"Whoever could make two ears of corn, or two blades of grass, to grow upon a spot of ground where only one grew before, would deserve better of mankind."
— Jonathan Swift, Gulliver's Travels (Voyage to Brobdingnag)

Any manager will tell you that a company needs to plan quantum leaps in product, process and profit to be on the growth path. But Dr M. S. Mithyantha, vice president (R&D), Rallis Research Centre, puts his company’s vocation in a nutshell, with this observation from Jonathan Swift’s path breaking work.

To this end, and in order to stay ahead of competition, Rallis India has celebrated many successes and also derived many well-learnt lessons from its failures. "We introduce at least two new products every year, apart from concepts in marketing and production to stay on top of the development curve," says Dr Mithyantha.

"Invention and exploitation is innovation," he says. To get the formula right, innovative marketing and problem solution practices are captured through Innogate, an HR initiative, which in itself is innovative. Over the last decade, the company has introduced a few landmark products, ideas and concepts that have increased the profits, just as it has learnt valuable lessons from a few not-so-successful experiments.

People power
Rallis India devised Innogate, to encourage people to generate, capture and implement new ideas in marketing and production. The system aimed at inspiring the organisational community to innovate, which in turn enhanced the organisation’s capability of sharing knowledge and ensured proper recognition of idea originators. The system operates in a networked environment and is user-friendly. "In the last two years since its implementation, a series of suggestions have been posted by employees. These concepts are filtered through an Innogate manager before presenting them to the board," says Mithyantha. "These suggestions have affected cost reduction, improved delivery systems and developed existing products."

The company, one of the agro majors in the country, operates in a highly competitive market. Products and operations are bound by statutory requirements of the government. This necessitates evolving strategies to counter the competition and also to comply with the regulations. The various options include introducing new products regularly.

To meet this challenge, Rallis embarked on new product development (NPD). The systematic introduction of the product with the combined efforts of employees across the company enables cost reduction and compression of time without compromising on the quality of the product. The products identified are taken through the conceptual 'innovation funnel,’ which critically reviews the products to check various aspects such as market potential, cost efficiency, techno-feasibility, bio-efficacy, safety of the product to humans and the environment, etc.

"Innogate also acts as a bonding exercise across the company. The essence of Innogate is capturing and prioritising development of new products and services to add value to the customer. By addressing the needs of the customer, the practice enables creating satisfied and loyal customers, which in turn helps the company in the market place," adds Mithyantha.

Some of the Innogate ideas, which have been suggested and are under evaluation, are:

• Use of low-density oil (low-cost fuel) instead of HSD in the incinerator leading to cost saving in Patancheru factory
• Cost reduction by incorporating spray quencher in the incinerator meant for effluent treatment instead of the frequent changing over of gas cooler bundles (to be implemented at Patancheru factory)
• Use of benzyl trimethyl ammonium in organo-clay formulations of herbicides to enhance the absorption of the non-polar herbicides by the organo-clay complex and to reduce photodecomposition and volatilisation of the herbicide
• New formulation delivery system - Use of controlled release pesticide formulations, which are environmentally friendly, to reduce overdosing of the pesticide
• Sales improvement: Increasing sales of Contaf in Tamil Nadu by educating farmers there about its effect in paddy, thereby aiding in market expansion

Success stories
Rallis carried out successful product innovations, the important ones being Hexaconazole and Imidacloprid. In 1987, the company decided that it did not have a blockbuster compound. The reason for this was that Rallis was considered a strong insecticide company; and 80 per cent of the sale came from insecticides. The company checked its usability mostly only on cotton and rice. It now decided to expand its zone into fungicide.

Rallis undertook a research into the total crop loss in the country due to fungus. It was found that of the 40 million hectare used for cultivating wheat, rice, apples and grapes, at least 15 million hectare is affected by fungus. There was no effective control measure at that time to combat the diseases, particularly to a class of fungal disease called powdery mildew.

Hexaconazole, a fungicide, is used against plant diseases. Its brand Contaf became the brand leader when it hit the market in 1996. The compound was conceptualised in 1988. Mithyantha states that for four years, 40 per cent of the gross contribution has come from this product.

Contaf did not make a big headway in Europe as it was used only on cereal crops such as wheat and barley. In India, it was used on a wide range of crops such as apple, coffee, tea, rice, fruits, vegetables and pulses, because of its ability to control a wide range of diseases. Due to the lack of a system of monopoly in the country, since 2002 a few other players have also introduced similar products in the industry. This has not affected Rallis’ market share, although the prices have crashed. The company continues to make substantial profits from this product. "Today when any product is introduced, we have the advantage of its newness for a year, till the others catch up," says Mithyantha.

