The Amazing Story of Thyrocare Technologies

30 11 2008

Dr A.Velumani, the Founder of Thyrocare Technologies Ltd is a an outstanding technopreneur and a true visionary to boot. Born in a landless farmer’s family in Appanickenpatti Pudur, an obscure village near Coimbatore, Velumani was a brilliant student. He became the first graduate from his village. He went on to acquire a PhD in Thyroid Chemistry. He joined as a Scientist at Bhabha Atomic Research Centre (BARC), Mumbai. He served BARC for fourteen years, when he decided to do something on his own.


Velumani decided to pursue his dream, which got formed while he was a Ph.D student at Tata Memorial Hospital, Mumbai. He used to see people camping on the road outside the hospital at Parel. These were relatives of cancer patients who did not have accommodation. He desperately wanted to mitigate the sufferings of the patients and their relatives. Realising that he was not a doctor, he decided to offer medical diagnostics, something that he could do, as a service to patients without profiting at their expense.


The outcome of this decision was Thyrocare, which he set up in Mumbai in 1996. Thyrocare is today the world’s largest thyroid testing laboratory. It has a single world-class centralized laboratory in Thane which can handle 500,000 tests a day. The company specialises in immunodiagnostics, testing blood samples for thyroid disorders. Thyrocare decided to focus on preventive healthcare. In his own words, Dr Velumani explains the rationale


At any given point of time, 10 per cent of India’s population is in need of some medical care. Out of these, only one per cent are acutely sick people. The rest nine per cent are not even aware that they have some problem. The 40,000 diagnostic laboratories in our country are all fighting for that one per cent. Few are focusing on the nine per cent, which need preventive healthcare.

We are targeting this very nine per cent. We are planning to include some common tests like heamatology, serology and microbiology. They are important in providing preventive care support. Some high-end tests are also planned.


Thyrocare realized that if they had to provide high-quality diagnostics at a low cost, they needed scale. The company pursues a unique franchisee model to collect samples from across the country. It has over 550 franchisees in last count. All the franchisee needs is a small office, a PC with an Internet connection.


For the centralized testing facility to work efficiently, it worked extensively on its logistics system. The company can provide reports to 90% of the locations in India, within 24 hours. Transporting specimens or reports are very costly considering courier and air-cargo costs. But at Thyrocare, the cost of collecting a specimen at Adyar, Chennai, at 4 p.m. to reach Santa Cruz, Mumbai, at 11 p.m. by air-cargo would be as little as 30 paise only.

Thyrocare uses technology extensively. It was the first in the country to introduce barcoded serum vials. The results of lab tests are transmitted through e-mail, available at all franchisees ensuring the cost of report delivery as truly low.

Thyrocare’s logistics system is so well-respected in the industry, that Reliance Life Sciences has tied up with the company to get samples for DNA tests at their labs using Thyrocare’s logistics.

Thyrocare uses its partnership with pharmaceutical companies for marketing. In an innovative collaboration, Thyrocare offers Cadila, Sun Pharma, Dr Reddy’s, Glaxo etc tests from Thyrocare at 50% discount. These companies give them as complimentary coupons to doctors. The doctor in turn gives it to his patients, which helps in expanding the business for all.

Thyrocare has kept its promise of providing tests at an affordable cost. Dr Velumani says “In the 12 years since I started Thyrocare, the cost of everything — rentals, fuel and reagents — had skyrocketed; yet my customers are not paying a single paisa more than they did twelve years ago,”.“Initially, my competitors called me ‘crazy’ for the rates I charged. They waited for me to go bankrupt, but in vain.”

Thyrocare is a closely held company. It achieved a turnover of Rs 80 crore in 2007. Dr Velumani has huge ambitions for Thyrocare which is clearly reflected in his twin dreams

·         Thyrocare should serve 50% of the world’s population for 50% of their diagnostic needs at 50% of the cost.

·         Thyrocare should be the biggest client for the top 20 diagnostic manufacturing companies in the world.

May Dr Velumani’s breed increase! 

– G. Mohan





Sudden Slump in the Steel Industry

24 11 2008

The recently concluded Beijing Olympics in August was as much a showcase for China’s sporting abilities, as much as its emergence as an industrial superpower. It was hard to miss the steel structures used in the main Olympics stadium, Bird’s Nest. The Bird’s Nest might not have used more than a few thousand tons of steel, but with the closing ceremony of the Olympics, the light seems to have gone out in the steel industry.


