FE conversations with Mukund Rajan on the ESG imperative – The session with Krishna Prasad Chigurupati from Granules India
At a time when many countries around the world are facing an unprecedented energy crisis triggered in large part by the war in Ukraine, the case for a renewed approach to resource efficiency may seem more compelling than never. A sense of urgency about using resources sparingly coupled with a growing awareness of the calamitous consequences of climate change, leaves energy guzzlers no choice but to go green.
For us at Financial Express, the timing couldn’t have been more appropriate for experts and thought leaders to engage in a series of conversations about the ESG (environmental, social and governance) imperative for companies. Each of them is led by Mukund Rajan, someone who is arguably the go-to guru in this space. Chairman of ECube Investment Advisors, a one-of-a-kind platform established in 2019 to catalyze environmental, social and governance (ESG) change in Indian companies. Previously, Mukund Rajan held several leadership positions during his 23-year career with the Tata Group, where he was the Tata Group’s First Brand Custodian, Chief Ethics Officer, Chairman of the Tata Global Sustainability Council , and Group Executive Board member 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 argues that corporate emphasis on ESG can only help them to strengthen their resilience, to gain in competitiveness. advantage and achieve better long-term returns.
In each of FE’s conversations on the ESG imperative, Mukund Rajan speaks with leading industry and thought leaders. After a very informative session with Naina Lal Kidwai, President of the India Sanitation Coalition and also former President of the Federation of Indian Chambers of Commerce and Industry (FICCI), Mukund Rajan’s interlocutor this time is Krishna Prasad Chigurupati, President and Managing Director of Granules India, one of India’s leading manufacturers of crucial front-line medicines to treat pain, fever and diabetes.
Krishna Prasad, who entered the pharmaceutical industry in 1984, has built one of the world’s largest pharmaceutical companies by volume, including one of the largest tablet manufacturing capacities in the world.
Granules India is now synonymous with well-known drugs like paracetamol, metformin and ibuprofen.
The conversation was amazing with some great takeaways and a bounty of what Mukund Rajan calls “quotable quotes” (SEE EXTRACTS OF CHOICE). “Today, if people want to raise money at a reasonable price, they have to follow ESG principles and this has made people think about ESG and after starting the journey, many people are realizing the benefits of ESG. ‘ESG’, says Krishna Prasad. He hopes it will become not only a fundraising activity, but also a way of life for people.
COVID and after
“COVID,” he says, “really woke us up. No one could ever imagine that a disaster of this magnitude could ever hit us. But it was a wake up call and the world has changed so much. If we don’t act today and urgently there will be more and more disasters. Speed is key today and while the social and governance components of ESG are very important, the environment is still key.”
On the crucial question of to what extent this focus on ESG and the environment helps or hinders the cause of the Indian pharmaceutical industry which is constantly under scrutiny, especially from foreign regulators and the costs of resulting compliance. “Compliance always helps a business,” says Krishna Prasad.
He says: “At Granules we have always placed great importance on GMP (Good Manufacturing Practice) compliance and I am proud to say that we are one of the few companies that have never had such an issue with one of the main foreign regulators. If all the compliances are built into the design of a system, they don’t need to be very expensive. »
ESG, he says, should be the backbone of any business philosophy or strategy. And it’s not just pharmaceutical, it applies to any company or business.
ESG and ease of doing business
Rajan raises the issue of an apparent contradiction in seeking improved ESG performance while seeking different or reduced compliance or disclosure requirements and therefore seeks to know how the two agendas converged. On this subject, Krishna Prasad has a rather clear and simple vision: “I think that the ease of doing business does not mean a reduction in conformity. They have to go, but there should be reasonable expectations and it shouldn’t be such that people can’t keep up.
Regarding Granules’ priorities, Krishna Prasad says: “For us, business growth and ESG are linked. The three elements of environment, social and 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 make all our factories as carbon efficient as possible. Although retrofitting these factories is not always possible and the only thing that can be done is to bring about energy savings and one of the things that we have done and are about to to implement is a greater reliance on green energy, as this alone can help reduce carbon emissions.
Cut to grow more
He goes on to say that “we work with companies that are good on energy storage systems so that there is a round-the-clock supply of green energy. Apart from that, all of our new factories, says- it, “will be based on innovative thinking about processes that can also help reduce costs by reducing reactions, energy requirements, reducing the use of many reagents. Some of these have been used in other industries, but maybe not in pharmaceuticals.”
For example, it refers to flow chemistry as opposed to batch production, biocatalysis (use of enzymes or natural substances in chemical reactions) was there too but was not widely practiced in the pharmaceutical industry and the latest is organocatalysis (where the rate of chemical reaction is increased by the use of organic catalysts) and we need to embrace those and create centers of excellence for those and try to learn more and to implement them and, he says, we are already starting to see some benefits.
After all, following the right technologies and producing the least amount of waste is only ideal, he believes. In the end, the carbon footprint for him is just the waste produced and if this is reduced, efficiency increases.
On the way forward for his business, Krishna Prasad says: “Our goal for the next decade is to focus on the environment without neglecting other areas. “The environment has become a passion for me over the past few years and I’m learning a lot,” he says. On the social level, it is about the development of people’s skills. For example, he explains, “we collect children from villages who have passed their class 12and and train them in an academy that we have for them and prepare them for employment or even pursue higher education. And it goes without saying that attention to governance is crucial.
Shareholders and stakeholders
On how all of this is financially feasible, he says, “instead of piling money on the books and just serving shareholders, companies also need to be more aware of an organization’s other stakeholders. – like humanity for example and trying to serve them too and doing that by channeling money into improving production processes and that’s not something that companies can’t absorb. long-term sustainable growth.
Krishna Prasad also refers to the tangled global supply chains and how Indian companies, which at one time were self-sufficient in pharmaceuticals, are now tied to external sourcing of raw materials and key pharmaceutical intermediates. But then he feels that “India has the capacity and the ability to change all of that. We need to start with readily available base materials and base materials and use different types of chemicals to reduce manufacturing steps and perhaps help us eliminate the need for some of these drug intermediates. And when it comes to certain critical drug intermediates, master the technologies and manufacture them on a global scale.
His appeal to the government is really to take action to ‘encourage innovation by providing tax breaks and then things will move faster, but either way I can see there will be a lot of self-sufficiency in India’ , he said.
The ESG landscape, as Mukund Rajan summarizes, “is rapidly changing in India and forward-looking companies can leverage their capabilities to shape the market and gain competitive advantage in several ways. The status quo will no longer be an option in the future and there will be a clear reset thanks to the new ESG paradigm. »
EXTRACTS OF CHOICE
- ESG will become a way of life.
- COVID woke us up.
- Compliances must be integrated into the design of companies.
- ESG should be the pillar of corporate strategy.
- Ease of doing business should not mean reduced compliance.
- Business growth and ESG are linked.
- By reducing waste, our costs can also be reduced.
- The carbon footprint is waste produced and if this is reduced, efficiency increases.