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is your money

Vol 9 Issue 5 June 2010

Managing Editor Jason D Pavoratti Editor John Antony Director (Finance) Ceena Senior Editorial Coordinator Jacob Deva Senior Correspondent Bina Menon Creative Visualizer Bijohns Varghese Photographer Anish Aloysious Correspondents Bombay: Rashmi Prakash Hyderabad: Iqbal Siddiqui Delhi: Anurag Dixit Director (Technical) John Antony Publisher Jason D Editorial & Business Office Cochin: 36/1924 E, Kaloor-Kadavanthra Road, Near IGNOU, Kaloor, Cochin-17. Ph:0484 - 2345876, 2534377, 2340080 Mob. 09947141362, 09947258505 Mumbai: 202, Woodland Heights Building, St. Martins Road, Bandra West, Mumbai -400 050, Mobile: 9757076197 Ph: 022-26401362, 26401360, Bangalore: House No: 493, Block 3 3rd Main, HBR Layout, Bangalore-4209731984836, UK Office: “CRONAN”, Boundaries Road Feltham, Middlesex, UK TW13 5DR Ph: 020 8890 0045, Mob: 00447947181950 Email: Reg No: KERENG/2002/6803 Printed & Published by Jaison D on behalf of PeteCarlson Solutions Pvt. Ltd. at Cochin. Printed at Rathna Offset Printers, Chennai-14. All Rights Reserved by PeteCarlson Solutions Pvt. Ltd. No part of this publication may be reproduced by any means, including electronic, without the prior written permission of the publisher. All India Distributor: India Book House, Mumbai UAE Distributor: Malik News Agency & Distributors Dubai

All health related articles are for first information purposes only. Always consult your doctor before taking any decison affecting your health.


We can mistake a fly for a mosquito, but can we mistake a fly for an elephant? Financial wizards around the world would like us to believe that – that a fly can also be an elephant, that too at the same time. Nobody knows how to size up problems. Be it Europe, Goldman, or China. But analyses have no end. The day Sensex is down, it is due to Euro concerns, and the next day when Sensex is up, it is due to Euro concerns easing, and the next day when again Sensex is down, it is again due to…you got it. Many among us were once bewildered from where Sensex or Nifty got its daily opening cue. There are those pundits on business channels and brokerages who always got this opening correct, though you would lose money on almost all of their daily bets. We were genuinely impressed. Later, we came to know that Sensex and Nifty opens up or down solely on how Dow Jones and NASDAQ had closed, that is, around 6 AM Indian Standard Time. But what if they had an ambiguous close? One could always rely on how the Asian Markets opened around 8 AM IST - the Japanese Nikkei and the Chinese Hang Seng or Shanghai Composite. And how does the Sensex or Nifty decide how to close? Half way through the session, they can look forward to how Europe opens, that is, around 12 to 1 PM IST. But the funny thing is from where Europe gets it opening cue. It looks at how Nikkei, Hang Seng, Sensex, & Nifty opened up! Things get funnier around 6 PM IST, when NYSE & NASDAQ opens again, taking cue from – you guessed it right – how Nikkei, Hang Seng, Sensex, & Nifty closed, and how London FTSE, and European CAC & DAX are faring! It is indeed one big merry-go-round. With this background in mind it was really funny to see how two respected institutional analysts predicted the immediate future for world and Indian markets. One saw the Sensex resuming its northwards journey and reaching 22,000 soon, while the other saw the key index dropping rapidly to reach 14,000 and fall further. Since there is only one market and only one Sensex both of them can’t be right. Or wrong, for that matter. But more interesting were the reasons behind their outlook. The bull saw only Western equities as falling, money flooding to treasuries and gold for safety temporarily, and money – hungry to grow - flowing again to China and India in a big way. The bear saw all equities as falling, money avoiding the big treasuries as they are already hit by sovereign debt, gold rising, and exports of China and India getting hit in a big way, and the world GDP and indices falling. Both outlooks at least agreed on one thing. The so-called Smart Money is finding it increasingly difficult to get itself parked. Smart money doesn’t include your money or my money. The money we spend, save, and invest should really be called by the antonym, stupid money. Smart money is the big-time institutional money that wants to grow by 1%, 5%, or 10% - not yearly or monthly – but weekly, or daily if possible. You will often hear analysts trying to find where smart money is headed. Markets and retail investors will be headed one way, and smart money would often be

smart or stupid? headed the other way round using complex instruments like derivatives, futures, and hedges, ultimately upsetting all the stupid money’s calculations. Better put, grabbing the stupid money, and increasing the size and smartness of smart money even further. It was interesting to know how the US Government stumbled upon Goldman’s smartness. Prompted by some cue, US SEC had inspected the company’s day trading records. For over 100 consecutive trading days, the firm hadn’t made a single loss. Now, that is pretty interesting, as anyone who has done even a bit of day trading would attest. Smart money players are now crying hoarse that Obama is all out to kill smart money. They may have a case, as he is personally the poorest American President in over five and a half decades, and as such, may be oblivious to the pains of the superrich. Though not as poor as Obama, Angela Merkel is also unconcerned about smart money hurting. Unable to drill any sense into the thick heads of her European counterparts, she forced German bourses to abruptly ban naked short sales in key financial stocks and government bonds. When smarties protested, she threatened to follow it up with a fiercer exchange-wide ban. But back home, NSE found the time opportune to introduce short sales for the first time in India. Until now, the country had only intraday shorting. The NSE idea is to introduce shorting as it is done in the developed markets, that is, across days, weeks, or even months. Though not the naked version, there is no reason why extended shorting should be introduced at this stage. From the investors’ standpoint there isn’t absolutely any reason to have this, as traders with deep pockets are sure to exploit this by crashing markets. But from NSE’s standpoint it is great, as the trading volumes and their commissions would swell. However, the fact that an institution like NSE – promoted by some of the largest Indian financial institutions like LIC - is attempting this, right under the nose of SEBI and Finance Minister, is cause for concern. The question is whether the NSE too is expecting a rout in the coming weeks, and wants to protect its interests by introducing shorting? Eerily, it was learnt sometime back that Goldman Sachs too had taken a stake in NSE. Make no mistake, exchanges and brokerages are perfect smart money players, even though they are great facilitators too. Smart money, however, has met its match when it tried to be smart with Indian entrepreneurs. Indian realty and energy sectors has shown that they can be smarter than international smart money. For example, you cannot make head or tails of companies like Unitech & Suzlon and their results. India’s second largest listed realty player has been successful in attracting high-profile international smart money for long, and investors of all sizes have been waiting with bated breath for this once-record-setting wealth-creator to surge again. But Unitech is keeping the cards close to its heart, with yearly net dipping by 44% and quarterly net surging by 44 times. The hope goes on, and even smart money should wait endlessly here. The pre-result P/E is 44.45 years, and that also means a yearly yield of 2.25%, less than half of an SB account. And Suzlon has only P and no E for the last 2 years. Retail investors would do well to keep in mind that nothing much changes for a business between one quarterly result to the next. Of course, there can be new order wins for the company intraquarter, but even then there is no need for this daily frenzy. As Buffet once famously remarked, after making an investment he would like the stock-markets to close for five years, and then open again to reflect the fundamental growth. The only thing that changes every day, every minute, and even every second, is the money flow. Smart money flowing in and out, trying to take away your stupid money too, thereby getting smarter. But don’t even take Buffet as a role model. He has recently bet his reputation by backing Goldman, solely because his $5 billion is there. That Buffet is appreciating such practices indicates the spread and reach of smartness. Our own Buffet, Rakesh Jhunjhunwala has a golden rule when asked about how to pick stocks. Never pick stocks with a significant institutional holding, especially of the FII kind, he says. In other words, smart money. But considering the past six month’s performance of some Indian scrips, it is better to extend his theory a bit – don’t invest in anything with Jhunjhunwala in it. Persons grow into institutions, over time. Then you are sure to hear about how wonderful it would be to SIP in these uncertain times. Believe it or not, there is scientific proof that Systematic Investment Plans works only to the investors’ advantage when the markets are sliding and nearing their bottoms. It is a great alternative to determining whether the bottom has reached, but a strict no-no in these uncertain times. John Antony


Bankrolling or Bankrupting Progress? The quarterly as well as annual numbers are in. From a pure investor standpoint some banks have done well, many have performed so-so, and some have shocked. While some banks couldn’t cope with the fourth-quarter dip in treasury income, others saw it coming and their efforts to grow their core interest income paid off. The headline results, as always, continued to mask the real picture in many cases. At some banks, the.. UNION BANK

Steady and Rapid Climb Bank of India

The Turnaround Strengthens, But More to Go IDBI BANK

On a Comeback, But Miles to Go BANK OF BARODA

Makes Up for Lost Time CANARA BANK

Unpredictable Moves UCO BANK

A Historical High DENA BANK

Predictable & Steady INDIAN OVERSEAS BANK

First Signs of a Turnaround ICICI BANK

Back in Reckoning KARNATAKA BANK

Year Dips, But Turnaround Strengthens VIJAYA BANK

Growth That Needs to be Steadied ORIENTAL BANK OF COMMERCE

Convincing Performance ALLAHABAD BANK

A Shocking Dip


Growing, But Growth Slowing? IFCI

A Breakout to Old Glory? BANK OF MAHARASHTRA



Set for a Major Correction?



Impressive, But Expect Lesser

Back in Reckoning UNITED BANK OF INDIA

Distracted by IPO?


Moving Into the Big League


Steady But Slow



Growing, But Should Shift to Overdrive ANDHRA BANK

Encountering a Reversal in Fortune?

A Chance for Breakout CENTRAL BANK OF INDIA

March Again Prevents the March Ahead


Previous Quarters Save the Show DHANALAKSHMI BANK

Results Take Bank Two Years Backwards KARUR VYSYA BANK

Another Winning Year, But Sequential Steadiness Would Help YES BANK

Moving Into the Big League INDUSIND BANK

Growing, But Should Shift to Overdrive ANDHRA BANK

Encountering a Reversal in Fortune? AXIS BANK

Moving Into its True League

Narayana Murthy

on the lessons he learnt from LIFE and CAREER

Manappuram Group

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Unleash The Power Within,The Power of Gold For early investors of Manappuram, it has been a dream run. Celebrity fund Sequoia of AppleGoogle fame has acknowledged it as its best India investment. The Kerala headquartered NBFC with gold loan at its core, is preparing for its third round of rapid growth. Will maverick entrepreneur VP Nandakumar follow the Kotak..

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Olympian Anil Kumar, Current National Record Holder in 100 & 200 metre.

Musli Power X-Tra’s formula is based on ancient ayurvedic texts, and is made up of concentrated hightechnology extracts of time-tested herbs and minerals like Safed Musli, Kapikachu, Aswagandha, Muringa, Dhathri, Tribulus, Vayalchully, Jathi Pathri, and Shilajith. They elevate you to the peak of a new world of power. Makes life a delight by refreshing and revitalizing. Makes you a healthy person of endurance and vigour. Maintains youthfulness by fortifying circulation and the nervous system. Extra efficient and extra safe, developed and tested using own high-tech R&D and analytical lab.

India’s fastest sprinter who broke legendary Milkha Singh’s 39-year old national record in 200 metres. Record setter in 100 metres – SAF Games, 1999. Represented India in 2000 Sidney Olympics.




GOLD For early investors of Manappuram, it has been a dream run. Celebrity fund Sequoia of Apple-Google fame has acknowledged it as its best India investment. The Kerala headquartered NBFC with gold loan at its core, is preparing for its third round of rapid growth. Will maverick entrepreneur VP Nandakumar follow the Kotak model, the HDFC model, or their own Manappuram model to enter a higher orbit? The unconventional leader he is, Nandakumar is now betting on growing the gold loan segment to its real potential, rather than on other smaller concerns.


