisation efforts across product and
transformed from a life sciences, syndicated market research
service offerings. This full stack solution enables a more
Company into a data-driven, technology-enabled, content
comprehensive engagement with our customers to better
delivery platform and healthcare insights business.
serve their end-to-end business needs.

"DRG is a business information services company, living at the crossroads of data and disease,
Financial Statements

technology and therapy, insight and illness - helping our healthcare clients bring life-saving
treatments to patients around the world. We help maximise the effectiveness of our client’s
commercialisation processes by understanding markets, optimising access, and engaging
their customers around the world. To succeed, we apply human wisdom and data science
to best-in-class data, we wrap our analysis with bespoke, tech-enabled service and we focus
relentlessly on client satisfaction."

JONATHAN SANDLER
CEO, Decision Resources Group

Annual Report 2017-18 | 85

 COMPREHENSIVE PRODUCT SUITE

• A portfolio comprising Data and Analytics, Research Products and

Global Consulting Services

GLOBAL TEAM OF INDUSTRY • One of the few players that provides end-to-end expertise, including
E X P E R T S A N D D ATA S C I E N T I S T S bespoke solutions, to address its clients’ most complex problems

• Over 1,300 employees across 17 global • Added 24 new products to the DRG portfolio and launched three
offices in North America, Europe and Asia tech-enabled insights delivery platforms
–– World-Class Epidemiologists
• Launched DRG Oncology solution suite addressing client needs
–– Expert Data Scientists and Engineers
spanning cancer epidemiology, clinical trial monitoring, competitive
–– Industry Leading Healthcare Market
landscape assessment and treatment sequencing, backend by a
Forecasters and Predictive Modelers
team of oncology experts
–– Digital Behavior Analysts
–– Internationally Renowned Consultants
–– Certified Pharmacists, Health
Economists, Health System & Policy
Analysts
–– Sophisticated Primary Researchers and
Team Trainers

Transforming to
grow and improve
S I N G L E , I N T E G R AT E D G L O B A L P L AT F O R M
profitability
• Shifted from a portfolio of brands accumulated through
a roll-up acquisition strategy to an integrated healthcare insights
and analytics services business under 'one' roof with significant
opportunity to up-scale

• Investments in global sales and marketing, distributed

production technologies and global capacity, cross-
functional data and analytic talent, and a new product
delivery platform, the business is expected to
achieve revenue gains and cost synergies from
this consolidation
• Reorganised business around market N O TA B L E S TAT I S T I C S
verticals and transformed broad-market
media marketing strategy into a
targeted customer engagement • 3,300+ Patient segments • 100% coverage of insured lives
strategy to engage directly covered globally by of the US population
with a targeted set of keys DRG epidemiologists
accounts and prospects • 240 Integrated Delivery Network
• >50 million Overlapping partners who work closely with
claims and electronic DRG pharmacists to compile
health records in DRG’s hospital formulary data
repository of
de-identified patient data

• 190+ Diseases
covered by DRG
analysts and delivered
in the Company’s
Insights platform

86 | Piramal Enterprises Limited

T E C H N O L O G Y A N D I N N O VAT I O N

Strategic Overview
• Products and services delivered through
user-centric technology platforms I N D I A A D VA N TA G E

• Delivery modality has shifted dramatically

from large, static research reports to digitally
delivered, modular content
• Of our 1,300+ employees, 340+ are located in
• Launched and then evolved our Insights platform India, in DRG’s Bengaluru and Gurugram offices
to support our MedTech business
• Built India-based marketing operations team
• Skill augmentation accelerates growth and
increases capabilities beyond existing products and

Management Discussion & Analysis

services, enhances customer delivery and response
time, and enables cost efficiencies
• Recruitment of critical talent, especially data
science and analytical talent, is significantly
enhanced by the Piramal brand

L O N G -T E R M R E V E N U E &

Board & Management Profiles

MARGINS VISIBILIT Y

• Serving 45 of top 50 • Stable revenue base with

pharma companies 100% retention among top
50 customers, contributing
• 10+ years of to approximately 66%
relationships with its of revenues
top 10 customers
• Total revenue retention by
value is ~96% across the
• Data & Analytics and
entire customer base, and
Research Products,
no single client comprises

