Escolar Documentos
Profissional Documentos
Cultura Documentos
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A fascinating co llectio n o f interv iew s w ith p assio nate first generatio n entrep reneu rs w ho d efied the o d d s to emerge w inners
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ROM TIME IMMEMORIAL, MAN HAS TRANSFORMED HIS CIRCUMSTANCE BASED ON THE POWER OF HIS CONVICTION. As a result, the sum of all total changes achieved by man has been the result of an entrepreneurial mindset. India has enjoyed a centuries-old entrepreneurial tradition. For centuries, this evident instinct was muted by the political system of the day - monarchic or invader-led. Even after India became independent in 1947, it was only in 1991 that the country began its real quest to catch up with the missed opportunity of the centuries. Interestingly, this inflection point converged with a number of realities: spread of globalization, emergence of capitalism, dismantling of financial controls, breakdown of information barriers, wider respect for unconventional businesses and a first-ever access to organised capital for first generation entrepreneurs. The result was that India wasnt just secularly placed to benefit from this global shift: one of the worlds most entrepreneurial countries was attractively empowered at the sweet spot in the worlds history to transform the destinies of its millions. Motilal Oswal Financial Services
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fastest growing segments of the Indian economy. In 2006, Motilal Oswal Private Equity Advisors Private Limited (MOPE) was started with the objective to catalyse the prospects of sound young businesses needing growth capital. The venture was intrinsically entrepreneurial; Vishal Tulsyan joined as CEO to spearhead the business. MOPEs first fund raised in 2007 was fully and successfully invested across 13 mid-market companies and diverse sectors. One of the facets of private equity is to distill fascinating stories of successful entrepreneurs with the objective to ascertain the well-spring of their passion. This book is an extension of the many evenings of our lives. A book of inspiring stories; a book of passionate individuals; a book of entrepreneurship. This book is being created with the hope that the underlying theme of these stories will be replicated across people, regions, hierarchies, backgrounds, dialects and time. Let a million entrepreneurs bloom!
WAS THE SON OF A HOMEMAKER AND INSURANCE SALESMAN WHOSE ENTREPRENEURIAL JOURNEY BEGAN AS AN EIGHT-YEAR-OLD IN 1970. MY MONTHLY POCKET MONEY OF ` 2 WAS IMMEDIATELY INVESTED IN SPORTSWEEK. The family almost called off the disbursement when it realized that the recipient was scissoring through the magazines to create thematic scrapbooks India versus West Indies, 1970-71 and then a few months later, India versus England, 1971. Around such a seemingly innocuous foundation was built a career of editing plus copywriting plus designing plus interviewing, getting someone to pay for the skill, being sent to tour with the Indian cricket team as a professional writer, ghostwriting for Imran Khan/Sir Garry Sobers/ Kapil Dev, reviewing the weekly movement in equities, writing a regular multi-edition Sunday investments column in The Economic Times and finally giving it all up to start Trisys. Trisys. Indias first dedicated annual reports agency. September 1995. Two borrowed tables. A team of four. Seventeen years later, MOPE assigns Trisys to interview some first generation entrepreneurs for a book. So here we are.
Why would anyone want to read about first generation entrepreneurs? This is why: we all desire to make positive change. Some of the people making the most effective change are entrepreneurs (through wealth creation for their diverse stakeholders). The most driven entrepreneurs are generally first generation. The most dynamic period of their existence are in their first few years comprising dramatic terrain: dearth of resources, native capability, opportunity window, responsiveness, lateral thinking, fleeting hopelessness, managing failure, inspiring people, infectious passion and work, work, work. There is something more about such people that I discovered while actually doing the interviews. They can charm; Sanjay Agarwal was into Mudar, saab within three minutes of shaking hands. They are peoples people; 16 of the original 19, who resigned Anil Jains erstwhile company to join him in the early Nineties, still work with him They have high energy; S. Kishore Babu continued to answer questions while engaged in a rigorous padmasana that had to be suddenly abandoned when the question became interesting; thereafter he would skip to the iPad, touch fingers on it and suddenly there would be a Helloooo from Germany and Babu would bellow, Mr Horst! I need clarification for an interview I am giving
They can be gutsy; Devendra Shah runs a near-` 1000 cr revenues company from a town most people will not even find on a map of India. They can be emotional; one of them emptied his wallet to produce ` 221 in diverse currency notes given as shagun on the morning of his first assignment 17 years ago. In a world that is increasingly obsessed with the trivia of never-was has-beens, this is finally something about achievers. In a world that selects to write only about the large and visible, this is finally something about the deserving. Galileo once said that there was no man who couldnt teach him something. By that yardstick, there is a university in here.
Limited (MOFSL) was a product of this convergence. The company was created by two first generation entrepreneurs Motilal Oswal and Raamdeo Agrawal drawn from humble rural and semiurban backgrounds, who moved to Mumbai seeking a Chartered Accountant degree and a livelihood. In the process, both these individuals met, developed a passion for analyzing and investing in companies, made humble beginnings as sub-brokers on Bombay Stock Exchange, capitalized on opportunities and formalized their engagement into a stock broking company. It has been two-and-a-half decades since and Motilal Oswal Financial Services Limited has emerged as one of the largest brands in Indias financial services industry, respected for quality equity research, superior service and complete transparency. Through this focus, MOFSL has transformed from a three-person shop into an integrated 1500-member financial services company servicing more than 600,000 retail customers and providing investment advice to the most competent institutional investors across the world. The company that started as a one-room outfit is now a ~US$ 310 mn market capitalization and ~US$ 230 mn net worth listed enterprise. MOFSL wasnt merely a product of Indias entrepreneurial revolution; it has also been a catalyst. It saw an opportunity to provide growth capital to companies (small to mid-size) the
Team MOPE
May, 2012
PS. This book has largely covered the success of first generation entrepreneurs funded by MOPE; subsequent editions will cover other MOPE investee companies.
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Anil Jain Time Technoplast Limited
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Sanjay Agarwal Au Financiers (India) Private Ltd
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Aaditya Dhoot IMP Powers Limited
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Motilal Oswal
O U R S T O R Y
Raamdeo Agrawal
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Vishal Tulsyan
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Our Team
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Nirmal Minda Minda Industries Limited
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Sunil Vachani Dixon Technologies (India) Private Ltd
OUR ENTREPRENEURS
ANIL JAIN
NUMBER OF EXPERIENCES FUSED TO MAKE ME WHAT I AM. My father rebelled against my feudal grandfather, left Moradabad and went to live in the family outhouse (meant for domestic assistants) in Dehradun, educated himself (MA, BA, B. Ed, M. Ed, LLB and doctorates in two subjects) before becoming a teacher. Money was always scarce; he would give tuitions from 7am to 11pm; on one occasion when my mother, with a pain in her tooth, needed urgent medical attention, my father made her sit on the cycle as he walked the cycle to the doctor. We couldnt afford a tonga. When I went to college, I decided to stand for elections. My father (who taught there) was not pleased. Beta, yeh Early days in school
sub kya achhey logo ka kaam hai? he told me. During the course of the campaign, I was threatened by my rival (Utha ke le jaayenge) and my father chanced to hear this. He told me, Now you will not withdraw your name. The result was that I fought the elections, won and the principal contestant disappeared. One line that my father said became a lesson for life: Dont let anyone overtake you from the wrong side!
most of my seniors were lazy; I would end up doing much of their work, which widened my understanding of technology, documentation, processes and people management. I was being educated every single day and being paid for it. I had made an informal pact with my seniors; if they took me to meet their seniors following the successful completion of an assignment, I would give them credit for project completion as long as they gave me more learning opportunities. When my boss moved to Voltas, he took me with him because I could be a good donkey. When the time came for me to
1 When an executive is coming into Mumbai to meet a senior executive of my office, I try to get from my office in Saki-Naka to the airport in 30 minutes and see him there rather than spend 90 minutes to see him at a south Mumbai hotel 2 Write clear memos for executives: what the individual is required to do, what others will do and how my executive assistant will follow up with them. The moment the executive sees that someone will follow up, speed picks up 20 per cent 3 When important issues are to be discussed with executives, the 7 to 8 pm slot works out to be three times more productive than the usual 2 to 5 pm slot 4 Use Skype rather than be willing to meet people at the drop of a hat. 5 Send people points of what you want to discuss with them in advance; then give them three time options of when you are open to discuss them. 6 Better to conduct a meeting in the cabin of the executive where he has an immediate access to all his papers, so that decisions can be concluded on the spot. 7 Collect your thoughts some seconds before a call so that you know what you need to speak about and in what sequence. No point getting on a call and asking Biju? 8 I usually tell my executives Tell me something that I do not know. This helps them get to the heart of the matter in seconds.
the promoter that in three years I would own a company with a higher turnover. When I got down, I called my wife from the Nariman Point PCO. All she asked was Anil, can you earn at least ` 40 a day? I said, I can at least do hamaali at Crawford Market and make that much. She replied: Absolutely ok then. Uske baad badshah ho gaye! The next morning, the doorbell at my house kept ringing every few minutes. Nineteen Prestige HM employees came home. They had also resigned. Most companies have a business plan and no employees; I had employees, no office and no business. Since we knew something about our industrial packaging business, we explored adjacent opportunities. Prestige had been making 200 litre drums; we entered the 30 litre segment. The employees pooled their provident fund and cash savings to raise ` 9 lacs,
HEN I GRADUATED FROM CHANDIGARH UNIVERSITY, I HAD A NUMBER OF CAREER OPTIONS. People said You cant join a PSU because nobody works there. I said that might be a good idea because if I end up doing the work of my colleagues, I will stand to learn things faster than any one of them. People said, Stay in a big company where your career will be secured. I said I would start at the lowest management tier of a large company, leave it to join the middle-level management of a midsized company and then leave that to join the senior management of a small company. And with this perspective I joined the E1 level of BHEL in 1976. Sure enough,
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leave Voltas, I selected to join an industrial packaging company called Prestige HM Polycontainers as CEO, responsible for technology transfer, marketing and commercialisation. It had taken me 10 years to move from the E1 level at a PSU to the head of a private sector organisation.
with which we bought our first moulds, raw material, telex and phone. The hall of my 900 sq feet residence
HAD AN ENRICHING TIME AT PRESTIGE HM POLYCONTAINERS FOR THE SHEER RANGE OF EXPERIENCES THAT THE STINT INTRODUCED ME TO. This stint came to an end when I was asked to sign some papers, which I was not in agreement with, and I refused. When I returned to my room, the lock had been changed. I got the message and resigned. Before leaving, I promised
doubled up as office; one of the bedrooms became the conference room. At the end of one month, I had to break into my childrens piggy bank for ` 5000 to pay our people. When our receptionist got her first pay cheque of ` 2500, she refused it on the grounds that she would rather dip into her savings and wait until the company did better. Meanwhile, our competitors attempted to block us by telling our vendors not to convert any material for us.
