Hi Deepak, (@deevee)
Clues to Poly Medicure much higher margins are in the DNA of the business/Management - and that is extreme Efficiency focus - Costs/Production - which became clear to us after 3-4 years of yearly engagement. If you go through successive Management Q&As, and keep that DNA search focus on - it might not take you long to spot many examples.
Some from my top-of-mind recall:
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They successfully import-substituted the needle used in safety syringes (not sure if applicable for all syringes) a special steel-alloy after persevering with trials for 3-4 years. If I remember correctly this was at 1/4th the imported needle cost from Japan …now imagine a million syringes …
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Faridabad, their main factory - was notorious for power cuts. And every powercut, there would be wastage of plastic in the injection moulding machines. Not only that, to remove and clean up, and re-start it would take up to 45 minutes each time. Their efficiency focus gave them the courage/ confidence to invest in 11Cr (if I am not mistaken again) worth of power-inverters for their entire injection moulding line. It was still pretty small in annual revenues, then
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When I first visited them, around 2012, the assembly line had 50 people. After a couple of years, again when we visited and enquired, no of folks had shrunk to 15. And by 2016 when we last visited and enquired it was down to 3 folks!! And all this automation was homegrown (not bought outs), designed and executed by them incrementally, over the years. (remember to check they export limited numbers of some of this machinery via subsidiary?)
@ayushmit - you may like to add?
These kind of small small things about understanding a small business - key sources of growth, and key drivers of profitability develops with years of familiarity in the business. It can also come from proper reading of previous Management Q&As - but probably it needs a “framework” in the mind.
Me & Ayush are trying to capture our experience of 2010-2020 in exactly these kind of things in the Deep-Dive Mental Model thread, but through active newbie/learner participation. And encouraging everyone (including TopContributors) to take up the Deep-Dive Template practicals exercise seriously for a favourite business that you are familiar with. The 360 degree template (magically) forces us to think deeper about the business.
I see so many looking at Poly Medicure seriously again (I have a different take though). Why not attempt a deep-dive Template capture on Poly Medicure yourself, and upload it on the deep-dive thread? If you want I would love to interview you and take you through that process, and capture that for you too - so others can benefit. But you could easily do that all by yourself by downloading the blank template (handwritten one) or digital one provided by Divyansh or Vamsi, and engage in some much needed 2nd order thinking, while analysing your favourite business.