VP Nandakumar, Chairman, Manappuram Group

ho will believe that a pawn shop in a remote Kerala village will one day be audited by Ernst & Young, attract private equity from Sequoia Capital, and get featured in New York Times? Probably none, not even the most diehard entrepreneurs, as we associate E&Y, Sequoia, & NYT with the likes of Apple, Yahoo, or Google. But that is exactly what a Keralite by name of VP Nandakumar did, or, should we say that is what happened to VP Nandakumar. This is that unbelievable a story. Jokes apart, the Executive Chairman of Manappuram Group of Companies has had lots of both – what he did and what happened to him. Often, life packs its goodies in unfortunate incidents, and a young Nandakumar was thrust with the responsibility to run the family’s gold loan business when his father passed away suddenly. Nandakumar was at that time an officer with Nedungadi Bank. A strange coincidence as it may seem, this bank ceased to exist as such shortly afterwards due to a crisis-led amalgamation with

for the finance business, being home to at least three banks – South Indian Bank, Dhanalakshmi Bank, & Catholic Syrian Bank – not to mention its status as the national capital of the chit business. Nandakumar’s entrepreneurial greatness is that he believed in this DNA and this DNA’s potential to elevate Manappuram from a village entity to a national entity. Today, Manappuram General Finance & Leasing, the Group’s flagship and listed entity is an investors’ darling, having gone up 500% in value since March 2009 lows, even while Sensex struggled to rise by barely 80%. His close associates will point out an uncanny ability in complex problem solving as his core strength, while Nandakumar



Manappuram has had a dream run since 2006, not only in the capital markets, but in fundamental growth. To what do you attribute this success?

The Manappuram story is, basically speaking, a story of realizing a hidden potential which is there in all of us. What I mean, specifically, is a funding potential. We Indians have this treasure called gold stored away in our cabinets and bank

Says Nandakumar, “Today, gold loan still has a taboo in this country. For some it is the last resort, and for others it is not in their radar at all. But we believe that this is not fair on gold or its power.” Punjab National Bank, and Nandakumar went on to do financial magic or let magic happen to him. In some ways this magic was in his DNA. His hometown of Thrissur, apart from its cultural leadership in Kerala, was famous

called personal financing that has one of the best yields in business. No wonder Manappuram’s recent QIP garnered Rs. 245 crore from 12 high-profile investors including Nomura, Merrill Lynch Capital Market, India Capital Fund, Morgan Stanley Mutual Fund, & SBI Mutual Fund. Now after a stock-split and bonus issue, not to mention excellent results, the real question before Manappuram is the way forward – whether they want to follow the Kotak model, the HDFC model, or follow on their own model. Seasonal Magazine interviews VP Nandakumar for this cover story:

himself would give due credit to the limitless possibilities of their core gold loan business in this country. Gold loan is the most secured of all loans, and thus has negligible NPAs. That eliminates the only risk from this money-minting business

Gold is at an all time high, and witnessing never before innovations like this gold vending machine in UAE

MANAPPURAM GROUP lockers. We even end up paying locker charges for it. But what is this material basically? This is just another form of currency, perhaps the most stable currency in these troubled times. In fact, in most of the developed world you can settle your dues in gold. But most of us have never thought about it that way. Manappuram tapped into this potential by focusing and growing our gold loan business. But Manappuram has been in the gold loan business for long, maybe from the 80s. What happened in these recent years to witness this exponential growth?

Yes, but not from the 80s, Manappuram was there as a single-branch gold loan operation since the late 1940s. I took charge from my father – who was the founder – in 1986. The growth since then has never been symmetric. We had diversified into other typical NBFC activities like leasing and general finance. At some stages, we were less focused on gold. Meanwhile, we progressed on the incorporation front, moving successively from a proprietary concern to a private limited company to a limited company and then to a listed company through our IPO in 1996. But overall, two rapid growth phases stand out – one, between 1998 to 2006, and the second, 2006 to till now.


That also means, the going hasn’t been that smooth always…

It was never smooth. Manappuram is a story that didn’t just happen with the overall economic development,


Manappuram House but a case that grew against economic adversities. In fact, all our turning points were adversity driven. This is one factor that I feel proud about, that this is in our DNA. Going forward, I think this is going to be our differentiating edge.


Can you describe how these adversities and subsequent growth phases happened?

Well, even before the two stages that I mentioned, there should be a few words. Leadership of Manappuram was not chosen by me, but almost thrust upon me when my father encountered a terminal illness. I was comfortably working as a probationary officer in a private bank then. I was not too keen to take this up, but did so after careful contemplation. This was not about a small family business at stake, as we could have easily wound up that over a short period. At stake was a values-based activity that my father had carefully nurtured, earning the trust of thousands of fellow villagers. The choice was before me – squander this trust, or realize its value and build upon it, however small it was then. Even to this day, we at Manappuram value this trust of our



customers and other stakeholders above everything else.


So, the very beginning was in adversity…

That is what I meant. It was a risky jump, taking over the reins of Manappuram. But then the initial going wasn’t as tough as I imagined. Luckily for me, the trust that my father had built up was enormous. In those good old days, even small financing companies like ours were allowed to take in customer deposits. But my father, the conservative person he was, had voluntarily limited his deposit and loan books to sub 25 lakh levels. Villagers used to queue up here, enquiring whether there is any slot for deposit, and my father used to keep a bunch of inland-letters ready for them, sending them one by one as some other depositors withdrew their money. That was the kind of trust he enjoyed. In the initial years

what I did was just to leverage this trust, by doing away with his voluntary limit on deposits and loans. The business quickly shot up above 1 crore, and then even beyond.

The Group runs a transparent operation, with good corporate governance, and this fact is reflected in its status as one of the largest income tax payers in its sector as well as in Kerala. Manappuram has never had any serious dispute with IT department in its history.


Still, Manappuram was a proprietary concern?

Yes, and that was a huge drawback for me. Remember, I was not hit with the entrepreneurial bug or anything, but I never forgot what I had forsaken to take this up. Here I was, once a well-travelled and accomplished corporate credit specialist at a bank, doing this 300 sq ft pawn shop. I decided that whatever I do, it had to be professional and excellent. I could always rely on this small operation’s values and business logic, but I needed to create something much bigger and respect-worthy.


That must have been the beginning of MAGFIL?

Exactly. I looked around and found that Thrissur, or Kerala, for that matter didn’t have much of a model to offer for financial companies.


“ Growth is in Our DNA ” Managing Director of Manappuram, I Unnikrishnan is a Chartered Accountant by training, and has been a Group veteran, having joined decades back as its first CA. This unassuming, seemingly light-hearted leader shares some rare insights into the Group’s and its Founder VP Nandakumar’s strategies:

I Unnikrishnan, MD with VP Nandakumar, Chairman



What made you go for its IPO? It was practically unheard of for a Kerala based company in those days?

Mainly, there were two reasons. All my efforts at having transparent procedures and good corporate governance at Manappuram were

Your Chairman states that you are brilliant. Do you share that view on him, and is it just because this is a mutual admiration circle? No role for mutual admiration here. He only values merit, and growing up with him, I too have imbibed this merit-only value system. This is not only with me, that is how all the top leaders including our Joint MD, CFO, and others have evolved.


What do you find brilliant in Chairman Nandakumar? His visions are always larger-thanlife. And this has been the case when we were tiny, when we were small, and now when we are midsized. I am sure he will push on and think bigger, even when we are really big. That is what has been driving our growth. Thinking about other strengths, he is an excellent


logically pointing to the next stage – the publicly listed universe – where such values were not only respected, but were the make-orbreak factors. Remember, this was in the 90s, the age of Dr. Manmohan Singh’s economic liberalization and the advent of respected operations

Besides gold loans and gold retailing, Chairman Nandakumar is also active in microfinance, affordable housing finance, and mulling an entry into equity broking. The Group is starting a new corporate office in Mumbai BKC, and a 60,000 sq ft new headquarters and data centre in Valappad.

communicator, which as you know, translates to excellent marketing, and he is also extremely fast in thinking and execution. How is he in delegating, grooming, empowering employees? He believes in people, bets on them, and extends their capabilities. There have been so many examples here, even I am one. If someone is willing to run at his speed, Chairman takes him or her under his fold. But it is very challenging.


Being headquartered at a remote village in Kerala, which is more difficult – attracting talent or retaining talent? Both are challenging. Attrition is not an issue at higher levels, but maybe at the entry level, which is


like Infosys. So, there was a synergy. Secondly, I was fed up with raising money from banks. I had even put in my house and entire belongings to a local bank to raise money. But that kind of money – one or two crores – was not enough to fund the expansion plan I had in place for MAGFIL. A public issue appeared the most appealing way forward.


How difficult was the IPO, especially with Manappuram put up at a remote village of Kerala?

Well, some things were easy, and some others quite difficult. Non financial aspects like accounts, transparency, governance, rating etc were non-issues for us. In fact, we were the first NBFC in Kerala to go for voluntary rating, at a time when most of our competitors were not even aware of such things. But the financial side was quite difficult. At

the case at all companies. But we have created our own value propositions like sponsoring for MBA education. Growth prospects are also very good for performers as merit is the only consideration. Will Manappuram remain at Valappad or are you moving to Mumbai? You heard right, we are creating a corporate office annexe at Bandra Kurla Complex in Mumbai. But this will remain. In fact, we are creating a new headquarters cum data centre here. It will span eight floors and 60,000 sq ft, will be centrally airconditioned, and will be the command and control centre integrating our 1100 branches across the country.



Most operations, for example those Thrissur based chit companies, were friends or family affairs. They were good at making money, but transparency was their last bother. I decided to do just the opposite. Instead of having friends or family members to occupy the Director Board, I created this company with accomplished financial and management professionals. The domains selected were general finance and leasing, which I thought will be highly productive areas. That is how our flagship NBFC, Manappuram General Finance and Leasing was born.

that time, a company going in for the IPO should have had a minimum of Rs. 3 crore as paid-up capital. We were around half of that, 1.5 crore. So I embarked upon an initiative to collect small retail investments from among our customers, most of whom were from this village and personally known to me. This was a time when the kind of trust that I spoke about earlier came to our rescue. Still, many were sceptical. I assured them that I would take back their shares and pay them interest, in case things went wrong.


And did it go wrong?

You bet, it did! We were not ready for the dynamics of being listed at a stock exchange. We were listed at BSE in 1996. I used to watch in horror as our share prices slid from its face value of Rs. 10 to 9.5, 9, 8.5, 8, over the subsequent months. People who had subscribed to the shares before the IPO began queuing up for the promised buyback. Many thought that I wouldn’t keep my word. It was so difficult too. But again, keeping their trust occurred to me as paramount. So, here I was, buying back Rs. 8 shares from whoever tendered it, and paying them Rs. 10 plus interest. Financially, it was the most foolish step an entrepreneur could take. But somewhere deep in my mind, I knew that it all could turnaround, provided we kept our faith.



These Rs. 8 shares were the same that went up to Rs. 690 recently, right?

Yes, they had appreciated by more than 85 times. But nobody had a clue back then. Many early investors kept their shares as I was advised that taking them back in

such an informal fashion would amount to violating SEBI norms.


What do you think of the phenomenal rise of the Manappuram scrip?

From those early days, I understood that a business shouldn’t be focussing too much on its share price. The only duty of the business was to grow its fundamentals stronger and stronger, quarter after quarter, year after year. The capital markets will take care of the rest. And that is what happened too. When we shifted gears into overdrive, and our earnings started reflecting that, the scrip’s price just went through the roof. As the stock market joke goes, price is nothing but P/E times E. Of course, when you start showing above-industry growth potential, you get rated at higher than industry P/E, reflecting your forward earnings.


We still didn’t get to those two stages of growth that you mentioned…

Yes, the first break came in 1998. Better put, the first serious adversity came around that time. Government suddenly changed the rules of the NBFC game. Almost overnight, we

were straddled with a serious assetliability mismatch. It was almost the end of road for us. Many of my professional Directors fled. I had no idea whatsoever as how to go forward. I kept rethinking all my strategies, and finally the truth dawned on me. I had made a mistake by relegating the gold loan business. We were still doing this non-glamorous business, but on a lesser scale and under the old proprietary concern. I decided to bring that business into this company. Gold loans were not risky like other loans. They could solve my asset-liability mismatch to a large extent. Still, there was another headache – the source of funds. Just before the government changed its mind on NBFCs, I had made all arrangements for a massive expansion. My new branches were raring to go, and I had a new business model to offer, and no money.