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You are the first man who has told me the truth. When do you want the machine?
HEN YOU STRONGLY RESOLVE TO DO SOMETHING, THE UNSEEN FORCES OF NATURE CONSPIRE TO MAKE YOU SUCCESSFUL. We had no spare cash to buy equipment. So MIDC included our name in a category of unemployed professionals and we bought our first Boisar plot for ` 329,000 in 1992. We had only ` 7 lacs out of the ` 30 lacs required to buy a moulding machine. The equipment provider asked how long I would take to pay the rest. I replied that I would not be able to commit a date because our business was just taking off. The supplier replied, You are the first man who has told me the truth. When do you want the machine? We had no advance to pay when we went to rent an office. One of the persons I went to was engaged in a phone conversation when I entered his Old office of Time Technoplast in Mumbai cabin. I spoke while he continued to be engaged on the phone. Suddenly, he opened a drawer, handed over keys and motioned me to leave. I said, what about the advance. That is when he put the receiver down for five seconds and said, Do you want to negotiate or start your business? So we got 700 sq ft of office space without paying a rupees advance.
We went to our competitors, offered them knowhow and got them into business to compete with us
HEN WE STARTED OUR OWN FACTORY, WE WERE CONVINCED THAT CUSTOMERS WOULD SOON QUEUE OUTSIDE OUR DOOR FOR OUR 30-LITRE DRUMS. We were mistaken. Despite the pioneering nature of our product, some of them could not buy for an interesting reason: they would say You are the only ones in your field to be supplying this. If you are not able to supply for some reason, it will affect all the shop floor equipment investments we have made. So we would rather buy a product where there are at least multiple suppliers. We had an ironic reality: our pioneering spirit was working against us. So we did something unthinkable: we went to our competitors, offered them knowhow to make 30-litre drums and then encouraged them to get into the same business so that our buyers could have a wider market to select from. The market for these products widened, more orders came in, we strengthened our competitiveness, carved out a larger market share and gradually emerged as the only supplier. There was another problem: we were fairly under-staffed to concurrently manage the office and factory. So I would take the 8.29 local from Andheri to Virar each evening, then take the Virar-Boisar shuttle, grab a bite at the andawala across the Boisar station, train our factory guard on how to hold a cycle for me while he rode his, get on to the cycle and then reach the plant by 11pm. Through the night I would check our output and quality, get to Boisar by 430 am, sleep on the station for a while, sleep again on the 515 local to Virar and then again on the Andheri local that would get me into Mumbai by 830 am. I would have my bath in office, put on a new shirt and tie and all those walking into office at 9 would see me smiling and wondering that I must have had a great evening at the club with the family. I worked like this for three years.
1 Whatever you do, try and be the best in the world. If you cant get podium position, sell and exit. 2 Dont get into a business because you like the balance sheet of someone who is already into that business. Check if the call is from within. 3 To see heaven you have to die first. I log 90.2 hours a week (I log my door-to-door time into an excel file every day), work 16 hours a day when I am abroad, work till 11 pm on Saturday to clear the weeks inventory and drop in at the office 11 to 5 on Sunday to read all pending mail. 4 Do extraordinary things with ordinary people. Passion always scores over intelligence. 5 Dont rush success. I spent 15 years from the lowest position in BHEL to the time I started my own company. Fruit that matures naturally is sweetest; pluck early, put it in for carbide treatment for quicker maturity and you could catch an infection. 6 Look global. Better to be a sailor on a ship at sea than the captain of a boat in a lake. 7 Most people want to do it alone. There is a limit to what can be achieved by one individual. Good managers lead teams that accomplish what they would have tried to unsuccessfully accomplish all by themselves.
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The desperation to survive is always more powerful than the desire to win.
OON THE TIME CAME FOR TIME TECHNOPLAST TO BUY SPECIALIZED MAUSER EQUIPMENT AND MOVE INTO THE NEXT LEAGUE. My previous employers blocked this through the legal route, insisting that it had an exclusive technology agreement with Mauser (which they didnt). We fought this over months in the courts of Uttar Pradesh. Every months delay was affecting our prospects. Finally, when we won the judgment in the Allahabad High Court, we didnt go home and celebrate. Since we knew that our competitors would block us through an appeal, I flew immediately to Moscow, chartered a military aircraft to Zurich, transported the equipment (which we had already negotiated) from Germany (where it had been manufactured) to Switzerland, bought it to Mumbai, paid the duty, transported it from the runway to the plant (where the foundation was waiting to be completed), had 300 workers to put the wall and roof back in hours and rolled the first batch of the end product out within just nine days from the time the plant had been shipped out from Germany. By the time we had paid for the machine a couple of weeks later, we had sold 14,440 drums for ` 50 lacs in revenues; the contribution derived from this was more than the freight incurred. I often say this: to beat Usain Bolts 100 m record of 9.58 seconds you can either rise early to practice hard or you can wear a red shirt and walk past a bull. The desperation to survive is always more powerful than the desire to win. By the time the Mauser technologists came down to get the plant up and running, they saw their equipment in full steam, so they rebooked their tickets and went off to see the Taj in Agra. Time Technoplast later went on to buy out the Prestige HM factories in Boisar. I remember telling the financial intermediaries who made that transaction possible: Is factory ke neev ke neechey mera khoon aur paseena hai.
immediately to a position of higher responsibility. We do not have any vouchers and rules for travel. If we suspect the integrity of any of the bills that have been presented, we extract all the travel bills of that individual for scrutiny. Indecision is no decision; people can fail, which is better than not having to take a call and escape unnoticed. We run a tight financial ship no show
business. I continue to stay in a 900 sq ft apartment that I bought when I was an employee. I travel economy class even when I go abroad; the notional saving is credited to an
Honesty pays.
TAY PRINCIPLED. THIS IS PRECIOUS ADVICE THAT I MUST SHARE WITH ENTREPRENEURS. WHEN ONE IS FIGHTING HARD IT IS TEMPTING TO BREAK A FEW RULES AND GET AHEAD. At such situations I always remember
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account used for general employee welfare. We take people with specific competencies and put them in new areas with responsibility. They
my fathers words: Never let anyone get past you from the wrong side. If we expected no one to overtake us from the wrong side, we shouldnt be doing it ourselves. There is one instance that comes to mind. Time Technoplast had a serious disagreement with Mauser in 2011 related to the manufacture of 1000 litre IBCs that had been developed by them,
which we had been licensed to use. Mauser called off the agreement for no fault of ours. However, the reality was that we were not wrong in any way. Even though they were larger, we decided that we would fight. It would have been tempting to continue using their 1000 litre IBC technology while the fight was in
progress. But that would have been unethical. We discontinued its use, we developed an alternative technology from scratch, and the result is that because of our principled stand on their IPR, Mauser got back with the decision to work with Time Technoplast all over again. Honesty pays.
will work hard to save their reputation, benefiting themselves and the company. When someone comes into my room, I have to
Because of our principled stand on their IPR, Mauser got back with the decision to work with Time Technoplast all over again.
add value to his insight in some way before he leaves. Now if I have to teach, I have to learn, so I end up reading a number of books on interesting subjects. If he stays, he adds value to the company; if he leaves, he spreads the companys goodwill all over.
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DEVENDRA SHAH
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drop handbills across the region to impress villagers. My grandfather brought two new Rajdoot motor cycles, went to the mukhiyas house, sat in discussion about some relatively flippant point, a crowd accumulated around the two gleaming vehicles, then my grandfather stepped out and took the mukhiya for a motor cycle trip around the village before dropping him back. It was an expert play in emotion; the competing brand disappeared from Manchar district in three months. Now that there were no disturbances in the market place, my grandfather leveraged the enduring trust: he began to market jewellery, fertilizers and
potato seeds. My father took this ahead; in 1972, he commissioned one of Indias first cold storage warehouses in Manchar, which made it possible for farmers to store potatoes during oversupply in exchange for rent. If farmers needed money while their potatoes were being stored, he gave them credit. As a result, the family graduated from one to multiple businesses lender, landlord and material supplier. And all because at the end of the day, we had created the reputation that whatever we sold would be genuine and rightly priced.
The three Shah brothers share the entrepreneurial zest. (Devendra is seated)
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ORN INTO SUCH AN ENTREPRENEURIAL FAMILY, IT WAS NATURAL THAT I ATTEND THE DUKAAN FROM THE TIME I WAS IN CLASS TEN. When I went to college, it was like going to kindergarten. The result is that I got through college with a 30 per cent attendance, would study at the dukaan during the day and attend only during examinations. My duties were fixed: I would unlock the shop each morning; I would be shifted across our various businesses as they peaked seasonally. It was during one of the particularly nivraa periods between seasons that I ventured to ask the family permission to start something potta nu (own). Within months, I started the business of cattle feed supply. This was my routine: rise early, skip
brushing my teeth, skip breakfast, get to the market the same time as the farmers would come to sell their milk, take their indents for cattle feed, requisition the material, warehouse it and deliver to my customers. Then return to open the shop and sit in it. Within weeks, I had figured out that this supply chain could be strengthened. I would reach the market, take indents, inform the supplier of how much material needed to be delivered directly to each farmer, eliminate the need for warehousing, save money, reduce the selling price and widen my market share. Within months, my feed business had grown from scratch to around 100 tonnes a day. Interestingly, despite the cash surplus that was growing each month, this was still side business for the family. I could do this as time-pass; eventually I would have to return to the serious time-tested business of marketing seeds and textiles. Bhagyalaxmi farms, Manchar. The largest private dairy farm in the country.
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If people would not be able to consume milk, we would make milk-based products instead.
