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My qualifications:
B.E. (Mech.), M.Tech (Industrial Management).
Ch. How are you coping with such a big change in function from Human Resources (HR) to business? BKR I don’t find much of a difference between HR and business. It is all about managing people and getting work done through them as it was in HR. The principles of management remain the same whether one is in Marketing, Manufacturing or HR. However, the Locks Division is a new and rich experience for me, especially in overseeing manufacturing activities.
Ch. What changes have you brought about in the Locks Division in the last two years? BKR When I joined this Division, I found that people were not clear about their roles. I brought in role clarity so that people could focus on their primary responsibilities. Since I do not believe in interfering in everything, I have empowered my subordinates and brought in more accountability. Locks Division employees are now open to voice their views even when they are not in line with their bosses’ views. I’ve brought in more openness in this Division and hold regular discussions with the Union members to keep them informed of the various aspects of business. I’ve started a system of sending frequent messages to the employees about the status of business, important events, significant achievements, etc. Today there is more involvement of people at various levels in decision-making. Having a background in marketing, I’ve also brought in more customer focus, both internal and external. I believe there is also a greater amount of discipline in the Division now. We have now a clear business definition and long-term strategy. There are monthly business reviews in the Divisional Management Committee and, wherever required, corrective action is taken to be in line with the Annual Business Plan and long-term strategy.
Ch. Why don’t we still have enough varieties of locks at lower prices to cater to the rural market? Being a brand that is over 100 years old, we should have been in every nook and corner of the country! BKR We have today one of the best distribution networks in India. Therefore, our products are available in almost every town in the country. However, in the Indian market we are priced a little high. We are an industry which is reserved for the small-scale sector, which does not pay all the government levies all the time. Further, our manufacturing base being in Vikhroli, which is a high wage island, adds to our costs. Therefore we find it difficult to compete with the small-scale sector on prices. In an attempt to bring out cheaper padlocks, we introduced Freedom locks, but they have not done well in the market. We are also rationalising our price structure to be more competitive in the market.
Ch. Does the Locks Division plan to shift out of Mumbai? BKR We have a factory in Goa, where we are planning to shift part of the manufacturing activities from Vikhroli to take advantage of cheaper labour and better productivity. Manufacturing of components of padlocks, lever technology locks and labour intensive locks will be shifted in phases to Goa while high value-added items such as the Ultra range of locks may continue to be manufactured here for some more time. Ultimately, departments like Design and Marketing will stay here in Mumbai while Manufacturing units may have to be located in places other than Mumbai for us to be competitive.
Ch. Has the Locks Division successfully controlled the sale of spurious locks? BKR We had engaged an investigation agency to conduct raids on spurious locks manufacturers/suppliers. But it is a massive task to contain the manufacture and sale of spurious locks. Police raids are not effective and the punishment meted out to the guilty is hardly a deterrent. For a month or so, the spurious manufacturer/trader stops, but soon starts up the same practice again. Even if we file a legal suit, it takes a lot of time. The only way to counter this problem and make things difficult for spurious lock-makers is to continuously keep introducing new products. That, again, is easier said than done. Spurious lock-making will continue and we have to learn to live with it.
Ch. How do you plan to improve the Division’s after-sales service? BKR We provide 24-hour Call Centre services in Mumbai and other major cities where anyone can lodge a complaint or ask for any service by just dialling 1600225511. The Call Centre will pass on the complaint to the dealer concerned who will attend to the customer. Emergency problems can, thus, be sorted out immediately. In the entire locks industry, we are the only Company to provide Call Centre service. We now have to make sure that our distributors render prompt service to customers. That’s why their mechanics are regularly trained by us and enough spare parts are made available to them. We are also making efforts to provide the required training to the carpenter community, who mostly do the installation of locks, because if installation is not correct, it may affect the performance of locks.
Ch. Godrej exports locks to developing countries, why not to the developed ones? BKR We face problems even in exporting to developing countries as we hardly have any margins in our export orders. Basically, we are not price-competitive. Hence, as of now, products made in India do not get a premium over those made in China. Reducing cost, therefore, is a major focus area for the Locks Division. Although we are probably more advanced in low-cost automation than other Divisions of Godrej & Boyce, we are still not able to bring down our prices to the levels required. Our Design Department is now into Value Engineering and we are also taking strategic decisions such as penetrative prices to enter export markets. We are also not good in terms of finish and aesthetics compared to locks of developed countries. Unless we address these issues, exporting to developed countries will be difficult.
Ch. You have named “Communication” as one of your strengths. However, dealers are complaining about not getting a detailed report as to why they have got a certain incentive. BKR Dealers are explained the details of various schemes by our Sales Officers personally so that they can themselves calculate the incentives due to them. However, it may help if the incentive cheques are sent with a covering letter, which explains how the incentive amount was determined. We will make this change with immediate effect.
Ch. CHANGE has also been given to understand that wholesale dealers are literally made to beg for the benefits accruing from various schemes. For instance, they do not get payments in time when it comes to that extra bit of commission the Company promises them. Are you going to take any corrective measures? BKR It is not correct that dealers are made to beg for their scheme benefits. Yes, there may have been some delays in payments in a few cases but, compared to a few years ago, we have certainly improved. Benefits of schemes are in many cases given on receipt of certain details such as secondary sales, installations, etc., from dealers. If the dealers delay in sending the required details, then the benefits naturally get delayed.
