my way - motilal oswal pe investee companies
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ABOUT TH
Entrepreneurs transf
inspire.
These simple realit
this book.
Motilal Oswal Priva
of this book, didn’t
Since 2007, when M
it has invested grow
growing, profitable
The stories of the p
have been inspirin
break of moving ou
they grew their bus
failure, how they di
and how they turne
companies.
The 14 stories capt
inspiring material o
transforming India
N
S
W
Motilal Oswal Private EquityMotilal Oswal Tower, Junction of Gokhale Road & Sayani Road, Prabhadevi, Mumbai 400025
Ph : +91-22-39825500, Email: pe@motilaloswal.com
www.pe.motilaloswal.com
A fascinating col lection of interviews with passionate f i rst
generation entrepreneurs who def ied the odds to emerge winners
A MOTILAL OSWAL PRIVATE EQUITY PUBLICATION
Motilal Oswal Private Equity Advisors (MOPE)
is a part of Motilal Oswal Financial Services
Limited, one of the most respected financial
services company in India. MOPE was started in
2006 with the express intention to provide
precious growth capital primarily to first
generation entrepreneurs.
MOPE closed its $125mn India Business
Excellence Fund-I (IBEF-I) in December 2007.
Today, MOPE also manages a $40mn India Realty
Excellence Fund-I (IREF-I), which is a residential
real estate-focused fund, and the $150mn India
Business Excellence Fund-II (IBEF-II) where the
first close has already been achieved at ~ $70mn
in the last quarter of 2011..
MOPE’s strengths comprise a competitive
advantage in deal sourcing, connectivity withIndian sensibilities, focus on adding value to
portfolio companies, world-class equity research,
brand image, access to quality institutional
investors and deep corporate relationships.
MOPE’s vision is to emerge as the most respected
alternative asset manager across Indian mid-
market companies with a track record of having
funded and grown at least 10 companies into at
$1bn in market capitalization in the next 5-7
years.
Feedback is welcome at
myway@motilaloswal.com
Visit us and share stories of enrepreneurship at:
facebook.com/motilaloswalltd
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2
P R E F A C ED I T O R ’ S N O T E
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 missedopportunity 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 wasn’t just
secularly placed to benefit from this
global shift: one of the world’s mostentrepreneurial countries was
attractively empowered at the sweet
spot in the world’s history to transform
the destinies of its millions.
Motilal Oswal Financial Services
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 plusinterviewing, 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. India’s 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.
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 semi-
urban 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 India’s f inancialservices 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 wasn’t merely a product of
India’s entrepreneurial revolution; it has
also been a catalyst. It saw an
opportunity to provide growth capital to
companies (small to mid-size) – the
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 people’s people; 16 of t he
original 19, who resigned Anil Jain’s
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 s uddenly 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 t hem
emptied his wallet to produce ` 221 indiverse 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 f inally 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 couldn’t teach him something. By
that yardstick, there is a university in
here.
Mudar Patherya,
Principal interviewer and editor
PS. This book has largely covered the
success of f irst generation entrepreneurs
funded by MOPE; subsequent editions will
cover other MOPE i nvestee companies.
fastest growing segments o
economy.
In 2006, Motilal Oswal Pri
Advisors Private Limited (
started with the objective t
prospects of sound young b
needing growth capital. Th
was intrinsically entrepren
Tulsyan joined as CEO to s
business. MOPE’s first fund
2007 was fully and successf
across 13 mid-market comp
diverse sectors.
One of the facets of private
distill fascinating stories of
entrepreneurs with the obj
ascertain the well-spring o
passion. This book is an ex
many evenings of our lives
inspiring stories; a book of individuals; a book of entr
This book is being created
hope that the underlying t
stories will be replicated ac
regions, hierarchies, backg
dialects – and time.
Let a million entrepreneur
Team MOPE
May, 2012
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4
OURENTREPRENEURS
P
06O U R E N T R E P R E N E U R S
O U R F O U N D E R S
O U R S T O R Y
Anil Jain
Time Technoplast
Limited
16Devendra Shah
Parag Milk Foods
(P) Limited
32S. Kishore Babu
Powermech Projects
Limited
42Sanjay Agarwal
Au Financiers (India)
Private Ltd
54Tushar Mehendale
Electromech Material
Handling Systems (P) Ltd
68Aaditya Dhoot
IMP Powers Limited
70Akhay Chhabra
Effort BPO Limited
72 Nirmal MindaMinda Industries
Limited
74Rajni BectorMrs. Bectors Food
Specialities Limited
76Sunil VachaniDixon Technologies
(India) Private Ltd
78Vinod AgarwalGR Infraprojects
Limited
82Motilal Oswal
94Raamdeo Agrawal
106Vishal Tulsyan
108Our Team
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THE MAN WHO SOLD
INSURANCE ON HISCOLLEGE CAMPUS.
ANIL JAIN
HERE IS GLAMOUR
IN INDIA ABOUT
BEING AN
ENTREPRENEUR
BECAUSE OF THE
TRAPPINGS THAT GO
WITH IT; FEW WANT
TO BECOME ENTREPRENEURS
BECAUSE OF THE GRIND THAT
GOES WITH IT.
I had joined as the junior-most
employee in BHEL in 1976. One day,
the executive director walked into the
large hall where I had a small desk,
came up to me, held me by my arm and
walked me to his r oom. Everyone was
watching; would he sack me?
When we were in his room, he said: “I
want you to help me. There is a tender
application that we have to submit. Theexecutive, who was to do this a few
weeks ago, has just told me that nothing
has been done. I have only 72 hours left.
Can you put together a team to
complete it?” All I said was “Yes sir, ho
jaayega.”
This was easier said than done. The
extent of supporting documentation
required for a tender used to run into
thousands of pages across nearly two
dozen large files. But there is something
I knew that the ED didn’t. Over themonths that I had been at BHEL, I
would volunteer for more work, which
means that I would go to officers outside
my functional areas and ask them to
give me assignments so that I could
broaden my learning. Inevitably, they
would pass on clerical work so they
could take it easy - ‘go and get this
cyclostyled’ they would say without
realizing that I would end up reading the
document and educating myself. So I
not only knew what information existed
but also where it could be located.
On the third day, my ED called me
frantically. “What happened?” he asked.
I said, “Done.”
“Show me”, he said disbelievingly.
I called for dozens of files t
into his room. He realized
sheet was in place. “How d
he asked.
I replied that I had not gon
three days, coordinated wi
offices in Trichy, Bhopal acentres, delegated work rig
the back-end working and
the assignment on schedul
I expected a big shabaash. O
contrary, he said, “Thank
Then he said, ”Young man
given you this opportunity
have never been able to be
could have done this in jus
Years later, when I think o
that the biggest lesson I lea
what Mr Basu had given m
deadline was not three day
hours.
When you see things this w
everything appears achieva
6
THE STORY OF ANIL JAIN,
MANAGING DIRECTOR, TIME TECHNOPLAST LIMITED
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“Don’t letanyoneovertakeyou fromthe wrongside!”
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 couldn’t afford a tonga.
When I went to college, I decided to
stand for elections. My father (who
taught there) was not pleased. ‘Beta, yeh
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: ‘Don’t let anyone
overtake you from the wrong side!’
‘Yaar, tum life mein naukri tokaroge nahin…’
within the first hour or two after t he
examination, most students would be
nervous; in that state, they would be
more inclined to buy my insurance.
This insurance pricing was flexible: in
normal circumstances, it was priced at
` 20; in certain cases of extreme
collective nervousness, the offering was
re-priced to ` 25.
How was I to know that students were
more nervous than usual even while the
examination was going on and I was one
of those sitting in examination hall? Iresolved this problem through an
unusual approach: I recruited
accomplices to provide me with precious
information: the guard at the toilet
would count the number of students
who had gone to relieve themselves; the
bearer carrying water from desk to desk
would count the number of students
who had asked for a refill (the higher
the number, the tougher the
examination). As months passed, I was
able to scientifically correlate the
numbers in either case to the extent of
nervousness within the examination
hall, which helped me price the
insurance accurately.
The success of the shop also depended
critically on how well I could crack the
NE OF MY EARLIEST
BUSINESS
OPPORTUNITIES
CAME AT THE
UNIVERSITY IN
CHANDIGARH.
Most district students
would find the first year at the
university particularly challenging. A
number of them failed, which was
termed in the university as ‘reappear’.
The problem was not that t he students
would have to ‘reappear’ but that they
would have to pay ` 45 per examination
they would have to take before they
could move into the second year.
In this mundane reality I perceived my
first business opportunity. I opened a
campus insurance shop.
This is what my shop offered: any
student sitting for the examination
during the first year would be welcome
to buy an insurance cover for ` 20
within half an hour of the examination
ending. If he failed that examination
(and was required to reappear), Ipromised to pay his entire ` 45 per
examination paper in the second year; if
he passed, he stood to lose the ` 20 he
had paid me.
The business did phenomenally well:
paper. It was important for
complete every three-hour
in two-and-a-half hours ac
university career, so that I
the researched findings fro
accomplices, price the insu
accordingly and open the c
enough for all those who w
cracked the paper early as w
For the students who failed
merely pay ` 45 and end th
transaction; I would fill the
form for the second year, p
hall admission card and ha
my insurance shop became
solution provider.
The business took off; I bro
motor cycle, three partners
widen our campus reach; th
helped us fund meritorious
could not afford to continu
studies; in the final year, o
partners wrote an excellen
scratched it all in the end
deliberately failed himself
passed and moved out, he w
to be a partner in what wa
lucrative franchise than wo
real world for a mere ` 850
That is when someone said
life mein naukri to karoge na
Early days in school
Respected parents
Leader in the making
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ABOUT THE COMPANY
TimeTechnoplaLimited
Time Technoplast is eng
manufacture of techno
polymer products and t
batteries. The Company
than 20 manufacturing
and strong distribution
350 cities and towns in
has operations across s
countries (Sharjah, Pola
Thailand, Bahrain, Chin
Czech Republic). The Co
manufactures polymer
composite material-bas
packaging solutions, lif
products, auto-componhealthcare products an
infrastructure products
batteries, HDPE pipes, p
fabricated structures et
Company was started b
technocrats in 1991 - A
Bharat Vageria, Raghup
Thyagarajan and Navee
are actively involved. An
Managing Director, wh
Vageria is Director (Fina
Raghupathy Thyagaraja
(Marketing) and Navee
Director (Technical). Th
achieved a topline of `
2012.
You may visit
www.timetechnoplast.
for more details
TIME SAVING TIPS FOR
MANAGERS AND
ENTREPRENEURS
By Anil Jain“Join acompanyat thelowestlevel…”
HEN I
GRADUATED
FROM
CHANDIGARH
UNIVERSITY, I HAD
A NUMBER OF
CAREER OPTIONS.
People said ‘You can’t 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 mid-
sized 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,
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
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.
Anil Jain at his desk at BHEL
Anil with his wife
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 lit re segment.
The employees pooled their provident
fund and cash savings to raise ` 9 lacs,
with which we bought our first moulds,
raw material, telex and phone.
The hall of my 900 sq feet residence
doubled up as office; one of the
bedrooms became the conference room.
At the end of one month, I had to break
into my children’s 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.
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 wasasked 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
“Anil, canyou earn atleast ` 40a day?”
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 aboutand 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.
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12
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 rupee’s
advance.
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
“You are the first manwho has told me thetruth. When do youwant the machine?”
SOME ADVICE FO
MANAGERS AND
ENTREPRENEUR
By Anil Jain“We went to ourcompetitors, offeredthem knowhow andgot them into businessto 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 ourcompetitors, 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.
Old office of Time Technoplast in Mumbai
1 Whatever you do, try
best in the world. If you
podium position, sell an
2 Don’t get into a busin
you like the balance shewho is already into that
Check if the call is from w
3 To see heaven you ha
I log 90.2 hours a week
door-to-door time into a
every day), work 16 hou
I am abroad, work till 11
Saturday to clear the we
and drop in at the office
Sunday to read all pend
4 Do extraordinary thin
ordinary people. Passion
over intelligence.
5 Don’t rush success. I
from the lowest position
the time I started my ow
Fruit that matures natur
sweetest; pluck early, pu
carbide treatment for qu
and you could catch an
6 Look global. Better to
a ship at sea than the ca
boat in a lake.
7 Most people want to
There is a limit to what c
achieved by one individu
managers lead teams thwhat they would have t
unsuccessfully accompli
themselves.
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14
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 themachine 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.
By the time the Mauser technologists
came down to get the plant up andrunning, 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.’
I often say this: to beat Usain Bolt’s
100 m record of 9.58 s econds you can
either rise early to practice hard or youcan wear a red shirt and walk past a bull.
The desperation to survive is always
more powerful than the desire to win.
OON THE TIME CAME
FOR TIMETECHNOPLAST 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 didn’t). We
fought this over months in the courts of
Uttar Pradesh. Every month’s delay was
affecting our prospects.