ITHIN MONTHS OF COMMISSIONING THE MILK PROCESSING CAPACITY OF 20,000 LITRES A DAY, I DOUBLED THE CAPACITY. THE MILK AVAILABILITY WAS DOUBLE WHAT I COULD CONSUME. However, another problem emerged: there was a limit to the amount of milk that could be processed and sold. People would drink milk once a day and would not necessarily increase their consumption because it was abundantly available. Besides, one couldnt sell cheaper because that would ruin the operational economics. We had a problem. So we could cap our milk processing capacity and wait for incremental
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demand increases linked to increases in per capita consumption. Or we could stop buying the surplus milk and destroy the trust that had been patiently created over the months. Problems lead to opportunities. We decided to create downstream processing capacity for value-added milk products instead. If people would not be able to consume milk, we would make milk-based products instead. And that is how our company entered the manufacture of ghee and powder in 1998, cheese in 2009 and paneer in 2012. Because of a problem in allocating the excess milk supply, we entered the challenging domain of milk-based products dominated by the likes of Amul for decades. By the back door. Pride of Cow the only farmfresh milk brand available in the country today.
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Which brings me back to how problems dont create problems; they only lead to solutions.
We proposed a cheese capacity larger than the cheese consumption of the entire country!
N LINE WITH OUR NEW BUSINESS MODEL, WE ENTERED THE BUSINESS OF CHEESE MANUFACTURE (3 TONNES PER DAY) IN 2001. WE KEPT THIS CAPACITY UNCHANGED UNTIL 2008 WHEN WE PROPOSED AN INCREASE IN CAPACITY IN VIEW OF A SWEEPING CHANGE IN DIET AND LIFESTYLE STANDARDS. The problem was not the increase: it was the extent. Around 2008, the size of the Indian cheese market was estimated at 27 tonnes per day. We were proposing an increase in our capacity to 40 tonnes per day. As soon as anyone would hear of this, he would dismiss us as reckless.
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Our farm, comprising 2500 of the best cow breeds, provides high yield and superior milk quality that is provided as a We entered the business of cheese manufacture (3 tonnes per day) in 2001. three Indian cities where our material would be in perpetual shortage; we reckoned that if we increased our production we would easily be able to market 8 tonnes in those markets. We introduced shredded cheese Then someone asked: what if we market our block cheese in other cities as well? So the team said maybe we would be able to raise sales to 15 tonnes per day if we widened our marketing network. Then someone suggested: what if we add an SKU? So we redid our calculations and added 5 tonnes per day for our second SKU. And that is how a 3 tonne-per-day We launched food products (chocolate plus cheese / tomato plus cheese) in a squeezy tube for the first time in India in 2011 endorsed by Disney characters Tom & Jerry as a packaged branded product for the first time in India in 2011 branded product (Pride of Cow) directly to consumers in South Mumbai no intermediaries We introduced fruit yoghurt for the first time in India (2009) with a folding spoon attached to each cup
But there was a method in the madness. We possessed a strong brand that had stood up to Amul in the marketplace. When Amul undercut us by 10 per cent, there was panic in our company. But the calls that came in from the urban centres told us something that we couldnt quite understand; our dealers would say, Zyaada maal do! Since we had limited capacity, we raised our selling price 5 per cent with the assumption that this would temper the demand of our product to the point where it balanced supply. However, the calls that followed from our dealers were Bhaav badhaaya theek hai, lekin maal to bhejo! So when we sat to discuss the increase
in our production capacity, I argued from an unusual point: there was something unprecedented transpiring in the marketplace that we couldnt quite place. We were making demand projections on the basis of an established track record but that past had no connection with how lifestyles were changing. As a result, we would need to base our capacity increase not on the basis of what was but on the basis of what could be. So the next question was: by how much should we increase our production capacity from 3 tonnes per day? We sat down to make estimations. We were marketing our block cheese in only
company drew out a business plan to seven-fold its sales in one year.
We were making demand projections on the basis of an established track record but that past had no connection with how lifestyles were changing.
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and Southern India. The Company has a milk processing capacity of 1.2 mn litres per day at Manchar (near Pune) and 0.5 mn litres per day at Palamner (near Bangalore). The company markets liquid milk and UHT milk in tetrapaks as well as valued-added milk products like ghee, curd, yoghurt, butter-milk, cheese (mozzarella and cheddar), whey, table butter, gulab jamun mix and milk powder (skimmed and whole milk powder). The traditional consumer products like ghee, butter, pouched milk, curd and paneer are sold under the Gowardhan brand while contemporary products like cheese, paneer, curd, flavoured yoghurt, UHT milk (tetrapak), butter milk and instant milk powder (Milko and Dairy Whitener) are sold under the GO brand. The Company was founded by Devendra Shah and his brothers in 1992. They hail from a Gujarati business family, which has been in Manchar for more than a century. The company achieved a topline of ` 9 bn for FY 2012. For details please visit www.gowardhanindia.com
HERE COMES A TIME IN THE HISTORY OF A COMPANY WHEN IT MUST DECIDE WHAT IT TRULY STANDS FOR. At our company, that moment came in 2010. Since we possessed a considerably larger cheese production capacity than we could immediately utilise, our company was approached by a large multinational competitor with a conversion proposal. The company was willing to buy the cheese manufactured by us, which would then be packaged and marketed under its own brand. One school of thought felt that we should grab this lifeline or the interest burden incurred for setting up
production capacity would erode our viability. The other school of thought felt that the income we would make from this outsourcing arrangement would be negligible compared to the additional cost that we would have to incur on branding to fight the multinational competitor marketing our very products in the marketplace. The big question: should we look at the next quarter or plan for the long-term? Our relationship with Motilal Oswal Private Equity (MOPE) proved handy. MOPE asked us to look within. What is it that we wanted to be? A contract manufacturer for the rest of our life? We got our answer. We knew what to do.
HERE DO WE WANT TO TAKE THIS COMPANY? Let me give you a perspective. Australia and New Zealand produce considerable milk, which is processed into milk products, graduating some of their companies into large multinationals. India is the largest producer of milk in the world but there is no Indian dairy or foods company with a global presence.
Parag Foods aspires to emerge as an Indian multinational in this sector by catering to the tastes of the Indian (resident and expatriate) population, which account for a sixth of the global population, and through competent brand management that inspires product trust and credibility. Soon.
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S. KISHORE BABU
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HE CULTURE OF SHARING BECAME A PART OF MY DNA FOR AN INTERESTING REASON. My parents left the family my two brothers and two sisters - under the care of my uncle Kasukurthi Ragaviah and my aunt Peddamma who had no children and adopted us as their own. It was Peddamma who virtually made all the important decisions. One of her decisions was to have a big impact on my life: I would be left to pursue my studies uninterrupted and the result was that I joined Bhira Swamy Elementary School in class 1. I was a good student and ranked between first class and distinction up to class 12. After school, I decided to pursue a degree in Mechanical Engineering and tried to gain admission in Siddhartha Engineering College, Vijayawada without success. Without wasting time, I decided to pursue my B.Sc. in Nagaram. Meanwhile, my uncle expired but told my aunt, Kishore will shine in life. Do not hesitate to spend on his studies. The following year I applied for a seat in Mechanical Engineering and got it. At the insistence of my aunt, my father sold that years paddy crop for ` 25,000 to mobilize the sum required for the admission fee. The monthly expenditure was met by my aunt with the paltry sum she received as rent and sale of milk from the few buffalos she reared. It is
around these sacrifices that the foundation of my career was built. At Vijayawada, I would stay in a hostel. The word of my engineering knowledge began to circulate; I would teach 30 fellow students; the study books you could read or not read, but my notes were something that students devoured. The word on the campus was that if you went though Kishore Babus notes, you were bound to pass. My success became my undoing; since I started providing tuitions, the hostel told me that I would have to seek alternative accommodation. They couldnt possibly have a resident student running a commercial business. When I finished college, one of my close friends Jagan Mohan joined a power engineering company. The company required him to assume office in Korba. Since his parents did not want him to go alone, his father M.Venkateswara Rao convinced me to join the company, produced an appointment letter with a traveling advance and the result was that I got my first job at Indwell Constructions without as much as an interview. Destiny. INCE I HAD A DREAM OF BECOMING A PROFESSOR IN AN ENGINEERING COLLEGE, I TOOK MY BOOKS TO PREPARE FOR ENTRANCE TESTS. Interestingly, for someone who would have been keen about pursing a career in power engineering, there could not have been a more appropriate place to join than the NTPC plant in Korba in the early Nineties. The company was engaged in building a 500 MW plant. The core mechanical did not return home. In the fourth year, my companys engagement with NTPC neared an end and I returned to Vijayawada. My friend left to join NTPC, I felt kind of lonely, I applied for jobs in IOC, BARC and ONGC, my managing director K. Rama Rao requested me to stay on with more responsibilities, and the result was that I was promoted to Project Manager, General Manager, Director and then Joint Managing Director. I was de facto number three in an organization of 200. I was only 28. When the time came for me to start my own company, I went to all the people I had known with the simple request: Saab, kaam to dega na aap? And that is how Powermech Projects Limited was created by my customers in 1999. Kishore Babu was and continues to be a dasher
My father sold a years paddy crop for ` 25,000 to mobilize the sum required for my university admission fee.
When I finished college, one of my close friends joined a power engineering company.
Fortunate to be in Korba
area was chocker-block with engineers from Germany and BHEL. In this invigorating space, I demanded more work. Within a year, I was promoted twice. I was so engrossed by what was happening that for a year-and-a-half I
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Failure as a teacher
OWERMECH STARTED AS A COMPANY FOCUSED ON THE OPERATIONS AND MAINTENANCE SIDE OF POWER ENGINEERING PLANTS. However, seeing that the larger ticket size projects were on the erectiontesting-commissioning (ETC) side, we gradually graduated towards ETC side.
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In the next few years, we secured a landmark order of our companys history in 2002 an assignment covering total piping and turbine erection for IOC (Panipat) for ` 4 cr. We did our scheduling, we did our calculations. We stood to make a tidy sum from the project. However, the scope of the project kept changing, the project kept getting delayed and the result was that by the time the project neared completion, we had been ruined:
there was no diesel in our on-site vehicles, there was no ration in the guest house and we finally finished with a net loss of ` 4 cr on that project. In retrospect, it was a valuable lesson early in my career. I would never make the mistake of embarking on a project with documentation loopholes ever again. And yes, we completed the project to the satisfaction of our customer. The ` 221 that my mother gave me when I first ventured out
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MY ADVICE TO ENTREPRENEURS
By S. Kishore Babu
Specialize, specialize, specialize. Dont profess to do everything Explore synergies by exploring adjacent business spaces If you are in business for the money, you will fail There is nothing like the culture of urgency (Do it now!) The entrepreneur with the word Yes, can do in his dictionary will always make things happen Clear your inventory of things to be done by the time you leave in the evening. If there is something unfinished, delegate and ensure that this is finished Capture the space you are present in and the business will come
We went with MOPE for some good reasons: my chemistry matched Raamdeojis within minutes at the first meeting; he decided he would invest in my company when I told him that I would never dilute my shareholding below 60 per cent even after I went public. Besides, MOPE brought rich value to our table: it taught me how to manage the cash flow better, how to strengthen the Board, strengthen the overall governance process and tighten what part of the business to report a stronger balance sheet.