How did you solve that finally?

That was the time when KV Kamath was having aggressive growth plans for the young ICICI Bank. One day I had an ICICI executive visiting me, and when they came to know of my healthy



Looking back, it was almost a miracle, isn’t it?

Definitely. But such miracles happen when you are fully equipped for such fateful events. In our case, this preparation was our IT infrastructure. From my early days, I had invested heavily on technology. Information was, even back then, literally at my fingertips. I can talk on and on about transparency, but more effective would have been to see it in action. This is what we offered ICICI. With a click of a mouse, they could verify for themselves how a certain

Manappuram branch somewhere in the country had fared that day. Built on the Oracle platform, today this networked software setup is equivalent to the CBS system recently implemented at banks.


But even with ICICI funding, your growth until 2006 was nowhere around your post-06 performance…

True, it was nowhere near. That point brings us to the second growth phase. Around 2006-07, ICICI Bank faced some regulatory hurdles regarding securitization, and they could no longer fund us. We were in an even bigger trouble. Buoyed by a few years growth, I had planned a larger-than-life branch expansion across the country. And when ICICI conveyed their difficulty, we again felt that end-ofthe-road feeling. I decided to take a breather and went on to Singapore to present a paper at a conference of NBFCs. Again, a chance encounter happened. One of my childhood friends was then at Singapore working for Temasek, that country’s sovereign investment fund. They were looking to enter the Indian financial sector in a big way, and through my friend they informed me that based on the paper I presented at the conference, they were interested in taking equity in Manappuram. After several rounds of discussions and due diligence here, and in Chennai, and in Singapore, that finally happened.



Manappuram is continuing its transparent accounting and good corporate governance in its gold jewellery business, with 100% BIS gold, and 100% billing. The company expects to get listed by 2015. arm to go full speed ahead with our expansion plans. After the ICICI episode, I had also made up my mind to de-risk the entire operation, by never relying on any one fund source. Temasek’s debt participation provided the visibility, and one by one, the others came, and we welcomed most of them. Celebrity PE funds like Sequoia, Capital World, and others.

? That also led to the scale up?

Yes, just like with ICICI, I had surprised them with my asking capacity. You can note that it is a special success trait that I am blessed with. Though they sanctioned only half of that, around Rs. 500 crore, it was a shot in our

What about the Indian response?

Some Indian institutions like HDFC Bank were quick to support us after this, following the foreign PE funds. But nationalized banks again proved difficult, even though we weren’t too hungry for their support. But once SBI chipped in


business model, they were willing to fund me to an extent. But the figure I had in my mind was ten times that. So he went back, and after extensive discussions at his HQ, came back with the idea of securitization, if I were to avail such massive funds. In those days, it was a novelty. Securitization involves transferring the gold loans from our books to their books, so that they could have a more trusted operation. I agreed and that is how this model, called ICICI Manappuram Model, was replicated by them elsewhere too. We could finally breath a sigh of relief.

with a handsome infusion, almost all PSBs and the smaller private banks were eager to fund. Today, the situation is so favourable that I can pick up the phone and ask my CFO to arrange significant funds, even on an emergency basis. But we don’t do that often as we haven’t still availed almost half of our net sanctioned amount, and we are very particular now about the cost of funds. Still, arriving at this situation, after all those tough years, has been something of an achievement.




To what do you attribute this kind of acceptance among institutional investors, especially from abroad?

I think this has much to do with the post-2008 financial situation across the globe. Before the recession, it was a case of mindless financing. Post recession, institutions, especially from abroad are hunting for secure financing. When they stumbled upon this gold loan business, they were pleasantly surprised. Here was the most secure of all loans – more secure than corporate loans, home loans, or vehicle loans. They were surprised to know that the major percentile of our loans were sub Rs. 20,000 and for periods as low as three months. Our NPAs are negligible, less than even 0.5%.



Going forward, what is the model you have in mind? Will you be working for conversion to a regular bank, much like Kotak Mahindra?

There was a time when I had my eye on the Kotak model. They were the first successful conversion of an NBFC into a bank. Owing to our good corporate governance and execution capabilities, we almost have an invitation to be a bank from

Manappuram Group has roped in stars like Akshay Kumar, Mohanlal, Vikram, & Venkatesh, to deliver testimonial ads about gold’s hidden funding power. Interestingly, the thrust will be on growing the entire gold loan segment, and not on inviting customers to Manappuram.

some of the authorities. But nowadays we have realized that there is a better model to follow, especially if you keep shareholder value in mind. Compare what happened to Kotak and Shriram Finance over the same timeframe, that is, after Kotak became a bank. Shriram could grow their assets under management much faster than Kotak. The reason is simple – while Kotak had to develop multiple competencies to succeed as a bank, Shriram became more and more adept at their core competence. A full-fledged bank has so many concerns like meeting priority sector targets and so on. Shriram’s performance is all the more outstanding when you

remember that Kotak’s core skills was in financing new vehicles, while Shriram’s continue to be the non-glamorous secondhand vehicle finance. Our core competence is in gold loans, and if we shed that to become a bank, our shareholder value may be eroded. It won’t be good for our customers too, as now we are the masters of this service.


That still leaves another model to emulate isn’t it? I mean the HDFC Bank model…

Definitely. That is one model that Manappuram Group is open to. HDFC could promote HDFC Bank as a separate entity, each highly

successful in their respective realms, and with no need to go for reverse-mergers like how ICICI and IDBI had to undergo. That model will also eliminate our concerns regarding diluting our ownership for the sake of being a bank. How will be Manappuram’s growth, going forward? Won’t it be tough matching the last few years’ performance? Don’t you expect competition to catch up soon?

Growth solely depends on whether we can continue the innovation. You will be surprised to know that we were the first company in India to advertise a loan, back in the 80s. Yes, even before ICICI & HDFC. That time people thought that I was mad. Loans were things people begged for, not marketed before them, was the line of thought then among banks and even NBFCs. Later, when gold loans caught up, we differentiated ourselves with tailor-made loan products. For example, using products, we addressed our main competitors, which were banks and individual financiers. One group focused on loan-to-value and other on interestrate. So we created two families of products, addressing each, and thus catering to individual customer tastes. However, going forward, we will be focusing on enlarging the whole gold loan market, rather than creating a niche for ourselves.


on gold or its power. Many people, especially small-scale businessmen, go for funds from unorganized sector at 10 times or more interest rates than what we can offer them. Through a publicity campaign across the country that will feature celebrity testimonials, we will deliver this message – you have a power within, the power of gold, that you can decide to unleash. We won’t be asking the celebrities to endorse only Manappuram, but to endorse this funding source. We realize that no business can go on growing endlessly without increasing its social relevance. We have also launched gold-overdraft type schemes that can deliver better than what a few banks are offering through their Gold OD offers.

That sounds interesting…

? Yes, it is, and hopefully this will mark our entry into an even faster growth orbit. Today, gold loan still has a taboo in this country. For some it is the last resort, and for others it is not in their radar at all. But we believe that this is not fair

You have recently ventured into gold retailing. What is the motivation?

There are two reasons for this diversification. The main is that we could excel as an NBFC because we could rewrite the rules, thus paving for honest practices and

good governance. Gold retailing is one such field where now honesty and professionalism take a back seat. We are confident that we can enter this game and rewrite the rules. The other obvious reason is that owing to our background, we know too much about gold. That kind of knowledge is a comfort in business.


Born and brought up against adversities, do you expect a smooth ride for Manappuram Group?

No business can expect that. The rules and dynamics of businesses will keep on changing. There will be challenges emerging. But as a professional organization employing scores of CAs, ICWAs, MBAs, & Engineers, having a professional Board, and having a professional top leadership for which merit and performance are the only concerns, we are confident of overcoming all challenges. We don’t intend to lose the trust of our customers, shareholders, associates, or any other stakeholders.



Banking on the fact that only a tiny fraction of the nation’s domestic gold reserves have been pledged so far, Manappuram expects to grow 60% YoY over the next 6 ? to 7 years.


Narayana Murthy

on the lessons he learnt from LIFE and

CAREER Chairman of the board, Infosys Technologies, delivered a precommencement lecture at the New York University (Stern School of Business). In a scintillating speech, Murthy speaks about the lessons he learnt from his life and career. Dean Cooley, faculty, staff, distinguished guests, and, most importantly, the graduating class of 2007, it is a great privilege to speak at your commencement ceremonies. I thank Dean Cooley and Prof Marti Subrahmanyam for their kind invitation. I am exhilarated to be part of such a joyous occasion. Congratulations to you, the class of 2007, on completing an important milestone in your life journey. After some thought, I have decided to share with you some of my life lessons. I learned these lessons in the context of my early career struggles, a life lived under the influence of sometimes unplanned events which were the crucibles that tempered my character and reshaped my future.

I would like first to share some of these key life events with you, in the hope that these may help you understand my struggles and how chance events and unplanned encounters with influential persons shaped my life and career. Later, I will share the deeper life lessons that I have learned. My sincere hope is that this sharing will help you see your own trials and tribulations for the hidden blessings they can be.

Murthy decides to pursue computer science The first event occurred when I was a graduate student in Control Theory at IIT (Indian Institute of Technology), Kanpur, in India. At breakfast on a bright Sunday morning in 1968, I had a chance encounter with a famous computer scientist on sabbatical from a wellknown US university. He was discussing exciting new developments in the field of computer science with a large group

of students and how such developments would alter our future. He was articulate, passionate and quite convincing. I was hooked. I went straight from breakfast to the library, read four or five papers he had suggested, and left the library determined to study computer science. Friends, when I look back today at that pivotal meeting, I marvel at how one role model can alter for the better the future of a young student. This experience taught me that valuable advice can sometimes come from an unexpected source, and chance events can sometimes open new doors.

Murthy decides to become an entrepreneur The next event that left an indelible mark on me occurred in 1974. The location: Nis, a border town between former Yugoslavia, now Serbia, and Bulgaria. I was hitchhiking from Paris back to Mysore, India, my home town.


Nagavara Ramarao Narayana Murthy,

Narayana Murthy By the time a kind driver dropped me at Nis railway station at 9 p.m. on a Saturday night, the restaurant was closed. So was the bank the next morning, and I could not eat because I had no local money. I slept on the railway platform until 8.30 pm in the night when the Sofia Express pulled in. The only passengers in my compartment were a girl and a boy. I struck a conversation in French with the young girl. She talked about the travails of living in an iron curtain country, until we were roughly interrupted by some policemen who, I later gathered, were summoned by the young man who thought we were criticising the communist government of Bulgaria. The girl was led away; my backpack and sleeping bag were confiscated. I was dragged along the platform into a small 8x8 foot room with a cold stone floor and a hole in one corner by way of toilet facilities. I was held in that bitterly cold room without food or water for over 72 hours.


I had lost all hope of ever seeing the

on the lessons he learnt from

outside world again, when the door opened. I was again dragged out unceremoniously, locked up in the guard's compartment on a departing freight train and told that I would be released 20 hours later upon reaching Istanbul. The guard's final words still ring in my ears -- "You are from a friendly country called India and that is why we are letting you go!" The journey to Istanbul was lonely, and I was starving. This long, lonely, cold journey forced me to deeply rethink my convictions about Communism. Early on a dark Thursday morning, after being hungry for 108 hours, I was purged of any last vestiges of affinity for the Left. I concluded that entrepreneurship, resulting in large-scale job creation, was the only viable mechanism for eradicating poverty in societies.