Statutory Reports
which are highly
more than 5% of DRG’s
D ATA A N D A N A LY T I C S C A PA B I L I T I E S recurring in nature,
annual revenue
COMBINED WITH MARKET EXPERTISE comprise over 70% of
total revenue • Large foothold in US Payer/
and allows deep and Pharmacy Benefit Manager
• Double the size of DRG's contextually relevant (PBM) market. Relationships
data repository (healthcare insight organised by key with 15 of the top 20 PBMs
claims, outcomes, areas of client interest, and 12 of the top 20 Health
formulary and insurance including patient journey, Plans
coverage) to 100 Terabytes drug, disease, device, and
• Through a concerted
stakeholder dynamic
• Invested in core technology programme of cost
Financial Statements

and analytic methods to • Real-world evidence containment and efficiency

manage and utilise massive (RWE) repository of maximisation DRG is driving
healthcare data assets healthcare claims is margin expansion which
among the largest in the includes the expansion of
• DRG’s data repository US and matches that of DRG's India operations,
covers over 90% of the the biggest RWE providers technology automation and
healthcare ecosystem portfolio planning
• Therapy or market experts
partner with data analysts
to contextualise analysis
and provide actionable
recommendations Annual Report 2017-18 | 87
 in FY2017, combines 11 DRG brands under a dynamic, web-
Spotlight on DRG Managed Services Offering: based application. It provides clients with an easy-to-use portal to
access all its expert forecasting, market sizing, and gold-standard
DRG’s increasing focus on driving customer centricity in
epidemiology for over 190 diseases. DRG continues to evolve
FY2019 and beyond is exemplified by its Epidemiology
and enhance the platform to shift to a product-oriented insights
Managed Services engagement for a global life sciences
business that focuses on distilling vast amounts of data into flexible
client. This partnership, launched in FY2018, is a deep
dashboards, critical summaries, and need-to-know information.
case study on excellence in customer partnership. Prior
to engaging DRG, the client’s epidemiology capabilities
In FY2018, DRG has shifted to a more customer-centric, market-
had proved insufficient to provide a strong foundation
needs focused business. By implementing a market vertical
for their market forecasting initiatives. Epidemiology is a
model, DRG has positioned itself as a client partner through
complex field of study, and the margin of error in patient
the process of understanding the market, optimising access,
population estimates can determine the commercial
and engaging customers. We are increasingly focusing our and
success or failure of a new drug. To meet the client’s
our clients’ attention on insights gleaned from our real-world
need for highly accurate epidemiological analysis with
data repository, data scientists, and therapy area leads—whose
a quick turnaround to inform their in-house market
expertise enables an understanding of the meaning of the
forecasting and brand management team’s decisions,
underlying data. The Company is now equipped to deliver
DRG supplied a team of five epidemiologists, embedded
lean, user-centric, and data-driven digital solutions powered
full-time at the client’s headquarters. Leveraging
by analytics and supplemented with insights services. Our way
DRG’s epidemiology data platform, the DRG team
forward is through a data engine that will establish master
now serves as the client’s in-house experts, providing
data management, data governance, and a data stewardship
on-demand analysis of patient populations and areas
framework across DRG’s data assets.
of opportunity for the client’s products. This team of
DRG epidemiologists has become embedded as a core
FINANCIAL PERFORMANCE
part of our client’s operating infrastructure, and client
employees have come to trust and rely on the embedded
Revenue from Healthcare Insight & Analytics business was at
DRG epidemiologists as critical team members and
`1,209 Crores as against `1,222 Crores in FY2017. The Company
thought partners in the client’s most critical initiatives.
witnessed stable revenues, in significant parts, though there has
been shifting customer demand away from traditional syndicated
market research towards data and analytics-driven, technology-
O P E R AT I O N A L P E R F O R M A N C E
enabled offerings. In recognition of this shift, over the past few
years the Company has increasingly invested in technology, data
Enhanced Data and Analytics Capabilities
assets, and analytics capabilities that enable it to provide user-
PEL has invested in core technology and analytic methods to centric solutions directly targeting high-value client problems.
manage, clean, link, and nimbly utilise massive healthcare data During the year, the Company witnessed strong growth in data
assets. Over the past three years, the business has compiled and & analytics business and strong performance in Global Health
organised a leading data repository – its real-world evidence data Economics and Outcomes Research (HEOR) services.
set is among the largest in the US, placing it in the top tier for
healthcare analytics providers. The repository covers over 90%
of the healthcare ecosystem, enabling businesses to deliver deep REVENUE FROM HEALTHCARE INSIGHT
and contextually relevant insights. Few, if any, other industry AND ANALYTICS BUSINESS
participants can integrate financial (claims) and clinical (EHR) data Revenue Performance (in ` Crores)
with proprietary data such as drug formulary and restrictions
status and convert it into useful business insights. FY2014 899
DRG is increasingly supplementing primary research with the FY2015 1,020
insights gleaned from the real-world data repository and data
scientists and therapy area leads. The Company is continuously FY2016 1,156
integrating real-world data into existing solutions as well as
creating new data-driven, technology-enabled products that can 1,222
FY2017
solve differentiated and complex customer problems.
FY2018 1,209
Investments in Tech-enabled Delivery Platforms
DRG is increasingly delivering its products and services through Note: 1. DRG acquisition was completed in June 2012, therefore revenue for FY2012-13 would only be for
user-centric technology platforms. Our delivery modality has a part of the period
shifted dramatically from large, static research reports to digitally
delivered, modular content that enables clients to obtain ‘just in
time’ answers. The ‘Ask DRG’ Insights and Content Platform created

