my way - motilal oswal pe investee companies

7/27/2019 MY WAY - Motilal Oswal PE Investee Companies

http://slidepdf.com/reader/full/my-way-motilal-oswal-pe-investee-companies 1/60

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: [email protected]

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

[email protected]

Visit us and share stories of enrepreneurship at:

facebook.com/motilaloswalltd



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



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



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



“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



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.



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.



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



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



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.



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.



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.”



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.



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



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



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



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.



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



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



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



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



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



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.



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



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



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”



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



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



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.”



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



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



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.



64

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.



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.



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



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



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



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



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



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



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



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



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. ”



88

“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.”



90

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



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



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



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



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



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 ”



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



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



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



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.



F U N D A D M I N I S T R A T I O N



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



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



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 [email protected]. 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: [email protected]

www.pe.motilaloswal.com

For sending feedback on the book, please write to us at: [email protected]

my way - motilal oswal pe investee companies

Documents