Ch. Why don’t you as Division Head consider giving a few days’ credit to dealers? BKR Some dealers have defaulted payment in the past. That’s why the policy of “cash and carry” was introduced in the Division. The system has now stabilised and I see no reason to revert to credit to dealers. It is also a good practice as the dealers order exactly what they want. Although this means an increase in the frequency of supplies, it reduces the working capital requirement of the distributors. Also, because we do not give any credit, we give additional discount to compensate the distributor.
Ch. How do you plan to improve institutional sales? BKR I believe our future is in institutional sales. Since we have a good Design Department, we are able to offer customised solutions to most of our customers. We also believe that there will be fewer suppliers in this field and we should be able to procure a good number of institutional orders. About two years ago we created a separate Institutional Sales Team. I plan to strengthen the team as our business grows. We already have people who look after institutional sales exclusively. These sales persons are expected to visit key industries, study their requirements and offer suitable solutions. We will only select technically strong persons for institutional selling. Also, we will be updating their knowledge through training, etc., from time to time.
Ch. Isn’t this going to be difficult? Generally, people are still not aware of our entire locks range. BKR We have certain constraints on our publicity budget. However, we do a lot of focused publicity through industry magazines like Sourcing Hardware, participation in industry-specific exhibitions such as “Inside/Outside”, conducting roadshows, making presentations to influencers like architects and builders, carpenters, etc. We believe this gives good exposure to our target audience. However, there is a need for us to do these on a much larger scale. Occasionally, mass advertising is also done as in the recent case where 14 local trains in Mumbai are carrying advertisements of Godrej locks throughout the train for a period of one year.
Ch. Chinese factories used to manufacture scissors and knives for Godrej in the name of Cartini. Due to the poor Chinese reputation, retailers consider Cartini an economy quality brand and Fiskars a premium brand. Since the Company changed the brand name from Fiskars India Ltd. to Cartini India Ltd., the dealers feel that Godrej is selling an economy brand at the price of a premium brand. Aren’t we losing sales? What is the Locks Division doing to start an awareness campaign of a name change? BKR One must understand that the joint venture between Godrej & Boyce Mfg. Co. Ltd. and Fiskars Inc. has come to an end. Therefore, we do not wish to use the brand name Fiskars any longer. The Cartini brand, originally, was an economy model. But, today, Cartini has two ranges, popular and premium. The two are clearly distinguished by their packaging. We started selling the premium Cartini brand only in April 2003. Therefore it will take some time for customers to accept the new premium brand.
Ch. Can we rename Cartini as Godrej? The Godrej brand can help boost sales. BKR We want to develop Cartini as a brand in itself without involving the Godrej name. It is true that the Godrej brand has great strength and can boost sales, but we are confident that Cartini can grow even as an independent brand. We have a proper strategy for developing the Cartini brand.
Ch. We sell traded products also. Retailers feel that we are merely promoting locks from Taiwan, Korea, etc., instead of manufacturing them. This is to increase our turnover. But, in the long run, is it helping or harming the Company? Also, how does the Division plan to change the image of Godrej locks amongst retailers? BKR We are doing trading because we want to give a price advantage to the customer. If we manufacture anything in-house, it becomes costly as our labour cost and overheads are high. However, before sourcing a product from Taiwan, etc., we thoroughly analyse whether we can manufacture the same item in-house, and only if there is a very convincing reason for us to import, we go ahead. We also make a thorough inspection of these products to ensure that the quality is of reasonable standards. By lending its name, Godrej provides a guarantee for the quality of these products. Imported locks today constitute just around seven per cent of our total turnover and we do not plan to significantly increase the imports as per our current strategy. Our long-term objective is also to develop our own capability for meeting different market requirements and reduce our dependence on imports. Retailers do not have loyalty to a particular brand. For them it is sheer business. The small-scale units make a lot of margins and also give a lot of margins to retailers, whereas our margins are limited. So retailers generally tend to promote other locks. Today we are selling only because of our brand image. We need to protect that brand image and spend some money on brand building. We are selling more because of customer pull rather than dealer push. For a retailer to be interested in selling Godrej locks, we have to ensure that we give him good service and also ensure a reasonable return on investment.
Ch. What are the “tough and unpopular measures” the Company plans to undertake for its bright future? BKR We cannot afford any inefficiency. We want a performance culture and we are coming down heavily on employees who are not good performers. This is the need of the hour. Also, many subsidies are being withdrawn gradually as employees have not been able to appreciate the value of these subsidies.
Ch. What are the changes you propose to bring in the Locks Division in the near future? BKR We have a Design team, which can offer customised solutions to meet the security needs of our customers. We will therefore focus on institutional selling. This is also an area where, as I mentioned earlier, we will have an edge over other competitors. In the future, there will be a good demand for electromechanical locks. We will therefore concentrate on this area by creating a separate team to work on design, manufacture and marketing of these locks. We are developing a Test Centre, which will be unique in the industry. Customers can in the future get locks as per international standards from Godrej. We plan to enter the business of key duplication in a big way. Today, the Ultra key, from anywhere in the country, has to be sent to Vikhroli for duplication. We plan to make it easy for our customers to obtain duplicate keys by opening Key Duplication Centres across the country. Customers will feel more secure and confident to go to a Godrej Key Duplication Centre rather than an ordinary chaabivala (key maker) on the footpath. We will be representing some foreign high-end lock-makers. We will also be representing some big names in door accessories. In fact we are already representing Hoppe Inc., a Swiss company, for door handles in India. In areas where we do not have the technology, we will represent the world leaders in this country.
Ch. When are you retiring? What are your retirement plans? BKR I have just a few years to retire. I have not really made any retirement plans, but I’m considering some options like working for an NGO or imparting some training or providing a consultancy service. I’ll settle down in Bangalore where I have a house and many relatives.
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