88 | Piramal Enterprises Limited

Way Forward

Strategic Overview
Over the past several years, DRG has been undertaking a transformation from a syndicated market research company into a
data and technology enabled insights firm. This transformation is ongoing and we are seeing the results of our investment in
the form of accelerated growth in our Data and Analytics business as well as expansion of our product and services offerings,
which have been driven by client need. As we continue our transformation, we have articulated five strategic priorities.

STRATEGIC PRIORITIES FOCUS AREAS

Management Discussion & Analysis

• Deliver a unified commercial team seamlessly delivering superior customer
engagement throughout the customer journey with DRG
• Monitor efficacy and efficiency of commercial execution through metrics;
Commercial Excellence creating visibility into future performance and creating predictable, scalable
business performance
• Develop strategy to deliver value to dramatically expand DRG’s engagement with
Mid-Tier clients

• Continue to invest in the capture and integration of data, particularly global real

Board & Management Profiles

word data
• Build enterprise-wide ‘Data Factory’ to unleash the full power of DRG’s analytics
Data Excellence
and insights, while reducing cost of capturing, cleaning, integrating and exporting
data to clients (internal and external)

• Acceleration of new product development and launch

• Focus on the creation of syndicated products, based upon highly successful
bespoke analytics and consulting services
Insights Excellence
• Expand best-in-class Oncology offering to meet the growing needs of DRG Clients

Statutory Reports
developing breakthrough solutions for cancer
• Drive audience engagement and relationships through creation of 'connected
content' platforms and innovative formats

• Ongoing expansion of DRG India

Margin Expansion • Creation of global procurement function
• Focus on 'Build Once, Sell Many' products
Financial Statements

Technology Excellence • Combine data assets in the development and enhancement of products
 Risk
Management
—
Enterprise Risk Management
A well-defined risk management
framework is integral to any business.
PEL has an independent and dedicated
Enterprise Risk Management (ERM)
system to identify, manage and mitigate
business risks. Risk management,
internal controls and assurance
processes are embedded into all
activities of the Company.

90 | Piramal Enterprises Limited

PEL’s ERM framework is designed by integrating COSO* ‘Audit and Risk Committee’, a new Board-level committee
framework at its core. — Risk Management Committee for Financial Services (FS)
— was formed to focus on strategy and risk management
The Risk Management Group (RMG) establishes the risk practices followed in FS business unit.
policy and processes for risk evaluation and measurement;

Strategic Overview
and business units focus on developing and implementing Periodically, the RMG appraises the portfolio health in the FS
mitigation measures, while taking controlled risk. Specific vertical and the risk profile of the business verticals in
risk approaches are in place for financial and non-financial non-financial services (non-FS) businesses to the Board.
businesses.
Business heads and teams
The Company ensures seamless interaction between the
Business heads and operational teams assess the risk profile
Strategic Business Units (SBUs) and RMG to assess the real risks
of their businesses/transactions and propose measure to
and their severity on the business. The RMG is independent
mitigate the risks. They work closely with RMG to provide
of SBUs and reports directly to the Board. PEL believes in
requisite information about the transactions or business
embedding a risk management culture in all facets of business
environments to assist RMG in creating the risk registers.
decisions to ensure sustainable growth of the organisation.

