Amazon Jeff Benzos
Excerpts 1997 Jeff Bezos interview proves he saw the future coming
A number of the billionaires of today made their money by having the foresight while the web was still in its infancy. None were more successful than Jeff Bezos, the founder of Amazon.com and now the richest man in the world (at least until his divorce goes through).
In a 1997 interview, the year when he first became a millionaire by raising $54 million from Amazon's IPO, Bezos relates the story of how he came up with the idea for the online juggernaut. He was in New York City in 1994, working for a qualitative hedge fund, when he came across the "startling" statistic that "web usage was growing at 2,300 percent a year." This inspired him to look for a business plan that would "make sense in the context of that growth."
After making a list of 20 different products to sell online, he picked books as the best one to orient the business around. Why books? Because unlike other products, there are "more items in the book category than any other category by far."
Digital thinking in the print age
The Amazon founder also explained how his company would continue to capture people's attention amid the glut of information. His secret? Doing something "new and innovative", creating an online business the likes of which did not exist, that "actually has real value for the customer." Doing that creates marketing opportunities from newspapers and generates "huge" positive word of mouth that helps grow the business. In the first year, all growth for Amazon was fueled by word of mouth and media exposure, not ads. In fact, as far as ads, in 1997 he expressed a preference for online ads versus traditional paper ones since the digital ones were much easier to track and quantify. He called it a marketing "Nirvana".
Published Big think.com. Interview available in youtube
VG Siddhartha, the trader who made a fortune from Mindtree stake sale
Siddhartha's background as an investment banker probably came in handy when he pitched in time and again, became a White Knight, when Mindtree needed it.
VG Siddhartha has been in the news for selling his stake in Mindtree to L&T, which then mounted the first hostile takeover in Indian IT industry.
Some may know the 58-year-old entrepreneur more as the founder promoter of Cafe Coffee Day, one of the largest coffee chains
But before all this, Siddhartha was an investment banker and trader.
Siddhartha, who was born in Karnataka's Chikkamagaluru, started his career as a management trainee trading in Indian stock market at JM Financial under the tutelage of Mahendra Kampani in 1983, after completing his masters' degree in Mangalore University in Mumbai.
He later bought Sivan Securities in 1984 and turned it into a highly successful investment banking and stock broking company. It was renamed to Way2Wealth Securities in 2000.
It was only in 1992, that Siddhartha started his coffee business Amalgamated Bean Company Trading (now called Coffee Day Global), an integrated coffee business which ranges from procuring, processing and roasting coffee beans to retailing of coffee products. The company's revenue stands at Rs 2,016 crore for FY18.
After the success of coffee, Siddhartha launched India's first coffee café -- Café Coffee Day -- on Brigade Road, Bengaluru in 1996. Since then, the company has grown to be one of the largest café chains in the country with 1,751 outlets in 250 cities. The company has outlets outside India as well.
Internationally, CCD outlets are present in Vienna, Czech Republic, Malaysia Nepal and Egypt.
In an interaction with Economic Times in 2006, Siddhartha attributed the success of his coffee trading business to this:
"Part of the credit goes to ABCTL's meticulous processing where our in-house laboratory supports quality control at every stage to ensure the best cupping quality. The quality of our roasting plant and processing equipment is matched by the excellence of our brewmasters who are the best in the country."
Mindtree journey
In 1999, IT veteran Ashok Soota roped in Siddhartha when the 10 founders including Subroto Bagchi, Rostow Ravanan and KK Natarajan were putting together Mindtree.
According to a CNBC-TV18 report, Siddhartha has invested Rs 340 crore for stakes in Mindtree since 1999, and by selling his 20.4 percent stake to L&T, he has taken home a massive profit of nearly Rs 3,000 crore after 20 years.
Siddhartha's background as an investment banker probably came in handy when he pitched in time and again when Mindtree needed it.
Siddhartha invested close to Rs 44 crore to buy a 6.6 percent stake in Mindtree that was just starting up in 1999. In 2011, he picked up another 5.57 percent and 2.05 percent stakes for Rs 85 crore and Rs 40 crore, respectively. Later in 2012, he invested Rs 171 crore to buy an additional 6.84 percent stake in Mindtree. This translates roughly into an internal rate of return of 20.43 percent per annum.
Apart from the coffee business, the Coffee Day group acquired SICAL Logistics, Tanglin Developments (which has Global Village tech park) and Coffee Day Hotels & Resorts.
With the Mindtree stake sale helping him to clear debts, Siddhartha may perhaps don the role of an investor, again.
Published on Mar 20, 2019 04:45 pm
Success mantras by Raman Roy
He kick-started the Indian BPO operations for American Express and GE; sold Spectramind to Wipro and started BPO consulting firm Quatrro BPO Solutions. Raman Roy is one of the few serial entrepreneurs that India has - a much branched-out man but essentially, rooted to the ground. He has the following to share with us :
How do you organize yourself?
Typical on any single day, I have a task list of 70-80 items on my Outlook that is duplicated on multiple access devices including my BlackBerry, iPod and laptop. In case of meetings or items where I need to involve multiple employees, I set a reminder for myself as well as all the others who need to react.
What's your management style?
Do unto other that you wish others to do unto you. Fundamentally, I have worked with all levels of people in my professional life and the only principle that has survived the test of time is that you have to treat subordinates with respect and dignity. At the end of the day, every activity you follow is people centric - they expect a pat on the back when they have excelled and they don't have to be let off if they mess up. But the thumb rule is their has to be a cord of mutual respect binding the employer and the employee.
Where do you invest?