Infosys' journey begins Deep in my heart, I always thank the Bulgarian guards for transforming me from a confused Leftist into a

determined, compassionate capitalist! Inevitably, this sequence of events led to the eventual founding of Infosys in 1981. While these first two events were rather fortuitous, the next two, both concerning the Infosys journey, were more planned and profoundly influenced my career trajectory. On a chilly Saturday morning in winter 1990, five of the seven founders of Infosys met in our small office in a leafy Bangalore suburb. The decision at hand was the possible sale of Infosys for the enticing sum of $1 million. After nine years of toil in the then business-unfriendly India, we were quite happy at the prospect of seeing at least some money. I let my younger colleagues talk about their future plans. Discussions about the travails of our journey thus far and our future challenges went on for about four hours. I had not yet spoken a word. Finally, it was my turn. I spoke about our journey from a small Mumbai apartment in 1981 that had been beset with many challenges, but also

LIFE and CAREER of how I believed we were at the darkest hour before the dawn. I then took an audacious step. If they were all bent upon selling the company, I said, I would buy out all my colleagues, though I did not have a cent in my pocket. There was a stunned silence in the room. My colleagues wondered aloud about my foolhardiness. But I remained silent. However, after an hour of my arguments, my colleagues changed their minds to my way of thinking. I urged them that if we wanted to create a great company, we should be optimistic and confident. They have more than lived up to their promise of that day. In the seventeen years since that day, Infosys has grown to revenues in excess of $3.0 billion, a net income of more than $800 million and a market capitalisation of more than $28 billion, 28,000 times richer than the offer of $1 million on that day.

A final story On a hot summer morning in 1995, a Fortune-10 corporation had sequestered all their Indian software vendors, including Infosys, in different rooms at the Taj Residency hotel in Bangalore so that the vendors could not communicate with one another. This customer's propensity for tough negotiations was well-known. Our team was very nervous. First of all, with revenues of only around $5 million, we were minnows compared to the customer. Second, this customer contributed fully 25% of our revenues. The loss of this business would potentially devastate our recently-listed company. Third, the customer's negotiation style was very aggressive. The customer team would go from room to room, get the best terms out of each vendor and then pit one vendor

against the other. This went on for several rounds. Our various arguments why a fair price -- one that allowed us to invest in good people, R&D, infrastructure, technology and training -- was actually in their interest failed to cut any ice with the customer. By 5 p.m. on the last day, we had to make a decision right on the spot whether to accept the customer's terms or to walk out. All eyes were on me as I mulled over the decision. I closed my eyes, and reflected upon our journey until then. Through many a tough call, we had always thought about the longterm interests of Infosys. I communicated clearly to the customer team that we could not accept their terms, since it could well lead us to letting them down later. But I promised a smooth, professional transition to a vendor of customer's choice.


In the process, Infosys has created more than 70,000 well-paying jobs, 2,000-plus dollar-millionaires and 20,000-plus rupee millionaires.

Narayana Murthy

on the lessons he learnt from LIFE and CAREER

This was a turning point for Infosys. Subsequently, we created a Risk Mitigation Council which ensured that we would never again depend too much on any one client, technology, country, application area or key employee. The crisis was a blessing in disguise. Today, Infosys has a sound de-risking strategy that has stabilised its revenues and profits.

Lessons 1 and 2 I want to share with you, next, the life lessons these events have taught me. I will begin with the importance of learning from experience. It is less

I am struck by the incredible role played by the interplay of chance events with intentional choices. While the turning points themselves are indeed often fortuitous, how we respond to them is anything but so. It is this very quality of how we respond systematically to chance events that is crucial.

Lessons 3 and 4 Of course, the mindset one works with is also quite critical. As recent work by the psychologist, Carol Dweck, has shown, it matters greatly whether one believes in ability as inherent or that it can be developed. Put simply, the former view, a fixed mindset, creates a tendency to avoid challenges, to ignore useful negative feedback and leads such people to plateau early and not achieve their full potential. The latter view, a growth mindset, leads to a tendency to embrace challenges, to learn from criticism and such people reach ever higher levels of achievement.

important, I believe, where you start. It is more important how and what you learn.


If the quality of the learning is high, the development gradient is steep, and, given time, you can find yourself in a previously unattainable place. I believe the Infosys story is living proof of this. Learning from experience, however, can be complicated. It can be much more difficult to learn from success than from failure. If we fail, we think carefully about the precise cause. Success can indiscriminately reinforce all our prior actions. A second theme concerns the power of chance events. As I think across a wide variety of settings in my life,

The fourth theme is a cornerstone of the Indian spiritual tradition: selfknowledge. Indeed, the highest form of knowledge, it is said, is selfknowledge. I believe this greater awareness and knowledge of oneself is what ultimately helps develop a more grounded belief in oneself, courage, determination, and, above all, humility, all qualities which enable one to wear one's success with dignity and grace.

A final word Based on my life experiences, I can assert that it is this belief in learning from experience, a growth mindset, the power of chance events, and selfreflection that have helped me grow to the present. Back in the 1960s, the odds of my being in front of you today would

have been zero. Yet here I stand before you! With every successive step, the odds kept changing in my favour, and it is these life lessons that made all the difference. My young friends, I would like to end with some words of advice. Do you believe that your future is preordained, and is already set? Or, do you believe that your future is yet to be written and that it will depend upon the sometimes fortuitous events? Do you believe that these events can provide turning points to which you will respond with your energy and enthusiasm? Do you believe that you will learn from these events and that you will reflect on your setbacks? Do you believe that you will examine your successes with even greater care? I hope you believe that the future will be shaped by several turning points with great learning opportunities. In fact, this is the path I have walked to much advantage. A final word: When, one day, you have made your mark on the world, remember that, in the ultimate analysis, we are all mere temporary custodians of the wealth we generate, whether it be financial, intellectual, or emotional. The best use of all your wealth is to share it with those less fortunate. I believe that we have all at some time eaten the fruit from trees that we did not plant. In the fullness of time, when it is our turn to give, it behooves us in turn to plant gardens that we may never eat the fruit of, which will largely benefit generations to come. I believe this is our sacred responsibility, one that I hope you will shoulder in time. Thank you for your patience. Go forth and embrace your future with open arms, and pursue enthusiastically your own life journey of discovery!


he quarterly as well as annual numbers are in. From a pure investor standpoint some banks have done well, many have performed so-so, and some have shocked. While some banks couldn’t cope with the fourth-quarter dip in treasury income, others saw it coming and their efforts to grow their core interest income paid off. The headline results, as always, continued to mask the real picture in many cases. At some banks, the gold-standard YoY quarterly growth often masked a serious sequential slowdown and impending dip in the coming quarters, while in some other banks the YoY quarterly dip hid the strong sequential turnaround gathering wind. The absence of strong promoter groups seems to have affected some private sector banks drastically, while some other have thrived on the same factor. For public sector banks, the presence of a strong promoter group has largely played to their advantage. But the real challenge for all banks will come in the coming quarters when credit is expected to pick up, and the financial world takes in the real impact of the European crisis, the US litigations against two of its biggest banks, and whether China will buckle or not under the potential export plunge. Also, in a country like India, the shareholders shouldn’t be the only stakeholders who matter. That includes the biggest investor of them all, the Government of India. Paying larger-than-life dividend cheques to the FM is fine, but the real question at the end of day is whether banks have enabled, facilitated, or even promoted progress. Progress not in the narrow sense of GDP growth, but in the wider sense of inclusion. Whether they have helped progress the people’s aspirations – educational, agricultural, entrepreneurial, or at the unfortunate level, the very basic survival instincts.



Steady and Rapid Climb

MV Nair, Chairman



The March quarter silences the critics of Union Bank’s and its Chairman MV Nair’s strategies, as the bank registers rapid growth on all counts – sequential and YoY, quarterly and annual. More than makes up for the first quarter dip, and proves that it can make a strong comeback in core income.

Though only the sixth and smallest player in this group by way of sales and profits, in addition to market cap, Union Bank has been one of most dynamic operations as they see themselves as the underdog in this club who has the potential to overtake almost all here, except for top dog SBI which enjoys a market cap that is 10 times that of Union. Among the other heavyweights, Bank of India and Canara Bank are well within the striking distance of Union, while it will take a little more effort to overtake No. 3 player, Bank of Baroda. Even the formidable No. 2, Punjab National Bank, seems vulnerable, having only a little over double than Union

Bank’s market cap. The Mumbai headquartered PSB’s dynamic attitude is evident from the fact that its annual net profit hasn’t dipped during the past 8 years, except for a brief dip in FY’ 05-06, but from which Union staged a more than compensating comeback. The bank which started off the first quarter of FY’ 09-10 with a sequential dip, quickly recovered in the September quarter, and then went on to display considerable sequential strength in the December 09 and March 10 quarters. The March quarter also registered an emphatic 27.61% YoY growth, thereby signalling that the bank is right on the high growth trajectory. This was the quarter that also silenced its critics regarding its high reliance on treasury income in the second and third quarters. In the last quarter, when treasury income was expected to dip, Union focused its momentum on growing the core

business, and its success was evident from the 50.7% growth in Net Interest Income (NII). It more than offset the 11.89% dip in other income. The main concern Union raises is the asset base, where this quarter witnessed 8% of restructured assets turning into NPAs. The bank is now having a provision coverage ratio of 74%. Despite having the overall sixth position among the heavyweight group, when it comes to assets, it slips outside this group, with IDBI Bank bettering it. Perhaps due to this factor, the price performance of Union Bank scrip over the past year was not outstanding like some peers, though keeping up with core indices like Nifty, moving up by nearly 85%. However, the scrip still has enough headroom by way of priceearnings, and is still not expensive by way of book, trading at 1.63 times.


Union Bank of India is one among the top-six public sector banks of the country that form a heavyweight club, each having a market capitalization in excess of Rs. 10,000 crore. All the remaining 17 PSBs have market caps less than this clearly demarcating figure.



The Turnaround Strengthens, But More to Go For many, the bank’s sharp dip during this quarter, and a matching dip for the year, are bad news. But for the discerning, and to those who know this PSB up-close, this dip is similar to the one in FY’ 2005, from which the bank quickly bounced back. Despite the current results, Bank of India remains one of the fastest growing banks of this decade. And the good news is that the sequential turnaround is gathering wind. Alok Kumar Misra, Chairman

Bank of India has been one of the fastest growing public sector banks in the country during this decade. From mere 100s in FY’ 2000, the bank’s net profit had swelled to the 3000s by FY’ 2009, an almost 30 times rise in less than 10 years. Obviously, such speed wouldn’t be with the associated dangers, and with the fourth quarter result, such a setback is clearly visible. But Bank of India is known to rebound from such setbacks, as was the case in FY’ 2005, when annual net had almost turned into one-third of the previous. It took around two years for the rebound, but when it came, it was emphatic and put the PSB major

back on the high growth trajectory. Compared with that episode, the setback in FY’ 10 seems more manageable as the net’s dip is not as deep as half of the previous year. This is more so because a turnaround is already in place since the December 09 quarter. BoI’s problems had started from the March 09 quarter and had extended to the first two quarters of this financial. With the current quarter registering a sequential growth, there is no doubt the turnaround is strengthening. Bank of India is one among the six heavyweight PSBs, and is – or better put, was – the third largest by both net profit and net assets

BANKROLLING or BANKRUPTING PROGRESS until last year. And it was a very close third, with No. 2 player, PNB, barely ahead of it. Sales wise it was the fourth largest. But this year’s results might place BoI at the fifth position in at least some of these parameters, ahead of only Union Bank. This position is already reflected in its market capitalization, where it already stands fifth. But historically, Bank of India has been the highest priceperformer among all banks in the country, including both statepromoted and private. This year’s price performance was only a pale reflection of its heydays, with only a 43% increase. Due to its above average historical performance, the Mumbai headquartered major continues to enjoy a priceearnings well above the industry average. Though this doesn’t leave much room for price appreciation in the near term, the bank is still a steal for the long term, trading just below one-anda-half times its book. One silver lining in the bank’s performance is its Net Interest Income growing substantially despite the overall dip in net. That means the core operations are strengthening, which comes more useful in post-recessionary periods such as this when credit demand is expected to look up. If this rapid-grower can get back to its earlier trajectory, this is one bank that can upset the calculations of all PSBs except for SBI.




A Historical Q4 net has surged by 269%, but that can be explained away on the low base. What is surprising is the steady sequential growth exhibited throughout FY’ 2010, which has now culminated in an almost historical high – at least since 2002 – quarterly performance, in absolute numbers. UCO Bank has come out with a game-changing result in the fourth quarter. YoY it is a surge, but sequentially also it is an emphatic rise. In fact, throughout the financial year, it has outperformed itself, with each quarter significantly better than the previous. The final result of these consistent quarters is a pleasant surprise. The annual net has almost doubled, going up by around 45%.