Management Discussion & Analysis

FINANCIAL SERVICES BUSINESS
BOARD OF DIREC TORS
The RMG independently assesses all investments and loans of PEL’s
FS business. The Group uses internal risk assessment models to
evaluate credit, market and concentration risks embedded in any
deal. Based on the assessment, the group recommends a plan to
Board Level Risk Committee
mitigate or to eliminate the identified risks in the investments.

Risk Assessment Approach

Risk Management Group
The approach involves identification and measurement of risk
for each investment. Risks are classified into quantifiable and

Board & Management Profiles

Independent of Business Head and Operational Teams
non-quantifiable risks.

1. Quantifiable risks are estimated as the deficit in Cash

The Board Flow under stress testing
2. Non-quantifiable risks are estimated through
The Board oversees PEL’s risk management programme. It
comprehensive scorecards and standard mark-ups
regularly reviews and evaluates the programme to ensure
–– Security value, promoter evaluation, exit options, etc.
adequate policies, procedures and systems are in place to
are rated through scorecards
execute the strategy and manage related risk. The Board-
–– Operational and concentration risks are covered through
level ‘Risk Committee’ reviews the micro-level risks and
standard mark-ups
reports it to the Board. This year, in addition to the existing

Statutory Reports
2018
EVOLUTION OF THE RISK MANAGEMENT GROUP 2017
• Initiated
• Enhanced
Macroeconomic
Portfolio Analytics
2016 stress testing
• Proposed limits
• Designed sectoral
• Portfolio Analytics framework
limits framework
• Transfer Pricing • Developed product-
2015 • Initiated
mechanism for FS wise provisioning
ALM Analytics
structure
• ALM Policy in place • Model
Financial Statements

2014 • Developed
Development for • Extensive review
• Risk Rating Credit Approval
new FS products of Corporate
• ERM Policy in place for individual Authorisation
Governance
transactions in FS • Focus on existing Matrix
• Risk Evaluation practices
model calibration
Model for • Implementation of (benchmarked • New model
structured Risk Registers for • Review of against international development
transactions non-FS businesses risk registers best practices) for new products

*COSO – Committee of Sponsoring Organisations of the Treadway Commission

Annual Report 2017-18 | 91
The risk team considers various factors like historical performance, thoroughly analysed and necessary mitigants are put in place,
execution capability, financial strength of the promoter and exogenous events can also alter deal dynamics significantly.
company, competitive landscape in the industry and specific Conservative underwriting and proactive measures helped
segment, regulatory framework and certainty, impact of PEL manage uncertainties that arose from recent events such
macroeconomic ‘changes’, etc. while assessing the deal. The security as demonetisation, Real Estate Regulation Act and the Goods
structure is assessed for value, enforceability and liquidity. The rating and Services Tax. After careful study of the impact of these
generated is used for internal benchmarking and pricing. The Credit events in various micro-markets and product segments, the deal
team take inputs from the RMG to arrive at optimal deal structuring. underwriting process was altered accordingly.

Framework to evaluate Risk Adjusted Returns In case of non-real estate loans and investments, a detailed
external due diligence is conducted. The external due diligence
The Risk team assesses every loan proposal independently
combined with internal understanding is assessed by credit
using proprietary risk assessment models.
underwriting and risk teams to structure and assess the deal.
The bigger deals and deals done in new sectors are presented
to internal committees which have independent experts with
considerable experience.

