Mumbai: Integrity and quick decision-making are crucial to succeed in business, and new entrants in the corporate world should make them a habit, Ajay Piramal, who heads the drugs-to-real estate Piramal group, told young entrepreneurs on Wednesday.
Addressing a mentoring session, Piramal also advised them to enter a market when others are sceptical about it, and exit when more people begin to see the opportunity and start crowding the space.
India’s business environment has changed dramatically since he started out, he said separately in an interview.
“There is much more positivity about the future. When we started, nobody would talk about exiting the business. Today, I could hear them (young entrepreneurs) saying we can create value, exit, go into another business,” said Piramal, who has expanded his group’s revenue from Rs106 crore in 1991 to more than Rs20,000 crore in 20 years.
Piramal had no experience in pharmaceuticals in 1988 when he acquired Nicholas Laboratories, with total sales of around Rs100 crore, as its owners doubted the prospects of the pharma business in India. In the nexttwo decades, the company became the largest in the country in terms of employee strength and fourth largest in terms of sales.
Last year, Piramal sold parts of this business for Rs17,600 crore in two high-premium deals to US drug maker Abbott Laboratories and local diagnostics group Super Religare Laboratories Ltd.
Exiting a growing business “was really unheard of in those days”, Piramal said. “You had a business, you remain married to it, whether it is good, bad, ugly.”
But that attitude is now changing, he added. “Here, people are thinking of growth, private equity and many more things... When I started business there was no concept of private equity, it did not exist. There is a whole new mindset, peopleare talking about all new industries.”
Piramal stressed on integrity as important for success.
“I think we got the value we did because we ran the business with integrity. That’s what Abbott thought and that’s why they paid us the value they did. It (integrity) makes commercial sense,” he said. “Similarly, in every acquisition we have done, we paid less than what others had agreed to pay and yet people sell to us, and it is the trust that the other side had in us that worked.”
Many young entrepreneurs from the small and medium-sized sector said they had gained fresh insights from their interaction with Piramal.
“When companies talk of integrity, it’s not new. But the point that he made that integrity makes commercial sense was a good insight,” said Pranesh Misra, chairman and managing director, Brandscapes Consultancy Pvt. Ltd.
Piramal said tough competition and increasingly discerning consumers are challenges young entrepreneurs need to deal with. “Another challenge is that there is always a constant pressure to reduce the costs. Every business feels that there is pressure (from) customers to lower the price,” he said. “Those days where you could just take price increases are gone. So how do you reduce costs is a priority area.”