With this result, UCO Bank is again staking its claim for a bigger role among the mid-sized PSBs of the country. The bank which encountered a downturn starting in FY 2005, had continued the dip in FY 06. Though it again started growing in FY 07, it took two more years to get back to the earlier growth trajectory, that is not until FY 09. But with this year’s near doubling results, UCO Bank has made its ambition very clear – by more than making up for lost time, it wants to be in the bigger league that it once was. FY 10 will go down in its history as the year in which UCO surpassed relatively bigger players like Syndicate Bank in net profit, and came par with biggies like IDBI Bank, Cor-

poration Bank, & Central Bank. Evidently, UCO won’t be competing with its earlier peer group members like Dena Bank, Bank of Maharashtra, & Vijaya Bank, as well as the small listed entities from the State Bank Group. In net profit, UCO is expected to move up by two positions from its 2009 position of 17th among listed PSBs, while in net sales the bank is expected to move up by one or two rungs from its 2009 position of 12. This bodes well for the bank as profits used to be its only problem, as, even in the down years, UCO used to fare better in assets with an 11th position edging out biggies like Oriental Bank, Indian Bank, & Corporation Bank. But the market is yet to correct the scrip upwards, as is revealed by its market capitalization that still stands at only the 16th position, whereas its rightful position should be somewhere upwards of 14th. However, there is no doubt that with a priceearnings that is only one-third of the industry average, and trading more or less at par with its book, there is significant upside possible. Kolkata headquartered UCO Bank is one of India’s leaders in banking

that meets the country’s complex social commitments. For example, UCO’s advances to the priority sector constituted more than 50% of its total advances, and this PSB also met all its lending commitments to the agricultural and weaker sections of the society. UCO Bank is also a two-time national award winner for lending to micro enterprises. UCO Bank’s Chairman & Managing Director SK Goel is a veteran banker of India, but also known for his non-conformist attitude with the industry. Under his leadership, UCO is trying to be more customerfriendly with new-generation features like no-holiday branches and express services. UCO’s footprint in India is significant, both geographically and sector-wise. The 66 year old bank has 2065 branches across the country and lends to all sections of the Indian economy - micro, small, medium & large enterprises, and spanning all sectors including retail, agriculture, services and infrastructure. UCO Bank has presence in Singapore, Hong Kong, China, and Malaysia, and correspondent arrangements all over the world.



SK Goel, Chairman




Moving Into its True League


The convincing Q4 numbers, both sequentially and YoY, point to catching up with ICICI & HDFC, and there are no signs of fatigue here.

For Axis Bank, this has been the year that it finally came within striking distance of its two bigger peers – HDFC Bank & ICICI Bank. Proving that it can sustain last year’s first-ever breakout into the five figure sales domain, it has emphatically put to rest a past where it was sort of competing with the likes of Kotak Mahindra, Federal, & IndusInd. Though it has bettered its sales position substantially, sales will continue to be the last domain for it to catch up with HDFC & ICICI. But that is a non-issue really, even a positive in a sense, as Axis has proved to be extra efficient in generating profits from that smaller sales. Another 500 crore, and it can bag the position of the second most profitable private sector bank, sailing past HDFC Bank. Even a head-on competition with ICICI seems possible now for the first time, as it will not entail a doubling of profits from the current level. This is really a performance that brings cheer to the Axis shareholders. All the more so, as market cap wise there is still a wide chasm – almost double – for



Axis to grow. Traversing that chasm should be a pleasurable experience for all. The Axis performance signals a unique strength in core business as the 36% rise in annual net profit reflects an equivalent rise in core Net Interest Income. That the bank could manage this is commendable, as during some of the recent quarters, banks had been forced to rely solely on other income, as interest income faltered. The clincher seems to be the fourth quarter performance, where Axis could grow its NII by almost 41.5%. In a scenario where the country’s public sector banks are providing increasing competition to private players like Axis, the bank has made some good strides. While its market cap is significantly more than all PSBs except for SBI, it is at par with formidable banks like Union Bank and IDBI Bank in sales, and at par or even better than Bank of Baroda and Canara Bank in profits.

All in all, it gives the impression that the Axis Bank Board’s decision to bring in Shikha Sharma as the MD & CEO has paid rich dividends to all stakeholders. The new top management comprising her has made the bank a worthy contender for the top spot. Shikha Sharma, MD & CEO


No wonder then that Axis’ year-to-date price performance of nearly 64% is significantly better than bigger peers like HDFC & ICICI, and even better than smaller market-savvy operations like Kotak.



Year Dips, But Turnaround

P Jayarama Bhat, MD & CEO



At first look, Mangalore headquartered Karnataka Bank seemed to have encountered an unfortunate quarter and year. Both the fourth quarter and the year have dipped on a YoY basis, with the yearly dip more serious. But on a closer look, on a QoQ or sequential basis, this listed private sector bank definitely is on a turnaround trajectory that was kicked off in the December 09 quarter. Owing to the unprecedented global economic slowdown that lasted for most of 2008 and 09, Karnataka Bank’s June & September quarters were really off the mark. But by the December quarter, the bank had managed to stage a comeback, almost compensating for the dip in the September quarter. And now with the sequential growth in March 2010 quarter, it has more than compensated for the June dip. However, it fell a tad short of bettering on the March 09 performance. Going forward, this South based bank is expected to furiously shrug off its hitherto regional image to a more appealing pan India image. With a Director Board packed with banking veterans from SBI Group, Canara Bank etc, and a homegrown, handpicked top management led by MD & CEO P Jayarama Bhat, the bank has attracted not only customer interest, but the fancy of FIIs and domestic institutional investors. Karnataka Bank has a unique ownership structure that eliminates promoter groups and the associated vested interests. The bank’s equity is perhaps the most widely held one among all private sector banks in the country, with no investor holding more than 5%. The total FII stake is less than 31%.




Another Winning Year


for All Stakeholders KVB has done it again. Another winning year that maintains the last 5 years’ winning streak with no dip in between. This year’s growth is also impressive, with a 42.5% surge in net profit. But on a closer look, Karur Vysya Bank seems to have a problem with sequential growth. Its QoQ numbers kept on oscillating throughout FY’ 09-10, with alternating dips and surges. On one hand, this shows the Tamilnadu based bank’s resilience in face of different kinds of troubles, which in any case were not rare throughout the year not only for KVB, but for most private sector banks. In fact, the QoQ oscillations were there for KVB throughout 2008-09 too. But on the other hand, this may also signal an organizational problem that the bank might be facing, whereby it easily gets into the complacent mood, after a big rebound or win. If that is the case, KVB stands to gain much from rectifying these oscillations, as such an initiative can take this traditional private sector bank to a higher orbit occupied by a new generation peer like Yes Bank or a traditional player like Federal Bank. There is no doubt KVB is already faring well with some peers like IndusInd Bank and ING Vysya Bank on the sales and profits fronts, but the market values it a notch lower with a lower market capitalization, maybe due to its significantly lower asset base. Maybe a steadier sequential growth can work wonders here, as the asset quality remains high due to low NPAs. Though a private sector bank, KVB has stuck to its roots as a traditional private sector bank, steering clear of the less diligent processes followed by new generation private banks in granting and managing loan accounts. The bank’s Net NPA stands at an excellent 0.23%, but the bank maintains a high provision coverage ratio of 86.85% for safety. Apart from impressive annual profit growth and low NPAs, the bank has advanced on most key metrics, signalling the overall healthy performance. Return on Assets has increased by 1.76%, Net Interest Margin (NIM) is now 3.23%, Capital Adequacy Ratio stands at 14.49%, Net Interest Income has increased by 37.64%, and low cost deposits has increased to a similar tune. Over the past few years, KVB has outgrown its local image with nationwide presence and full implementation of core banking services. KVB’s MD & CEO PT Kuppuswamy is uniquely qualified as a Chartered Accountant and a Company Secretary, and has been a Canara Bank veteran, exposed to numerous industry events and training programs, including in USA. The bank is extremely capital market savvy, having 16 fully subscribed rights issues, 6 bonus issues, and high dividend levels. This year’s dividend is 120%

PT Kuppuswamy, MD & CEO









Noma Copenhagen, Denmark






El Bulli Spain


1) Noma (Copenhagen, Denmark) 2) El Bulli (Roses, Spain) 3) The Fat Duck (Bray, England) 4) El Celler de Can Roca (Girona, Spain) 5) Mugaritz (Errenteria, Spain) "The result is a very idiosyncratic style of food that speaks to concerns about the way a global food culture turns our eating experiences a uniform beige." Noma's ascension to the top slot ends the reign of a culinary titan. After four consecutive years ranked as the World's Best Restaurant, Spanish restaurant El Bulli takes a seat at No. 2. However, that won't make it any easier to snag a table. Only 8,000 reservations are accepted every year, out of a reported million requests. The dethroning of Catalonia's culinary king, Ferran Adrià, comes after his announcement of plans to close the Mecca of molecular gastronomy for two years in December 2011. In 2014, the restaurant will reopen as a nonprofit foundation -- "a think tank of gastronomic creativity" for 20 to 25 young chefs. Despite the second-place finish, Adrià was still awarded Restaurant Magazine's Chef of the Decade honor. The illustrious list is compiled by The World's 50 Best Restaurants

Academy -- an 806-member panel of the globe's most venerated chefs, food critics, restaurateurs and gourmands. "The list creates tremendous debate and it's meant to," according to the World's 50 Best release. Eight of the restaurants crowned this year Alinea in Chicago, Illinois; Daniel, Per Se, Le Bernardin, Momofuku Ssäm Bar, wd~50 and Eleven Madison Park in New York; and The French Laundry in Yountville, California are in the United States, this year's most honored country. Of the remaining 42 top finishers, six are in France; Spain and Italy each have five.




Danish cuisine reigns supreme, according to some of the planet's most prominent eaters. S. Pellegrino's annual "World's 50 Best Restaurants" list was released on Monday at a celebrity-chefstudded event in London, England, marking the ninth edition of the much buzzed-about (and hotly debated) catalogue of the international culinary landscape. The No. 1 spot goes to Noma in Copenhagen, Denmark. The restaurant, helmed by chef René Redzepi, ranked No. 3 in 2009. The Guardian newspaper's restaurant critic Jay Rayner -- better known to U.S. food fans as a judge on "Top Chef Masters" -- agrees with the judges' decision. Writes Rayner on The Guardian's food blog, "Is that the right result? Allowing for the fact that I think the rankings are far less interesting than the list itself, I would say, yes." "Redzepi, the 32-year-old chef at Noma, pursues a regional, seasonal agenda that is right on the cutting edge: if it isn't available in the Nordic region, he won't cook with it," he continued. TOP 5 RESTAURANTS IN WORLD




Growing, But Slowly With the fourth quarter results, PNB has reinforced the sequential turnaround that was in place since the last two quarters, and done away with the effects of the first quarter dip. YoY also the quarterly growth is reasonable, but the annual growth pace has moderated from FY 09. This does not bode well for the country’s second largest public sector bank, which on one hand is

unable to close the huge gap towards the No. 1 player SBI, and on the other hand, is finding No.s 3, 4, & 5, viz. Bank of Baroda, Bank of India, & Canara Bank breathing down on its neck on different metrics like net sales, net profits, and net assets. Together with its unusually high provision coverage ratios against NPAs, PNB needs to act quickly to augment its position.


Set for a Major Correction? Kotak Mahindra Bank has come out with good fourth quarter numbers that is somewhat helped by the low base, but in any case, this more than makes up for the serious dip encountered in the first quarter of the past fiscal. Overall, the annual growth is also commendable. The all important question, however, is whether the results are enough to justify the almost obnoxious valuations this private sector bank has been enjoying for some time now. It trades at a P/E of 58 which is more than double the industry

price-earnings, which in itself is rather high at 23, against the public sector banks’ average P/E of just 9. This makes Kotak Mahindra the most expensive banking stock with the lowest yield, going forward. Book wise also the bank is trading at a hefty valuation of nearly 7 (P/ B) against SBI’s 3 and BoB’s 2. All these factors are pointing to an impending grave correction, especially so if there is a flight of capital from India due to deepening worldwide crises like Euro or Goldman. Kotak has been enjoying these valuations due to its relatively high margins, but which is mostly due to the riskier nature of its business.