Exit Security Asset Liability Management (ALM) Policy

Analysis Analysis
The Risk Management team and the Treasury team had
initiated the ALM process for the Financial Services business.
RISK
The Board has approved the ALM Policy and the formation
ADJUSTED
Cash Flow Operational & of Asset Liability Management Committee (ALCO). The ALCO
RETURNS
at Risk Concentration includes the Company’s senior management and an external
Model Risk industry expert, and defines the strategy for managing liquidity
Markups and interest rate risks in the business.
• Liquidity risk: ALCO assesses the static liquidity gap
Business/ statement, future asset growth plans, tenor of assets, market
Promoter liquidity and pricing of various sources of funds. It decides on
Evaluation the optimal funding mix taking into consideration the asset
strategy and a focus on diversifying sources of funds.
• Interest rate risk: ALCO reviews the interest rate gap
Appropriate Stress is assumed for key project statement and the mix of floating and fixed rate assets and
liabilities. The in-house Economist presents the forward-
variables to compute Cash flow at Risk looking interest rate view based on which the RMG prepares
C A S H F L O W AT R I S K scenario analysis to assess the short-term impact of interest
rates on net interest income (NII). This helps ALCO decide
the strategy to mitigate interest rate risks promptly.
Drop in Rise in input Delay
revenues costs/delay in sales
in execution ramp-up
Liquidity Risk
Factors such as business strength, competition and industry risks are
evaluated to arrive at Cash flow at Risk
ALCO
Portfolio Revaluation Process
All executed deals are re-valued by the RMG at regular intervals.
Transfer Pricing
The portfolio revaluation provides the Management with latest
Interest Rate Risk
overview of the portfolio performance. It also triggers specific
action plans for identified deals and data-based insights for
enhancing underwriting criteria for future deals. The deal-specific
action plans are duly executed by business teams to mitigate
NON-FINANCIAL SERVICES BUSINESSES
or eliminate the identified risks. Also, the insights are used as
feedback for better credit underwriting in the future.
Risk assessment at Non-Financial Services Business units is carried
out using risk registers. Risks across different business units; their
Underwriting and Risk Mitigation
probability, impact and mitigation plans are properly documented
Effective deal structuring is critical to ensure loan repayments are at regular intervals. These risks are then aggregated, and key risks
on schedule. While idiosyncrasies related to a particular deal are across each business units along with the proposed mitigants are
presented and reviewed by the Board on periodic basis.
92 | Piramal Enterprises Limited
MAJOR RISKS AND MITIGANTS
The major risks perceived by PEL along with the measures taken to mitigate them are highlighted as follows:

Strategic Overview
RISK IMPACT MITIGATING MEASURES
Client and PEL’s primary businesses are based on contracts with PEL’s business development teams continue to actively
product customers. In some contracts, a large portion is transacted seek to diversify its client base and products to mitigate
concentration with a few major customers. Therefore, any set back at concentration risk.
risk in customers’ end may adversely affect the Company’s financials.
non-financial While some particular products generate a significant portion
services of the Company’s overall revenue, any drop in demand for
businesses these products may adversely affect profit margins.
Product and PEL is expected to maintain global quality standards A dedicated Corporate Quality Assurance
quality risk in manufacturing. Some of PEL’s products are directly Group actively monitors adherence to prescribed

Management Discussion & Analysis

consumed/applied by consumers. Therefore, any deviation quality standards.
with regards to quality compliance of products would
impact consumers worldwide, and hence, adversely affect
the Company’s performance.
Default and • In the financial services businesses, the risk of At PEL, each investment is assessed by the investment
concentration default and non-payment by borrowers may team as well as an independent risk team on the risk-
risk in adversely affect profitability and asset quality. return framework. The combined analysis of these teams
Financial is presented to the Investment Committee for investment
• The Group may also be exposed to concentration
Services decision.
risks across sectors, counterparties and
business
geographies. The risk is being partly mitigated by setting up a
concentration risk framework, which incentivises

Board & Management Profiles

business units to diversify portfolio across counterparties,
sectors and geographies.
Adverse PEL has significant revenues in foreign currencies – The centralised treasury function aggregates the foreign
fluctuations through exports and foreign operations. Therefore, the exchange exposure and takes prudent measures to
in foreign Company is exposed to risks arising out of changes in hedge the exposure based on prevalent macroeconomic
exchange risk foreign exchange rates. conditions.