Finally, when we won the judgment inthe Allahabad High Court, we didn’t go
home and celebrate. Since we knew that
our competitors would block us through
an appeal, I flew immediately to
“The desperation to survive isalways more powerful than thedesire to win.”
my father’s words: ‘Never let anyone get
past you from the wrong side.’ If we
expected no one to overtake us from the
wrong side, we shouldn’t 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 i n 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.
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
“Honesty pays.”
Because of ourprincipled stand ontheir IPR, Mausergot back with thedecision to work withTime Technoplast allover again.
“To beat Usain Bolt’s 100 mrecord of 9.58 seconds you caneither rise early to practicehard or you can wear a redshirt and walk past a bull.”
HOW WE HACREATED AMAVERICK HACHIEVINGCULTUREBy Anil Jain
• Employees at Time Technoplast a
to compare their salaries with othe
often remunerations are based on
considerations (ailing family memb
looked after etc.). So if someone c
that he / she needs to get a higher
someone else is getting higher, we
individuals to the table and then a
getting the higher salary to take a
of the other.
• If someone comes and says that
not need a boss, we promote that
immediately to a position of highe
• We do not have any vouchers an
travel. If we suspect the integrity o
bills that have been presented, we
travel bills of that individual for scr
• Indecision is no decision; people
is better than not having to take a escape unnoticed.
• We run a tight financial ship – n
business. I continue to stay in a 90
apartment that I bought when I w
employee. I travel economy class e
abroad; the notional saving is cred
account used for general employee
• We take people with specific com
put them in new areas with respon
will work hard to save their reputa
benefiting themselves and the com
• When someone comes into my r
add value to his insight in some waleaves. Now if I have to teach, I hav
I end up reading a number of book
interesting subjects. If he stays, he
the company; if he leaves, he sprea
company’s goodwill all over.
Industrial packaging products from Time Technoplast
The Time Technoplast family
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HE STORY OF THE GROWTH OF PARAG FOODS IS
UNUSUAL FOR SOME GOOD REASONS.
We emerged as a rural I ndian success story with extensive urban
implications.
We created a business that succeeded in something that had absolutely
no connection with our family’s existing businesses.
We ventured into an area (milk products) that was about the ability to balance
manufacturing competence, marketing penetration and branding excellence.
We sought to grow our presence in a sector dominated by cash-rich giants (Indian
and multinational) with relatively no space for anyone else.
We grew our presence in a sector we knew nothing about compared with
multinationals with longer experience, larger brands, wider reach and considerably
larger investments.
We succeeded in a high mortality business without ever needing to withdraw a single
product across nearly two decades.
We did all this by setting up our factory and corporate office in a small town with a
population of not more than 40,000.
THE MILKMANFROM MANCHAR
DEVENDRA SHAH
1616
THE STORY OF DEVENDRA SHAH,
CHAIRMAN, PARAG MILK FOODS (P) LIMITED
16
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Y GREAT
GRANDFATHER
MIGRATED FROM
KUTCH TO
MANCHAR (60 KMS
FROM PUNE) FOR
A CURIOUS
REASON.
He had heard stories of the fabulous
wealth that Shivaji had accumulated
following the plunder of Surat. Since
much of that wealth had gone back to
Shivaji’s capital Shivneri, my ancestor
presumed that it would be best to settle
in the vicinity and explore trading
opportunities there.
Since the Manchar community was
largely agrarian, my ancestors traded
drop handbills across the region to
impress villagers. My grandfather
brought two new Rajdoot motor cycles,
went to the mukhiya’s 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
horses and fabric. Gradually they
recognized that farmers would complain
about low crop yields, so my grandfather
brought laarva lasan (garlic) from
Rajkot, branded it as ‘Garlic King’ and
sold it to farmers leading to enhanced
yields.
This farmer trust was soon tested. Seed
competitors deployed a helicopter to
potato seeds. My father too
in 1972, he commissioned
first cold storage warehous
Manchar, which made it p
farmers to store potatoes d
oversupply in exchange fo
farmers needed money wh
potatoes were being stored
them credit. As a result, th
graduated from one to mul
businesses – lender, landlo
material supplier.
And all because at the end
we had created the reputat
whatever we sold would be
rightly priced.
18
“I am a fourth generationentrepreneur. Business runs inmy blood.”
The three Shah brothers share the entrepreneurial zest. (Devendra is seated) Completely enmeshed with the farmer community - the company’s lifeline.
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20
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 f eed 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.
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 unlockthe 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
“When I
went tocollege, itwas likegoing tokinder-garten”
Bhagyalaxmi farms, Manchar. The largest private dairy farm in the country.
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22
eaten into their revenues. Then one of
them pleaded, ‘Please do something
with the milk.’ Since I had a reasonable
insight into refrigeration due to the
family’s cold storage business, I made a
suggestion: send me your milk in metal
cans, I will refrigerate the milk and
transport it to Mumbai for sale.
They did. I took all the milk I could get
on those two days, would give them 20
paise per litre more than what the co-
operatives paid and soon there were
people using all kinds of influence so
that I would buy their milk as well. So I
arrived at a deal: whoever would want
me to buy their milk would have to buy
my cattle feed as well. I did not make
any money on the sale of milk; I more
than made it up through the sale of
cattle feed.
I would have stayed with this businessmodel had it not been for a farmer who
made what then appeared like an
impossible suggestion: ‘Why don’t you
buy the milk we provide across all seven
days?’
OMETHING
INTERESTING
HAPPENED IN THE
EARLY NINETIES IN
THE MANCHAR
DISTRICT OF
MAHARASHTRA – THE
BENEFITS OF OPERATION
FLOOD – WHICH TRANSFORMED
MY LIFE FOR GOOD.
Farmers produced more milk than
government co-operatives – their only
customer – could buy. So on two days
per week, the co-operatives would
actually shut shop and on those days,
the farmers would have to take all their
precious milk and put it into the drains.
Hamaare Manchar mein doodh ki naaliya
behti thi. Literally. An estimated
112,000 litres a week aggregating into a
farmer revenue loss of ` 3.6 cr a year.
This would not have been of much
concern to me but for one detail. I
began to experience a slowdown in
farmer payments for my cattle feed.
They told me that the weekly waste had
“Milk flowed in thedrains of Manchar…”
“Hamaare Manchar mein doodh ki naaliya behti hain.”
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24
CAPACITY OF 56,000 LITRES A
DAY).
So I drew out a business plan,
approached the local bank (with whom
we had been dealing for decades) for a
loan and took my father along. The
branch manager appraised the loan
proposal, nodded and eventually asked
my father to sign.
My father refused; he said that if the
bank was issuing the loan on account of
his family’s credibility, then he would
not sign any paper. The bank would
need to appraise my proposal in my own
right.
The bank refused. We walked out.
That day I wept like I have never wept
in my life. I complained to my mother, ‘I
never asked father for anything in lif e.
Now when I ask him for one favour, he
refuses to sign?’
After the wailing had been done, I
resolved: soon the bank would have to
appraise my loan proposal without a
guarantor. This happened sooner than
expected; the moment I raised the
margin component from 30 per cent to
48%, my proposal was sanctioned.It took me years to appreciate my
father’s decision. If he had signed my
loan proposal that day, I would have
remained an emotional dependent.
He grew me in an instant.
LL SEVEN DAYS. IF I
WOULD HAVE TO BUY
ALL THE MILK OF THE
REGION, I WOULD
NEED A MILK
PROCESSING
CAPACITY OF20,000 LITRES A
DAY (COMPARED TO A CO-
OPERATIVE PROCESSING
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 farm-
fresh milk brand
available in the
country today.
ITHIN MONTHS
OF
COMMISSIONING
THE MILK
PROCESSINGCAPACITY 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 couldn’t sellcheaper because that would ruin the
operational economics.
We had a problem.
So we could cap our milk processing
capacity and wait for incremental
“If people would not beable to consume milk, wewould make milk-basedproducts instead.”
“My father refusedto sign my loanproposal…and grewme in an instant”
Rotary milk parlour at Bhagyalaxmi Farms.
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26
Nearly 80 per cent of our milk
processing capacity would be allocated
to bulk unpackaged milk powder. In
2004-05, we derived 17.68 per cent of our revenues from exports, emerging as
India’s largest milk powder exporter.
Then everything changed.
The Indian government banned the
export of milk powder. With ` 70 cr of
debt on our books, we stood to be wiped
out.
We went to the Supreme Court and
won. But I had learnt my lesson: Parag
Foods would never again place all its
chips on a business model that could be
killed by a single stroke of the pen. The
company would spread its risk across the
broad Indian market, make a variety of
milk-based retail products and all these
would be branded to beat the commodity
trap. The foundation of the sustainable
growth of the company had been
created. And none of this would have
happened had it been happy sailing
through the export of milk powder.
Which brings me back to how problems
don’t create problems; they only lead to
solutions.
PPORTUNITIES COME
DRESSED AS
PROBLEMS. BY THE
LATE NINETIES, WE
DOVETAILED OUR
LARGE MILK
PROCESSING
CAPACITY WITH A MILK
POWDER PRODUCTION CAPACITY.
“From the edge of being wiped outby the stroke of a pen…”
But there was a method in the madness.
We possessed a strong brand that had
stood up to Amul i n 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
couldn’t 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 couldn’t 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
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.
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
company drew out a business plan to
seven-fold its sales in one year.
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: itwas 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.
“We proposed a cheese capacitylarger than the cheese consumption
of the entire country!”
“Which brings me backto how problems don’tcreate problems; theyonly lead to solutions.”
“We were makingdemand projections onthe basis of anestablished track recordbut that past had noconnection with howlifestyles were changing.”
“We entered the business of
cheese manufacture (3 tonnes per
day) in 2001.”
THE PIONEEINITIATIVEPARAG FOOBy Devendra Shah
• Our farm, comprisin
the best cow breeds,
high yield and superio
quality that is provide
branded product (‘Pri
directly to consumers
Mumbai – no interme
• We introduced fruit
the first time in India
a folding spoon attac
cup
• We introduced shre
as a packaged brande
for the first time in In
• We launched food
(chocolate plus chees
plus cheese) in a sque
the first time in India endorsed by Disney c
Tom & Jerry
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28
cheese manufacturing plants at a single
location, the terms of trade would
change: the day the farmers switched off
their milk supply, we would be on our
knees. So we de-risked by developing an
alternative milk procurement centre in
Chittoor district in Karnataka.
Three, people warned us of the effects of
the 2008-09 economic slowdown. We
took a contrarian view: we said that the
longer the slowdown lasted, the more
people would eat. We were proved right;
the market for cheese grew 35 per cent
in 2008-09.
Finally, we commissioned the 40 TPD
plant in 2010 with a number of
observers insisting that our asset under-
utilisation would soon make the
company unviable.
The reality is that by 2012, supply had
widened product demand, our share of
institutional cheese purchases in India
had risen from 12% to 55%, the plant
had achieved 80 per cent capacity
utilization and we now intend to
increase capacity to 60 TPD by 2013.
We were right about being wrong. We
had all missed the unseen change in
India’s food consumption habits.
HE YEAR 2008 WAS
ONE OF THE MOST
EVENTFUL IN OUR
EXISTENCE.
One, the slowdown. We had
an option to scale down
the 40 tonnes per day
plant to 20 tonnes per day, which would
have been in line with our sales plan.
Everyone agreed. Then I had a
brainwave: at a time when no one was
buying any cheese manufacturing
equipment anywhere in the world, I told
the equipment manufacturer: things are
looking difficult and we will buy only if
you provide us a 40 tonne-per-day plant
for the cost of a 20 TPD facility. They
agreed.
MOPE provided us with ` 55 cr and in a
single stroke, we created a cheese
manufacturing capacity 50 per cent
larger than the entire Indian market at a
capital cost per tonne that was half the
prevailing international average.
Two, when we had gone into cheese
manufacture we had done so with the
objective to liquidate excess regional
milk supply and restore farmer viability.
We now recognized that if we
commissioned one of the world’s largest
“We negotiated a40 TPD cheesemanufacturing plantdown to a 20 TPD
equivalent”
ABOUT THE COMPANY
Parag MiFoods PvLimited
Parag Milk Foods is a l
milk’ product compan
manufacturing presen
and Southern India. Th
has a milk processing c
1.2 mn litres per day a
(near Pune) and 0.5 m
day at Palamner (near
The company markets
and UHT milk in tetrap
valued-added milk pro
ghee, curd, yoghurt, b
cheese (mozzarella an
whey, table butter, gu
and milk powder (skim
whole milk powder). T
consumer products lik
butter, pouched milk,
paneer are sold under
‘Gowardhan’ brand w
contemporary product
paneer, curd, flavoured
UHT milk (tetrapak), b
instant milk powder (‘
‘Dairy Whitener’) are s
‘GO’ brand. The Comp
founded by Devendra
brothers in 1992. They
Gujarati business fami
been in Manchar for m
century. The company
topline of ` 9 bn for FY
For details please visit
www.gowardhanindia
Largest state-of-the-art cheese plant in Asia
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30
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.
“Do youwant to bea contractmanufac-
turer forthe rest ofyour life?”
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.