My vision is to emerge as a onepoint provider of power sector solutions thermal, gas, hydro and nuclear - the world over.
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Since 2008-09, we grew to a turnover of ~` 700 cr in 2011-12. We entered into partnerships with most of the power majors operating in India - BHEL, NTPC, STATE GENCO, DVC, Reliance, Lanco, Adani, L&T, BGR, JSPL, Sterlite, GMR, Siemens, Alstom, GE, LMZ, Power Machines, SEPCO, STEPC, Doosan, Tata, IOC, HPGCL and Ceethar Vessels, to name a few.
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Powermech is a leader in the erection and commissioning of boilers, turbines and generators for thermal power plants in India. The Company also undertakes the overhauling and maintenance (OHM) of power plants. In 10 years, Powermech has carried out 36 erections/commissioning of projects in India and over 250 OHM contracts in power plants. Powermech has worked for almost all the power EPC players in India like BHEL, REL, Lanco, Doosan and SEPCO. Powermech was promoted in 1999 by technocrat S. Kishore Babu, a first generation entrepreneur. Before promoting the Company, he spent 15 years with Indwell Constructions, a company in the same space. The company achieved a topline of ` 7 bn for FY 2012. Please visit www.powermechprojects.in for more details
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SANJAY AGARWAL
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But after I finished my college, it was time to decide. Put more time into cricket or dhandhe mein lag jaao. I made my decision. I went and handed over my kit bag to a friend and never played again.
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Create a hunger for doing something big; do not be happy with your ` 12,000 a month, increment to ` 15,000 a month; zindagi mein bade banne ka sapna should not be things that you would like to own (Ek bada ghar, ek badi car) but how how you see yourself a few years from now, your work, your passion and life objective. Take the big chance in life. Experiment with this or that, try something or the other. In your position, what is there to lose? When the ball is coming on to the bat, why bat as if batting for a draw on the fifth afternoon? Become more secure; shrug when someone doubts your ability. When someone beats you with two outswingers, take fresh guard, dont lose confidence and snick behind that very over. Dont be distracted by all the khilona of the world - mobiles, facebook and twitter. Spend much of this time productively in learning something, widening your knowledge. The memory of what film you saw last night will soon be forgotten; the benefit of a new acquired skill will be enduring.
painted a fascinating picture: agar hum ` 10 cr ka bhi kaam kiye, then on the basis of a 2 per cent commission, we would make ` 20 lacs a year especially when there was no competition of the kind of services that we would provide in Jaipur. I nodded and we drew out our terms: I would get fixed remuneration (` 5000 per month) and unfixed remuneration (partnership with undecided sharing). The irony was that we started a company alright BIFCO but there was no money, no clients, no business plan, no role allocation. So I did what might appear laughable now: I went to the nearest SRF Finance outlet and asked What do you do? How do you do it? How much will you pay me if I get you a car finance customer? And
then I went to Anagram and then more such financing outlets to get an idea of how they did business. After an initial survey had been made, I called some existing clients of Anil Bafna & Co.: Sir, if you need a car to be financed, we would be happy to do it for you. And then we took companies intending to go public to merchant bankers. In a few months we realized that we need a stronger business model than just be calling existing customers for khudra-khudri business. Eventually few companies that did go public through our intermediation would ever get round to paying us our fees. Problem. And that is how one day I told Anil sir, Why dont we start a financing business of our own?
In a few months we realized that we need a stronger business model than just be calling existing customers for khudra-khudri business... And that is how one day I told Anil sir, Why dont we start a financing business on our own?
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Turning point
OMETHING HAPPENED THEN. MY SISTER WAS DIAGNOSED WITH MULTIPLE MYLOMA. SHE REQUIRED BONE MARROW TRANSPLANT IN LONDON. The projected expenditure was estimated at 100,000 pounds. After about four months while we were in London, she passed away. That extended stay in a foreign land widened my exposure. For instance, when I was leaving the service apartment that we were staying in, I went to settle the bill. The man on the desk did not produce a ledger and check our name and tally it with the number of days we had stayed here. He simply asked me, How many days have you stayed with us? I told him. He calculated the amount. I paid. The bus conductor would not go from person to person checking whether one had bought a ticket or not; commuters paid anyway. The 7.01 train came at 7.01. My mother could commute from our place to the hospital by simply looking at the signages along the way. I returned a changed man. I decided that whatever business I would own or run would respect people. I would fight bebasi (helplessness) at all levels. If I prospered, I would share my wealth (our chauffeur has ESOPs and more than 1000 Au employees have gone abroad in the last three years to see the world, including our peon). These are the enduring gifts that my sister left for me. If they wanted the executives time, he or she would drop everything else, attend immediately and ensure that the customer could move on in quick time. If people entered my office, the gateman would smile and the peon would offer a welcoming glass of water. If they needed something to be done, the accountant would reply making eye contact.
Our chauffeur has ESOPs and 1000 Au members have gone abroad in the last three years to see the world, including our peon
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HEN YOU ENTER THE FINANCING BUSINESS, SOURCE CASH WITH SPEED AND FINANCE WITH RESPONSIBILITY, THE WORD GETS AROUND. In our case, the word got to HDFC Bank. Their executives noted that this new fellow in Jaipur had a can do attitude, he would seek customers from way out places, he would report an attractive IRR difference for months in succession, he would turn some business away if he was not sure about loan quality (no chepna), his people would treat customers well, he had sound documentation systems and his existing
customers were getting more of their friends and relatives to work with him. This fellow could be trusted. And that is how HDFC Bank gave us ` 50 cr for the first ever time in 2003-04 I kept a security deposit with HDFC Bank. The bank gave me a growing pipeline to funds. I would collect an attractive IRR spread. I would also bear the loss risk. HDFC Bank reported an appreciable increase in income. They gave me more funds to work with. The business grew for both. HDFC Bank reduced the proportion of security deposit I needed to keep with them (from 20 per cent to 5 per cent). A relationship had commenced. Life is a cricket match. There is more to be learnt about life on the cricket field than in most business school classrooms. It is all about passion. Why else would a Tendulkar (not captain) with his hand in a cast be willing to travel with the Mumbai Indians team to other centres in 2012 knowing fully well that he would not be able to play? Develop match temperament. A big score not made only by middling the ball. It is made by ignoring the abuse while you are in the middle, standing up to the heat, recognising changes in pace, bounce and field placement etc. Similarly, business is about managing the entire eco-system, not just about select competencies. There is always the next innings. Losing business or market share is not the end of the world. It is simply a turn in the game when you have lost three wickets for 2 runs. The moment the other team puts on the wrong bowler and two of their fielders drop catches, the game can turn again. Stay prepared.
WHAT THEY DONT TEACH YOU IN BUSINESS SCHOOL, YOU CAN LEARN ON A CRICKET PITCH
By Sanjay Agarwal
big goal should be to get to 30, and then 40 and so on. Similarly, dont try and precisely plan your way into 2022. The pitch will always keep changing. What was a firm wicket on the first day will be crumbling by the fifth. Adapt. Teams become good when players deliver. Teams become great when average players deliver. Back team members to do big things (across roles and situations). Pace your innings. Grow fast, then consolidate, then grow fast again. Respect the umpires finger. Respects regulators and the laws of the land. The best player is one who performs well in adverse away conditions. Most people hit big centuries at home. But when they go abroad, they fail. It is important to succeed in various geographies. All players make a team. People remember Laxmans 281 in the Kolkata Test when India beat Australia after following on, but there was a Harbhajan who also took a hat trick and others who held all the catches.
HDFC Bank noted that this new fellow in Jaipur had a can do attitude, he would seek customers from way out places and he would report an attractive IRR spread for months in succession
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Plan your innings in increments of 10 runs. When you are 20, the
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Managing a crisis
HAD GROWN AU FINANCIERS PRIVATE LIMITED FROM A BOOK SIZE OF ` 5 CR IN 2003 TO ` 250 CR IN 2008. FROM A NET WORTH OF ` 1 CR IN 2003 TO ` 25 CR IN 2008. FROM A PROFIT AFTER TAX OF ` 0.2 CR IN 2003 TO ` 2.5 CR IN 2008. FROM A PRESENCE IN 3 On the one hand, a number of intending customers stayed away. On the other, we had a debt-equity ratio (gearing) that had already touched the prescribed limit. We recognized that the one way to grow was to put our earnings back into the business, even as a number There was only one alternative: get someone to put money into net worth from the outside. And that is how I LOCATIONS TO 42 LOCATIONS. Then came the slowdown of 2008. of marketplace opportunities would have to be forgone. The other way to grow was to put in additional net worth that would make it possible for us to borrow/lend afresh and expand the size of our book. But I had no spare cash; all my assets were in the business.
began to entertain the idea of broadening the shareholding, getting a decent valuation on my business, selling a part of the companys equity for an attractive inflow of net worth and create the financial foundation to drive the company into its next orbit. We had excellent credibility in a competitive business environment. What we now needed was cash. And that is how Motilal Oswal Private Equity (MOPE) came into the picture. Agreements being signed with MOPE and IFC Washington
your own? Then perhaps recalling his own days as a young entrepreneur, growing his resources from scratch, he said something that I will always remember: You can do it! And that is how MOPE invested ` 20 crores in a company with a net profit of no more than ` 2.5 cr in 2008 despite its stated discipline of putting money only in companies that reported more than ` 10 cr in profits. They didnt back our content; they backed our intent. At the IFC Washington awards in London
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TUSHAR MEHENDALE
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completely funded my education. However, when I reached the university I realized that the research was in an area where I had no interest. So I had alternatives: make a compromise and agree to engage in a field where I had no interest, or pay my way through. I decided that I would do my own thing and find alternative funding. I refused the offer for Research Assistantship and suddenly, I was in the university with no means of funding my education. The university gave me a week to come up with an alternative funding line or told me that I would have to go back. So I immediately typed my resume and went from department to department within the university, checking whether they would in any way have any openings for research assistants or project assistants. I was refused in four places. Finally, I presented myself at the office of the Director of Industrial Engineering. I waited while he read my resume. Suddenly he stopped. He pointed to a word AutoCAD. You know AutoCAD, right? I nodded. Frankly, I had only an inkling of AutoCAD at that time. AutoCAD was something that we had as a small part of one subject during the engineering course in India. I had indulged in classical resume padding as I did not have anything significant to put on the resume, being fresh out of my undergraduate training. So when he asked, Will you convert some of the legacy drawings of my consulting client into AutoCAD? I can offer you a Project Assistantship, I nodded again.