Interest Volatility in interest rates in PEL’s investment and treasury ALCO actively reviews the interest rate risk and ensures
rate risk operations could cause the net interest income to decline. that interest rate gaps are maintained as per ALCO’s
As a result, this would adversely affect profitability of the interest rate view.
Financial Services business.

Statutory Reports
Tenor Early redemption or delay in coupons and principal ALCO reviews the gap statements and formulates
Mismatch payments from Financial Services businesses can cause appropriate strategy to manage the risk.
mismatch in the tenor of assets and liabilities.

Regulatory PEL requires certain statutory and regulatory approvals The applicable regulatory framework is continuously
Risk for conducting businesses. Any failure to obtain, retain tracked by various teams within PEL. Necessary
or renew them in a timely manner may adversely affect and appropriate actions are undertaken to ensure
operations. A change in laws or regulations made by the compliance with all regulatory requirements.
government or a regulatory body can increase the costs
of operating a business, reduce the attractiveness of
Financial Statements

investment and/or change the competitive landscape.

Also, PEL is structured through various subsidiaries across
various countries in a tax-efficient manner. Changes in
regulations in terms of repatriation and funding may lead
to adverse financial impacts.

Investment PEL has equity investments in various companies in India. The Company continues to effectively evaluate various
Risk Like any other equity investment, these are subject to risks involved in underlying assets, before and after
market conditions. making any such strategic investments.

Annual Report 2017-18 | 93

 Human
Resources
—
In 2014, PEL’s HR function embarked
on an extensive transformation
journey called SEEDS (Strategy
for Employee Engagement and
Development Support). Six strategic
focus areas were identified to fuel
the HR strategy of ‘creating an
environment where employees
can thrive and are enabled
to deliver sustainable
performance’.

94 | Piramal Enterprises Limited

 U P D AT E S O N T H E K E Y F O C U S A R E A S
This year, the highlight was the execution of the identified
strategic priorities and involvement of the Chairman and the
Creating a robust succession pipeline through impactful
business CEOs in the process. Regular updates to the PEL
development programmes
Board on the progress on each of the focus areas are added

Strategic Overview
to ensure timely implementation of deliverables. Some of the The objective of The Group Talent function is ‘to grow our
key outcomes of the SEEDS projects in FY2018 include: own leaders’ and ensure ‘every critical role has a ready
successor identified and groomed’. The Company aspires
to have 60% of the open positions at senior and mid
management level staffed by internal promotions of high
Creating a robust succession pipeline potentials in a 3-year time frame.
through impactful development programmes
At entry level, the focus on acquiring high quality entry-level
Nurturing high-potential employees and
talent and grooming them to take on larger leadership roles
providing them accelerated careers through
whereas at junior, middle and senior management levels, the
bespoke programmes that include the IGNITE
aim is to strengthen our focus on systematically identifying
programme at junior management level,

Management Discussion & Analysis

high-potential talent, offering focused development
ASCEND at middle management and SUMMIT
opportunities for them and facilitating internal talent
at senior management levels
movements across the Group i.e. ‘growing’ from within.
Institutionalising an inclusive
The following are the development programmes:
and value-based culture
Cascading the values framework and SUMMIT: The leadership programme focuses on preparing
organising focused campaigns to activate senior leaders to become successors to the CEOs of PEL
cultural transformation businesses. Senior leaders define their own ‘business
mandate’ – to act as true entrepreneurs of their business
Building a world-class units or functions. The programme interconnects the senior
Piramal Learning University management by encouraging peer feedback, peer support

Board & Management Profiles

groups and inputs from CEOs on each leader’s business
Customised learning and development
and personal mandates. 58 senior leaders are currently
initiatives for the global workforce and
being groomed for top management under the SUMMIT
launch of the first state-of-the-art physical
programme.
campus in Mumbai
ASCEND: The platform selects and grooms high-performing
Bringing the Employee Value
employees at the middle management level for senior
Proposition to life
leadership roles. High potentials are identified by way of a
Becoming an employer of choice with selection process conducted by leading firms specialising in
a keen focus on attracting high-quality talent leadership assessments. High Potentials, who qualify, undergo
a one-year structured development process and development