“Parag Foods.Indianfoods
MNC.That is ourdream”
Parag Foods aspires to emerge as an Indian multinational
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32
Y FATHER SAJJA SESHAGIRI RAO WAS A FARMER WHO
GREW PADDY AND PULSES IN REPALLE, GUNTUR
DISTRICT.
He was hardworking; he would cultivate the tracts with bullocks. He
was industrious; he progressively grew the 5 acres that he inherited
as a 19-year-old to around 20 acres by the time he retired. He was
focused; my mother Satyavathi and he stayed 5 kms from the
nearest habitation. He was caring; he would pedal 13 kms to deliver milk and
vegetables to us every alternate day.
I say all this because somewhere this culture became my own.
THE LARGESTDEDICATED
POWERENGINEERING
COMPANY IN ASIA.
S. KISHORE BABU
THE STORY OF S. KISHORE BABU,
CHAIRMAN AND MANAGING DIRECTOR, POWERMECH PROJECTS LTD.
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34
“When I finishedcollege, one of my closefriends joined a powerengineering company. ”
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 auntPeddamma 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 year’s 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 s tudents devoured.
The word on the campus was that if youwent though Kishore Babu’s 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
couldn’t 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 i n 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 j ob at Indwell
Constructions without as much as an
interview.
Destiny.
“I was defactotutor tomy fellow
studentsin college”
“Fortunateto be inKorba”
did not return home. In th
my company’s engagemen
neared an end and I return
Vijayawada. My friend left
NTPC, I felt kind of lonel
jobs in IOC, BARC and O
managing director K. Ram
requested me to stay on wi
responsibilities, and the re
was promoted to Project M
General Manager, Directo
Joint Managing Director.
number three in an organiz
I was only 28.
When the time came for m
own company, I went to al
had known with the simple
‘Saab, kaam to dega na aap?
And that is how Powerme
Limited was created by my
1999.
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
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
My father sold a year’s paddy
crop for ` 25,000 to mobilize
the sum required for my
university admission fee.
Kishore Babu was –and continues to be – a dasher
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36
“Going entrepreneurial –starting my own company”
“A reputation for timelycommissioning”
The next big tender that Tata Trombay
gave out was for ` 50 lacs. The usual
practice was for BHEL to get the
contract and then sub-contract it to aspecialized vendor. Since we had not
been registered with BHEL, we were
prevented from tendering for the
contract.
But not quite. In an unusual initiative,
Indira Narasimhan at Tata Trombay
remembered her previous experience
with us, wrote to BHEL specifying that
it would be considered only if certain
members (specified by name - ours) were
engaged to execute the project and that
is how we came to be sub-contracted for
this prestigious assignment.
Now there was considerably work to be
done: to be registered with BHEL; we
were required to produce a bank
guarantee, so I went t o Nagpur,
requested a friend to lend ` 5 lacs,
deposited it in Federal Bank, took thestatement to show BHEL, which was all
okay, but BHEL now said that it
couldn’t possibly award us a contract on
a single tender basis so our next
headache was producing two
competitors who would also submit their
quotations for this assignment. As it
turned out, we emerged L1, reported a
profit of ` 40 lacs for an order that
lasted for 35-days and at the end of that
eventful first year, we had reported a
topline of ` 5 cr with a 50 per cent
margin.
No looking back.
OWERMECH’S
OBJECTIVE WAS
TO PROVIDE
MECHANICALENGINEERING
SOLUTIONS IN THE BTG
SEGMENT OF POWER
PLANTS. THE COMPANY
DID NOT HAVE TO WAIT LONG
FOR ITS FIRST ASSIGNMENT.
Within a few weeks, we had a call from
Tata Trombay. Would we help them
balance their LP rotor? We said yes.
When we went to conduct the job, the
well-wisher there asked us to put all our
signatures down on a sheet and then put
a tilak on it for shagun. My mother gave
me ` 221, which I still carry in my
wallet. We received ` 3 lacs for an
assignment that lasted a few days.
“Failure as a teacher”In the next few years, we secured a
landmark order of our company’s history
in 2002 – an assignment covering total
piping and turbine erection for IOC
(Panipat) for ` 4 cr.
We did our scheduling, we did ourcalculations. 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 r uined:
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 makethe mistake of embarking on a project
with documentation loopholes ever
again.
And yes, we completed the project to
the satisfaction of our customer.
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 t he erection-
testing-commissioning (ETC) side, we
gradually graduated towards ETC side.
N THE NEXT FEW YEARS,
WE BUILT A CREDIBLE
REPUTATION.
We excelled in working on the
erection of gas turbines, a
specialized area within a power
plant. We became well known
in delivering projects on or ahead of
schedule, being meticulous in our
planning and being present right
through commissioning. A number of
plant managers began to see us as some
kind of insurance: "Have these fellows
around and the plant will be up and
running on schedule".
A 250 MW plant commissioned one day
ahead of schedule was likely to generate
an incremental ` 3 cr in revenues (on
the basis of power sold at ` 3 a unit).
Preponing their cash flow, reducing
their break-even point and enhancing
their profitability.
This capability was drawn from a deep
competence. A major overhaul of V94.2
Siemens naphtha-fired gas turbine at
Paguthan CCPP (Gujarat) carried out
by us in a record 19 days was at least 11
days quicker than the nearest
benchmark under Siemens 2002
supervision. A major overhaul of V 94.2
Siemens gas turbine at NTPC Dadri
carried out by us in a record 35 days in
2001 was way below the prevailing
national average.
The result is Powermech jumped from a
turnover of ` 8.8 cr in 2002-03 to ` 26.8
cr in 2005-06 and to ` 155.9 cr in
2008-09.
However, all looked attrac
paper. The truth is that we
cash-stretched. Whatever
generated was usually plou
security deposit with a clie
project. Then there was mo
deployed in growing peopl
investing in specialized equ
creating on-site offices and
overheads. With more deb
have only stretched our ba
further. In turn, we would
weakened our case by buyi
coupon rates, which in turn
pushed us into a debt trap.
What we needed was net w
credible partner. And that
Motilal Oswal Private Equ
the picture in late 2009.
With close friend Ravuri The ` 221 that my mother gave me
when I first ventured out
Kishore Babu with his famil
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38
“Credible privatequity partner;credible custome
MY ADVICE TOENTREPRENEURSBy S. Kishore Babu
• Specialize, specialize, specialize.
Don’t 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 inthe 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
My vision is toemerge as a one-point provider of
power sectorsolutions – thermal,gas, hydro andnuclear - the worldover.
OPE WAS
THE ONLY PEQUITY PLA
MET AND N
SOMEONE W
OFFERED US
HIGHEST
FOR OUR
We went with MOPE for some
reasons: my chemistry matched
Raamdeoji’s within minutes at
meeting; he decided he would
my company when I told him t
would never dilute my shareho
below 60 per cent even after I wpublic.
Besides, MOPE brought rich va
our table: it taught me how to m
the cash flow better, how t o str
the Board, strengthen the over
governance process and tighten
part of the business to report a
balance sheet.
Since 2008-09, we grew to a tu
~ ` 700 cr in 2011-12. We ente
partnerships with most of t he p
majors operating in India - BH
NTPC, STATE GENCO, DVC
Reliance, Lanco, Adani, L&T,
JSPL, Sterlite, GMR, Siemens
GE, LMZ, Power Machines, SE
STEPC, Doosan, Tata, IOC, H
and Ceethar Vessels, to name a
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40
comprise more than 30% of its direct
employees; worker attrition has been a
mere 2 per cent per annum for years.
The company stands for a peace of
mind; clients provide land and
equipment and Powermech commissions
the power plant on schedule through
the interplay of turnkey mechanical
engineering and civil construction.
The company is respected for pushing
the envelope all the time; when the
company entered the business, it began
to work in 35 MW segment and is now
engaged at the cutting-edge end of 800
MW.
The company helps its customers go on
stream faster; the commissioning of a
500 MW that would earlier take 49
months now takes 28 months. Never in
the company’s existence have its bank
guarantees ever been invoked; on theother hand, the company earns around 3
per cent of revenues through incentives
for earlier-than-scheduled
commissioning.
O WHERE HAS
POWERMECH
REACHED IN A LITTLE
MORE THAN A
DECADE-AND-A-HALF
IN A CHALLENGING
BUSINESS?
Powermech is the largest dedicated
company of its kind in Asia.
The company accounts for 65% market
share in the BTG segment of India’s
power sector. The company has more
than 50 functional sites in addition to
over 25 ongoing O&M sites across I ndia
and abroad.
The company has been associated with a
generation of over 40,000 MW of power
to the National grids and is presently in
involved in commissioning projects over
30,000MW. It is involved in one form or
the other in every three out of fourmajor ongoing power generation projects
in India.
The company provides gainful
employment (direct and indirect) to
around 20,000 individuals; engineers
“Largest dedicatedcompany of our kindin Asia”
ABOUT THE COMPANY
PowermechProjectsLimited
Powermech is a leader in
erection and commissionboilers, turbines and gen
thermal power plants in
Company also undertake
overhauling and mainten
(OHM) of power plants.
Powermech has carried o
erections/commissioning
in India and over 250 OH
contracts in power plant
Powermech has worked
all the power EPC players
like BHEL, REL, Lanco, Do
SEPCO. Powermech was
in 1999 by technocrat S.
Babu, a first generation
entrepreneur. Before pro
Company, he spent 15 y
Indwell Constructions, a
in the same space. The c
achieved a topline of ` 7
2012.
Please visit
www.powermechprojec
for more details
Power plant at the Mundra Port on which Powermech worked
Power plant at the Mangalore Refinery on which Powermech worked
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42
FAILED IN CLASS EIGHT.
THIS WAS A FAMILY
SETBACK MORE THAN ONE
REASON.
Our paternal family was fairly
intellectual: my grandfather
was a progressive freedom
fighter who inspired his two sons – my
father and uncle – to become an
engineer and a doctor. The result was
that wherever my father went he was
respected, but when it came to me, I
would have to churaao aankh on account
of my weak academic record, cousins
would say ‘Yaar, tu to fail ho gaya!’ and
the family pronouncement was that
‘Tum to bhai kuch bhi nahin ban sakoge.’
It appeared as if the destiny of my life
had been written on the basis of how I
performed in school.
Then something happened. My father –
he was Chief Engineer, Rajasthan State
Electricity Board – was transferred from
Jaipur to Alwar just after I had failed.Two things followed: I was required to
move from a CBSE English-medium
background to a Hindi-medium
educational environment; because of my
father’s audhaa, I did not have to repeat
the year in class eight; I went one class
ahead regardless.
I came first in class nine.
That’s right. First. I turned the academic
corner, became school monitor, school
cricket captain, best sportsman (and
called up for trials with Rajasthan
under-19 a few years later).
When I look back, I recognise what
caused the transformation. Since I was
not good at conversational English, this
had affected my confidence to the point
that I would do terribly in select subjects
and that under-performance pulled
down my overall average.
As a result, my entire academic career
was being hostaged by the fact that I
could not speak or write one particular
language with competence. When this
problem was relatively corrected by my
going to a school that no longer
challenged me from this perspective, I
relaxed internally, my resident strengthsasserted themselves and I was Sanjay
Agarwal all over again.
Pura confidence ka khela.
THE BOY THEYSAID WOULD DO
NO GOOD.
SANJAY AGARWAL
THE STORY OF SANJAY AGARWAL,
MANAGING DIRECTOR, AU FINANCIERS (INDIA) PRIVATE LIMITED
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44
“Kindling the desire to makemoney”
“But after I finished mycollege, it was time to
decide. Put more timeinto cricket or dhandhe mein lag jaao. I made mydecision. I went andhanded over my kit bagto a friend and neverplayed again.”
RICKET WAS MORE
THAN A GAME, IT
WAS AN
OBSESSION.
Yahaan khelna,
wahaana khelna. Aaj
khelna, kal khelna.
Khelna hi khelna.
My dream was to make it big in cricket,
play for the state, then zone and then
who knows…
But after I finished 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
to a friend and never played again.
I was walking into my residence on one
of those days when I realized that a
friend of my father was at our place.
‘Beta, kya kar rahe ho aaj kal? ’ he asked. I
mumbled something indecisive. He
asked me to go and see his son who was
running a chartered accountancy firm in
Jaipur. And that is how I went to Anil
Bafna & Company the following
morning.
Anil Bafna & Co. introduced me to a
new world: fielding promoters, with
business ideas, needing to raise money
through an IPO, comparing one projectwith another in the same line of
business, asking for more responsibility
and getting it, being asked to go and
deliver some document 20 km away by
cycle, standing in a photocopy dukaan
I cleared the second group (Inter) on my
third attempt in May 1993.
Now remained two groups of the CA
final. I decided to take both on
simultaneously in November 1993 and
went to Delhi to train for three months.
On the eve of the exams, I pulled out. I
said I would sit for both in May 1994
instead. By April 1994, I had slipped
into a mild depression, my tabiyat was
affected (I would sneeze 500 times in
succession) and concluded that pucca I
would sit for the examinations in
November 1994.