We struck an agreement. He would provide me paid work; I would completely fund my education through my earnings. Within seven days, I was alive again. I paid for my first year of Masters course by being draftsman by night and student by day. I learnt something valuable: when you say no, a number of possibilities emerge.
Within seven days, I was alive again. I paid for my first year of Masters course by being a draftsman by night and a student by the day.
A number of our classmates became our first clients; we would create their horoscopes on this software companys computers and then roll print outs on their dot matrix printers! Looking back on this today, this was definitely riding on the wild side as there would have been serious complications had we been caught.
WHAT EVOLVED ELECTROMECH INTO ONE OF INDIAS MOST DYNAMIC CRANE MANUFACTURERS
By Tushar Mehendale
Our intellectual capital, reflected in our flexibility to customize the right product around specific customer needs Our possessing a small company soul in a large company body; customers know exactly where the buck stops in our business, which helps resolve issues with speed
Our sense of innovation; over the years, we have made a widespread use of cutting-edge technologies; some control and drive systems pioneered by us were used in cranes for the first time in India and are now industry standards. Our scale; we are the largest in our industry space in India by a factor of three; this has translated into higher economies and quicker deliveries Our range; we make small to large cranes, helping enhance our cash flow and reduce the risks arising out of project delays. We have the largest product mix in the industrial cranes segment in India Our brand associations, which not only enhance our credibility among customers but also widen our capability to provide customers with whatever they want, irrespective of whether we make it or not Our crane population in India of around 4000 compared to around 2500 by the nearest competitor, creating a larger market for us to service this equipment and generate annual service and maintenance income
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In retrospect, the instance taught me the importance of fighting back. Against injustice, against adversity, against challenges.
black listed by the entire Tata group. Which is when our lawyer suggested something lateral. He said that there was no point in filing a civil suit; what we needed to file was a winding up petition as the client was not in a position to pay us up and that if the client did not respond within 15 days, we could actually push for the liquidation of Tata Projects. As it turned out, nobody at Tata Projects even read the notice we had sent. When the deadline passed, someone in that company realized that the company could now be technically dissolved. The result was that we were paid the entire outstanding in a day, the delivery of goods was taken and we were liberated! We were fortunate. We survived that scare, the economy revived thereafter, our order book grew, revenues and profits increased and we were never in as difficult a position ever again. This incident was a trial by fire for me and was akin to learning to swim by jumping into the deep end of the pool. In retrospect, the instance taught me the importance of fighting back. Against injustice, against adversity, against challenges.
AROUND THAT THIS FELLOW IS DIFFERENT. And just as it so happened, on 4 February 2000, just a fortnight after my father had passed away, our company received the biggest single order in its existence until then. ` 1.05 crores worth of hoists to be delivered to Tata Projects by May 2000. We had a total annual sales turnover of only ` 3.25 crores in that year and hence this order was pretty significant. However, when the goods were ready as per schedule, Tata Projects backed off. We concluded that due to some project execution issues at their end, they would
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N A NUMBER OF BUSINESSES, THE BRAND REMAINS THE SAME ACROSS THE LIFE OF THE BUSINESS. At ElectroMech, we recognised that if we needed to graduate from the local to the national, we would need to get past the doors of a number of decision makers. The problem was that in the early years of our existence the sole brand of Electromech was not likely to get us there. Then came an opportunity. While Tata Blue Scope Steel was being commissioned (engaged in the business of pre-engineered buildings), the company had a requirement of cranes. While Tata Steel was convinced that we could make the cranes that were required, Blue Scope Steel expressed the intention to stick with ABUS cranes they possessed in their plants in Australia. The simple thing for Tata
Blue Scope was to get ABUS into India. But ABUS was conservative; it had no intention of entering India on its own as its strategy was to expand its reach through strategic partners in different countries. We saw an opportunity: we would propose to be ABUS representatives in India. This is how the value proposition would work. Their benefit: we would be able to market ABUS products in India without ABUS needing to worry about anything. Our benefit: we would be able to leverage this international association and reach out to a higher category of customers, we would be able to provide ABUS existing products, we would be able to customize ABUS products to Indian conditions and client requirements and we would be able graduate from selling products to crafting solutions for our customers. In our cricketing equivalent, we would now be able to extend from the Ranji level to play Test matches. The result was that in 2005, this 150 million German giant shook hands with a ` 12.5 crores revenue Indian ElectroMech to cater to the growing needs of the fourth largest economy. Coup.
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Playing the volumes game - and never making that mistake again
O SOMEONE WHO HAS SEEN THE SHARP GROWTH THAT WE REPORTED, IT MIGHT APPEAR THAT OUR BUSINESS HAS BEEN SMOOTH SAILING. It has not. We have made a number of business errors in the past but recovered with the conviction to never make them again. This is best explained by what happened in 2010. We entered the year with a revenue enhancing focus. We reckoned that since we possessed a large space capacity, we could easily become the only recall in the cranes and hoists sectors in India. We felt that we would be able to achieve this objective if we addressed every kind of order that came in - whether value-added or low priced. In our opinion, this would enable us to capture a large market share; create a relationship so that the next time the customer ventured to buy a crane, it would only do so from us. More importantly, the customer would be able to spread the goodwill of the experience to other industry players, encouraging them to work with us. Our strategy was vindicated recently On paper, this theory made sense. Not in the marketplace. We took a number of orders to enter specific industry segments at substantially low prices. The result was that our overall margins declined nearly 800 bps and the projected cash flows just did not happen. We were becoming bigger alright but not necessarily better. We made a course correction. We recognised that even though the profitability in this business was driven by volume, we needed to be selective. This business was not about topline ego; if the competition took some low realizations business away from us, then so be it. As a result, in the last couple of years, which were among the most challenging in the capital goods sector in a long time, there were times when production was consciously low on our shopfloor or else, paisa kheesey se jaata. The result is that in an increasingly commoditised space, we have gone back to our internal contribution benchmark of 30% plus, derived through valueadded products, savage cost reduction and an ability to roll products out faster through enhanced productivity. when we looked at the numbers reported by some of our competitors who took away a substantial chunk of business from us on low prices. They struggled to break even and some have even managed to wipe out their networth completely!
Eventually, one recognised that one needed to build capacities under one roof and if we ever wanted to time it business first, space later - we would never ever be able to time it right.
We made a course correction. We recognised that even though the profitability in this business was driven by volume, we needed to be selective.
MY FAVOURITE BOOK
By Tushar Mehendale Atlas Shrugged by Ayn Rand. The principal message I derived out of it: you are your own architect and own enemy. Your best friend and fiercest competitor. I have read the book three times.
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MY ADVICE TO ENTREPRENEURS
By Tushar Mehendale Start early in life as an entrepreneur; if you fail, you are more likely to have the courage to stand up and fight again Resist the pride that comes with small achievements and the ego that goes with 100 people saying well done. There is always more to achieve! Create an open culture where people can speak their mind and not a durbar where people can come in say only those things that please the boss. Beware of Yes Men! Resist the temptation to
splurge on lifestyle buys like big cars and extravagant homes (especially funded by debt) as soon as you start making money Keep your management layer flat. Keep communicating with team members. Keep telling them what is happening in the marketplace. I spend nearly a fourth of my working day on the shopfloor. I am always visible.
We possess the largest volumes in our sector in India; we now need to report the highest profitability and in turn highest revenue in the sector.
Condone first-time mistakes. This will give your people the freedom to innovate. Responsibility without authority is bureaucracy. Authority without responsibility is dictatorship. But when you combine the two, you cut red tape and get work done.
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AM A SECOND GENERATION ENTREPRENEUR WHO JOINED THE BUSINESS ESTABLISHED BY MY FATHER RAM NIVAS DHOOT JUST WHEN IT NEEDED FAMILY HANDS, IN THE EIGHTIES. I was a teenager in the second year of college when I began to attend office. I was paid ` 800 per month and shunted from desk to desk, bank to bank and then to our Kandivli factory for multidepartment training. In my second year, our company went headlong into its first (and last) labour problem resulting in a nine month lockout. I would spend days in the factory trying to arrive at a solution. This is what the incident taught me: never underestimate the power of an individual or small group; stay prepared. One of the things that my father often said was, Take care of the families of our 500 labourers. This learning has remained. And the gist of this learning is that as ones career progresses, people get an idea of what to do. In my case, I acquired an insight into what not to do. The result: we dont have a union in our AADITYA DHOOT (RIGHT), RAM NIWAS DHOOT (MIDDLE) & AJAY DHOOT THE PROMOTER GROUP, IMP POWERS LIMITED company today. In the power sector, reforms started from the mid-Nineties. In 1995 we entered into a technological collaboration with Skoda and went public at a premium of ` 80 a huge amount at that time.
Our technological collaboration did not work. The period 1997 to 2002 was our worst. The State electricity boards paid us after months. We were cash-strapped. We applied for corporate debt restructuring in 2004. We reduced costs. We rationalised our work force. This challenge turned out to be a blessing in disguise. 2004 was a milestone as our debt restructuring scheme was approved. We learn the biggest business lesson: earn in cash and the result is we never made another cash loss thereafter. One can tolerate losses but not cash mismatches. In 2007, MOPE invested in our company when we were planning to double our capacity. They asked: Why not treble? And so it was. Our vision today is to be amongst the top five players in the industry (we are already in the top ten) and to be the most respected transformer company in three years in terms of quality, customer satisfaction and competitiveness. We have been growing revenues at a CAGR of 30-35% over five years even as others in our space are making losses. In our company we have a strong You win-I win proposition. If an employee wins, then I win but he gets the credit; the vice versa does not apply. So we try to create leaders where they can take the credit. And that is how we expect to grow into one of the largest transformer companies in India.