The coincidence of the dip in steel demand and Olympics is not just a happenstance. China is by far the biggest producer of steel in the world. In the run-up to the Olympics, it was also a big consumer of steel. It took up huge infrastructure projects, whose completion coincided with the Beijing Olympics. One estimate puts China’s expenditure for Olympics at US $ 42 billion.


The sharp dip in demand for steel is reflected by various indicators. The price for steel has witnessed a sharp correction. Although, there is no official exchange for steel like LME for other metals, several newspaper reports indicate the price of steel has fallen by as much as 30-35% from Rs 45,000 per tonne to Rs 30-35,000 per tonne, since August. The Baltic Dry Index (a global indicator for shipping freight, for iron ore and other dry goods) has crashed by 90 % in the last 10 months. The crash in BDI has been attributed to the sharp fall in iron-ore imports by Chinese mills.


For the first time since 1981, there has been a decline in steel production in China. Over 85 blast furnaces have been closed down due to the demand slump. The iron ore mines in Goa and Bellary region of Karnataka, who made bumper profits exporting iron ore to China, are facing tough times now. NMDC, the public sector iron ore major, is largely unaffected by the demand slump, because it hardly exports iron ore in the spot trade to China.  


Economic Times has reported that over 35 sponge iron units in the Chhattisgarh region have stopped production, in recent months, because of the slump in demand and un-remunerative prices.


The steel majors in India. SAIL and Tata Steel reported good quarterly results for the quarter ending September’08. But their outlook is quite gloomy. SAIL has already announced its intention of going slow on its expansion plans by two years. Tata Steel has not made any formal announcement of deferring any of its expansion plans or greenfield projects. But if one extrapolates, the thinking in the Tata group, as expressed by the Group Chairman Ratan Tata is to put all acquisitions and capital expenditure on hold, one can interpret that Tata Steel would also be going slow on its expansions.


Global majors like Arcelor Mittal and Corus have reported 20-25% lower production targets, going forward. Arcelor Mittal has already indicated that its India plans will be on hold, until the industry outlook improves.


The bleak outlook for the steel industry is reflected in the sharp drop in the stock prices of all steel companies. Tata Steel stock is trading at Rs 165, a far cry from its 52 week high of over Rs 850. The SAIL stock is touching new lows everyday and it is currently trading at Rs 65. The ET Metal index has underperformed the broad-based index considerably in the last six months. The Price-earnings multiple is 3.1 for ET Metal Index against 11 for the broad-based ET 100.


My own take on the steel industry is that this slump may continue for a few months, as long as the global housing and automobile slowdown continue.


This is a good time to acquire stocks of steel companies like Tata Steel and SAIL in small packets. I prefer SAIL over Tata Steel, because it has no overhang of debt.


– G. Mohan


Citi Citi Bank Bank: Quiz on Citibank

24 11 2008

Q1. Citibank had one of its earliest International branches in an Indian city. It has been operating in India since 1902. Name the city and by what name was it known earlier..


Ans: Kolkata. Citibank started as City Bank of New York. From 1962, itt was known as First National City Bank.


Q 2. The full name of Citibank in India is Citibank. N.A. What does N.A stand for?


Ans : National Association


Q 3. Started by Frank McNamara, Ralph Schneider and Casey Tailor , it was the first independent credit card company in the world. In 1950, the first of these cards were given out to 200 associates of McNamara, mostly salespeople who often needed to dine with clients.Citibank was the exclusive franchisee of this well-known brand from 1981 to April 2008. In April 2008, Citibank sold this business to Discover.Name the brand.


Ans : Diners Club


Q 4. Citibank was found guilty by the Joint Parliamentary Committee for being one of the perpetrators in the 1991-92 stockmarket scam in India, popularly known as the Harshad Mehta scandal. Approximately, how much fine was Citibank asked to pay for this offence?


Ans : Rs 5.05 billion


Q 5. In 1998, Citibank merged with Travellers’ Group to form CitiGroup. From Travellers’ group, Citibank got its CEO, who remained the top boss of Citi from 2003 to 2006. He has been called  “King of Capital”, by his biographer. Name this Citibank CEO.


Ans : Sanford I.Weill or Sandy Weill


Q 6. Connect Citibank India to HP  .


