Business matters, but purpose is more important: Tarun Arora
The CEO of Zydus Wellness recounts how it navigated the challenges sprung by the first wave of the COVID-19 pandemic.
FMCG industry veteran Tarun Arora joined Zydus Wellness in March 2015 as Chief Operating Officer, and was elevated to CEO in less than four years.
In October 2018, Zydus acquired the Indian subsidiary of Kraft Heinz for Rs 4,595 crore, and Arora's task was to integrate Heinz India with Zydus, and capitalise its portfolio of brands like Complan, Glucon-D and Nicel. And then, the pandemic happened.
In this interview with EnterpriseStory, he recalls the year of difficulty and resilience for Zydus Wellness as the country faced the outbreak of the COVID-19 virus in 2020.
EnterpriseStory: How do you look back at the past year for Zydus Wellness?
Tarun Arora: The past year was quite a challenge for us. Initially, we were not fully prepared, and quite unhappy with how things were shaping up.
We had acquired the Kraft Heinz business in 2019, and were a couple of years ahead of what we wanted to do. By the end of December 2019, we completed the Heinz India integration with Zydus.
I remember talking to the team at the start of 2020—discussing the VUCA (volatility, uncertainty, complexity, and ambiguity) world, and how we were going to deal with those factors. We had a larger, but leaner and sharper organisation.
We set up a fairly aggressive task of building the business in a certain way. So when March 2020 came, it took everyone by surprise, and we were no exception.
In the initial phase, we put our heads down and got on with it. We thought the pandemic’s impact will last a few months because China was overcoming it. We thought it might take two or three months, and focused on protecting our people, business units, and also on being responsible towards our communities.
There are more than 25,000 farmers from whom Zydus sources milk for our Aligarh plant. So, we had to be responsible for not just our internal employees, but the ecosystem that depends on us. We had to get over those two or three months with them.
"When the second wave came, our supply chain, backend and ecosystem were better prepared. We knew if there is a lockdown, it is a lockdown. The government was also better prepared."
While we missed the big market opportunity after the integration of Heinz India with Zydus, the pace at which we did the integration before the pandemic proved to be timely. We had been aggressive in reducing our cost structures then, whereas many organisations—after going through that hit—went back to the drawing board to cut their cost structures.
EnterpriseStory: With Sugar Free, Glucon-D and Nycil, how does Zydus maintain and grow the brand equity?
Tarun Arora: A common theme across our brands is authenticity—this is part of our wellness DNA. When I joined Zydus Wellness six years ago, I articulated our organisational DNA across our brands, and how we would participate in emerging categories.
In everything we do, we look to do good rather than be superficial. So, when we participate in the skincare category, we talk about the experiential aspects. This works for a brand like Everyuth facial scrub or Everyuth peel-off. And when it is Complan, we focus more on the nutritional aspect of the product.
So while the market competition is fought on execution, our brand propositions matter.
But the underlying foundation has to be authenticity. And in our product portfolio, we are pioneers—and a leader in five out of six categories that we operate in.
While they may look like niches, one thing we will stay consistent on is that we deliver to consumers what we promise. That authenticity flows through all our products, our execution, and the overall organisation.
EnterpriseStory: How is Zydus responding to online customers today?
Tarun Arora: Consumers are behaving very differently across categories. Some categories got embraced much faster. Three or four years ago, diapers was a large category, though we don't participate in it. Skincare was a little ahead of the blocks, and other segments like food picked up much faster.
The past 15 months have given an adrenaline rush to the ecommerce and digital play because access got limited in the offline world. So, there has been a disproportionate enhancement.
Our way of looking at digital is that it's creating multiple opportunities of engaging with consumers, both in terms of how we influence the consumers—so that they can understand us better—and reach out to them in certain ways. So, we work on content.
The other is in terms of access and purchase. That has seen a disproportionate increase—more than 200 percent year-on-year increase—in terms of consumers buying from the ecommerce channel.
The whole online channel and consumer behaviour is changing so much. And, they are buying from different types of channels in different ways. So, we are ready to get there—from engaging customers, and getting them early on, to fulfilling the needs, and selling on the digital platform.
We are also taking this whole digital journey to the backend. I'm not seeing digital just from a consumer point of view, but saying: how can I digitalise my whole organisation end to end to have a much sharper service offered to the consumers?
EnterpriseStory: Are you creating a separate team for ecommerce?
Tarun Arora: Our journey on digital started about four or five years back. We got a couple of specialists—one to do digital marketing and to be there at various touch points: bloggers, YouTube, all the stuff.
But we realised that when we gave the task of ecommerce to the monetary team, they didn't really get it. So, we got a person on the other side of the table who had worked in e-commerce environments.
"We actually created a small startup inside Zydus, with direct access to me and the sales head, rather than creating layers around it. There was empowerment."
We didn't have to measure e-commerce’s productivity levels the way we would measure a general trade partner.
This was a startup with a few lakhs here and there. So, we gave a free and open space, and started building it bit by bit. Over time, this became a dedicated team with services for its consumers. We now have joint business planning with the e-commerce team. And it doesn’t end there.
Even the backend servicing—the supply chain and commercial departments—has a single point of contact who works with the ecommerce team.
Similarly, in marketing, it's not just about having a person who's a digital marketing guy or other specialists. But, the brand managers and category heads have to factor in the e-commerce channel. So, it's been a journey for us. And, we are ready for the future changes as they come.
EnterpriseStory: Zydus' international business grew 200 percent in FY2021, and is 3 percent of consolidated revenue. Tell us about it.