AADITYA DHOOT
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Y STORY IS THE STORY OF LIFES CYCLE HOW YOU CAN GET ONE THING TO LEAD TO ANOTHER; HOW THE JOURNEY CAN BE MORE EXCITING THAN THE DESTINATION. In 1992, when I was in the second year of an engineering course, I started an IT training center with borrowed capital. This was a six-seater centre in Chembur surrounded by the likes of NIIT and Aptech. Since innovation is the mother of survival, I came up with a novel idea of going door-to-door to counsel students on the need for IT training and how we could make a difference with professional trainers. I knocked on doors for three months, speaking to 14,000 students. The result: a 150% demand and being booked out for two years. I ran the business while completing my engineering degree and a part-time MBA course. We ran the training center for almost eight years (bought an adjacent 15seater facility) and grew the business from scratch to ` 20 cr revenues before the 2000 US crash wiped us all out. In 1999, I fixed an appointment with HSBC honcho Vivek Kudva who appointed us as a direct selling agent AKSHAY CHHABRA, MANAGING DIRECTOR, EFFORT BPO LIMITED within three minutes of the meeting (he said he backed our integrity and passion more than experience). We did well: in ten years, we ranked number one allIndia for six years and in the top three for four. Vivek Kudva became my mentor. He taught me how to stay humble and
conservative. He lived this philosophy: He was entitled to fly Business Class but often flew Economy to stay grounded and save his organisations money. The DSA business planted the seed of the BPO business in my mind. DSAs generally require a large field force. Since it is not possible to track each staffers movements, we altered our business model through the progressive appointment of tele-callers, who would fix appointments and even close deals just for the field staff to go over and complete the documentation. Even here, we could not trust if tele-callers were indeed making business or personal calls. So we came up with a solution through technology. In 2004, even though our turnover was just ` 4 cr, we invested in Genesys, the worlds numero uno dial-up technology for a kingly ` 1 cr. With this technology in place, we thought of migrating into outbound calls acquiring customers on the basis of our experience. And so Effort BPO was born. Today, we have over 65 unique customers; a topline of ` 2.5 cr in 2005 has surged to ` 45 cr. We are not only among Indias top-10 domestic BPOs but also the most diversified, catering to verticals like telecom, aviation, consumer durables, e-commerce and insurance, among others. In 2008, we met Motilal Oswal PE, our first interaction with a PE fund. MOPEs mentoring has been priceless, especially our interactions with Raamdeo Agrawal. They have been a pillar of strength; during crisis MOPE has hand holded us at every stage.
AKSHAY CHHABRA
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INCE MY FATHER WAS NOT OF GOOD HEALTH AND THERE WAS A FAMILY TO SUSTAIN, I HAD TO RELINQUISH MY DESIRE TO STUDY ABROAD AFTER COMPLETING MY B.SC AND JOIN THE FAMILY BUSINESS OF AUTOMOTIVE COMPONENT MANUFACTURE.
me with the personality breakthrough; he said what was more important was whether I was honest and could respect others and if I could, then nothing could stop me. People talk about a flash of light that transforms lives; this was mine.* What I have learnt through the years is that as long as you are positive and passionate and are ready not to accept defeat you can achieve any thing. In February 2010, MOPE invested in our
In the late Eighties and early Nineties, it was difficult to access global automotive technology. Finally, in 1991 we began to work with Tokai Rika, the foremost global player in the area of automotive switches, and cemented our relationship with a joint venture in 1995. This wasnt just a joint venture; it was a cultural leap. The Japanese culture was different. They spoke with pride about the country first, the company thereafter and about themselves last; in India it was the reverse. So instead of only bringing some Japanese people to our shop floor, we began sending our people to Japan. I was required to train in Japan for a year; when the babu himself works on the shop floor, the culture cascades. Suddenly, what has not happened in NIRMAL KUMAR MINDA, CHAIRMAN AND MANAGING DIRECTOR, MINDA INDUSTRIES LIMITED years happens in months. The culture changes.
company, resulting in a higher standard of governance, discipline and preparedness. MOPE initiated a switch in our statutory auditors, which resulted in a cultural change. Also, while our battery business was not doing well they introduced us to experts who could potentially help in solving the problem. My vision is to create an Indian showpiece that possesses its own R&D and technology without needing to fall back on collaborators. And yes, grow from ` 3,000 crore in revenues to a topline of ` 10,000 crore by 2014-15 with 25% of our topline derived from international revenues. A number of people ask what got us to this point of success. Strategic insight? Knowledge? The answer is ethics, as followed by my father. Respect for people, hard work and honesty. Its amazing that even as businesses
Besides, I learnt about the business from the people within and without (customers). I traveled extensively. I suffered from an inferiority complex: I could not speak English well. One customer in Tamil Nadu finally helped
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RAJNI BECTOR
cleared out my entire stock while Kwality could merely sell one ice cream. That was the turning point. Cremica was born in the back of my house with a ` 300 investment. I did everything myself with two helpers as I feared that the others would compromise on quality. We produced only ice creams and puddings in the first year and later ventured into biscuits, bread and condiments. Meanwhile, the party orders got bigger. There came a time when we asked ourselves: do we want to continue the way things have been or make the big leap. The result was that we commissioned a plant for breads and biscuits in 1990. Our next break came in 1996 when McDonalds came looking for bun RAJNI BECTOR, FOUNDER AND DIRECTOR, MRS. BECTORS FOOD SPECIALITIES LIMITED suppliers. They liked our way of working. They engaged in trials with us for a year before they finally shook hands. Thereafter, we entered into a 50:50 joint venture with Quaker Oats Company, a S I CAME FROM A WELLOFF FAMILY, MONEY WAS A FACTOR THAT COULD HAVE STOPPED ME FROM WORKING. In the 1980s, being a lady from a reputed family, it was
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Today, our products are on the approved list of Canteen Stores Department, which caters to the requirements of Indian Armed Forces. Besides, we supply to Indian Railways, Super Bazaars, Big Bazaar, Vishal Mega Mart, Reliance, Pizza Hut, Cafe Coffee Day, Barista, Papa Johns, United Nations (World Food Programme) and Jet Airways. The key to this success has been hard work. I would sleep for just four hours, sleeping at 2 am and rising at 5am. Maintaining a balance between home and work was challenging; I would often work at night so that I could spend time with the family the following day. Life is full of ironies. I learnt making ice cream from a specialist but when he meets me today he says that he taught me only vanilla ice cream and sends me his students to learn exotic flavours. The Dean of Home Science used to give me recipes; he has got me to teach cooking to students at colleges. My mantra of success is simply: work is worship whether at home or outside. It is really that simple.
* What was once a cottage industry is now driven by the dream of emerging as a worldclass food company, competently driven to its next stage of growth by my sons Ajay, Akshay and Anoop.
difficult to do something on my own but I said to hell with what people think and proceeded regardless. I was a housewife fond of cooking. My ice creams were a favourite with friends who would casually say, Why dont you do something? So I started by catering to their party needs plus giving cooking
lessons until I said enough of this academic stuff and started a professional kitchen, churner and then electric churner. In those days there would be lot of Diwali fetes so I put up a small ice-cream stall next to the grandfather of all ice cream makers Kwality. Amazingly, I
Fortune 200 company, to produce liquid products (tomato ketchup, mayonnaise, tartar and sandwich spreads, milk shake syrups and ice cream toppings) to cater to McDonalds requirements in India and the neighboring countries. When Quaker Oats withdrew from the joint venture in 1999-2000, the company was renamed Mrs. Bectors Food Specialities Ltd.*
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Noida. Thereafter, I chanced upon a meeting with Goldstar (now LG) executives who were seeking an Indian CTV supplier. Those were the days when Indians were wary of Koreans and the response was lukewarm. I differed. I signed a partnership for the export of 2,000 CTVs a month at a breakeven price of US$ 1.5 per CTV. Most forecasted that I would die at birth. If I had weighed all the risks I would have turned down the order. As it turned out, we built such an excellent rapport that in just four years, monthly CTV offtake surged to 400,000 units, paving the way for Goldstar and other Koreans and MNCs into India. I think the one incident that defined my character was when I applied for my first third party loan. We had applied to several banks and most refused to provide loan to a start-up without 100 percent collateral. So I requested my father to provide adequate collateral. He heard me patiently and then said: The golden rule of entrepreneurship is to SUNIL VACHANI, MANAGING DIRECTOR, DIXON TECHNOLOGIES (INDIA) PRIVATE LTD never accept no for an answer. So the following day I went again to Central Bank of India and re-presented my business model. The result: I was ONTRARY THINKING. THESE TWO WORDS HAVE DEFINED MY ENTREPRENEURIAL JOURNEY AND HAVE REMAINED THE CORE PHILOSOPHY OF WHATEVER WE DO AT DIXON. You could say that this runs through the veins of our family and a shining
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understanding, it laid out a vision, which translated into the following initiatives: Increase focus from manufacturing to product design, positioning ourselves as Original Design Manufacturers (ODM) so that we could not just build what the customer wanted but actually share insights of trends, helping manufacture tomorrows products; so in a way, we soon emerged as an integral part of our customers value chain. Establish an innovation center, our experimental lab where we would focus on future products and invest in R&D on existing process to beat down costs Identify strategic areas of opportunities and diversify into other businesses comprising set-top boxes, LCD/LED televisions and lighting products (LED and CFL). Emerge as Indias largest manufacturers and suppliers of Set Top Boxes (STBs), a business which has the potential to throw up huge opportunities on account of the mandatory digitization of cable television. Vertically-integrate our EMS business with the result that we own capacities under moulding, sheet metal and reverse logistics (repairs and maintenance) with a grip on costs across all intervening points of the value chain. So most of our resources were dedicated to these initiatives and our turnover surged from ` 517 cr in FY 2009 to ` 750 cr in FY12. Based on the power of two words. Contrary thinking!