Ans : Jaitirth Rao, alias Jerry Rao. Mr. Rao is credited with building the Citibank’s retail business in India. After leaving Citi he started Mphasis, an IT Services company. Mphasis merged with BFL to form Mphasis BFL. Mphasis BFL got acquired by EDS. EDS in turn has now been acquired by HP.


Q7. Connect Citibank to Oracle in India


Ans: CITIL. Citibank set-up an IT company called Citibank Information Technology India Ltd (CITIL). CITIL was renamed as I-Flex and it went public. I-Flex was acquired by Oracle and recently renamed as Oracle Financial Software Ltd.


Q 8. Citibank in India was always seen as the banker of the elite. In 1997-98 , it launched a new service targeted at the middle class with a low mimimum balance of Rs 1000 in Bangalore. This had other add-on services like utility bill payments, automatic creation of fixed deposits etc. This was considered a major innovation and Citibank took this product to many other countries. Name this service.


Ans: Suvidha.


Q 9. Name an Indian private sector bank which has a strong Citibank connection. Media has often speculated that should the RBI regulations slacken this bank would be taken over by Citibank.


Ans : HDFC Bank. Citibank has about 11 % stake in HDFC Ltd. HDFC in turn is the promoter of HDFC Bank and has 26% stake in HDFC Bank Ltd. Aditya Puri, the CEO of HDFC Bank is an Ex-Citibanker.


Q 10.  In the 1950’s and 60’s, Citibank had a member of the Rockefeller family at the top. But now the ownership of Citi is highly fragmented. Who is the largest individual shareholder of Citigroup ?


Ans: Prince Al-waleed bin Talal, belonging to the Royal family of Saudi Arabia. He owns less than 5 % in Citi and has promised to increase his stake.


– G. Mohan

Quiz on Bond Brands

16 11 2008


Whenever there is a James Bond film released, there is a lot of media hype around it. James Bond films are also used extensively by companies to push their brands. The just released film, Quantum of Solace has already broken all previous records for endorsements by getting endorsements of over 50 million pounds.


Q1. Which James Bond film before Quantum of Solace had the highest value of endorsements? Clue: It is not the previous Daniel Craig film Casino Royale.


Ans: Die Another Day


Q2. According to a survey conducted by Brand Republic, a respected Advertising publication, what is the brand most associated with James Bond? Clue: It is Bond’s car


Ans: Aston Martin


Q3. What car does the Bond girl Olga Kurylenko drive in Quantum of Solace?


Ans: Ford Ka (they are launching a new variant through this film)


Q4. Ian Fleming in his novels has mentioned James Bond wearing a Rolex watch. Sean Connery used to wear Rolex Submariner in Dr. No and Goldfinger. From Goldeneye onwards, Pierce Brosnan as the Bond, started wearing a different brand of watch. Name the brand and the model too?


Ans: Omega Seamaster Professional Diver


Q5. The close partnership between _________ Vodka and Bond began in Dr. No when the villain hands Sean Connery a “Martini, shaken not stirred” made with _______ Vodka.  This monumental moment in film literally changed the way martini drinkers made their cocktails, shifting from the traditional gin to a vodka-based drink and popularizing the vodka martini the world over. Name the vodka brand.


Ans: Smirnoff


Q6. Which brand of laptop and cell phone would you find James Bond using in Quantum of Solace?


Ans: Sony Vaio laptops and Sony Ericsson cell phones. Sony has launched a limited edition Titanium Silver C902 Cyber-Shot Phone through Quantum of Solace.


Q7. Which watch brand has released a range of 22 watches, each of which is centered on a different 007 villain?


Ans: Swatch.


– G. Mohan

Deflation: When Inflation Makes an Ugly U-Turn

16 11 2008


In India, we have seen only inflation. The rate of inflation goes up or comes down. But prices of all things going down, all at the same time, has been just a dream.


In the first half of 2008, the inflation rose steadily on the back of high crude oil and food prices. It touched double-digit inflation and rose to nearly 13%, before slowly declining. Indian Government and the RBI have been taking all the steps necessary for bringing down inflation through various fiscal and monetary steps, all the while blaming global factors for the high inflation. Even the most optimistic economic analysts, did not expect the inflation to come down to single digits before the end of 2008.   Omkar Goswami, in a column as recent as 19 September in Businessworld said


Inflation is unlikely to be in single digits by the close of 2008-09. That’s what the data suggests. He qualified it by saying that “My take is that unless there is a spectacular fall in prices in the coming months, we won’t see 8 per cent point-to-point inflation by end-March 2009. It is more likely to be around 10-10.5 per cent — falling, but still in double digits. The moral of this story: Be hopeful, by all means. But don’t ignore the data.”