Statutory Reports
Leveraging HR Technology to deliver through virtual learning platforms in partnership with Harvard
sustainable organisational performance Business School. 300+ nominations were received, out of which
260 high performers have undergone the ASCEND programme,
Establishing tighter linkages between individual
of this 78 were identified as High Potentials
key result areas and business goals through a
robust technology enabled online goal setting
IGNITE: The programme that was launched in June 2017,
and performance review process
identifies and develops young leaders from junior management
to take on mid-management leadership roles. The key objective
Transforming the HR function
is to build an equal focus on functional and managerial
Transitioning into a specialised, expertise and strengthen engagement amongst Band 2
effective and lean structure. employees. 400+ applications were received, of which 35
IGNITORS were identified in October 2017. The participants are
Financial Statements

undergoing an 18-month development journey that includes

multiple aspects of functional and leadership learning.

60% 58 260 IGNITE

of senior and mid management level senior leaders are currently high performers programme meant to
positions to get staffed by internal being groomed for top have undergone the develop young leaders from
promotions of high potentials management under the ASCEND programme junior management was
SUMMIT program launched during the year

Annual Report 2017-18 | 95

Institutionalising an inclusive and value-based culture
Our philosophy is to build an employee base, which is as
diverse as our customer base to ensure we are able to deliver
value to our diverse customers.

Our philosophy in action

Diversity at PEL
At the heart of PEL’s diversity agenda is the promise to be
an equal opportunity employer. The PEL’s code of conduct
emphasises the Company’s commitment towards supporting
diversity in hiring and promotions across levels. Gender
Diversity is the first area of focus in building a culture of
diversity and inclusion.

Safety at PEL
The Company is committed to build a safe and inclusive
workplace and has a Zero Tolerance policy towards any form
of discrimination including sexual, racial or other unlawful
harassment, threats or acts of violence or physical intimidation,
abuse of authority or any other discriminatory conduct.

PEL is a 100% PoSH (Prevention of Sexual Harassment)

compliant through the 14 Internal Complaints Committee
(ICC) panels that was institutionalised across all the India
sites to swiftly address any incidence of sexual harassment,
bullying, or misdemeanor. The PoSH playbook ensures
standardised objective intervention and redressal. An
impactful awareness campaign was launched across the India
sites through mailers, posters and teasers.

Inclusivity at the Workplace

• Flexi-work policies: PEL’s flexi time policies
empower employees to balance their personal WOMEN EMPLOYEES
and professional commitments.

16%
• Childcare support: The Company provides childcare support
to employees who have children below the age of six years. An
in-house crèche was launched at the Kurla office in Mumbai.
PEL also collaborates with childcare facilities in a 5-km radius for OF WORKFORCE
other offices in Mumbai.
• Parental Support Program: The Company adopts a gender-
neutral leave policy for the primary caregiver and has in place

29% 36%
a Parental Support Scheme.
• ‘Own your Success’ - A signature development programme
for women: The programme focuses on the middle
management high-potential women employees and includes OF HIGH POTENTIAL O F T H E C O R P O R AT E
a two-day workshop followed by a voluntary life stage-linked EMPLOYEES LEVEL ROLES
mentoring, delivered in partnership with a leading external
agency in the area

31% 28%
of process work.

Embedding a consistent understanding of our values across Piramal

Group
OF IGNITORS OF ASCEND
• Continuation of Values Cascade: The Company uses LEGO®
PA R T I C I PA N T S PA R T I C I PA N T S
SERIOUS PLAY® to gain insights into how values have seeped
into the culture of the organisation. This technique has helped
make abstract concepts of values more tangible and concrete
to employees.

96 | Piramal Enterprises Limited

 partnered with SHL, world leaders in personality assessment
to administer the Person Job Match report based on the PSFs
for all new joinees. Additionally, hiring managers are being
encouraged to use the Behavioral Event Interviewing (BEI)

Strategic Overview
technique to interview candidates during the recruitment
process – the BEI is also based on the Piramal Success Factors.

Building a world-class Piramal Learning University

The Piramal Learning University is focused on continuously
improving the learning experience and augmenting business
performance. Today, the Piramal Learning University provides over
43 unique learning solutions in over 300+ batches addressing over
14,000+ learning needs across businesses and geographies.