In November when it appeared that the
drama would recur, my friend Ajay
Sankla came home, deposited me on his
scooter, delivered me to the
examination hall and ensured that I
appeared for the examination. I would
like to describe what happened
thereafter with a cricketing analogy:
when you think your team has a chance
of winning, you will bat carefully, leave
all deliveries outside the off stump and
bat within the ‘V’. But when you are
seven wickets down and 200 runs
behind, then you hit out at everything
and who cares. This was my state: I
knew I was going to fail so I addressed
the examinations with abandon. I hadnothing to lose.
The day the CA results were to be
announced, I khiskoed to my masi’s
house to fly kites. Ajay went to check
the marksheet instead. He tracked me
down to my masi’s residence and what
I will never forget is me standing on
the roof and Ajay standing below,
shouting ‘ Abbey, tu CA ban gayaaaaaa!’I almost fell off the roof. We went to
the CA Institute and stood staring at
the marksheet for four hours. We re-
read the line; we got others to read it
as well.
and seeing how employees would cheat
on their companies by getting lesser
number of pages photocopied for
personal gain, assuming effective controlof the firm when the seniors were away
even though I was just an articled clerk.
The result of this diverse chemistry was
that for the first time in my life paise
kaamaney ki ichha pehli baar dil mein jaag
gayi.
And that was the time for me to
leverage my deductive capabilities and
become a chartered accountant. I took
leave from my job as an articled clerk in
Anil Bafna and Company (Jaipur) to
prepare for the first group (of four that I
would eventually need to appear for). I
was among the toppers of the Jaipur
chapter for the first group (Inter).
However, when I appeared for the
second group (Inter) I failed. So I
reappeared. Failed again. This was
embarrassing. I would feel small when
appearing in front of my boss. One could
almost feel the entire office talking
behind my back – ‘Sanjay zindagi bhar sirf
accountant rahega.’
A few days later, another shock. I
stood 39th. In our CA language, I had
earned a Merit. The stigma of the
number of times I reappeared for theexamination and the number of times I
detoured on the eve of the
examination to return home was
quietly buried.
I had acquired ‘match temperament’.
Winning was a passion from an early age
Budding cricketer. Note the way the head is inclined
ABOUT THE COMPANY
Au is a regionally focused
banking finance companCompany operates in the
Rajasthan, Maharashtra
Gujarat. The company re
entered the states of Goa
Chhattisgarh and Madhy
It offers loans to custome
urban and rural areas for
heavy commercial vehicle
utility vehicles, three whe
cars. It also offers loans a
property and micro loans
businesses. As on March
the Company had appro
150 branches across vari
It recently promoted Au
Finance, a housing finan
company registered with
Housing Bank to provide
loans to customers in sem
and rural areas.
The Company has been p
by Sanjay Agarwal (MD &
with over 15 years’ exper
financial services. He is a
Accountant (all-India ran
The company had assets
management of ` 25 bn
of FY 2012.
Please visit www.aufin.in
details
Au Financ(INDIA) PLtd.
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46
• 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,
don’t lose confidence and snick
behind that very over.
• Don’t be distracted by all the
khilona of the world - mobiles,
facebook and twitter. Spend much
of this time productively in
learning something, widening yourknowledge. The memory of what
film you saw last night will soon
be forgotten; the benefit of a new
acquired skill will be enduring.
“MY ADVICE FORTODAY’SYOUNGSTERS”By Sanjay Agarwal 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 ourterms: 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 t here
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 don’t we start a financing business
of our own?’
FTER GETTING A CA
MERIT POSITION,
SHAHENSHAH BAN
GAYE.
Some of the best
companies in India were
now approaching me
with job offers. IDBI,
ICICI, HLL and the best of all was the
AV Birla Group: I was an Agarwal, was
from Rajasthan and was a CA. It was
almost as if they were asking me ‘Where
within our group would you like to
work?’
I eventually decided on two – IDBI
Bank and AF Ferguson – with a package
of around ` 200,000 a year, work
environment in Nariman Point and
home accommodation provided for.
That is when Anil sir (Anil Bafna &
Company) asked: ‘What will you do in
Bombay?’ I must have said s omething.
He said, ‘Why don’t we start a financial
services company in Jaipur?’ I said that I
was disappointed by what CAs in Jaipur
had reduced themselves to; one needed
to know more tax officers than one
needed to be intelligent. Anil sir said
why don’t we start a fee-based company
instead. I asked what kind. Anil sir
“Turning down IDBIBank and AF Fergusonto do my own thing”
“In a few monthrealized that we stronger businesthan just be calliexisting customekhudra-khudri
business... And thow one day I tosir, ‘Why don’t wa financing businour own?’”
With Anil Bafna, a respected guide and mentor
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of incremental profits after their cost of
funds and no fund management fees.
We got friends to help with financing
agreements from competing companies,
photocopied them, created a reasonable
corpus, extended our financing portfolio
from passenger cars to three-wheelers,
commercial vehicles and taxis and then
extended beyond Jaipur. The singular
focus: finance only those cases where
returns would be in excess of 30 per cent
and secured.
It wasn’t a singular focus.
My brother and I began to
engage in job-work for
garment exporters. The
business failed.
I started a granite processing
unit, leveraging the
experience of having worked
with a number of granite
processors who would come
to Anil Bafna & Co. to get
their work done. The business
failed.
I started the export of
garments to Italy. Paise doob
gaye.
I entered the business of cement
transportation from DLF’s factory but
realized that the business was more
about working with truckers and getting
down to their level of language. I quit.
I started a granite marketing business in
Dubai and entered into a partnership
with a granite processor. I exited
(leaving it to my brother).
Most people would have been
disheartened and concluded that
business was not for them. I sat down to
think. I concluded that the businesses
weren’t wrong; I was only managing
them wrongly. These businesses requiredpersonalized attention; I was operating
by remote control. These businesses
needed an entrepreneur; I was only an
organizer.
And that is when I decided to wind
down. I exited Anil Bafna & Co., exited
BIFCO and decided to access funds from
a single source (chacha), drew out a
broad arrangement with him (‘ jitney
paisey chahiye bol dena’) took over a
company called LN Finco Gems Pvt
Ltd., moved into a modest rent-free
2000 sq ft office and that is how SanjayAgarwal was reborn.
E DIDN’T HAVE
MONEY. WE
DIDN’T HAVE
EXPERIENCE. WE
HAD CREDIBILITY.
And that is how three
individuals came forward
to fund our seed corpus with ` 25 lacs.
They knew we could be trusted and
would be safe financiers. In turn, we
assured them capital protection, 9% per
cent return on their funds, 50 per cent
“Four more businessesand all failures”
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.
If they wanted the executive’s time, he
or she would drop everything else,
attend immediately and ensure that the
customer could move on in quick time.
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.
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 i nstance,
when I was leaving the s ervice
apartment that we were staying in, Iwent 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 s imply 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.
“Turning point”
“Our chauffeur has ESOPs and 1000 Au members have gon
the last three years to see the world, including our peon”“Create a hunger for doing something big!”
48
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50
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 (‘nochepna’), 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.“The HDFCBank touch”
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.
• Plan your innings in increments
of 10 runs. When you are 20, the
big goal should be to get
and then 40 and so on. Si
don’t try and precisely pla
way into 2022.
• The pitch will always kee
changing. What was a firm
on the first day will be cru
by the fifth. Adapt.
• Teams become good wh
players deliver. Teams bec
great when average playe
Back team members to do
things (across roles and sit
• Pace your innings. Grow
then consolidate, then gro
again.
• Respect the umpire’s fin
Respects regulators and th
the land.
• The best player is one w
performs well in adverse a
conditions. Most people h
centuries at home. But wh
go abroad, they fail. It is im
to succeed in various geog
• All players make a team
remember Laxman’s 281 iKolkata Test when India b
Australia after following o
there was a Harbhajan wh
took a hat trick and others
held all the catches.
WHAT THEYDON’T TEACIN BUSINESSSCHOOL, YOULEARN ON ACRICKET PITBy Sanjay Agarwal
“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 i n succession”
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52
LOCATIONS TO 42 LOCATIONS.
Then came the slowdown of 2008.
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 t o put our earnings
back into the business, even as a number
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.
There was only one alternative: get
someone to put money into net worth
from the outside. And that is how I
began to entertain the idea of
broadening the shareholding, getting a
decent valuation on my business, selling
a part of the company’s 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 howMotilal Oswal Private Equity (MOPE)
came into the picture.
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
“Managing a crisis”
engine running. We had scaled the
organization to a certain size. If we
stopped lending, revenues would
decline, overheads would appear
relatively higher, we would lose ourpositive body language and our de-
acceleration would begin.
To grow we needed money. The two
banks funding us at until that point
were skeptical. We had a modest net
worth of ` 10 crores. The first thing we
needed to do was to st rengthen our net
worth, enhance lender confidence and
widen our presence.
When we went to Motilal Oswal Private
Equity (MOPE), one of the first things
that Raamdeoji said was, “I want to
know how is it that HDFC Bank gave
you ` 250 cr over the last five years even
though you hardly had any money of
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 – despiteits stated discipline of putting money
only in companies that reported more
than ` 10 cr in profits.
They didn’t back our content; they
backed our intent.
HEN THE
GLOBAL
ECONOMY WENT
INTO A TAILSPIN
IN 2008, BANKSSAID, ‘WE ARE NOT
LENDING UNTIL THE
GLOBAL PICTURE BECOMES
CLEARER.’
But at Au, we needed to keep the
“The MOPE booster effect”
(ending 2011-12). We increased our net
profit of ` 2.5 crores in 2008 twenty-fold
to ` 55 cr (2011-12). We increased our
book size of ` 250 crores ten-fold to
` 2,500 cr (2011-12).
We grew from two states to seven states;
we widened from 42 locations to 150;
we extended from vehicle financing to
business loans to home financing to
insurance broking.
We have numbers that any company
will aspire towards: our net interest
margin of 6 per cent is among the
highest in India, our collection
efficiency is around 100 per cent, our
delinquency ratio of 0.4% is among the
lowest, we write off bad financing cases
within 360 days and our return on
equity is more than 25 per cent.
Only two banks were funding us in
2008; there are 35 today.
HE RESULT IS
SOMETHING THAT
ONE ONLY DREAMS
ABOUT.
In a mature business, we grew
our net worth more than
50 times in just three years
“Dreams and realities”
Agreements being signed with MOPE and IFC Washington
At the IFC Washington awards in London
Agreements being signed with Warburg Pincus and IFC Washin
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54
Y FATHER CAME FROM A CONSERVATIVE MARATHI
BRAHMIN BACKGROUND WHERE THE FORMULA FOR
SUCCESS IN LIFE WAS: STABLE JOB, WORK, RETIRE.
HIS FIRST BREAK CAME WHEN HE MOVED OUT OF A
50 ROOMS-A-FLOOR CHAWL IN DADAR TO GO OUT TO
STUDY MECHANICAL ENGINEERING AND LIVE IN A
HOSTEL.
This widened his exposure, gave him chutzpah and the feeling that “What is there t o
lose?”
The result was that my father had the khujli to do things through his life. So during
the course of his career as a mechanical engineer he worked for companies in and
around Mumbai. Then one day, in 1979, he and his colleagues left to set up two
companies in Pune - one to manufacture hoists and another to manufacture cranes.
This was largely unheard of within our community. In fact my father lied to his father
that he had not quite started a business for the first few years. What times!
THE CRANE MANFROM PUNE.
TUSHAR MEHENDALE
THE STORY OF TUSHAR MEHENDALE,
MANAGING DIRECTOR,
ELECTROMECH MATERIAL HANDLING SYSTEMS (P) LIMITED
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56
“I ran a software-based horoscopebusiness while I wasstill in school”
OME OF THAT
ENTREPRENEURIAL
CHUTZPAH MAY
HAVE BEEN GENETIC.
In 1990 when I was 14,
just when personal
computers were becoming
popular in India, my friend and I started
a software-based horoscope business for
` 25 per horoscope. We sold these
horoscopes to fellow students and other
interested people. Almost every rupee
that I earned translated into thebottomline for an interesting reason: A
famous listed software company (which
will remain unnamed) had its operations
in a row house adjacent to my friend’s
house. Once we had climbed into their
balcony from my friend’s balcony and
realized that they would leave the door
open, so on many nights after all their
executives had left, we would climb
from our balcony into theirs and play
games by inserting our precious 5 ?”
floppy discs in their machines. Then
one day, I loaded the horoscope software
into their system, made some
simulations and when I was convinced
that the operational model was
dependable, we launched our
‘commercial service’.
A number of our classmates became our
first clients; we would create their
horoscopes on this s oftware company’s
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.
“You don’t have tobe in business to beentrepreneurial”
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 alternativefunding. 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
Master’s course by being draftsman by
night and student by day.
I learnt something valuable: when you
say ‘no’, a number of possibilitiesemerge.
NE CAN BE
ENTREPRENEURIAL
WITHOUT EVEN
GETTING INTO
BUSINESS.
I had an interesting
related experience when I
went on a 100 per cent scholarship to
the University of Wisconsin in 1997.
Having been a university ranker
throughout, I was offered a Research
Assistantship that would have Tushar on his graduation day at the University of Wisconsin.