In two months flat, he has been proved wrong. This week’s inflation figure is already single digit 8.98 %. It is a single digit figure, in spite of the fact that the administered prices of petrol, diesel have not been reduced. The fact is, there has been a spectacular fall in prices of commodities worldwide, particularly, metals.


If you set out to tame inflation and you achieve it sooner than expected, you should be rejoicing. Yet, the government and the RBI are not. Instead, they are worried about the fact there is a danger of Indian economy swinging towards deflation, much like the rest of the world.


What is deflation? The phenmenon of deflation is said to have occured when prices start declining over time. This is the opposite of inflation; when the inflation rate (by some measure) is negative, the economy is in a deflationary period.”


Deflation can occur because of a combination of four factors:


  • The supply of money goes down.
  • The supply of other goods goes up.
  • Demand for money goes up.
  • Demand for other goods goes down.


The liquidity squeeze in the economy has caused money supply to go down. In October, many goods supply have gone up and demand has fallen considerably. Automobiles, steel, cement, housing all have had considerable demand slowdown and inventory build-up in the last couple of months.


Deflation is painful because “in deflation [there’s] a declining spiral. Businesses make less profit so they cut back [on] employment. People feel less like spending money. Businesses then don’t make any profits and everything works itself into a declining spiral.” Deflation also has a psychological element as it “becomes rooted in peoples’ psychologies and becomes self-perpetuating. Consumers are discouraged from buying expensive items like automobiles or homes because they know those things will be cheaper in the future” says Colin Asher, an analyst with Nomura Securities. This kind of a deflation happened during the Great Depression in the USA during 1929-1933.


The managers of Indian economy seem to have sensed a threat. The RBI has already taken several steps to ease money supply. The Finance Minister is urging all the PSU banks to lend more money to spur demand. The central government employees have been given wage arrears based on the sixth pay commission scales. It is possible that the Indian government like their Chinese counterpart may announce some fiscal stimulus package.


If the above measures click, then it is possible that like 2007, India will have low inflation and reasonably good GDP growth.  It is also possible, that due to the increased money supply inflation goes up, but the growth does not happen, leading to stagflation. There is also a remote possibility that none of these measures work and the overwhelming impact of the global factors lead to a deflationary period in the Indian economy.



The trouble is it is very difficult to read the onset of deflation early. It is easy to get monetary and fiscal measures wrong on both counts –  trendspotting and timing.



– G. Mohan

The Talent Trap : A Career Lesson from Anil Kumble

9 11 2008


According to a new book Talent is Overrated by Geoffrey Colvin, the role of talent in an individual’s success in any field be it music, sports or business is much lesser than previously imagined. In an interesting anecdote, he mentions that in a batch of fresh MBAs at Proctor and Gamble, USA, two new recruits, one a Harvard MBA and the other an MBA from Dartmouth looked unambitious and least likely to aim for the top job. But both went on to become CEOs of Fortune 10 companies, Microsoft and GE. The individuals being described are Steve Ballmer and Jeffrey Immelt., who became CEOs of Micorsoft and GE before they turned 50. 


Geoffrey Colvin attributes the success to enormous amount of hard work over many years. But not just plain hard work of the ‘practice makes a man perfect’ kind. Prof Ericsson from Florida State University, who has researched extensively on this subject says: 


The best people in any field are those who devote the most hours to what the researchers call ‘deliberate practice’.  It’s activity that’s explicitly intended to improve performance, that reaches for objectives just beyond one’s level of competence, provides feedback on results and involves high levels of repetition.


For example: Simply hitting a bucket of balls is not deliberate practice, which is why most golfers don’t get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day – that’s deliberate practice.  


Consistency is crucial. As Ericsson notes, “Elite performers in many diverse domains have been found to practice, on the average, roughly the same amount every day, including weekends.  


Evidence crosses a remarkable range of fields. More deliberate practice equals better performance. Tons of it equals great performance.  