The company produced this at 60 per cent of the earlier cost by the European producer. The product was priced at Rs 450. Today it sells at Rs 300. "It was important to attain a small volume but big value," says Mithyantha.

The gestation period of any product is long. Between 1988-96 the company generated data on the chemistry of the compound, its biological performance in the field and its effects on the environment. Every compound must meet the RRRR control system — right method, right dose, right time and the right chemical specifications of a compound. The company seeks multi-seasonal and multi-locational information about the product and tests its biological efficacy and its environmental fate. In the process, the following questions are answered: how toxic is the compound, how much chemical is retained on the plant, can it be mixed with other compounds, how does it get metabolised, will the chemical remain as a parent compound, what happens to its efficacy when the compound becomes degraded, etc. These experiments help in determining the product’s level of toxicity, which results in arriving at the maximum residue limit.

The product’s toxicity is tested on animals. Sub-lethal doses are administered on rats over a period of time and the changes monitored. Chronic toxicity is also registered by feeding the animal through its lifespan with very low doses of the compound, for two years. By the end of this experiment, one comes up with a concept called no observable adverse effect level (NOAEL). This also reveals the product’s carcinogenic possibility and its effects on an animal’s reproductive system through three generations.

Toxicity is tested on environmental animals too: fish, honey bees and spiders. This provides a holistic view of the product. According to NPD, the total time for the experiment is 72 months. The company has spent Rs 8 crore for this experiment. In 2000, the company grossed Rs 40 crore from the product.

The second successful innovation, Imidacloprid, is effective against sucking pests, found underneath the surface of the leaf. It is used in very low doses. Rallis is the second producer of the compound in the world. The product was first sold in the market at Rs 3,800, till Rallis re-engineered the product and sold it at Rs 2,400. Today, after three years, it is available at Rs 1,500. The company had the cost advantage for two years. The product was conceptualised in 1997. In 2001 it was introduced in the market and is being largely used on cotton, rice and vegetables.

Not so successful innovation
Rallis’ foray into rodenticide with Bromadiolone, however, proved unsuccessful. The company re-engineered the product manufactured by a French company. The product in the form of a cake, was used for killing rats: after a few days from its consumption of the rodenticide, the rats die of internal hemorrhage. Ultimately, the product turned out better than the original French product. The original compound was sold at Rs 1.13 lakh per kilo while Rallis’ cost was Rs 21,000.

However, Rallis was not in the household business and the present NPD process was yet to be formulated. The product could not impact the market. The company made the product in small quantities and sold it to coconut farmers. Today, Rallis has handed over the product’s marketing to Godrej. "We have to critically examine the market. The product may be good, but cannot work in isolation from market demands. This was one of the mistakes that propelled the application of the NPD within the company," says Mithyantha, of the learning.

Unsuccessful innovation
Thiophante-methyl, a fungicide, was a failed enterprise by Rallis. In 1990, the company used a fungicide called Captafol, which was a suspected carcinogenic. Rallis was producing 400 metric tonnes of the product in a year. That is when the company thought of a substitute called Thiophante-methyl. The compound was inspired by a BASF product, Carbendazim. Thiophante-methyl was a rung above Carbendazion, and was less expensive. But it was no match for Captafol. The farmers rejected it.

Rallis derived an important learning from this experiment. The company now understood importance of product positioning. It was erroneous to position Thiophante-methyl as a substitute to Captafol. "We learnt to work from the field backwards," says Mithyantha. "The failure was the result of a lack of marketing feedback to R&D. Since this experiment, the marketing and R&D units began working closely. Today a product is conceptualised and critically examined by the marketing department before it is put on the market development".

Accidental innovation
Sometimes it pays to break a rule. Fenitrothion, an insecticide, is the finest example of that act. The product, originally made and marketed by Sumitomo in Japan about two decades back, is now obsolete. In 1974, Rallis created the solvent partnering with Sumitomo. The company could manufacture the product only to its 94-95 per cent purity. The international requirement was 97 per cent. The prevalent practice was to crystalise the solvent and wash it. A lab assistant washed the product with solvent with alkali, and achieved the intended levels of purity. Traditionally, the product is never washed with alkali to avoid it from wearing down its properties.

"It escaped everyone that the degradation with alkali takes place only in an aqueous medium. This solvent was a non-aqueous medium. There was no water concentration in it," says Mithyantha. "The lab assistant was insightful enough to realise this and act upon it." The assistant won accolades from colleagues and seniors, and was awarded for his endeavour. Sumitomo marketed the product till 1984. Eventually it was discontinued from the market when similar products hit the shelves.

	Tata Metaliks:	Ordinarily extraordinary
	Tanishq:	The lord of precious things

Research is the key Successful companies pay as much attention to the search for newer forms of knowledge as to their application. Rallis has made significant strides in research and development

Uploaded on November 4, 2004