Results Take Bank Two Years Backwards Nobody knew it would be this bad. Dhanalakshmi Bank has registered a uniquely unfortunate annual result that takes the bank to where it was, not one year back, but more than two years back, profit-wise. To begin with, nobody had high expectations from this traditional private sector bank, till a couple of years back. It was doing fine for its size. Then came the big ambitions and the tall talks. For a while, it seemed to work too. In FY 2009, despite still being the smallest listed

private bank by sales and assets, Dhanalakshmi had edged past bigger banks like Lakshmi Vilas Bank and DCB in net profit. The markets too were encouraging with Dhanalakshmi coming up with one of the best annual priceperformance of nearly 125%. But with this kind of utterly devastating results, Dhanalakshmi has a lot of introspection and clarification to provide to all stakeholders. Otherwise, a serious correction in the capital markets won’t be the only side-effect.


Growth That Needs to be Steadied Q4 net up both sequentially and YoY, but the sequentially alternating dips need to be convincingly eliminated.


Moving Into the Big League Q4 further proves that the profit growth march here goes ahead undeterred, both sequentially and YoY. DENA BANK

Predictable & Steady

No big upmoves here, but all the moves – both sequential & YoY – are northwards.


Convincing Performance The YoY jump is due to the low base, but sequentially this is going northwards.


Can This Be The Game Changer for Realty? There are several reasons why NCR based Eldeco Group’s upcoming IPO can be jinx-breaker for the pending realty IPOs. It can more than show the way forward.


or months now, the queue for real estate IPOs has been growing. Growing at one end, and not getting cleared at the other. Right from mega Issues like EmaarMGF & Lodha, to smaller ones like Oberoi, Ambience & Neptune. Appalled at the state of capital markets, and especially the realty index, most of the aspirants

were shying away from taking the plunge, waiting for someone else to enter first. Finally, gathering courage, Nitesh Estates had dived in, but only to find itself in trouble, unfortunately. NCR based Eldeco Group’s recently revealed plans for an IPO is especially interesting in this scenario. From the very announcement in these troubled times, one thing is clear – there is

SK Garg, Chairman

something special about Eldeco. The point is whether this something special is powerful enough to take their plans forward to fruition. To start with, Eldeco is promoted by not the typical realty entrepreneur – either born rich or self-made from setups like real estate brokerages. Eldeco promoters are professional entrepreneurs, with founder and Chairman SK Garg a civil engineer with over 30 years of hardcore experience in real estate development and construction. Managing Director Pankaj Bajaj is an MBA from IIM Ahmedabad, having around 15 years of experience in institutional investment consulting and real estate development. The currently proposed IPO is for NCR based group company Eldeco Infrastructure & Properties Ltd (EIPL). At around Rs. 300 crore, the IPO is rather small, but this can be an advantage in the uncertain markets of these times. At the same time, the Group has a relatively large land bank, around 4500 acres, out of which 1500 acres is residential land, most of it in NCR-Delhi. The other 3000 acres is industrial land in the states of Maharashtra & Uttaranchal.

There are other factors too that can make this IPO a game-changing one

Pankaj Bajaj, MD

Eldeco recieves Amity Corporate Excellence Award for Best Infrastructure Developer

for the entire realty sector. Eldeco is a Group with award-winning performance, award-winning projects, and award-winning leaders. The Group has won the Amity Corporate Excellence Award for Best Infrastructure Developer; one of its Gurgaon projects, Eldeco Mansionz, has been selected as a top-25 project in the sprawling NCR; and Chairman SK Garg has been presented with the Lifetime Achievement Award by industry body, CIDC. Capital markets are especially keen about such highperformers with high-visibility, and this can be a positive factor for this IPO. But the most important upside for this IPO would be something else. The Group already has an IPO and listed company, the performance of which provides some insight into Eldeco’s strengths. The first and flagship company of the Group, Eldeco Housing & Industries Ltd (EHIL), has more than doubled both its annual sales and fourth quarter net profit in the period ending March 31 st 2010, a time which was especially bad for most realty companies. EHIL only fell a tad short of equalling and bettering the annual net profit, YoY.

No wonder then, that the EHIL scrip has had an excellent year-to-date price performance of 50%, even when the BSE Realty Index lost money to the tune of 11.25%. The more interesting point is that while EHIL is focussed largely on UP and other tier-two cities where margins are low, EIPL, the group firm going for IPO now is focussed on one of the highest-margin markets in the country, NCR. The Group has so far played the game very diligently, attracting the right investments and associates. Noted real estate fund Xander has invested in Eldeco, and the Group is employing Motilal Oswal for the public issue. Xander has been a high-profile player, providing private equity to Reliance Industries Ltd for their mix-use development in Mumbai BKC. Eldeco has been also high on innovation with their recent Eldeco Personal Floors project at Sonepat getting noticed for its whole-floorfor-a-home themed apartments, complete with a lawn or roof terrace for each family.


When it comes to standards and ratings, Eldeco has always been way ahead of the rest, including developers multi-times their size like DLF or Unitech. The Group is North India’s first DR2 rated developer by ICRA/Moody’s. There is a high probability that Eldeco’s IPO too would have an above average rating. But the real stunner with Eldeco is that its success is taught as a Business Case Study at Harvard Business School (HBS) - a singular achievement for an Indian realty brand. This can really make a difference when going in for the IPO, especially with foreign institutional investors and anchor investors.


the Better Bet Mumbai headquartered Orbit Corporation’s offerings are ultra premium and largely for Mumbaikars passionate about some niche locales, but their top-performing scrip is an investment opportunity for all, like no other in realty. Here is why Orbit might be this superior bet.


umbai headquartered Orbit Corporation is proving to be a contrarian play in the beleaguered realty sector of the country. In a year when the realty index fell more than 10% (YTD), and much bigger Mumbai players like the newly listed DB Realty and HDIL falling by more than 15% and 28% respectively, Orbit has put up a price performance of over 60% (YTD), which comes across as pretty impressive. The performance at the bourses has almost been in direct proportion to the actual performance. Orbit could complete FY 2009-10 as one among a few developers who could manage to stage an impressive growth in both sales and profits. While total sales grew by around 72%, net profits jumped by over 170%.

Pujit Aggarwal, Managing Director

This has been a strong rebound from the dangerous dip the company took in FY’ 09, much in sync with the rest of the industry. But nowhere except in Orbit has the rebound been this powerful. Because, with this result, Orbit has more than compensated, with FY’ 10 bettering FY’ 08 too.

The key to Orbit’s performance is that a major chunk of its business is in South Mumbai where its aver-

Orbit Residency Park, Andheri-Saki Naga

Ravi Aggarwal, Chairman age realization has been Rs. 46,000 per sq ft during the last quarter. Orbit has a commanding presence in the Nepean Sea Road area, where many developers are daunted by the low FSI due to it being a Coastal Regulatory Zone (CRZ), and as such supply is much lower than the demand.

Another strong point for Orbit is their focus and expertise in the redevelopment sector, with many of their residential projects being redevelopments of old apartment complexes. This reduces the capital required for projects to a great extent, and helps in improving margins.

Orbit’s next important sector, South Central Mumbai, is also not bad in realization. In areas like Lower Parel, where Orbit has projects, its average realization had slightly bettered to Rs. 17,100 psf during this quarter. However, going forward, Orbit is also bracing for a 20% discount from these levels due to a potential oversupply in the region.

On the management side, the Group is very strong on both the professional and entrepreneurial fronts. Founder and Chairman Ravi Kiran Aggarwal is a BITS Pilani Engineer and Delhi University MBA, while Managing Director Pujit Aggarwal is an alumnus of Harvard Business School. Chairman Ravi has been a successful entrepreneur even before founding Orbit. MD Pujit has been an industry leader, despite his young age, heading the redevelopment association of Mumbai.

In its third most important sector, that is Suburban Mumbai, Orbit has projects in locations like Andheri. The average realizations are much lower here, but still much better than most other cities in the country. Their Orbit Residency Park at Andheri has seen an average realization of Rs. 7700 psf, but here unlike in Lower Parel, Orbit is expecting a 5-10% appreciation going forward, as the visibility of the project improves. Currently, Residency Park is only 25% complete.

The Group is noted for highest quality design and construction, employing celebrity architects like Hafeez Contractor and US/UK based consultants, and exclusive use of stainless steel structure for reinforced concrete and stainless steel plumbing for ultra-hygienic and leak-proof operation.


Of course, it would be long before Orbit can replicate the astounding jump between FY’ 07 and FY’ 08, when sales jumped by 13 times and profits by 21 times, but it is comforting to know that the company has been capable of such rapid growth phases. The more important point now is that the company is succeeding massively, contrary to a large segment of the sector which is underperforming.


What is a Club Celebrities?


Mumbai has no dearth for socializing clubs, but what is such recreation worth without some celebrity company? Everyone who is upwardly mobile wants something more than recreation from a luxury club, something larger-than-life, like getting to chat and interact with celebrities. Mumbai Cricket Association’s Recreation Centre at Bandra Kurla Complex stands out from the rest of the socializing clubs on this crucial metric. What is more, with a coveted membership here – tagged at Rs. 12 lakhs – you not only get to co-own this 14-acre British Raj themed luxury club together with the who-iswho of India Inc., but actually play host to celebrities ranging from Sachin to Shah Rukh.

elebrity events are a way of life at MCA Recreation Centre, BKC. On the 50th Anniversary of Maharashtra State’s foundation, the guests assembled were a cross-section of Mumbai’s elite – not just its super-rich, but its talent-rich. Guests were celebrities from diverse walks of life like movies, art, academics, sports, bureaucracy, business, and more, and included Sonali Kulkarni, Padmini Kolhapure, Aditi Govitrikar, Ujjwal Nikam, Bharat Dabholkar, Dr Nandita Palshetkar, Dr Himanshu Mehta, Shaina NC, Kalim Khan, Girish Mistry, Dilip Dandekar, Santosh Naik, Sachin Adhikari, Unmesh Joshi, Nandini Dias, Mahesh Manjrekar, Veena Patil, Jayraj Salgaonkar, Suma Shirur, and many more. At MCA RC, you will also get to taste some unique offerings never seen before anywhere. Recently, the Centre hosted a unique art exhibition on cricket. Thirteen artists portrayed different moods of the game through their artworks in the weeklong exhibition, and won much acclaim. While the works of artists like Manoj Sakale focussed on the fun element of cricket which is now sorely missing in the game, artist Vivek Kumarwat portrayed how

Worth without MCA RC is not all about cricket. But in case, your idea of recreation is cricket, and then a little more of cricket, look no further. The Centre and its adjoining ground was the official training host to Deccan Chargers & KKR during IPL3, and not to mention it being the venue of the Under 19 T20. MCA RC also excelled in providing boarding facilities to the players from England. The stature of the Club is evident from the fact that it was here that

Sachin chose to address his first public appearance after his recent record breaking performance. Other celebrities who have visited the club recently include Shah Rukh Khan, Saurav Ganguly, and cricketing legend Garry Sobers. The upcoming major events at the Club include CNBC Power Brunch, World Health Day, Businessworld Round Table, Baishakhi Celebrations, International Squash Camp, National Chess Championship, Cycle Day, No Tobacco Day, Super Snooker, Environment Day, Family

BG Shirke, Chairman, Shirke Group

Vijay Shirke, MD, Shirke Group


cricket is almost a religion in this country.

MCA RECREATION CENTRE, BKC Day, Father’s Day, Heartisitic Expression, Rink Soccer, and many more. Built like a classic club reminiscent of the British Raj royalty, no resources or efforts have been spared. Starting with a 14-acre prime property in the Bandra-Kurla Complex, it lives up to its indoor promise with a temperature control of 14 to 40 degrees. Though many kinds of sports and fitness facilities are provided, at the heart of the facility is the 38 metre by 28 metre Indoor Cricket Academy. Great views of matches playing at the adjacent stadium are possible from the club, the bar, and the card room through full-length toughened glass walls. Other sports / fitness facilities include world-class badminton courts, a half-Olympic swimming pool, squash courts, billiards, a 3000 sq ft Technogym, and a fleet of treadmills. And for relaxing accommodation, there are fine rooms and even finer dining.