SUNIL VACHANI
example would be one where my grandfather Sundar Vachani pioneered the consumer electronics business in India through the Weston brand of black-and-white and colour televisions when most dismissed consumer electronics as ostentatious consumption way back in early 1980s. However he thought these were revolutionary products, which had the power to transform the entertainment space. Weston soon emerged as a pioneering
brand that eventually ushered the consumer durables boom in the country. In 1991, when I returned from the UK after my post graduation, most wanted me to join the family business. However I thought differently and possessed a burning passion to do something of my own. I approached my father and convinced him enough to give me a ` 20 lakh loan with which I set up a 600 sq. ft colour television (CTV) and printed circuit board manufacturing unit in
provided a cash credit loan of ` 50 lacs. Later, the bankers told me that the only reason they gave me the funds was not because of my family name but because of the passion they saw in my eyes. Scale and technology obsolescence are the two most important facets of our business. If you get a control of the two, you have mastered the business. This is where Motilal Oswal stepped in. Leveraging its deep business
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VINOD AGARWAL
project ahead of schedule and the word went around in our business circles that there was this company called GR Infra that did an excellent job. There was another break-through moment. In 2008, Punj Lloyd was assigned a project by RIDCOR; the company was unable to execute and the project was passed on to us (had it been a government order, the project would have been re-tendered). The ` 150 crore project came with a rider: if we completed within 18 months, we would be paid bonus. Punj Lloyd had already taken two years with limited success; we completed the 18 month project in half the time and were awarded the bonus. We had arrived. When any one wanted a road construction assignment done in the shortest time, the word would be to go to GR Infra. Like in 2008-09, when we received a contract for the reconstruction of the Jodhpur Airforce VINOD AGARWAL, CHAIRMAN AND MANAGING DIRECTOR, GR INFRAPROJECTS LTD runway from Military Engineering Services. In general experience, no MES project had been completed without litigation. We completed this 18 month INCE MY FATHER WAS ENGAGED IN CIVIL CONSTRUCTION, I JOINED THE FAMILY BUSINESS AFTER COLLEGE BUT IT WAS NOT UNTIL THE LATE NINETIES, WHEN ROAD CONSTRUCTION EMERGED AS A
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We possessed the capability to execute large projects; what we didnt have was a balance sheet that would make it possible for us to bid for them. Motilal Oswal along with IDFC (PMS) invested ` 80 crore in 2010, thereby enhancing our bidding capacity. A number of people ask How do you do it? There are five reasons. One, mil-jul ke kaam karte hai, no loss of productive time in litigations etc, enhanced productivity and sapne main bhi road hi nazar aata hain. Two, we take just that much work that we can finish in the quickest time; in the construction industry the one who overburdens is the first to fail there are more people who have failed in the construction industry out of too much work than too little work.. Three, we pay advances to our suppliers and negotiate the best prices (as opposed to delaying payments). Best is udhaar nahi lena hai, aur agar udhaar lena hi hai toh bank se lenge, apne supplier se nahi. Four, we have abided by the laws of the land and paid all our taxes - income, sales or excise on schedule. No evasion. Five, we take care. We are planning to open a free boarding school for the children of our junior employees. Actually it comes down to just two words. Take care.
BOOM AREA, THAT WE VENTURED INTO IT. THE INITIAL BRIEF WAS SIMPLE: DO SMALL PROJECTS AND LEARN THE BUSINESS. The turning point came in 2005 through a ` 200 cr project by Road Infrastructure Development Company of Rajasthan Limited (RIDCOR), which was a joint
venture between IL&FS and the Rajasthan government. Though RIDCOR was interested in awarding us this project, we were honest in our confession: we did not have the size to execute the project. So when Ashoka BuildCon was awarded that contract, it allocated a ` 80 crore chunk to us. The previous largest project that we had executed was ` 15 cr; we completed this
project in 10 months no litigation with superior equipment than what had been specified. The result was that the Air Force hosted a party in our honour and ceremonially handed us a certificate of excellence. The word GR Infra was now a brand: GR Infra took care of the interests of its customers by completing projects earlier than scheduled completion.
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MOTILAL OSWAL
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MIGHT HAVE BECOME A TRADERS ASSISTANT IN MY FATHERS BUSINESS, 100 KM FROM PADRU, HAD IT NOT BEEN FOR AN INTERESTING REALITY. I always stood first in class. The family realized that something needed to be done to take this promising career ahead. So starting class nine, I was sent for a couple of years to a hostel 100 km away and then for four years to another hostel to complete my B. Com. When you are away from the family, exposed to the magical influence of television, people and friends, some remarkable things can happen. In my case, it exposed me to how education could transform destinies. So inspired by the example of my jeejajis jeejaji the only chartered accountant from a nearby town - I enrolled for a CA course. The odds were against me; a number of aspirants had failed the CA course, not because they could not come to terms with accounting but because they could not understand English. I was not competently equipped either; I could not read a book in English; could write a few elementary essays (My mother, My father and My village) and could not converse in English at all. But attitude prevailed over aptitude. I cracked the CA course at the first attempt. I checked out at least 25 hostels and 100 CA firms in the process In hostel, I would sleep at 8 pm, rise at 10.30 pm, study till 530 am for months I would walk 25 kms (Bombay Central to Cuffe Parade and back) while checking out a hostel or CA firm during the first three months after I reached Mumbai
MY STRUGGLE
By Motilal Oswal
The odds were against me; a number of aspirants had failed the CA course, not because they could not come to terms with accounting but because they could not understand English.
I would work 6 am to 11 pm almost seven days a week I would work on many Sundays to collect money, send shares to clients, check bad deliveries etc. I would be on my feet from 7.55 am to 4 pm five days a week I would studiously watch the TV news to strengthen my English as I knew this would be critical in my companys success when it was time to recruit professionals more qualified than myself (I still think in Hindi though)
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FTER I COMPLETED MY C.A. FROM MUMBAI, THE FAMILY BONDING TOOK ME TO AHMEDABAD WHERE MY BROTHER WAS IN THE SAREE BUSINESS. I didnt want to join that business so I joined a CA firm in Ahmedabad, engaged in routine boring audits because most CAs preferred CA practice. Meanwhile, my brother began to do something interesting: investing in IPOs and selling the allotted shares on listing. When I explored further, I found that a share issued at ` 10 would often list at a huge premium. When I explored yet further, I discovered that financial developments were often linked to share prices. I found it quite fascinating. I was also not happy in Ahmedabad after getting a taste of Mumbai. My brothers were active on the stock market and since they did not have a Mumbai link, I sensed that by going to Mumbai I would be in a position to help my
brothers. My only lead was my brothers Chennai broker who would trade through a Mumbai broker, so technically as happens in India, I had a Mumbai contact. I went and introduced myself. I wanted to sit in his office and transact business on behalf of my brothers. I asked if I could use the office phone to receive orders. The broker refused; there were a number of claimants to that privilege. So at 1.30 pm each afternoon I would walk two kms to PCO booths opposite Mantralaya with a collection of one rupee coins, make my calls uninterrupted, take orders (usually related to the sale of shares that had been allotted in IPOs like United Phosphorus, Apple Computers and Batliboi), scoot back to the exchange, deliver the second round of orders to my sub-broker (who would at an appointed hour come to the door of the ring and wait for me) and get him to execute trades in the dying minutes of the days trading. In those days, the arbitrage opportunity between exchanges would sometimes be 10-20 per cent of the value of a stock. If a share listed on the BSE at ` 20, then that very minute it could be trading at ` 14-16 on the Ahmedabad Stock Exchange or Chennai, so the simplest thing to do was to get to a phone, buy in Chennai or Ahmedabad and sell in Mumbai. And in that manner, my saree-trading brothers traded nearly ` 3-5 lacs worth of stocks every month. And it was during a number of those visits to the edge of the ring I would see someone quite my age enter with a badge. I must have asked him about the price of some stock one day, we got talking, he introduced himself and asked me to catch up at his brokers office in Nariman Point and that is how I formally met Raamdeo Agrawal. Both migrants. Both Chartered Accountants. Both passionately consumed by the stock market. By the third meeting, Raamdeo had popped the question: Why dont we do something together? Trader to BSE president. Meticulous and diligent
Both migrants. Both Chartered Accountants. Both passionately consumed by the stock market.
brothers part time and continue with my CA practice. I reached Mumbai without money and without a plan. I got a job in a relatives CA firm. During lunch, I began to visit the stock exchange seeking to explore a broker link so that I could assist my
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We would not speculate and lose customer focus; we would not leverage and we would report trades honestly.
brokers with our vaandha sheet to reconcile trade mismatches, then be off to our office in Kalba Devi to punch saudas into a computer, call our clients and tell them about the trades done on their behalf (few brokers actually called), take the relatively de-congested 8.35 local to Dombivli, place the briefcase on my lap for a desk to write out all the contracts of the day, then take the local from Dombivli to Kalyan the following morning from where I would get sitting space all the way to VT Station and once again I would erect my impromptu desk and complete all my pending documentation so that when I reached office, we would be ready to settle accounts with our clients. No backlog. Meanwhile, we would call clients for cash if they bought before we were required to pay Sunder; we would plead with Sunder for a quick payout whenever we needed to pay our customers. In that manner, we grew our business from scratch. We had no corpus apart from the commission we made. And that is how we grew despite nearnegative working capital. At the end of the first year (only 150 trading days), Raamdeo and I had about ` 40,000 left as surplus between ourselves. The ever lasting bond
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Best Capital Markets and Related NBFC Award at CNBC TV18 India's Best Banks & Financial Institutions Awards 2011
Best Performing Equity Broker (National) Award at CNBC TV18 Financial Advisor Awards 2012.
The shares that came in vaandha became our investment (which the office boy would produce in wazan by the kilo at the end of the year to ask what we intended to do with it.
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to keep the computer from overheating. We bought a telephone only for Raamdeo as he was the customer interface; since I was the trader, the company did not intend wasting money on buying me one. When we applied to BSE for a card under the professional category, I was
We recruited professionals like Nirmal Jain, Nishid and Madhu Kela, creating the foundation of professional-led growth.
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Always be obsessed about how to take your business to the next level. Become better in bad times, become bigger in good times. Escape commoditization. The more you specialize, the more you get pricing power. A strong value system is nonnegotiable. We paid our taxes; we never paid cash to our employees on the quiet We invested in HR and technology.
People own about 100 cars and jeeps. Is a trading hub. Has proper government schools. Enjoys electricity and phone exchange. And you can drink water out of a tap. There are thousands of Padruites aspiring to become chartered accountants and waiting to fulfill their entrepreneurial destinies. It is this rural India which will assert itself in the national mainstream and it is here that we expect to invest a growing part of our investments. With the possibility of reporting exponential gains in a sustainable way.
More brokers shut down because they did not invest in systems to manage their risk. Invest in like-minded people with complementary skills. I was sound in operations and administration, Raamdeo was excellent in research and relationships. Conservatism pays. Do not endanger ` 100 for a brokerage of 50 paise. Master the eco-system. To succeed, you need to do everything product development, people management, accounting etc. well. Be hungry for knowledge. Read, network, learn. I still read about 15 books a year.
There are thousands of Padruites with aspiring chartered accountants waiting to fulfill their entrepreneurial destinies.
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Balance is key. I eat every two hours, I have never missed my morning walk for 20 years. I am up at 5 am even after I have slept late. I dont attend to phones The entrance at Motilal Oswal Tower, Mumbai after work.