“Within seven was alive againfor my first yeaMaster’s coursbeing a draftsmnight and a stuthe day.”
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58
decide. If my father was gone then this
wasn’t his show any longer. If I dithered,
then it would all go away anyway. Bus
khatam. There was nobody else to step
into his shoes. So in a way this was
taking control from ground zero and
building from there.
What the team needed at this point was
no strategic bhaashan. I gathered all the
100 or so employees who had turned up
at the crematorium under a tree, rose on
a slab to become visible and told them
that from the following day it would bebusiness as usual. At sharp nine the next
day, I turned up in my father’s cabin, sat
in his chair and asked, “ Aagey kya karne
ka hai?”
RETURNED FROM USA IN
SEPTEMBER 1999 WITH THE
AGENDA OF ACHIEVING
SOMETHING FROM
SCRATCH.
Life may have been different
had it not been for something
unexpected that transpired on 17
January 2000. While my father was on a
badminton court in Pune, he suffered a
fatal heart attack. He was 52 and I was
24.
For years I had lived with the
conviction that my father could keep his
company and that I would create
something of my own. From scratch. Do
it my way. However when this
happened, it took me a second to r e-
“Getting into businessand into a crisis at thesame time”
• Our intellectual capital, reflected in o
flexibility to customize the right produc
specific customer needs
• Our possessing a small company sou
company body; customers know exactl
the buck stops in our business, which h
resolve issues with speed
• Our sense of innovation; over the yea
have made a widespread use of cutting
technologies; some control and drive sy
pioneered by us were used in cranes fo
time in India and are now industry stan
• Our scale; we are the largest in our in
space in India by a factor of three; this translated into higher economies and q
deliveries
• Our range; we make small to large cr
helping enhance our cash flow and red
risks arising out of project delays. We h
largest product mix in the industrial cra
segment in India
• Our brand associations, which not on
enhance our credibility among custome
also widen our capability to provide cu
with whatever they want, irrespective o
we make it or not
• Our crane population in India of arou
compared to around 2500 by the neare
competitor, creating a larger market fo
service this equipment and generate an
service and maintenance income
WHAT EVOLVEDELECTROMECH INTOOF INDIA’S MOST DYNCRANE MANUFACTURBy Tushar Mehendale
ABOUT THE COMPANY
ElectroMech is engaged in the
business of design, engineering,
manufacturing and installations of
Electric Overhead Travelling (EOT)
Cranes, Electric Wire Rope Hoists,
Jib Cranes and Gantry Cranes. In the
last 30 years, the company has
supplied in excess of 4,000 cranes.
The company is the largest
manufacturer of work shop duty
cranes in India with the widest
product spectrum in the cranes
industry.
ElectroMech is led by Tushar
Mehendale, a second generation
entrepreneur, who stepped into his
current role at the age of 24 in
2000. Over the last ten years he has
catapulted ElectroMech into one of
the largest players in India in terms
of number of cranes produced and
sold.
The company achieved a topline of
` 1.8 bn for FY 2012.
Please visit www.emech.co.in for
more details
ElectroMechMaterialHandlingSystems (India)Pvt. Ltd.
State-of-the-art facilties in Pune
Quality next to none
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60
“Hands on. Not an absenteelandlord passing through”
product. There were drastic reviews; I
quietly made people understand that I
trusted whatever they had done in the
past and they had done it with the best
of their knowledge and intention.
Five, I made only incremental changes.
Only when the managers and workers
had got a fix on this new guy who hadcome in from the cold did I start
pushing the envelope.
Six, I met every single customer,
assuring them that old relationships
would be respected, quality standards
would be uncompromising and delivery
schedules would be met.
Seven, we would not run this
conventional business in a conventional
way. We would negotiate payment
schedules with vendors as tightly as we
could, but on the appointed date their
cheque would be ready. “Us” would not
mean Electromech alone; the term
would refer to our vendors, customers,
community and employees. Everyone.
couple of senior managers; in turn, they
would be accessible to four more
managers. This is where my egalitarian
US exposure kicked in; I walked around
the shopfloor, met people, shook hands,
saw people in the eye, remembered their
names and if anyone wanted to speak
with me he was welcome to come to myopen-door office.
Two, I began to ask “What are you
doing? Why don’t you show me?” In
some cases I learnt. In some cases I
advised. And in other cases I said “Let
us crack this issue together.” A dialogue
had begun.
Three, I pushed the envelope. If
someone said, “This has always been
done this way” I ventured to suggest
what could be another engineering
alternative. The word got around. This
fellow had an engineering degree fromAmerica and knew his stuff.
Four, I opened every single file,
reviewed every single customer
relationship, understood every single
HEN YOU TURN
IN ONE FINE DAY
INTO A BUSINESS
THAT YOU HAVE
‘INHERITED’ FROM
YOUR FATHER, AND
ACT LIKE SOME
ABSENTEELANDLORD WHO IS PASSING
THROUGH, PEOPLE WILL SIMPLY
NOD THEIR HEADS IN FRONT OF
YOU AND TALK BEHIND YOUR
BACK THEREAFTER.
So my first test was establishing
credibility in my father’s absence.
These were some of the things that I
began to do that were completely
different from the way engineering
companies would be run around Pune in
those days.
One, I got out of the air-conditioned
comfort of my cabin. The company
would not come to report to me; I would
go to the company. Typically, a
promoter would be accessible only to a
“My lowest momentand fighting back”
black listed by the entire TWhich is when our lawyer
something lateral. He said
was no point in filing a civ
we needed to file was a win
petition as the client was n
position to pay us up and t
client did not respond with
we could actually push for
liquidation of Tata Project
As it turned out, nobody a
Projects even read the not
sent. When the deadline p
someone in that company
the company could now be
dissolved. The result was th
paid the entire outstanding
delivery of goods was taken
liberated!
We were fortunate. We sur
scare, the economy revived
our order book grew, reven
profits increased and we we
as difficult a position ever
This incident was a trial by
and was akin to learning to
jumping into the deep endIn retrospect, the instance
the importance of fighting
Against injustice, against a
against challenges.
take delivery a month later, but thatnever happened. We waited for another
couple of months, but nothing moved.
We waited another quarter, but there
was no progress. Tata Projects had
goofed up in their project execution
details and as a result were unable to
satisfy the requirements of their end
customer to whom they were to supply
our hoists. Conveniently, they passed on
this burden to us and we were left
holding on the baby.
We were jammed. In servicing the
biggest order in our existence, we had
consumed all our working capital, our
bank limits had been overdrawn and the
shopfloor was packed with material that
could not be moved. We met everyone
who we thought could help from within
the Tata Group; nothing moved. We
were now stranded
for more than 15
months with this
order and no one in
Tata Projects cared a
damn.
We considered going
legal; someone said
that we would bleed
to death faster as we
could potentially be
HE WORD GOTAROUND 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, t hey would
The plant at Pune.
“In retrospect, tinstance taught mimportance of figback. Against inagainst adversityagainst challenge
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62
I could not only bring ideas from the
outside but also implement them.
My ignorance proved to be an
advantage. Soon.
Even though we were a small hoists and
cranes player catering to the demand of
local players, we resolved to go national.
Even as we addressed the broad demands
of the marketplace through popular
products, we resolved that we needed to
develop niche, high lift, high speed
winches (we delivered a 135m lift crane
when the prevailing Indian industry
standard was 30m for tunnelling
projects, which surprised the customer,
industry and ourselves).
Even as people said that the future lay in
India, we resolved to market products
abroad.
Even as most companies waited for the
orders to come in, we created offices in
metro cities supported by a sales and
marketing team to travel the country,
see who was going to buy what in a few
months and then exhorted the team
with “Dhanda leke aao!”
Even as most companies within our
business recruited old industry hands to
interface with customers, we recruited
fresh engineering graduates without any
industry prejudice.
Even as companies made pitches based
on drab brochures given out by
unimpressive sales people, we created a
comprehensive catalogue that made us
look like a multinational company, we
transformed our logo and visual
branding and we put laptops in the
hands of our sales engineers. Suddenly,
we were looking bigger and better than
what we were.
Even as most of the industry always
focused on the ‘price’ part of their
proposition, we extended the argument
to ‘price-value’, the ‘value’ proposition
comprising our rich engineering,
network and delivery.
Suddenly, a number of people were
asking, “Is this the same ElectroMech?”
HEN YOU ARE
RUNNING A
COMPANY IN A
MATURE
BUSINESS, THERE IS
A DANGER OF
BELIEVING THAT
EVERYTHING THAT NEEDS TO BE INVENTED HAS
ALREADY BEEN DONE.
This is especially true when you have
managers who have spent years within
the business before rising to positions of
authority. Since they have seen the
entire business from the inside, they feel
that in a mature sector what was good
will continue to remain so and there
would really be no reason to innovate.
We were fortunate. Even though I had
been exposed to the business when I was
young - most of my school vacationswere spent on the shopfloor - I was not
grounded within the industry. I could
bring ideas from the outside. More
important, the buck stopped with me so
“Notknowingeverythingproved to
be anadvantage”
“Fromlocal toglobal inone move”
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 numberof 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 cranesthey possessed in their plants in
Australia. The simple thing for Tata
Young and dynamic at 35!
Blue Scope was to get ABU
But ABUS was conservativ
intention of entering India
its strategy was to expand i
through strategic partners
countries.
We saw an opportunity: we
propose to be ABUS repre
India.
This is how t he value prop
work.
Their benefit: we would be
market ABUS products in
ABUS needing to worry ab
Our benefit: we would be a
leverage this international
and reach out to a higher c
customers, we would be ab
ABUS’ existing products, w
able to customize ABUS p
Indian conditions and clie
requirements and we woul
graduate from selling produ
crafting solutions for our c
In our cricketing equivalen
now be able to extend from
level to play Test matches.
The result was that in 2005
million German giant shoo
a ` 12.5 crores revenue Ind
ElectroMech to cater to th
needs of the fourth largest
Coup.
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economy rebounded. It had taken
Electromech 26 years to get to revenues
of ` 12.5 cr by 2004-5; then in just one
year, the company trebled revenues to
` 36.5 cr, by which time the company
had emerged as the largest in India in
terms of volumes.
Upto 2005-06, nearly 90 per cent of the
company’s projects were local in nature
and 50% of the revenue mix was derived
from the construction sector. Now that
we had more space to work and a better
product portfolio with addition of
ABUS, we extended our presence to the
auto, auto ancillary, power and windmill
sectors; within the construction sector
we made cranes customized to the
precast technology that made it possible
for construction projects to be
completed faster. The result was that we
now derive only 40 per cent of our
revenues from Maharashtra, with a large
55 per cent from North and South
India.
This widening spread provided
Electromech with the surplus to put
back into its business. The result is that
company grew every single year in the
six years leading to 2011-12; the growth
in revenues during 2008-09, when the
world passed through a slowdown, was a
significant 72%; in our worst year
(2009-10), we grew 1.5%.
In the short space of seven years, the
company enhanced its factory area
nearly 50-fold and seven-folded the
number of bays as a precursor of
sustainable growth. In the following
years, the company sustained its growth
and reinvestments: revenues increased
to ` 202 cr by 2011-12; corresponding
factory space increased to 20,000 sq
metres across a 76,000 sq. metre campus.
A birds-eye view of the facilities
ROUND 2004, WE TOOK
STOCK OF OUR
BUSINESS.
From the time I had
assumed control of the
business, we had
consolidated our
presence around 1600 sq metres of plot
space.
We now had to decide: if we intended
to emerge as a national company, we
would need more space. If we needed to
widen our product mix, we would need
more space. If we needed to engage inincreasingly challenging products -
higher lift, higher speed - we would need
more space.
But the big question was should the
business come first and the space
thereafter - or vice versa. 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. One would have to walk
blindfolded and take a leap of faith.
So in 2005, Electromech embarked on
the big leap. The company enhanced its
space capacity six-fold to 10,000 sq
metres.
The gamble paid off. The Indian
“Growing our capacity six-fold!”
On paper, this theory made sense. Notin 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 value-
added products, savage cost reduction
and an ability to roll products out faster
through enhanced productivity.
Our strategy was vindicated recently
when we looked at the numreported by some of our co
who took away a substanti
business from us on low pri
struggled to break even an
even managed to wipe out
worth completely!
Playing the volumes game - andnever making that mistake again
Atlas Shrugged by Ay
Rand. The principal m
I derived out of it: yo
your own architect a
enemy. Your best frie
fiercest competitor. I
read the book three t
MY FAVOURBOOKBy Tushar Mehendale
Eventually, onerecognised that oneneeded to buildcapacities under oneroof and if we everwanted to time it -business first, spacelater - we would neverever be able to time itright.
We made a courcorrection. We
recognised that ethough the profiin this business wdriven by volumneeded to be sele
O SOMEONE WHOHAS 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, itwould 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.
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66
highest revenue in the sector.
• We will widen our product basket to
address the needs of a larger number of
sectors through customised applications.
• We need to extend beyond cranes and
hoists to construction equipment,
leveraging our scale and competencies.
• We need to emerge as the first pan-
India crane maintenance services
provider through our services subsidiary
Cranedge, catering to a population in
excess of 100,000 cranes in India by
offering maintenance contracts,
retrofits, modernizations and breakdownservices.