Rajiv Wagh, VP, Shirke Group


MCA Recreation Centre is a joint venture between Mumbai Cricket Association and Shirke Group, a noted

infrastructure player based in Mumbai. Shirke Infrastructure is a special purpose vehicle (SPV), launched to diversify Shirke Group’s interests into hospitality. Says Rajiv Wagh, Vice President (Marketing & Business Development) of MCA Recreation Centre, “This facility is the first in a series of fine sports academies and clubs that Shirke Group is planning across the country, and especially in other parts of Mumbai and other cities of Maharashtra like Pune.” BG Shirke Construction Technology Private Limited (BGSCTPL), formerly known as BG Shirke & Company, was established in 1944 by its Founder Chairman, BG Shirke. BGSCTPL is a multi-disciplinary civil, mechanical and electrical engineering consortium having seven international technology tie-ups and over 12,000 employees. Evidently, nobody who wants to enter and play in the high circuits of Mumbai can afford to give MCA RC a miss.


Subroto Bagchi

on the essence of

success Subroto Bagchi is best known for co-founding MindTree in 1999 where he started as the chief operating officer. Bagchi, now the vice chairman and gardener of MindTree, has written extensively in leading newspapers and magazines, and spoken at industry platforms and educational institutions the world over. His first book, The High Performance Entrepreneur, was released in 2006, and his second book, Go Kiss the World, was released in 2008. Mark Tully hailed it as 'a remarkable story of courage, integrity and enterprise'. His third book, The Professional, was released in September 2009. Following is the speech he delivered to the Class of 2006 at the Indian Institute of Management, Bangalore on defining success. Bagchi said it was the first time he had shared the guiding principles of his life with young professionals. Read on . . .


I was the last child of a small-time government servant, in a family of five brothers. My earliest memory of my father is as that of a District Employment Officer in Koraput, Orissa. It was, and remains, as back of beyond as you can imagine. There was no electricity; no primary school nearby and water did not flow out of a tap. As a result, I did not go to school until the age of eight; I was home-schooled.

My father used to get transferred every year. The family belongings fit into the back of a jeep -- so the family moved from place to place without any trouble, and my mother would set up an establishment and get us going. Raised by a widow who had come as a refugee from the then East Bengal (now Bangladesh), she was a matriculate when she married my father. My parents set the foundation of my life and the value system, which makes me what I am today and largely, defines what success means to me today. As District Employment Officer, my father was given a jeep by the government. There was no garage in the office, so the jeep was parked in our house. My father refused to use it to commute to the office. He told us that the jeep is an expensive resource given by the government -- he reiterated to us that it was not 'his jeep' but the government's. Insisting that he would use it only to tour the interiors, he would walk to his office on normal days. He also made sure that we never sat in the government jeep -- we could sit in it only when it was stationary. That was our early childhood lesson in governance -- a lesson that corporate managers learn the hard way, some never do.

Subroto Bagchi is best known for co-founding MindTree in 1999 where he started as the chief operating officer. Bagchi, now the vice chairman and gardener of MindTree, has written extensively in leading newspapers and magazines, and spoken at industry platforms and educational institutions the world over.

When I grew up to own a car and a driver by the name of Raju was appointed -- I repeated the lesson to my two small daughters. They have, as a result, grown up to call Raju, 'Raju Uncle' - very different from many of their friends who refer to their family driver, as 'my driver'. When I hear that term from a school- or college-going person, I cringe. To me, the lesson was significant -you treat small people with more respect than how you treat big people.

It is more important to respect your subordinates than your superiors. Our day used to start with the family huddling around my mother's chulha -- an earthen fire place she would build at each place of posting where she would cook for the family. There was neither gas, nor electrical stoves. The morning routine started with tea. As the brew was served, father would ask us to read aloud the editorial page of The Statesman's 'muffosil' edition -- delivered one day late. We did not understand much of what we were reading. But the ritual was meant for us to know that the world was larger than Koraput district and the English I speak today, despite having studied in an Oriya medium school, has to do with that routine.

After reading the newspaper aloud, we were told to fold it neatly. Father taught us a simple lesson. He used to say, "You should leave your newspaper and your toilet, the way you expect to find it." That lesson was about showing consideration to others. Business begins and ends with that simple precept. Being small children, we were always enamored with advertisements in the newspaper for transistor radios -- we did not have one. We saw other people having radios in their homes and each time there was an advertisement of Philips, Murphy or Bush radios, we would ask father when we could get one. Each time, my father would reply that we did not need one because he already had five radios -- alluding to his five sons. We also did not have a house of our own and would occasionally ask father as to when, like others, we would live in our own house. He would give a similar reply, "We do not need a house of our own. I already own five houses." His replies did not gladden our hearts in that instant. Nonetheless, we learnt that it is important not to measure personal success and sense of well being through material possessions. Government houses seldom came with fences. Mother and I collected twigs and built a small fence. After lunch, my mother would never sleep. She would take her kitchen utensils and with those she and I would dig the rocky, white ant infested surrounding. We planted flowering bushes. The white ants destroyed them. My mother brought ash from her chulha and mixed it in the earth and we planted the seedlings all over again. This time, they bloomed. At that time, my father's transfer order came. A few neighbours told my mother why she was taking so much pain to beautify a government house, why she was planting seeds that would only benefit the next occupant. My mother replied that it did not mat-


The driver of the jeep was treated with respect due to any other member of my father's office. As small children, we were taught not to call him by his name. We had to use the suffix 'dada' whenever we were to refer to him in public or private.

Subroto Bagchi on the essence of success ter to her that she would not see the flowers in full bloom. She said, "I have to create a bloom in a desert and whenever I am given a new place, I must leave it more beautiful than what I had inherited." That was my first lesson in success. It is not about what you create for yourself, it is what you leave behind that defines success. My mother began developing a cataract in her eyes when I was very small. At that time, the eldest among my brothers got a teaching job at the University in Bhubaneswar and had to prepare for the civil services examination. So it was decided that my mother would move to cook for him and, as her appendage, I had to move too. For the first time in my life I saw electricity in homes and water coming out of a tap. It was around 1965 and the country was going to war with Pakistan. My mother was having problems reading and in any case, being Bengali, she did not know the Oriya script. So, in addition to my daily chores, my job was to read her the local newspaper -- end to end. That created in me a sense of connectedness with a larger world. I began taking interest in many different things. While reading out news about the war, I felt that I was fighting the war myself. She and I discussed the daily news and built a bond with the larger universe. In it, we became part of a larger real-

ity. Till date, I measure my success in terms of that sense of larger connectedness. Meanwhile, the war raged and India was fighting on both fronts. Lal Bahadur Shastri, the then prime minster, coined the term 'Jai Jawan, Jai Kishan' and galvanised the nation in to patriotic fervour. Other than reading out the newspaper to my mother, I had no clue about how I could be part of the action. So after reading her the newspaper, every day I would land up near the university's water tank, which served the community. I would spend hours under it, imagining that there could be spies who would come to poison the water and I had to watch for them. I would daydream about catching one and how the next day, I would be featured in the newspaper. Unfortunately for me, the spies at war ignored the sleepy town of Bhubaneswar and I never got a chance to catch one in action. Yet, that act unlocked my imagination. Imagination is everything. If we can imagine a future, we can create it, if we can create that future, others will live in it. That is the essence of success. Over the next few years, my mother's eyesight dimmed but in me she created a larger vision, a vision with which I continue to see the world and, I sense, through my eyes, she was seeing too. As the next few years unfolded, her


Imagination is everything. If we can imagine a future, we can create it, if we can create that future, others will live in it. That is the essence of success.

vision deteriorated and she was operated for cataract. I remember, when she returned after her operation and she saw my face clearly for the first time, she was astonished. She said, "Oh, my God! I did not know you were so fair." I remain mighty pleased with that adulation even till date. Within weeks of getting her sight back, she developed a corneal ulcer and, overnight, became blind in both eyes. That was 1969. She died in 2002. In all those 32 years of living with blindness, she never complained about her fate even once. Curious to know what she saw with blind eyes, I asked her once if she sees darkness. She replied, "No, I do not see darkness. I only see light even with my eyes closed." Until she was eighty years of age, she did her morning yoga everyday, swept her own room and washed her own clothes. To me, success is about the sense of independence; it is about not seeing the world but seeing the light. Over the many intervening years, I grew up, studied, joined the industry and began to carve my life's own journey. I began my life as a clerk in a government office, went on to become a management trainee with the DCM group and eventually found my life's calling with the IT industry when fourth generation computers came to India in 1981. Life took me places -- I worked with outstanding people, challenging assignments and travelled all over the world. In 1992, while I was posted in the United States, I learnt that my father, living a retired life with my eldest brother, had suffered a third degree burn injury and was admitted in the Safdarjung Hospital in Delhi. I flew back to attend to him -- he remained for a few days in critical stage, bandaged from neck to toe. The Safdarjung Hospital is a cockroach infested, dirty, inhuman place. The overworked, under-resourced sisters in the burn ward are both victims and per-

His first book, The High Performance Entrepreneur, was released in 2006, and his second book, Go Kiss the World, was released in 2008. Mark Tully hailed it as 'a remarkable story of courage, integrity and enterprise'. His third book, The Professional, was released in September 2009.

One morning, while attending to my father, I realised that the blood bottle was empty and fearing that air would go into his vein, I asked the attending nurse to change it. She bluntly told me to do it myself. In that horrible theatre of death, I was in pain and frustration and anger. Finally when she relented and came, my Father opened his eyes and murmured to her, "Why have you not gone home yet?" Here was a man on his deathbed but more concerned about the overworked nurse than his own state. I was stunned at his stoic self. There I learnt that there is no limit to how concerned you can be for another human being and what the limit of inclusion is you can create. My father died the next day. He was a man whose success was defined by his principles, his frugality, his universalism and his sense of inclusion. Above all, he taught me that success is your ability to rise above your discomfort, whatever may be your current state. You can, if you want, raise your consciousness above your immediate surroundings. Success is not about building material comforts -- the transistor that he never could buy or the house

that he never owned.


His success was about the legacy he left, the memetic continuity of his ideals that grew beyond the smallness of a ill-paid, unrecognised government servant's world.

I flew down from the US where I was serving my second stint, to see her. I spent two weeks with her in the hospital as she remained in a paralytic state. She was neither getting better nor moving on.

My father was a fervent believer in the British Raj. He sincerely doubted the capability of the post-Independence Indian political parties to govern the country. To him, the lowering of the Union Jack was a sad event. My mother was the exact opposite. When Subhash Bose quit the Indian National Congress and came to Dacca, my mother, then a schoolgirl, garlanded him. She learnt to spin khadi and joined an underground movement that trained her in using daggers and swords. Consequently, our household saw diversity in the political outlook of the two. On major issues concerning the world, the Old Man and the Old Lady had differing opinions. In them, we learnt the power of disagreements, of dialogue and the essence of living with diversity in thinking. Success is not about the ability to create a definitive dogmatic end state; it is about the unfolding of thought processes, of dialogue and continuum. Two years back, at the age of eightytwo, mother had a paralytic stroke and was lying in a government hospital in

Eventually I had to return to work. While leaving her behind, I kissed her face. In that paralytic state and a garbled voice, she said, "Why are you kissing me, go kiss the world." Her river was nearing its journey, at the confluence of life and death, this woman who came to India as a refugee, raised by a widowed mother, no more educated than high school, married to an anonymous government servant whose last salary was Rs 300, robbed of her eyesight by fate and crowned by adversity was telling me to go and kiss the world! Success to me is about vision. It is the ability to rise above the immediacy of pain. It is about imagination. It is about sensitivity to small people. It is about building inclusion. It is about connectedness to a larger world existence. It is about personal tenacity. It is about giving back more to life than you take out of it. It is about creating extraordinary success with ordinary lives. Thank you very much; I wish you good luck and God's speed. Go, kiss the world!


petrators of dehumanized life at its worst.