Before we acquired the Kraft Heinz India assets, we had just Sugar Free, Nutralite and Everyuth. One of the things I said after joining Zydus Wellness six years ago was that we are a strong player in these categories.
We have knowledge in these categories that are comparable to global knowledge. You could look at sugar substitutes, which are available in the US and European markets. We understood these categories reasonably well, whether it went through the health platform where it was a prescription for diabetics, or where it was low calorie and a way to a better and healthier lifestyle.
It was the same case in Nutralite and butter substitutes, or Everyuth in facial cleansing. So, we said our knowledge and cost structures allow us to have a global play.
At least, some of the markets offer us opportunities to grow. Then, we looked at the environment: most Indian consumer businesses have anything between 15 percent and 55 percent businesses coming from outside India. And, some of the markets were absolutely a fit for us to take our products abroad.
So, we said why not plan for this, and do it organically? We hired somebody based in Dubai—not in India—so that we are not bound by what I think, but the person looks at the market and operates from the marketplace. It was a person who understood the lay of the land.
Now, we have a whole team that is building up, and we've been able to also integrate our products across markets. We have been able to grow Sugar Free beyond sugar-substitutes to chocolates.
"When we launched Sugar Free Green, which is our stevia version, we actually launched SKUs (stock keeping units) for international markets, and then India because those markets were ahead of us."
I’m ready to innovate what is required for those markets, build on our basic understanding, and create a strong, globally-competitive cost structure that my plants have to build a business.
While 3 percent may look small, the fact is we started from zero, and it's all organic. We are following a reasonably profitable model—not a free-for-all just go and invest. We are building business in a responsible way. And we have taken the right steps to build it.
Our major focus has been West Asia and Africa, though Zydus Wellness is also present in Southeast Asia and New Zealand. I'm also counting on South Asia, which is Nepal, Bangladesh, and Sri Lanka.
If there is a right acquisition in sight, we'll add it on. But right now, my wish list is to organically take our international business to 8 percent or 10 percent of consolidated revenue, which will both create strong brands in some of these key markets, as well as innovate to build these.
When the Ministry of Food Processing Industries says that it will support Indian brands going abroad and Atmanirbhar Bharat, we are right there chasing some of those dreams.
EnterpriseStory: Tell us about managing stakeholder expectations in a challenging period.
Tarun Arora: If I look at the entire set of stakeholders in our entire value chain—through the pandemic—while I am focused on building a consumer-centric organisation, the people in our organisation are a crucial link to consumers.
"That has been my learning in the past few months. You can deliver to consumers if you first take care of your people. So, the welfare of people has become much higher."
It's always been so, but the pandemic made me re-look at whether we are doing enough for our people.
That's one thing I have personally driven, and pushed my team to look at this with a different lens. Are we doing enough for the safety of our people and their families? Because my salesman sitting in Gorkhpur—it is not just him, but he earns for his family. So just to be conscious of employees as a stakeholder.
Second, it's the communities that depend on us. When the pandemic came and everything got disrupted, we took a call to continue sourcing. There are 25,000, farmers providing milk every morning.
The choice was to stop everything in business because we couldn’t sell, and nothing is happening. But, we had faith that things will come back to normal. So, we continued buying milk, which we didn’t need immediately. But, we could convert it into intermediate products and save for the future. We sourced milk from these 25,000 farmers whose livelihoods mattered.
Several dairies in that region shut down in that period. But we continued business after putting safety measures. I'm proud of what Zydus did.
Similarly, for our C&F (clearing and forwarding) partners—there are 23 of them across the country—I reached out to them on a Zoom call to get the business up and running. We asked them about their challenges, and engaged with them directly.
I didn't leave it only to my supply chain, but felt the C&F partners need to hear directly from me. In the past few months, we have ensured that all their people—up to 300 of them—have insurance cover.
It's not just about taking care of our people, but we went the extra mile for our distributors’ sales-people to provide financial assistance and hardship allowance. We reached out to our partners, whose livelihoods depend upon Zydus. That became extremely crucial for us.
The third piece on community is that some of our products are essential.
"While business is important, purpose becomes much more important when we realise our products matter to the country. We ensured that our plants stayed on for products like Sugar Free."
In the extreme summer conditions, we realised health workers and policemen worked in the sun to ensure that people stay at home—or to help them. So, our team ensured that they got Glucon-D in packets. This also energised my team who experienced the importance of giving. We empowered them to give.
EnterpriseStory: Are you engaging with startups?
Tarun Arora: There are two or three different ways of engaging with startups. A lot of reasonably-sized companies are saying they can be a place to go to for startup investments. I don't think we are ready for that, though we evaluate startups on a case-by-case basis. But, we don't have a venture fund for startups.
Recently, I had a chat with one startup, which in three or four years, is doing very interesting work in supply chain solutions. The founder's team reached out to my team for possible solutions for our requirements. So, we are engaging with startups, especially because some of them are coming up with new and unique solutions that were not earlier available.
We are also engaging with startups in several of our digital initiatives, but we don't have a structured startup outreach. We are engaging in different parts in different ways, like in the case of the supply chain startup.
One thing I have done is we are trying to imbibe the startup culture in some of the pieces we have built, like we did with e-commerce. We create walls around that piece for a few people, so that they can move at a faster pace, and learn at a faster pace like only a startup can.
So, creating those oasis in a desert or islands of startup culture within the organisation will help Zydus be ready for the future.
Edited by Kunal Talgeri