• We need to graduate to a global
presence through inorganic initiatives
that facilitate a prudent selection of
targets that bolster our product mix, our
market reach and synergies.
O WHERE DO WE
TAKE ELECTROMECH?
My vision is to create a
globally respected capital
equipment company.
We have charted out a
roadmap on how to get there:
• We possess the largest volumes in our
sector in India; we now need to report
the highest profitability and in turn
“The presence may be India, butthe vision is global”
inevitably appraised around the safety of
their capital.
This is where the ` 45 crore investment
that Motilal Oswal Private Equity made
in our company in February 2011 was
just what the company needed. It
provided us with precious equity capital
to grow the business; it provided us with
access to business support that an owner
would provide to a fellow owner on how
to grow the business fastest in a
sustainable way.
MOPE helped in the following ways: it
helped us implement the right systems
(financial control, strategic planning). It
served as a sounding board against
which we could validate our business
plans.
This proved to be a god-send: most
entrepreneurs are sound on the
technical side but address financial
issues based on their gut feel. By asking
me a number of questions that no
external person had asked, MOPE
helped me identify strategic gaps, which
were plugged and institutionalized.
The result is that the quality of our data
analysis and knowledge generation is
richer than ever. The institution of
monthly reviews is more formal across
departments. Our heads of departments
have understood their businesses
holistically. Organisationally, MOPE
has influenced Electromech graduate to
high margins.
Best of all, entrepreneurs have a limited
understanding of how financial analysts
will appraise their companies. MOPE
brought in a rich perspective of how we
should position ourselves, what are the
things that we should do and what we
should not and create the foundation fora sustainable increase in valuations once
we are listed.
HICH BRINGS
ME TO THE LAST
THING I HAVE ON
MY MIND.
Personal trainer.
Successful athletes have
excellent coaches. But in
business, especially when one is
relatively small, we do not always have
the luxury of specialized advice.
One, we do not have a knowledgeable
Board due to our scale. Two, while we
do have financial associates, they are
lenders and bankers who have their own
perspective on our business, which is
“MOPE became our personal trainer”
• Start early in life as
entrepreneur; if you fa
more likely to have the
to stand up and fight
• Resist the pride thatwith small achievemen
ego that goes with 10
saying “well done”. Th
always more to achiev
• Create an open cult
people can speak thei
not a durbar where pe
come in say only thos
that please the boss. B
Yes Men!
• Resist the temptatio
splurge on lifestyle bu
cars and extravagant h(especially funded by
soon as you start mak
• Keep your managem
flat. Keep communica
team members. Keep
them what is happeni
marketplace. I spend
fourth of my working
shopfloor. I am alway
• Condone first-time
This will give your peo
freedom to innovate.
• Responsibility withoauthority is bureaucra
Authority without res
is dictatorship. But wh
combine the two, you
tape and get work do
MY ADVICE ENTREPRENBy Tushar Mehendale
We possess the largestvolumes in our sector inIndia; we now need to
report the highestprofitability and in turnhighest revenue in thesector.
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68
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.
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 multi-
department 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 one’s 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 don’t have a union in our
company today.
In the power sector, reforms started from
the mid-Nineties. In 1995 we enteredinto a technological collaboration with
Skoda and went public at a premium of
` 80 – a huge amount at that time.
AADITYA DHOOT
IMP Powers makes po
distribution transformmanufacturing facilitie
located in Silvassa. IM
class supplier to almo
electricity boards (SEB
as well as to the railw
defence and private co
(Areva, ABB, Siemens,
Structures, BHEL, IVRC
Kalpataru). IMP increa
transformer manufact
capacity from 3,600 M
2007 to 10,000 MVA
December 2009. It ex
order to make 330kV
transformers, paving i
into the extra high vo
segment of 400kV rat
Set up in 1961 as a m
manufacturer by Ram
Dhoot, the company i
by sons Ajay and Aad
company is expected t
a topline of ` 3 bn in
You may visit www.w
powers.com for more
AboutIMP PowLimited
AADITYA DHOOT (RIGHT), RAM NIWAS DHOOT (MIDDLE) & AJAY DHOOT
THE PROMOTER GROUP, IMP POWERS LIMITED
i H li d hi hil hY STORY IS THE AKSHAY CHHABRA
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70
conservative. He lived this philosophy:
He was entitled to fly Business Class but
often flew Economy to stay grounded
and save his organisation’s 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
staffer’s movements, we altered our
business model through the progressive
appointment of tele-callers, who wouldfix 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
world’s 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 soEffort 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 India’s 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. MOPE’s
mentoring has been priceless, especially
our interactions with Raamdeo Agrawal.
They have been a pillar of str ength;
during crisis MOPE has hand holded us
at every stage.
Y STORY IS THE
STORY OF LIFE’S
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 yearof 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 15-
seater 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
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 all-India for six years and in the top three
for four.
Vivek Kudva became my mentor. He
taught me how to stay humble and
AKSHAY CHHABRA
Effort provides call cen
services to Indian clien
industry verticals. It su
clients in customer ac
billing, collections and
transaction processing
Banking & Financial S
Telecommunication, E
Commerce, Manufact
services, Supply chain
management, and Ins
well as Retail manage
services industries. Eff
employs over 2,500 p
services marquee clien
Reliance General Insur
Future Generali, LG, G
group, Times Jobs, Ea
Naaptol.com and Tata
Effort has its own fac
Vashi (Mumbai) with
centers in Delhi and In
The Company is prom
Akshay Chhabra (MD
who possesses more t
years of experience in
services marketing/ser
qualifications include
Electronics and MBA.
company achieved a t
` 450 mn for FY 2012
Please visit www.effor
for more details
AboutEFFORTBPO Lim
AKSHAY CHHABRA,
MANAGING DIRECTOR, EFFORT BPO LIMITED
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72
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
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.
It’s amazing that even as businesses
become hi-tech and modern, the oldvalues prevail.
* Today, I can communicate fluently in
English, Tamil, Italian and Japanese. Some
change.
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 COMPONENTMANUFACTURE.
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 wasn’t 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
years happens in months. The culture
changes.
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
NIRMAL KUMAR MIND
Minda Industries Ltd.
automobile compone
India, engaged in des
developing and makin
switches, lighting, aut
batteries and blow mo
products for two, thre
wheelers. It is a prefer
supplier of these prod
various original equip
manufacturers like Ma
Auto and Hero Honda
Minda Group has bee
business of auto ancil
over five decades and
group turnover of ove
` 12 bn in FY12.
Please visit
www.mindagroup.com
details
MindaIndustrieLimited
NIRMAL KUMAR MINDA,
CHAIRMAN AND MANAGING DIRECTOR, MINDA INDUSTRIES LIMITED
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74
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 don’t you
do something?’ So I started by catering
to their party needs plus giving cooking
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
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
Fortune 200 company, to produce liquid
products (tomato ketchup, mayonnaise,
tartar and sandwich spreads, milk shake
syrups and ice cream toppings) to cater to
McDonald’s 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.*
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 John’s, 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 world-
class food company, competently driven to
its next stage of growth by my sons Ajay,
Akshay and Anoop.
S I CAME FROM A WELL-
OFF FAMILY, MONEY
WAS A FACTOR THAT
COULD HAVE
STOPPED ME FROM
WORKING.
In the 1980s, being a
lady from a reputed family, it was
RAJNI BECTOR
Mrs. Bectors Food Spe
Ltd. (popularly known
Cremica) is a leading m
segment value-added
processing company w
manufacturing facilitie
Northern and Western
Company was founde
by Mrs. Bector as an ic
parlour and caterer fro
home in Ludhiana. Ov
years, the Company e
value-added processed
manufacturing busine
biscuits, buns and bak
condiments, namkeen
Company is headed b
Akshay and Anoop Be
look after the liquid co
and namkeen busines
the biscuit and bakery
respectively. The comp
achieved a topline of `the FY 2012.
Please visit
www.mrsbectorfoods
more details
About Mr
Bectors FSpecialitiLtd.
RAJNI BECTOR,
FOUNDER AND DIRECTOR, MRS. BECTORS FOOD SPECIALITIES LIMITED
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
d t di it l id t i iN id Th ft I h d SUNIL VACHANI
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76
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
tomorrow’s products; so in a way, we
soon emerged as an integral part of our
customer’s 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 India’s 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!
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
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 s uch 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 myfather to provide adequate collateral. He
heard me patiently and then said: “The
golden rule of entrepreneurship is to
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
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
SUNIL VACHANI
Dixon is an electronic
manufacturing service
company, which make
circuit boards, TVs, LC
DVD players, microwa
washing machines, se
boxes, compact fluore
lamps and LED lightni
under prescriptive
manufacturing and or
design manufacturing
companies like Philips
Videocon. It is the onl
in India that has the c
manufacture and desi
boxes. The company w
promoted by Sunil Va
(CMD) in 1993. Atul L
DMD) has been with t
company since incept
company achieved a t
` 7.5 bn in FY 2012.
Please visit www.dixo
for more details
About DiTechnoloPvt Ltd.
SUNIL VACHANI,
MANAGING DIRECTOR, DIXON TECHNOLOGIES (INDIA) PRIVATE LTD
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
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 consumptionway 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
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78
We possessed the capability to execute
large projects; what we didn’t 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.
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 theshortest 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
runway from Military Engineering
Services. In general experience, no MES
project had been completed without
litigation. We completed this 18 month
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.
VINOD AGARWAL
GR Infraprojects is eng
engineering, procurem
construction for roadsoperates toll road pro
emulsion plants. The E
has executed over 162
in the last ten years. T
Company executed pr
across Rajasthan, U.P,
Jharkhand, Meghalaya
Madhya Pradesh. The
also operates a toll roa
Udaipur and has signe
concession agreemen
NHAI for the Shillong
Meghalaya) and NH-1
Sikar stretch (in Rajash
company is based out
Udaipur and was prom
the Agarwal family in
Vinod Agarwal is the
Director of the Compa
ably supported by his
brothers. The compan
a topline of ` 9 bn fo
2012.
Please visit www.grinf
more details
About GRInfraprojLtd.
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 toexecute 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
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
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
VINOD AGARWAL,
CHAIRMAN AND MANAGING DIRECTOR, GR INFRAPROJECTS LTD
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82
ADRU. YOU NEED A LARGE MAP OF INDIA TO LOCATE
THIS SPECK CLOSE TO RAJASTHAN’S BORDER WITH
PAKISTAN.
Where only 3000 would live. Where I would walk a km to have a
bath. Where a bullock cart would be tied to the pulley of the well to draw
water to the surface. Where I would wash the week’s clothes at the
community well. Where classroom was a seat on sand under a tree. Where
there was no concept of bijli and would study by kerosene lamp. Where there was
only one kutcha road leading to the village. Where most people in the family had
probably never passed class three. Where only one bus in a day linked us to the rest
of the world. Where possessions (for me) comprised three short pants. Where our
family of 18 lived in three rooms. Where the nearest I got to being entrepreneurial
was when my mother made some confectionary out of jaggery for our Annual Day in
school which I marketed for a profit. Where anyone who wanted to be anyone
usually went to Hyderabad or Chennai or Mumbai and never returned.
My destiny would perhaps have been quite like that of the others in my village. Grow
up. Trade. Marry. Father children. Become the patriarch. Until it was time for my
children to live similar destinies.
But…
FROM VILLAGETO INSTITUTION.
MOTILAL OSWAL
THE STORY OF MOTILAL OSWAL,
CHAIRMAN AND MANAGING DIRECTOR- MOFSL
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84
“The odds were againstme; a number of aspirants had failed theCA course, not becausethey could not come toterms with accountingbut because they could
not understandEnglish.”
MIGHT HAVE BECOME A
TRADER’S ASSISTANT IN
MY FATHER’S 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 jeejaji’s
jeejaji – the only chartered accountantfrom 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 firstattempt.
“Crackedthe CAexam atfirstattempt”
• 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
• 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 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 company’s success when it was time torecruit professionals more qualified than myself (I still think in Hindi
though)
MY STRUGGLEBy Motilal Oswal
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86
“The first
taste of thestockmarket”
brothers. My only lead was my brother’s
Chennai broker who would trade
through a Mumbai broker, so
technically as happens in India, I had aMumbai ‘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 day’s
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 broker’s 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 don’t we do
something together?’
Trader to BSE president.
Meticulous and diligent
FTER I COMPLETED MY
C.A. FROM MUMBAI,
THE FAMILY BONDING
TOOK ME TOAHMEDABAD WHERE
MY BROTHER WAS
IN THE SAREE
BUSINESS.
I didn’t 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 ahuge 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 part time and continue with my
CA practice.
I reached Mumbai without money andwithout a plan. I got a job in a relative’s
CA firm. During lunch, I began to visit
the stock exchange seeking to explore a
broker link so that I could assist my
“Both migrants. BothChartered Accountants.Both passionatelyconsumed by the stockmarket. ”
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“The birth of anenduring partnership”
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 t o 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 thatwhen 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 near-
negative 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 bondOn the ocassion of Raamdeo’s marraige
provided me with an access to the ring. I
could now call Raamdeo from the floor
through a hotline, Raamdeo wouldconnect immediately with my brothers
and we would shrink our
communication cycle from 60 minutes
to just three minutes.