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RAAMDEO AGRAWAL
THE STORY OF RAAMDEO AGRAWAL, JOINT MANAGING DIRECTOR, MOFSL, AND CHAIRMAN, MOPE
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India has grown rapidly in sectors where the government has vacated space to entrepreneurs
NDIA HAS ENJOYED A DEEP TRADING TRADITION FOR CENTURIES WITHIN THE COUNTRY OR WITH FARAWAY LANDS. For centuries, this deep entrepreneurial spirit was throttled by invader-rulers in one form or the other. But even as the country became politically independent in 1947, its economic independence had to wait until 1991. After 1991, an Indian could begin his business without a license, grow as much as he wanted, take his business wherever he liked, move from one product to another and sell at whatever price he liked (or the market could bear). The simmering embers of entrepreneurship could now leap into a full flame. The timing was right. The Nineties represented a convergence of a number of unprecedented realities: the rise of the internet, the crumbling of communism, the dismantling of financial controls, the rise of globalization, a wider respect for unconventional business ideas and a first-ever access to organized capital for
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India is best equipped to ride the entrepreneurship wave sweeping the world
first generation entrepreneurs. It is in this decade, India shrugged off its conservative socialism. The government reduced its control of business, trade and commerce. Product availability increased, product range widened and prices declined wherever the government vacated its control (and vice versa). Within just two decades, we have created the worlds most affordable telecom network. The software boom has transformed Indias image into a technology powerhouse. What does this mean? It means that if the biggest wealth of Saudi Arabia lies in its oil and the biggest strength of China lies in its empowered government, then the most enduring strength of India lies in its deep-rooted tradition of entrepreneurship. However, oil will exhaust one day, an empowered government could be transitory but Indias largest strength will be enduring by bigger. As this happens, it will create unimaginably more wealth for the country and its people.
HERE ARE A NUMBER OF REASONS WHY INDIA IS BEST EQUIPPED TO RIDE THIS ENTREPRENEURSHIP WAVE SWEEPING ACROSS THE WORLD. One, it has the second largest population of entrepreneurs (intending and existing) in the world. Two, we have suffered centuries of deprivation, creating a hunger for success on the one hand and an incredible appetite for creative adaptation (jugaad) on the other. Three, India enjoys a growing access to capital (national and international) and a willingness to risk some part of it on growing various businesses. Four, India has a large expatriate population, large coastline and a deepening presence of information technology (my village in Chhattisgarh may or may not have acceptable toilets, but it sure does have a mobile phone with internet) all three representing attractive media for the export of products and services.
Five, there is a greater respect for the Indians ability worldwide. Six, services accounted for 41 per cent of Indias GDP in the early Nineties; it accounts for more than 60% per cent today, which means that not every entrepreneurial Indian needs to set up a conventional brick and mortar factory to generate wealth any more. Seven, India is still extensively underconsumed. As incomes rise and spending moves from the basic to the discretionary, the countrys economy will widen faster than before, creating an unprecedented opportunity for entrepreneurs. A convergence of these realities tells me that we have seen nothing yet. Over the next decade, there will be large cap entrepreneurs coming out of rural India. Indian companies will become global plays. Small innovative players will become some of the fastest growing global companies. Niche first generation innovators will become global case studies. We are at the cusp of something in India that has been in the wait for centuries. Two of the most revered stories of Indian entrepreneurial success Brij Mohan Munjal of Hero Honda (above) and Nandan Nilekani of Infosys (below)
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MY ADVICE TO ENTREPRENEURS
By Raamdeo Agrawal
You dont have to be the most intelligent or academically brilliant to be a successful entrepreneur; you have to be the The first office where the two shared a cabin most passionate. At a young age, you must be was a big leap of faith for us with its pros and cons. The cons were that we were betting the house with no guarantee of success; the pros was that since the BSE traded only two hours (noon to 2pm) there was an acute shortage of brokerage services to transact the daily throughput of more than 200,000 trades; besides, we were anyway transacting business worth ` 40,000 a day so there would be business available to us from day one. Motilalji and I did something we have seldom done since: we took a loan of ` 12 lacs. We knew that if it came to the crunch, the BSE card would at least sell for ` 25 lacs and we would be able to recover our investment; if we failed, we were both chartered accounts and could always get a job somewhere. We had no business plan except for a deep-seated confidence in our capabilities. The calculated gamble paid off. We had estimated a years payback based on the brokerage volumes we were generating. During the bull run of 1990-92, there were junctures when we made more money in a single month than what he had paid for the card. Harvard Business Review commissioned a case study on MOFSL You must be able to create challenges at every level; in the first 25 years of our existence we focused on broking; we will now also focus on investing. The result is that there are a number of times when I wake up nervous From a one-room office, to a 2.5 lakh sq.ft. tower in the heart of Mumbai. willing to risk your career for the next 15 years on one big idea (a bigger risk than financial). You must select the ethical route or you will soon be caught out. You must provide infrastructure ahead of growth; in 2012, we invested in property with a 60 per cent redundancy as a provision for the future. You must push the decision making down; the more you delegate the everyday and the functional, the more the entrepreneur can focus on the strategic.
in the morning, which I interpret as a sign that the entrepreneurial cells are ticking.
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UR COMPANY MAY HAVE BEEN ENGAGED IN A VOLATILE BUSINESS BUT IT HAD BEEN BUILT AROUND A SOLID FOUNDATION: THE STATED PURPOSE OF OUR BUSINESS WAS THAT WE WOULD HELP OUR CLIENTS MAKE MONEY, WHICH WAS A LARGER CAUSE THAN BEING IN BUSINESS TO MAKE MONEY ONLY FOR OURSELVES. Besides, we had resolved that we would not speculate, we would not leverage, we would provide unbiased advice and we would be available to customers 24x7. This brought us to some interesting decisions: we made one of our biggest investments in two telephones for ` 26,000 each; one was put in the office and the other at home so that we would always be available to clients; the phone at home had a 30 ft cable so that I could carry it from the bedroom to hall to kitchen to the bathroom; there were a number of times when calls came while I was soaped all over and I 24X7 service standards was a way of life
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door open, put my arm out, pick the receiver, take the order and put the receiver back. There was one instance when our credibility was tested: a leading financial institution came to us with an order to sell 150,000 SKF Pharma. We knew the company would do better and the stock would appreciate; on the other hand, we stood to make ` 500,000 in brokerage from this transaction. Our instinct prevailed; we advised the institution to hold on and within some time the stock trebled. The word got around: when you went to Motilal Oswal, you got competent transaction capability alright, but more important, you got trustable advice for free. We selected on the latter; here too, the There were a number of other instances through which we could consistently demonstrate that we were different. Since there were no mobile phones or internet trading to communicate trades immediately to clients, there was always room to quote the days highest price for the client even though the trade may have been conducted at a lower price. As a culture we forbade any of our sub brokers from engaging in this practice; clients would check the newspapers and realize that in a number of instances, they had been bought in at the lowest price of the day or sold at the highest. Gradually, we acquired a reputation that we could be completely trusted for advice dependability, transaction integrity and payment timeliness. With Navin Agarwal, (first from the left, CEO,Institutional Equities, Member of the Board, MOFSL) and Madhusudan Kela, (second from left), (Chief Investment Strategist, Reliance Capital), were some of the first employees of MOFSL. usual instinct would have been to hire ROUND THE MID NINETIES, WE HAD ALTERNATIVES: GROW THE WAY WE HAD THROUGH CAPTIVE RESOURCES OR BRING IN PROFESSIONAL TALENT TO TAKE THE COMPANY TO A NEW LEVEL. someone un-intimidating so that we could continue to call the shots and the managers would do our bidding. We did the opposite (in line with Warren Buffets statement that If you hire people better than you, you become a company of giants). We hired a professionals like Madhusudan Kela and Nirmal Jain (who later went on to found India Infoline) from Hindustan Lever. Nirmal was a marketing professional who had not been into equities at all; I vacated my position as Head of Research for him. After studying Nirmals credentials (he had been a gold medalist throughout his academic career), someone commented: This is not a break for Nirmal, this is a break for Motilal Oswal.
If you hire people better than you, you become a company of giants
If you hire people better than you, you become a company of giants
Motilal Oswal with Nirmal Jain who founded India Infoline subsequently.
At MOPE, we are also convinced that companies will create considerably more wealth through their valuations than they will through their profits. Take Infosys for instance; the company reported a net profit of ` 8,500 cr in 2010-11 but attracted a market capitalization of around ` 1,60,000 cr. The company created more value on the stock exchanges than it did through its own earnings.
decade something exciting has happened: a number of entrepreneurs coming out of India are not necessarily from its large urban centres. These entrepreneurs possess the big business idea and the hunger to grow; what they dont have is capital. That is where Motilal Oswal has come
The graph highlight how some of Indias largest companies have created more wealth through their market capitalization than they have through their profits
Rather than own 100 per cent of my own company, said Nelson Rockefeller, we would rather own 1 per cent in 100 others
Growth Multiple
At MOPE, we are attractively placed to leverage on this phenomenon. We invest in attractive companies when
they are still unlisted, catalyse the primary value-creation exercise through our advice, networking and financial discipline, advise and facilitate strong governance practices and then
$32.9bn $25.6bn 7.7x 6.2x 7.0x $16.0bn $8.2bn $4.7bn $1.7bn Hero Honda Infosys
participate in the secondary valuecreation programme following the companys IPO. This ability to select, incubate, handhold and grow these companies into listed entities represents the gamut of our value-creation capability, which
$6.9bn Reliance $1.4bn Bharti Airtel
$6.3bn
L&T
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Trisys Communications Private Limited was established by first generation entrepreneurs Mudar and Shalini Patherya in 1995. Mudar was a professional cricket writer and stock market analyst in earlier incarnations; he combined those experiences to create Indias first dedicated annual reports agency. Since then, Trisys consistently leads the space and has produced more than 1200 annual reports in its existence, in addition to sustainability reports, intellectual capital reports, corporate books and associated collateral. Trisys is yet to be funded by private equity. Mudar can be reached at mudar@trisyscom.com. Usually responds within three minutes. Disclaimer
This book is based on conversations with entrepreneurs. Much of the flavour of the interviewees has been retained. Wherever the language was polished it was done carefully without altering the spirit of the narrative. This book has been researched, written and designed by Trisys. Before extracting any information printed in this book, it is adviced that permission be taken from the publishers.