Mood killer #1:

Hiding unhappiness You must never keep your unhappiness with the relationship to yourself and suppress it. Psychologists agree that a constructive argument is one of the building blocks of a successful relationship. If you keep evading open verbal altercations, you will become cold and bitter, which will sooner or later kill your passion and your sex life.

Mood killer #2:

Words that hurt No matter how angry your partner made you, do not let words escape, which could hurt him deeply. His personal shortcomings must not be used as a weapon to hit him where it hurts most. You will lose his trust and soon his love as well.

Mood-killer #3

Don`t let yourself go Even though you have been together for many years, you should never take your relationship as self-evident. You have to constantly fight for your partner`s affection, which means taking care of your body. Letting yourself go also means not caring about your partner and can kill passion.

The American sexologist Denis Novels presents 5 mistakes you should not make in a long-term relationship, if you want to keep a passionate sex life.

Lack of trust If you are very jealous by nature, try to hold back at least a little. Being too jealous and untrusting can destroy any relationship. Constant accusations and looking for reasons to fight even where there are none will quickly extinguish the flame of passion still burning in your relationship.

Mood killer #5

Unattractive habits Biting nails, loud slurping of soup or throwing socks around the flat are only some of the unattractive habits, which can eventually drive a partner mad. Even though you find these insignificant, they are one of the biggest enemies of passion. Change them, while you still have time.


5 Passion Killers

Mood killer #4

Love at first sight? Not possible

Falling in love at first sight isn't necessarily a good thing. Or so this new study claims. Research conducted by dating website Parship shows that men who believe in love at first sight are three times more likely to cheat on their partners. Of the 5,000 single men and women interviewed, researchers found that 42 per cent of men who believed in love at first sight had later cheated (at an average of 3.4 affairs compared to women who averaged 1.2). Nafsika Thalassis of Parship told that the research finding pointed to a close relationship between infidelity and impulsiveness. "Men who consider themselves 'in love' within minutes of meeting someone are likely to fall in love rather frequently. It is also likely that such men interpret attraction and love as more or less the same thing," she added.

Trends of film promotion is really gearing up in Bollywood, as actors are not leaving any stones unturned to make their projects a huge hit. Recently our b-town heart heartthrob Ranbir Kapoor traveled in a local train in Mumbai to promote his upcoming movie Rajneeti, among general masses. For the first time in Bollywood's film Ranbir Kapoor will be seen in a critical role as a political figure in Rajneeti, who strikes pose in smoke rings, and changes all the rules of the game in politics.


Ranbir promotes Rajneeti,travels in local train

Coal India IPO on Track, Promises to be Like No Other


That this is the biggest IPO ever is not the only claim to fame. Coal India’s IPO is woven around a set of unique strengths that no other offering can hope to match, Indian or foreign. Investment bankers and investors around the world are already sitting up and taking notice of this one mega issue unfolding.

Secondary markets maybe going berserk due to international concerns, but Coal India IPO is not only on track for August-September, but promises to be like no other. While initial reports had highlighted the fact that Coal India’s is going to be the largest Indian IPO ever, more and more unique aspects are evolving that shed light on this IPO’s inherent strengths. Usually IPOs are big business opportunities for investment banks, with Indian IPOs garnering 3-5% of the total issue size as fees for the banks managing the IPO. But this time around, this largest Rs. 12,500 crore IPO will only bring in Rs. 12,500 only to the the six banks short-listed for the purpose. The reason? For major merchant banks, this IPO is too hot to miss. The bidding just got too hot with Citigroup going in for a Rs. 1 for Rs. 1 crore offer, and other international majors like DSP Merrill Lynch, Morgan Stanley, & Deutsche Bank, as well as Indian institutions like Enam Financials

Chairman Partha S Bhattacharyya is heading unprecedented initiatives like arranging 4 lakh demat accounts for employees, as well as low cost loans for them so that the ESOP portion delivers for Coal India’s huge employee base.

Partha S Bhattacharya, Chairman

and Kotak Mahindra Capital matching the offer, that works out to a mere 0.000001% fees. It goes without saying that all of them would have quoted zero fees, but then it would have been technically illegal. Indeed, as per some estimates, each participating bank is expected to tolerate a loss of Rs. 2 crore to make sure that this IPO is a success. From this, one can guess how valuable is this IPO compared with many hardpushed private sector IPOs which the banks view as just another business for them. Coal India is also getting a huge support from the Coal Ministry, with Minister of State for Coal, Sriprakash Jaiswal pressing Union Cabinet for awarding Maharatna status to this now Navaratna company. Maharatna status will give Coal India a stature and visibility that is now enjoyed by listed PSU giants like ONGC, NTPC, IOC, & SAIL. It will also allow Coal India to invest up to Rs. 5000 crore or 15% of its own net-worth in a project without asking government’s permission, which


Sriprakash Jaiswal, Minister of State for Coal

means an almost autonomous operation. With such support from international financial institutions and Government, Coal India is leaving no stone unturned to make this IPO uniquely successful. Chairman Partha S Bhattacharyya is taking special interest in ensuring that the company’s employees get the best deal out of the ESPO that is clubbed with this IPO. To make this a success, Coal India is creating 4 lakh demat accounts for its employee base, and even arranging for low cost loans so that they can subscribe effectively for the 10% shares reserved for them. Through such unprecedented moves, Chairman Bhattacharyya is confident of winning the endorsement of trade unions. Coal India and its investment bankers are now busy fixing the modalities of the issue including its price. Companies comparable to Coal India are non-existent in India, and rare even in the whole world. The best available comparisons are


Coal India is also getting a huge support from the Coal Ministry, with Minister of State for Coal, Sriprakash Jaiswal pressing Union Cabinet for awarding Maharatna status to this now Navaratna company.

The biggest international investment banks like Citigroup, Morgan Stanley, DSP Merrill Lynch, & Deutsche Bank have thrown their weight behind this IPO by agreeing to manage it for a record low cost of almost zero, and this clearly indicates the hotness of this IPO. USA’s Peabody Energy and China’s Shenhua Energy. But even these giants are no comparison, as, while Peabody holds 9 billions tonnes of coal reserve and Shenhua holds 7 billion tonnes, Coal India’s reserves are the world’s largest at 63 billion tonnes. The profit margins are also much better in Coal India, even better than Peabody, even while these giants complain that Coal India is subsidizing its product nearly 50%, compared to world coal prices. It is a remarkable performance indeed as no organization or the government is bleeding money due to this pricing, in contrast to what the oil PSUs are undergoing. The company is having a 30% operating profit margin. Coal India is also moving aggressively to address the fact that Indian coal is somewhat inferior in quality to the international one, by investing heavily in a washing process. International giants are in fact watching this development with concern, as the company plans to sell washed coal at a significant dis-

count to comparable quality international coal. Though being a monopoly is seen as an advantage in the capital markets, Chairman Bhattacharyya wants no such advantage and points out to the fact that due to the recent partial privatization of the sector, many corporates are having captive coal blocks, at least a couple of them having the size of one of Coal India subsidiary’s blocks. Coal India IPO is also likely to do well on the green front, unlike some private sector mining companies of the country that have attracted investor wrath in the West recently. In the geographies that they operate, the company has been noted for its significant green initiatives. The issue is likely to be priced around Rs. 200 with a possibility for decent appreciation in the near term itself. But the real attraction is in the medium-term to long-term as Coal India has definitive plans to double its output. And the beauty is that even then it can’t hope to match the demand for coal.



A Meticulous Hotel Management Institute Meticulous is a word readily associated with star hotels, but sadly not so with hotel management institutes, as many disenchanted hospitality students would attest. But here is the exception –Wayanad, Kerala based Oriental Group. Proving that a hotel management institute can be as meticulous and thorough, as the finest hotels in the world, or even more. Parents and students are bound to be surprised by Oriental’s relative perfection in almost all aspects ranging from the wide variety of professional courses, all the correct accreditations and affiliations that matter, the industry experienced faculty, the impressive infrastructure that is second to none in the country, the superb placement assistance, and above all, an exceptional level of transparency that is rare in this academic stream, both inside and outside Kerala. Starting from providing the true picture regarding their

t NK Mohamed, Chairman

Vithiri Village

various national and international accreditations – be it mandatory or voluntary affiliations – it is notable that Oriental doesn’t even attempt to make any misrepresentations. No wonder then that Oriental has quickly grown to be the country’s largest private sector hotel management institute. Still, no tall claims are made, with facts being presented as facts. Fact ranging from possible first salaries as a trainee to the probable time taken to be elevated as a GM, Oriental’s strategy is to guide realistically, and not misguide students or their parents. A visit to their different campuses would impress parents about their core facilities like the Basic Food Production Lab, Quantity Food Production Lab, Advance Food Production Lab, Training Restaurant, Front Office, and House Keeping, as well as their extensive hostel facilities. Promoted by a strong group of hospitality entrepreneurs, headed by noted hotelier NK Mohamed who has a couple of internationally renowned properties to his credit (Kadavu, Greeshmam, Vythiri Village), Oriental is professionally managed to the core by its Dean KC Robbins, Principal Shaji K, and Vice Principal Vinu George, all three of them noted not just for their academic track-record in hospitality, but for their hands-on exposure in the hospitality industry, as also for their multi-disciplinary postgraduate training in associated fields like travel, business administration, and computer science. Oriental’s innovative course, the three-year BA – International Hospitality Administration, is affiliated to IGNOU and American Hotel & Lodging Educational Institute. Admissions are open till July 31st 2010.

Vithiri Village - Treehouse

When you learn hotel management under Oriental Group, you not only learn it from India’s largest private hotel management group, but get to study in Malabar, the Oriental land that has mesmerized all – the Westerners, the Arabs, the Chinese – with its spontaneous hospitality, since the days of yore. No wonder, Oriental students enjoy 100% placement and are found across the world’s best hotels – Europe, Middle East, India, and more. Students opt for hotel management courses dreaming about landing a career with international hospitality brands like Hyatt, Taj, Oberoi, Trident, Radisson, Park Hotels, Leela, Metropolitan, ITC Welcomgroup, Holiday Inn, Quality Inn, Club Mahindra, Le Meridien etc. But, needless to say, many students fail to make it. But at Oriental Group of Hotel Management Institutions, such placements are second nature. In fact, Oriental students have been placed in each and every one of these hospitality legends, and more – altogether, in more than 50 renowned star properties, across India, Middle East, & Europe. The difference starts from the land. Oriental Group of Institutions is

promoted by Malabar Hotel Management & Catering Promotion Trust (MHMCPT), a coming-together of hospitality promoters based in Malabar, the cradle of hospitality in this part of the world, from time immemorial. Led from front by NK Mohamed, one of Malabar’s most successful hoteliers – his ventures include Kadavu Resort and The Greeshmam Resort – MHMCPT has made Oriental Group of Institutions the country’s No. 1 player in hotel management in the private sector in less than 15 years. The Group runs three institutions located along the Calicut-OotyMysore-Bangalore route. Altogether, the campuses measure up to 28 acres, in scenic locations of Wayanad District like Lakkidi and Vythiri. Oriental School of Hotel Management was the group’s first venture that started in 1995 and is affiliated to University of Calicut. The School’s Lakkidi Campus offers BSc Hospitality & Hotel Administration (Ministry of Tourism / IGNOU), while its Vythiri Campus offers two degrees – Bachelor of Hotel Management

& Catering Technology, BHMCT (AICTE / University of Calicut) and BSc Hotel Management & Catering Science (University of Calicut). Oriental Institute of Hotel Management’s campus is at Vythiri, and offers BA International Hospitality Administration. The course is affiliated to IGNOU. However, the most prestigious of the Group Institutions is the 1.5 lakh sq ft Oriental College of Hotel Management & Culinary Arts, that offers two three-year degrees affiliated to University of Calicut – BSc Hotel Management & Catering Science, and BSc Hotel Management & Culinary Arts. The College is India’s largest hotel management college in the private sector. The Group’s strength in this field is that their students get to train extensively at the two group-owned resorts. While Kadavu in Calicut is a 5-star resort, Greeshmam in Wayanad is a 3-star property. Another 5-star resort, attached to the group institutions, has also become operational now.

Seasonal Magazine June 2010 Issue  
Seasonal Magazine June 2010 Issue  

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