The role of a parent or a coach in designing a deliberate practice routine cannot be overestimated. Tiger Woods’ father coached him on golf since he was 18 months old. Vishwanathan Anand had his mother. Sachin Tendulkar had his mentor in his brother first and then Ramakant Achrekar. 


This need not be limited to sports or music alone. It can be applied to business too. Here is what Colvin says: 


Many elements of business, in fact, are directly practicable. Presenting, negotiating, delivering evaluations, and deciphering financial statements – you can practice them all.


Still, they aren’t the essence of great managerial performance. That requires making judgments and decisions with imperfect information in an uncertain environment, interacting with people, seeking information – can you practice those things too? You can.



The first is going at any task with a new goal: Instead of merely trying to get it done, you aim to get better at it.



Report writing involves finding information, analyzing it and presenting it – each an improvable skill. Chairing a board meeting requires understanding the company’s strategy in the deepest way, forming a coherent view of coming market changes and setting a tone for the discussion. Anything that anyone does at work, from the most basic task to the most exalted, is an improvable skill. 


Through the whole process, one of your goals is to build what the researchers call “mental models of your business” – pictures of how the elements fit together and influence one another. The more you work on it, the larger your mental models will become and the better your performance will grow.  


Andy Grove could keep a model of a whole world-changing technology industry in his head and adapt Intel, as needed. Bill Gates, Microsoft’s founder, had the same knack: He could see at the dawn of the PC that his goal of a computer on every desk was realistic and would create an unimaginably large market. John D. Rockefeller, too, saw ahead when the world-changing new industry was oil. Napoleon was perhaps the greatest ever. He could not only hold all the elements of a vast battle in his mind but, more important, could also respond quickly when they shifted in unexpected ways.  


That’s a lot to focus on for the benefits of deliberate practice – and worthless without one more requirement: Do it regularly, not sporadically.  


Sachin Tendulkar and Anil Kumble have both achieved great success. Sachin was identified as a prodigy, but Anil Kumble was branded as a talentless plodder. Tracing his long journey with Tendulkar, Kumble said, “When Sachin started his career everyone said he would break all batting records, and when I started my career everyone said I would not play more than two test matches. Sachin has had to spend the rest of his life proving people right while my entire career was spent on proving people wrong.”  


So everyone can achieve greatness by ‘deliberate practice’! But why then only a few people actually make it? Is this because we’ve not yet cracked the motivation code? We know we need ‘deliberate practice’ to succeed. But we still do not know for sure which are the different factors that motivate different individuals to dedicate themselves in ‘deliberate practice’. 


– G. Mohan 

ICICI Bank’s Q2 Results: What Lies Behind

2 11 2008


 Last month, ICICI Bank reported its results for the Q2 ended 30th September 2008.The Bank has been able to maintain its margins by reducing its operating expenses and increasing its share of  CASA  (Current Account and Savings Account) deposits . As CASA  deposits are low cost deposits, they are the darlings of all commercial banks. They reduce the banks’ cost of funds. On savings accounts, they pay a measly 3.5% now and on current accounts they pay no interest.



ICICI Bank claims to have grown CASA by 30 % over the same period last year How did they achieve this significant increase at a time when the fixed deposit rates were offering an attractive yield? 



A major shift in policy helped ICICI Bank to increase its CASA deposits. (Mind you, we’re talking about  the increase in deposits here, not the depositors). From July 1, 2008, it mandated all savings bank account holders to maintain a minimum balance of Rs 10,000 in place of Rs 5,000. This was not applicable for salary accounts and no-frill accounts. ICICI Bank sent out a letter to all its savings account holders informing the same and adding that they would levy a Rs 750 + Service Tax, should the accountholders failed to maintain a Quarterly Average Balance (QAB) of Rs 10,000. They also  suggested their customers that should they found the hike in QAB too steep, they were free to switch to a no-frill account with the bank or even close the account. The Rs 10,000 minimum balance is the highest among all banks ( including all public and private sector banks, except Kotak Mahindra Bank, which also requires a Rs 10,000 min QAB). One fails to understand why ICICI Bank is imposing a minimum balance  limit which is at least ten times that of a PSU bank for offering exactly the same range of services?



While the weeding out of non-remunerative savings accounts may incease operational profits, it may also surge the number of disgruntled customers. I suspect alienating such customers has contributed  to the current problems with perceptions that ICICI Bank seems to be grappling with.

– G. Mohan

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