Due to the mandi following the 1986
crash, there were a number of days when
we went without business. We widened
our client spread: my brothers in
Chennai and Ahmedabad got us more
clients, we reached out to their
respective brokers and we touched more
Bombay investors.
This is what we assured: we would not
speculate and lose customer focus; we
would not leverage and we would report
trades honestly.
At a time when the stock market was at
the mercy of jobbers – there used to be a
` 10 jobbing difference in illiquid stocks
like Procter & Gamble and a rupee’s gap
in liquid stocks like JK Synthetics even
while it was being traded a couple of lac
shares every day – we told our clients
that we would report purchase prices
honestly and we would add a reasonable
brokerage thereafter. The client would
always know what price he had been
bought or sold at.
Besides, we would write the transactions
in Sunder’s books by 4, go around to
HE PARTNERSHIP
WAS WIN-WIN.
RAAMDEO FELT IWOULD BRING THE
VOLUMES: I FELT
RAAMDEO WOULD
PROVIDE ME WITH A
TRADING RING ACCESS.
We went to a prominent broker called
Sunder Iyer to check if he would get us
into the ring. He said he did not have a
spare card, so for the next few months,
we stood/sat in his office. When one of
his sub-brokers vacated, Sunder
“We would notspeculate and lcustomer focuswould not leverwe would reporhonestly.”
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unlucky as this quota had largely been
used by the relatives of existing brokers.
Finally, we bought an existing card from
the open market, backed this with a 180
sq ft office in Natwar Chambers,
capitalised on Harshad Mehta’s boom,
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) and Raamdeo
would select what to keep and what to
sell from that heap.
We did well. I bought a Maruti 800 in
1992, moved into a Vile Parle home and
then to a Peddar Road apartment.
Harshad Mehta was soon arrested and
the market crashed thereafter.
UR STOCKBROKING
COMPANY WAS
REALLY THREE-
AND-A-HALF
PERSONS.
RAAMDEO, MYSELF,
THE OFFICE BOY AND
A PART-TIME
COMPUTER OPERATOR.
We owned an air conditioner, which
was not for ourselves as much as it was
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
by 1995-96 and pioneered the
franchisee concept in our industry.
We recruited professionals like Nirmal
Jain, Nishid and Madhu Kela, creating
the foundation of professional-led
growth.
When the markets collapsed in 2000,
we leveraged technology to cap costs,
and strengthen professionalisation; this
would enable us to manage growth more
competently when markets revived.
We went public in 2007.
Today, we are a ` 500 cr revenuecompany with a profit after tax of more
than ` 100 cr, net worth in excess of
` 1150 cr and a market capitalization of
` 2000 cr.
E GREW OUR
PARTNERSHIP
THROUGH
VARIOUS
INITIATIVES
THEREAFTER.
When FIIs bought
money into the country in the wake of
the landmark Morgan Stanley mutual
fund offer, we were empanelled to advise
UTI, LIC, Morgan Stanley, Sun F&C
and the like.
We commenced institutional broking in
1993-94.
We became NSE members in 1994.
We issued our first formal research
report in the same year.
We leveraged the power of the VSAT
“Scaling thepartnership into afull-fledged business”
“Achieving ourdream. BecomingBSE brokers”
“The shares that camein vaandha became
our investment (whichthe office boy would
produce in wazan bythe kilo at the end of the year to ask what
we intended to dowith it.”
We recruitedprofessionals likJain, Nishid andKela, creating thfoundation of professional-led
No 1 Broker Award ET NOW Starmine Awards
2009Best 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.
Best Equity Broker at Bloomberg UTV
Financial Leadership Award 2012
Listing of MOFSL on the B
MY ADVICE TO
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92
ND YES, PADRU. TODAY,
OUR VILLAGE GETS
ABOUT 60 BUSES A
DAY. IS CONNECTED
BY ABOUT SEVEN
PUCCA ROADS.
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.
“There are thousands of Padruites with aspiringchartered accountantswaiting to fulfill theirentrepreneurialdestinies.”
“The growingopportunity
called India”
• Always be obsessed about how
your business to the next level.
better in bad times, become big
good times.
• Escape commoditization. The
specialize, the more you get pric
power.
• A strong value system is non-
negotiable. We paid our taxes; w
paid cash to our employees on t
• We invested in HR and techno
More brokers shut down becaus
not invest in systems to manage
• Invest in like-minded people w
complementary skills. I was soun
operations and administration, was excellent in research and
relationships.
• Conservatism pays. Do not en
` 100 for a brokerage of 50 pais
• Master the eco-system. To suc
need to do everything – product
development, people managem
accounting etc. – well.
• Be hungry for knowledge. Rea
network, learn. I still read about
a year.
• Balance is key. I eat every two have never missed my morning w
20 years. I am up at 5 am even a
have slept late. I don’t attend to
after work.
MY ADVICE TOYOUNGENTREPRENEURSBy Motilal Oswal
The entrance at Motilal Oswal Tower, Mumbai
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94
OME 85 PER CENT OF THE GLOBAL POPULATION LIVED
BELOW THE INTERNATIONAL POVERTY LINE 200 YEARS
AGO; THE CORRESPONDING FIGURE IS DOWN TO ONLY
20 PER CENT TODAY.
Evidently, more wealth has been created by individuals in the last 200
years than in the previous 5000 years.
What is that single idea that transformed the world more extensively in the
last 200 years than any political ideology or mass action?
Entrepreneurship.
FROM SCRATCHTO SUCCESS.
RAAMDEO AGRAWAL
THE STORY OF RAAMDEO AGRAWAL,
JOINT MANAGING DIRECTOR, MOFSL, AND CHAIRMAN, MOPE
“India has grown
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96
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 world’s most affordable
telecom network. The software boom
has transformed India’s 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 India’s largest strength
will be enduring by bigger. As this
happens, it will create unimaginably
more wealth for the country and its
people.
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
India has grownrapidly in sectorswhere the governmenthas vacated space toentrepreneurs”
“India is best eto ride theentrepreneurssweeping the w
Five, there is a greater respect for the
Indian’s ability worldwide.
Six, services accounted for 41 per cent
of India’s 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 under-
consumed. As incomes rise and
spending moves from the basic to the
discretionary, the country’s 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.
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.Two of the most revered stories of Indian entrepreneurial success – Brij Moha
Hero Honda (above) and Nandan Nilekani of Infosys (below)
“We came with no
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98
We came with noresources; we had nofamily wealth to fallback on…”
E AT MOTILAL
OSWAL CAN
IDENTIFY WITH
ENTREPRENEURS –
ESPECIALLY FIRST
GENERATION –
BECAUSE WE ARE
THAT OURSELVES.
We came from semi-urban India – I
came from Raipur while Motilalji came
from Padru; we came with no resources;
we had no family wealth to fall back on;
we had perceived a window of
opportunity through research-led
brokerage at a time when most players
speculated and inevitably lost their
capital.
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 l oan 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 year’s 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.
We would trade on behalf of our clients
and get these trades registered in a
brokerage firm (since we did not own a
brokerage company then). We would
read about 300 balance sheets a year; we
had a reasonable idea of which
companies would do better; we would
advise our clients to invest for the long-
term as opposed to advising clients on
how to speculate and become rich
overnight.
The result of this unusual approach was
that at the end of our first year, Motilalji
and I had created a cash pool of `
120,000 after paying all expenses; by
1990, our retained earnings
had ten-folded, which
brought us to our first
inflection point. Both of us
partners realised that our
future lay in buying our
own BSE card; we would
then be able to save on the
brokerage that we were
required to share with our
principal.
A new card cost ` 25 lacs;
we were ` 13 lacs short. It
• You don’t have to b
intelligent or academi
brilliant to be a succes
entrepreneur; you havmost passionate.
• At a young age, you
willing to risk your car
next 15 years on one
bigger risk than finan
• You must select the
route or you will soon
out.
• You must provide
infrastructure ahead o
in 2012, we invested
with a 60 per cent red
as a provision for the
• You must push the
making down; the mo
delegate the everyday
functional, the more t
entrepreneur can focu
strategic.
• You must be able to
challenges at every lev
first 25 years of our ex
focused on broking; w
also focus on investing
result is that there areof times when I wake
in the morning, which
as a sign that the entr
cells are ticking.
MY ADVICE ENTREPRENBy Raamdeo Agrawal
“We had no businessplan except for a deep-seated confidence inour capabilities.”
The first office where the two shared a cabin
From a one-room office, to a 2.5 lakh sq.ft. tower in the heartof Mumbai.
Harvard Business Review commissioned a
case study on MOFSL Always on an onward journey
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100
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. Weknew 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.
There were a number of other instances
through which we could consistentlydemonstrate 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 day’s 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.
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
would just ease the
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 Buffet’s 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
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.
We selected on the latter; here too, the
usual instinct would have been to hire
“If you hire people better than yyou become a company of giants
“Ourstatedobjectivewas to helpclientsmakemoney”
vacated my position as He
Research for him.
After studying Nirmal’s cre
had been a gold medalist th
academic career), someone
‘This is not a break for N
a break for Motilal Oswal
“If you hire peopthan you, you becompany of gian
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.
Motilal Oswal with Nirmal Jain who founded India In
subsequently.
“24X7 service standards” was a way of life
“There is a lot of wealth to bet d th h it li ti
“Private equity investment, thet bi th t it ”
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102
we grew our net worth to ` 1200 cr by
2012 (depressed year).
It took India 60 years to grow from
US$ 10 bn to a trillion dollar economy;the country will replicate this in just six
years and then do the same in four years,
and then in three years and then in only
18 months.
As India grows exponentially, the
proportion of income spent on basic
services will decline and the proportion
of spending on discretionary services
will rise. When this happens, it will
enrich entrepreneurs with business
models built around this unfolding
reality.
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.
At MOPE, we are attractively placed toleverage 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
participate in the secondary value-
creation programme following the
company’s IPO.
This ability to s elect, incubate,
handhold and grow these companies
into listed entities represents the gamut
of our value-creation capability, which
will unleash value in a bigger way across
the foreseeable future.
XPONENTIAL. THIS
IS ONE WORD THAT
WE BELIEVE DEEPLY
IN. FOR A GOOD
REASON: AVERAGE
COMPANIES GROW,
BUT THE WELL-
MANAGED GROW
EXPONENTIALLY.
Consider this: it took us 15 years to
grow our net worth to ` 17 cr by 2002;
created through capitalizationof corporate earnings power.”
in (through its private equity arm
Motilal Oswal Private Equity). We
provide capital that makes it possible for
the companies to graduate from one
level to another.
At our company, we would have stayed
with the established formula of buying
into strong companies through the
secondary route of investing. Through
the funds managed by MOPE, we are
investing in some of these attractive
companies with fast growing potential
when they are still nascent and unlisted.
Rather than own 100 per cent of my
own company, said Nelson Rockefeller,
we would rather own 1 per cent in 100
others. The same applies to
At MOPE, our objective is
platform where more entre
monetize the value of their
where we can selectively id
business idea, offer our inv
companies our capital, enc
advice and network; where
create more Motilal Oswal
T MOTILAL OSWAL, WE
COULD HAVE
CONTINUED TO ONLY
OFFER BROKERAGE
SERVICES TO OUR
CLIENTS.
But over the last
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 don’t have is capital.
That is where Motilal Oswal has come
next big growth opportunity”
“Rather than owper cent of my owcompany, said NRockefeller, we wrather own 1 per100 others”
$1.7bn
$4.7bn$6.3bn
$6.9bn $1.4bn
$16.0bn
$25.6bn
$8.2bn
$32.9bn
$49.0bn
6.2x7.0x
7.7x
17.2x17.8x
Growth Multiple20122002Market Capitalisation
RelianceInfosys BhartiAirtel
L&THeroHonda
The graph highlight how some of India’s largest companies have created more wealth
through their market capitalization than they have through their profits
Raamdeo Agrawal in on of his wealth creation studies
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which would provide equity capital to
mid-sized businesses in India. He bought
into this concept and over the next few
m nth h d r l di i n nd
We attempted to create a platform
where more entrepreneurs could
monetize the value of their capability,
h r l ti l id ntifi d big
interest payout but a partn
alignment with the decisio
every rupee of precious acc
b in gr th
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106
HE GENESIS OF
MOPE CAN BE
TRACED TO A
CHANCE MEETING I
HAD WITH RAAMDEOJI
AND NAVIN
AGARWAL IN 2003,
WHILE I WAS AT RABOBANK.
MOFSL was an upcoming Indian
brokerage firm. I had gone to explore
months we had several discussions and
made presentations to the MOFSL
Board of Directors to convince them to
set up a third party private equity fund.
Based on their own journey of creating
an organization from scratch and seeing
how many corporates had been built
over the years, both Motilalji and
Raamdeoji were convinced of this idea –
both for its emotional appeal to them
and its business proposition. Motilal
Oswal Private Equity was born in 2006.
