Dhiren Ponnusamy: “We now have the right team in place to deliver a sustainable level of profitability”
The seasoned financial analyst joined Medine Group in 2018 as COO after a long career in international finance. Now, as its acting CEO, he shares his near-term strategies in this Covid era to meet the challenges facing the Group.
We hear there is a reshuffle within the senior management at Medine. Could you shed more light?
Medine went through a leadership change on 1st April this year and I have since been leading the Group on an acting basis. With the backdrop of the COVID-19 crisis, I took the decision to really challenge Medine’s operating model and some of its legacy structures that simply made no sense in the context of the size and scale of Medine. We have set out a path to become leaner and to aggressively improve our efficiency. This has invariably required some hard choices – including at the top management where some have decided it was time to pursue other career opportunities.
You are currently the Acting CEO of the group…can you tell us more about your career?
I relocated to Mauritius in January 2018 to join Medine as its Chief Operating Officer. Prior to joining Medine, I was a Managing Director at Standard Chartered Bank based in London. I spent the large majority of my career in international finance and I also worked on different continents in a number of CFO roles for Standard Chartered – namely, I spent nearly four years in South Korea, a few years in Africa as Regional CFO overseeing the bank’s 14 markets in Africa. I also worked in Singapore and the Philippines, where I was Regional CFO for some of the bank’s ASEAN countries.
What are main challenges facing Medine?
The current operating environment remains very challenging. For some of our operations, it is clear that no matter how efficient we become, as long as tourism does not recover, our room to manoeuvre will remain very limited. That said, we have different dynamics playing out across our various operations. Some are directly exposed to tourism and others are impacted by the second and third order consequences of the crisis.
We have therefore developed a clear near term strategy for each of our businesses as we navigate this challenging period. In the case of Casela, Tamarina and Concorde, these are three businesses that are directly exposed to tourism and therefore heavily impacted by Covid. Our nearterm strategy on these businesses is cost containment and franchise protection. There is a careful balance to be struck between running these businesses at minimal cost but also ensuring we do not destroy valuable franchises that have taken many years and significant resources to develop.
Can we attribute everything to Covid-19? Or the business model needed to be reviewed anyway…
Medine previously had a cluster-based model with four independent clusters. It may work well for other Groups in Mauritius but it was simply not fit for purpose at Medine. The cluster structure for Medine meant a lot more overheads than needed with each cluster operating in silo with its own management team and its own support functions. To put it bluntly, Medine is just not big enough to justify this type of structure and we had to dismantle these siloes if we wanted to make genuine productivity inroads.
We simplified things – six business departments focussing purely on business in one Company – and not four companies running a standalone agenda. We also centralised all support functions. This helped us not only in realising efficiencies but also improve productivity significantly with a simpler operating model. We are now seeing a lot more synergies being realised within Medine with our teams displaying a lot more initiative and creativity. But more importantly, we have embarked on a journey of cultural change where the focus is unequivocally on frugality – embracing frugality in everything we do and frugality at the core of how we operate. This uncompromising emphasis on performance and delivery will be key to Medine’s future success.
In terms of new capability, what is Medine looking for to improve its financial performance?
Our assessment of Property in the near term is one of cautious optimism. There is clearly some softness in the rental market and we are going to be very cautious there. We have therefore detuned our appetite for ‘build and lease’ projects’ in the near term until we have greater visibility. On the other hand, our sales evidence suggests that demand for land parcels is very strong. With interest rates at an all-time low, land is seen by Mauritians as an alternative investment and a natural hedge against inflation and rupee depreciation. We will therefore divert our efforts to increase our land parcelling offerings to our customers.
Property development is in the DNA of Medine and it is absolutely critical that we attract the right talent at Medine. I am pleased to announce that Joel Bruneau will be joining Medine on 1st December to lead our Property team. Joel joins us from Omnicane, where he led their Property department. Joel is a seasoned professional with over 25 years spent in a number of senior management and leadership roles, with the last 13 years spent exclusively in Property. I am delighted that Joel has decided to join us at a time when we are transforming the business and accelerating our financial performance to continue playing a leading role in enabling sustainable development on the west coast.
How can you reduce debt and deliver profitability?
What are your new projects? In the medium term, we know that we need to a) reduce our debt and b) deliver a sustainable level of profitability. At our analyst briefing last week, we unveiled ‘Target 4-4’. This is the management’s commitment to the Board and our shareholders for the medium term. In essence, we will reduce our debt to below Rs4bn by 2023. We already have some active real estate projects – we launched Magenta Parkside, our new morcellement in Flic en Flac on 5th October – which, along with others will help bridge the gap.
On the other hand, we need to achieve a sustainable earnings per share (EPS) of Rs4 by 2023. The combination of the efficiency actions and the debt reduction will, on their own, give us a significant profitability tailwind. In addition, we are revamping our agriculture business and reviewing our product mix to target new segments. ‘Jardins de Medine’ is well established but we identified a further gap in the market and we launched ‘Mo Ti Bazar’ a few weeks ago. Pangia, the first children’s themed park, was also recently launched at Casela. We will continue accelerate new initiatives over the coming months.
Target 4-4 is all about execution and we believe we now have the right team in place, with the right motivation to execute on this plan.
Dhiren relocated to Mauritius in January 2018 after a rich international banking career to join Medine as its Group Chief Operating Officer, taking responsibility for the overall strategy of the Group and all Corporate Functions. Prior to this, Dhiren was a Managing Director with Standard Chartered Group in London with a global remit and was responsible for driving the financial performance and strategic agenda of the Group. His extensive international career with Standard Chartered also included a number of senior CFO roles in South Korea, Singapore, Africa and the Philippines where he spearheaded a number of M&A projects, regulatory advisory and restructuring initiatives. Dhiren has extensive exposure to post-crisis banking reforms, global stress testing regulations as well as balance sheet optimization, and also set up the global AI & Analytics department at Standard Chartered.
Dhiren is a Chartered Financial Analyst charterholder and holds a BSc (Hons) Economics from the London School of Economics & Political Science. He is married with two kids and his hobbies include swimming, travelling and cinema.
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