Bespoke high-impact learning interventions through academies:

Management Discussion & Analysis

The Academy at Piramal is a learning entity within the
Piramal Learning University that builds identified behavioural,
functional, or technical capabilities of employees and modelled
on the philosophy of ‘continuous learning’.

Currently, the Leadership Academy, HR Academy and IT

Academy have been institutionalised at Piramal. The Leadership
Academy caters to the behavioural and managerial needs of
employees across the Group and delivers world-class leadership
development solutions. The functional academies on the
other hand focus on creating world-class functional specialists

Board & Management Profiles

who are at the cutting edge of their profession. The ‘Leaders
as Teachers’ initiative enables internal leaders to become
‘teachers’ who facilitate critical training programmes that have
direct and significant impact on business imperatives.
• Addition of ‘Impact’ to our core values: The value of
Learning Anywhere, Anytime with Piramal Learning University
‘Impact’ that includes individual performance and resilience
Virtual Campus:
as core behaviour was added to the existing framework in
FY2018. The virtual campus hosts a variety of rich learning content,
including online learning programmes, videos and MOOCs
• Values Dialogue: A focused action on role modelling our core (Massive open online courses) in partnership with prominent
values of Knowledge, Action, Care & Impact was initiated organisations.

Statutory Reports
through a Values Dialogue Process with the top leaders of
PEL. This process, conducted by the method of appreciative State-of-the-art Learning Facility:
inquiry, is intended to encourage values-aligned behaviour
Located at Kurla, Mumbai, the first state-of-the-art learning
right from the topmost echelons of the organisation.
centre at PEL can house 250+ participants. It is equipped with
high-end technology such as Meeting pods, Virtual Classroom
• Piramal Success Factors (PSFs): PSFs is a framework
facility, movement and audio tracking cameras to capture
of everyday high-performance behaviors based on the
classroom sessions and fully centralised digital controls are
Company's values which has been customised for various
just some of the amazing facilities, which makes it one of the
levels in the organisation – at the performer (junior
best-equipped corporate learning spaces in the country.
management), translator (middle management), and architect
(senior management) levels. The PSFs is a key input into our Bringing the Employer Value Proposition to Life
Financial Statements

performance management process as well as development

Achieving Excellence in Talent Acquisition:
conversations between a manager and an employee. The
Company believes that the 'how' of performance (PSFs, based Talent acquisition is a multistage process that includes
on our values) is as important as the 'what' of performance cognitive and psychometric testing of candidates
(goals and key result areas). PSFs is also interwoven into the supplemented by robust behavioural event interviews. The
recruitment process across levels. Every new joinee goes process focuses entirely on attracting high quality talent at
through a test of learning agility as well as a personality test PEL. This is corroborated by the fact that 53% of new hires are
based on the Piramal Success Factors. The Company has in the top 3 performance ratings in their first year.

Annual Report 2017-18 | 97

 Life@Piramal on Linkedin:
Through powerful stories in the form of video testimonials and
photographs, the Life@Piramal section on the PEL LinkedIn

PEL's 1,600+ 7,300+

state-of-the-art ACTIVE USERS
T I L L D AT E
ONLINE COURSES
ACCESSED

learning centre is PIRAMAL LEARNING UNIVERSIT Y

one of India's best

equipped corporate Functional Continuing
learning spaces Academies Education

Induction Customised
Programs Business
Learning Plans
Leadership
Academy

STEP
Leaders as Piramal
(Strive Towards
Teachers Leadership
Excellence
Series
Programs)

page offers rich insight into the life of Piramal employees

and the work culture at the organisation to prospective
candidates. The page also provides information on current job
opportunities at PEL.

Hiring Leaders of tomorrow:

PEL’s young talent programmes like the Future Leaders
programme and the Graduate Management Trainee
Programs and summer internship programme Launchpad
are excellent platforms to attract and engage with some of
the brightest minds of the country and create a leadership
pipeline for the business.

Leveraging HR Technology to deliver sustainable

organisational performance
For the first time in the history of PEL, an e-Performance
Management process was launched in FY2018, and 95% of
employee goals were completed on the platform.

The ‘My Piramal’ global HR and talent management system

98 | Piramal Enterprises Limited