This proved an entrepreneurial call for
MOFSL and me. MOFSL was entrusting
someone, whose prior experience had
only been on the financing and advisory
side, with not only money but also their
brand, customer trust and opportunity.
For me, this was a call to move out of my
comfort zone and turn entrepreneurial.
They say that luck favors the brave and
the result is that the strong tailwind of
2006-07 coupled with the Motilal Oswal
brand, enabled us to raise our first
private equity fund in 2007. Since then
we have significantly transformed
ourselves. A team which was effectively
a one-member team is now a 18
members team; our asset pool that was
US$ 125 mn is now US$ 300 mn. It has
already invested its first fund across
young promising companies across
sectors.
We recognised that superior deal
sourcing could be the difference: we
built relationships with boutique
advisors across India, we focused on
companies in Tier 2/Tier 3 cities and we
built our approach around accessibility,
humility and partnership.
where we selectively identified a big
business idea, offered capital,
encouragement, advice and network,
and over the space of 5-7 years help
them realize their goal.
Our aim is to fund and partner with at
least 10 promising mid-market
companies and grow each one of them
into US$ 1 bn market capitalization
companies over the next 5-10 years.
WHY PRIVATE EQUITY?
Businesses need alternative kinds of
capital in different stages of their
existence.
When a business is young and
performance cannot be predicted
quarter to quarter, what is required is
intelligent risk capital; however, what is
generally available at such junctures is
only debt. So while most of these
businesses are fraught with risks, the
only capital available to them istypically risk-averse. The result is that
most businesses that could do much
better with timely funding, struggle to
just survive as equity funding is often
inadequate, untimely and prohibitively
expensive.
This is where private equity comes in.
Private equity provides risk capital,
advice, guidance, networking and
strategic direction in a more cost- and
time-effective manner than raising
money from the public.
There is another reason why this genre
of funding is becoming increasingly
popular - the capital provider becomes a
responsible risk-taker; the young
business is not hostaged by a quarterly
business growth.
Even though the institutio
equity was established seve
ago in the developed mark
introduced into India only
decade and a half. Howeve
with which this concept ha
catching up on lost time h
remarkable. The entry of p
in India has given tremend
to entrepreneurship and we
creation. One cannot unde
fact that around 27% of th
that India received in the
has come from private equ
US$ 60 bn being invested.
However, what excites abo
equity is not what has been
can be. Private equity acco
mere 0.6% of India’s GDP
years; the corresponding n
developed markets is betw
4%. If India grows into a cu
US$ 35-40 trillion GDP ov
decade (as is forecasted) an
private equity sector retain
share, at worst, then the siz
private equity sector could
probable 3.3x (around US
the next 10 years); should
sector double its market sh
share would still be a fracti
market share of PE in most
markets - the industry coul
estimated 6.7x fold (US$ 4
next decade). It is time tha
and government recognise
role of private equity with
corresponding support tha
strategic opportunities for MOFSL to
acquire a global platform. I was
impressed with the passion and vision
they had for their firm on the one hand;
on the other, was Raamdeoji’s simple
approach towards investing and life.
At Rabobank, I had an opportunity to
work on several financing transactions
for mid-market companies. Through
these extensive interactions, I realized
that there was a huge mismatch between
avenues for debt and equity funding in
India. There were enough banks to
provide debt to growing companies but
only a couple of organised players to
provide equity capital.
I discussed this thought with Navin
Agarwal in 2005, and presented to him
as to how the strengths of MOFSL can
be leveraged in creating a platform
VISHAL TULSYAN, CEO AND DIRECTOR,
MOTILAL OSWAL PRIVATE EQUITY ADVISORS (P) LIMITED
I N V E S T M E N T T E A M
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108
T E A M M O P E
Raamdeo Agrawal (Chairman):
Raamdeo, co-founder of MOFSL and
Chairman of MOPE, is one of India’s
premier investors with investing
experience of more than 25 years. He is
the driving force behind MOFSL’s
award-winning equity research franchise
and the entire asset management
business including private equity. He
offers a unique perspective of both a
successful entrepreneur and investor. He
has a keen appreciation of value-drivers
for various businesses with a first-hand
understanding of the challenges faced by
small to mid-sized companies. He is the
Chairman of the Investment Committee
of the India Business Excellence Fund-I
and India Business Excellence Fund-II.
Raamdeo is a member of the Institute of
Chartered Accountants of India.
Raamdeo is a big hindi movies and
music buff and is a keen and
enthusiastic Table Tennis player. He
has one son Vaibhav, who is a budding
investor and currently pursuing a careerat CRISIL
Rakesh Sony (Director): Rakesh
joined MOPE in October 2008. Over
the last four years he has played
significant role in shaping up MOPE’s
strategy, fund raising, investments and
managing portfolio companies. Prior to
MOPE, Rakesh was a founding member
and Managing Director at Microsec
Capital, Eastern India’s largest
investment bank. At Microsec, Rakesh
was an advisor of choice to a number of
small and mid-market companies.Overall Rakesh has more than 14 years
of experience in India’s capital markets.
Over the years, Rakesh has specialised
in the successful transition of family-
managed business into professionally-
managed enterprises.
Rakesh is a member of the Institute of
Chartered Accountants of India and is a
graduate of the prestigious St. Xavier’s
College, Kolkata. Rakesh is a keen
badminton player and keeping up with
latest trends and gadgets. He has a flair
for networking. He has two sons,
Yashvardhan and Harshvardhan, who
are studying in class III and class UKG
respectively.
Vishal Tulsyan (Director and Chief
Executive Officer): Vishal helped
found MOPE and has played a key role
in driving MOPE’s success through
organization-building, networking and a
keen understanding of strategic and
financial business issues. Under his
leadership, MOPE has raised two funds
and fully invested IBEF, its maiden fund.
Prior to MOPE he had a successful
tenure at Rabobank where he was a
Director and helped build Rabobank’s
life sciences practice in India. At
MOPE, he is responsible for all business
aspects and overall management of the
funds. Overall, Vishal has more than 14
years of experience in India’s capital
markets.
Vishal is a member of the Institute of
Chartered Accountants of India (all-
India rank holder) and was a t op
ranking graduate of the prestigious St.
Xavier’s College, Kolkata. He is a movie
buff and a die-hard Amitabh Bachchan
fan. He is a regular tennis player andfocuses a lot on his physical fitness. He
has one son Harsh, who is currently
studying in class I.
VERALL, THE MOPE TEAM
COMPRISES EIGHT INVESTMENT
PROFESSIONALS AND FIVE
PROFESSIONALS FOCUSED ON THE
LEGAL COMPLIANCE, INVESTOR
RELATIONS AND FINANCE
FUNCTIONS.
The aggregate experience of the MOPE team (‘Team’) is
more than 100 person-years, which is applicable across the
various phases of the private equity investment life cycle.
Over the past six years the Team has gained significant
experience in private equity. It has evaluated more than 850
transactions, met with 175-plus management teams and
invested in 13 companies. The Team has been a witness to
a complete market cycle starting with the euphoria of 2006-
07 and ending with the pessimism of 2008-09. The MOPE
team leverages a wide network of relationships with
investment bankers, corporate India, banks, PE funds,
management consultants, legal firms and accounting firms.
Vishal K. Gupta (Principa
joined MOPE in June 2008
last four years at MOPE he
on fund raising from offsho
institutional investors, inve
managing some of the portf
companies. Before joining M
Vishal worked as an Associ
at UBS Investment Bank, N
where he executed M&A a
market transactions for fina
companies. Prior to movingVishal worked for several y
Limited, where he evaluate
strategic and private equity
Overall Vishal has 13 years
experience in financial serv
Vishal earned an MBA fro
University of Chicago and
degree in Mechanical Engi
Aligarh Muslim University
movie buff and another die
Amitabh Bachchan fan. H
and loves eating all kind of
is a keen follower of politicdevelopments in the count
one son Aditya who goes to
playschool.
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F U N D A D M I N I S T R A T I O N
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112
Ankit Kachalia (Manager): Ankit joined MOPE in 2011 and is respons
Investor Relations, internal communication of the fund and formulation
implementation of all the events hosted by MOPE and the marketing pl
portfolio companies of real estate fund. Previously he worked with Tikon
Networks and advertising agencies – Draft FCB Ulka and Contract. Ovemore than five years of experience in the field of advertising, marketing
management.
He is an MBA in Marketing from N.L. Dalmia Institute of Management
Research, Mumbai and has done his B.E. in Electronics & Telecommun
Mumbai University. He loves travelling and exploring new places. He i s
follower of Indian politics.
Anoop Tulsyan (Associate Vice President): Anoop joined MOPE in September
2011 and is responsible for accounts, MIS, investor relations, investor services and
legal functions. Prior to MOPE he worked in various other functions with MOFSL for
over five years. Prior to MOFSL he worked with the Times of India Group and the
India Hotels Company Limited. Overall he possesses nine years of experience in
various fields, including accounts, corporate planning and strategies, MIS and
research of mid-cap entities listed on the stock exchange.
Anoop is a member of t he Institute of Chartered Accountants of India. He loves
travelling and is a keen follower of current affairs. He is into spiritualism and
meditation.
Meenal Kulkarni (Associate Vice President): Meenal has recently joined MOPE
and is responsible for legal and compliance function and is the chief compliance
officer with direct reporting to governance board. In her past assignments she has
worked as a Senior Associate with Khaitan & Co and as an Associate with Little &
Co and Divekar & Co. in corporate team. Overall she has more than 10 years of experience in corporate law with focus on Project Financing, Capital Market, M&A,
Joint Ventures and general corporate law.
She is a law graduate from Symbiosis Law School, Pune. She is a big admirer of art and
loves travelling to new places. She has two daughters – one named Rama who is 5
years old and studies in Class one and the other named Rucha who is ten months old.
Karishma Kotwani (Associate Vice President): Karishma joined MOPE in January
2008 and is currently focused on investor relations, communication and investor
services function. She was previously part of the investment team. Before MOPE, she
worked with Tata Consultancy Services (‘TCS’). Overall, she has more than five-
years of experience in the IT and financial services sectors.
Karishma earned an MBA from SP Jain Centre of Management and a Bachelor inBusiness Studies from Jai Hind College (Mumbai). She is a keen trekker and is
focused on exploring the spiritual aspect of her personality. She is currently on a
sabbatical for six months.
Vinalee Doshi (Sr. Manager): Vinalee joined MOPE in 2011 and is pa
finance and accounts team at MOPE. She is responsible for monitoring p
of the real estate fund and monitoring finance and accounts of the real e
portfolio companies. She is also involved in accounting functions relate
and India Business Excellence Fund. In her past assignment she served a
Manager, Accounts, with Lodha Developers. Overall, she has more than
of experience in accounts.
She is a member of the Institute of Chartered Accountant of India. She
fiction books and collecting coins.
Mohit Khaitan (Associate): Mohit has been with MOPE since July 200
of accounts, MIS and investor services team. Before joining MOPE, he w
Tata Consultancy Services. Overall he has more than five years of exper
IT and financial services sectors.
Mohit earned an MBA from Balaji Institute of Modern Management, Pu
graduate of Kolkata University. He likes reading fiction and listening toone daughter Preksha, who is seven months old.
A N D C O M P L I A N C E
thi k bi
As long as you’re goingto be thinking anyway,
d iBe a user of your own product.Make it better based on your own
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114
think big.– Donald Trump
practice.– Peter Drucker
Entrepreneurship is neither ascience nor an art. It is a
desires.But don't trick yourself intothinking you are the user.
– Evan Williams livinga few years of your life lipeople won’t, so that you
spend the rest of your lifmost people can’t.
– Ano
Entrepreneurship is
decide– Alan Sugar
Once you
to work for yourself, younever go back to work forsomebody else.
best– William James
The
use of life is to spend it forsomething that outlasts it.
self education– Jim Rohn
Formal education willmake you a living,
will make you a fortune.
accomplishment,
– Mahatma Gandhi
Every worthwhile
big or little, has its stages of drudgeryand triumph: a beginning, a struggleand a victory.
job
– Confucius
Choose a
that you like and you will neverhave to work a day in your life.
failed.– Thomas Alva Edison
I have not
I’ve just found 10,000 ways that
won’t work.
Ideas- Dhirubhai Ambani
Think big, think fast,think ahead.
are no one’s monopoly.
expand- Raamdeo Agrawal
Before expanding yourbusiness you should
your mind
timeYour
is limited, so don't waste it livisomeone else's life. Don't betrapped by dogma, which is livwith the results of other peoplethinking.
– Steve J
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 i ncarnations; he combined those experiences to create
India’s 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
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DisclaimerThis 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.
collateral. Trisys is yet to be funded by private equity. Mudar can be reached at mudar@trisyscom.com. Usually responds within
three minutes.
Motilal Oswal Private EquityMotilal Oswal Tower, Junction of Gokhale Road & Sayani Road, Prabhadevi, Mumbai 400025
Ph : +91-22-39825500, Email: pe@motilaloswal.com
www.pe.motilaloswal.com
For sending feedback on the book, please write to us at: myway@motilaloswal.com
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