All along, I have been a very risk-averse investor so I never dabbled in equity. But of late there has been a shift in my investment aptitude and I have invested heavily in Mutual Funds. It seems to be the most balanced option with professionals at the helm of things. And there is always insurance. With time, I have certainly become more focusse on how and where I invest so that if I were to disappear from the face of this earth, my family is well taken care of.
What's your biggest challenge as a manager?
Managing transparency. When I go and break bad news to my team, they think I must be holding back a lot so the news is preceived as much worst than what I actually tell them. When I say good things, they think I must be holding back stuff so that they don't bloat. Due to the legacies in earlier assignmnets, people have still not learned to take me on face value when it comes to being a celestially transparent manager.
Wellness mantra for globe trotting executives
That is something I need to figure out myself. I travel often and love it because it gives me the opportunity to test various cusines and drinks. But that is not the way to go. It takes me three weeks to shed what I gain in one week.
How do you manage stress?
I would rather say I mis-manage it because I come very close to brooding. When I am at a low, I spend a lot of time thinking about the root cause and have to talk it out and analyse it to get to the bottom of it. I tend to become distant and secluded and have to take the time to think it over. My assistants have learned to warn my peers to stay off me when I am in one of those mood swings moods.
Two lessons learned in life
We in India believe in rebirth and go by the philosophy that whatever good or bad one does in this lifetime comes back to you in the next life. But I know for certain that one does not have to wait till the next lifetime. Everything you do unto others comes back to you in this very lifetime. The other thing that stands out as a lighthouse in my life is what I learned partly by working with Azim Premji - money, power and position are all transitionary. So when in position of power and riches, don't develop a chip on the shoulder. You are always as big as your humility.
Young leaders must not just throw up ideas, they must develop them
Young executives feel that despite the bombast at town hall meetings, leaders do not demonstrate the emotional entanglement with
innovation to drive innovation. They quote how a "great" suggestion did not get implemented or how due promotion or recognition did not follow in some case. They seem to expect their leader to behave like a hungry lion, which should "leap and grab meatballs of innovation" with alacrity. The
leadership view, on the other hand, is that young folks must show innovation stamina. They must not just throw up ideas; they must develop the ideas in detail, subject their proposal to challenge and review, and, above all, must demonstrate a personal commitment to persist with the idea.
As a result most companies have a plethora of innovative ideas in the pipeline. The absence of innovation stamina relegates these ideas to PowerPoint presentations that are permanently awaiting execution. This creates a negative spiral in the organisation.
In the earlier
InnoColumns there was emphasis on innovation culture: about organisational atmosphere and attitudes and the kind of visible leadership attributes that suggest emotional entanglement with innovation. Stories within an organisation often tell a lot about culture because they demonstrate the right-brained facet compared to the left-brained survey data.
Here is one such incident dating back 50 years, scooped out of the archives of a company which has existed for over a century and continues to flourish today.
In 1960, India was not seen as technologically savvy, the country could barely feed its population competently; innovation was rarely discussed among business people or economists. The top leaders of a large engineering company were in despair because they found that the equipment at a new and expensive plant exhibited, as the archival documents state, "several shortcomings - there was double handling of materials, the operation of the plant was slow and time-consuming, and the plant could not deliver its rated output." The production and engineering department were at loggerheads. The top management accorded high priority to solving the problem and the chief engineer was tasked to resolve this major crisis. Such a situation arises these days as well. Typically, the task force leader would nominate a crack team to solve the problem.
In this case, the records show that "one person who interested himself was a young assistant engineer in the project department." Let us call him Mr YE, standing for young engineer. What does it mean to say he interested himself? Did he not wait to be nominated to the team? How could he be successful within such a traditional and hierarchical organisation? However, he did not seem bothered about having a mandate, reporting structure and resources. He moonlighted in his spare time.
Mr YE, as subsequently recorded by Mr CE (chief engineer), "gave considerable thought to the matter and evolved a proposal." Almost, all on his own. The records show that the seniors in the operating and engineering departments were taken aback and were initially dismissive. Thanks to the support of Mr CE, as the archives reveal, "The various aspects of the proposal were thoroughly studied with all concerned, and it was finally decided to adopt it. The financial savings were computed and found to be significant." The internationally-reputed German company, Demag, was the equipment supplier. The German engineers reviewed the innovative solution at the highest level and endorsed the proposal. They forthwith undertook to manufacture the required new parts in Germany.
A whole year later, a memo was sent by Mr CE to the company's top leadership recommending Mr YE for a modest reward, the nature of which "we leave to the senior management." Mr YE was noted as an innovator, but not decorated with a new office, designation or big salary increase.
Mr YE carried on as an assistant engineer. Two years later, he sought study leave (without pay) to work at a German rolling mill company and to acquire a Diploma of Imperial College (DIC), London - now hold your breath, at his own expense. He must have been crazy to be quite so committed. Upon completion of his DIC, he was commended once again by Mr CE as "the first employee of our company to acquire such a high qualification. With his attainments, a lucrative position in the UK or Germany was within his reach... but he elected to return to his company in India to re-assume his modest position in ample testimony of his loyalty and sincerity." Mr CE ended his letter with a suggestion that Mr YE be considered for a higher salary band, but still within the assistant engineer role. The suggestion was accepted.
Just to narrate the ending, in due course, Mr YE and Mr CE advanced significantly. Mr CE rose to be Director of Technical Services and Mr YE went on to be a Director of Tata Sons. Syamal Gupta (now 79) and K P Mahalingam (now 91) are YE and CE respectively, and the company is Tata Steel.
This may sound like a fairy tale, but it is not: any leader can emulate these within his or her unit or department. This is not a story about the individuals or the organisation. There are at least four lessons. First, that a company needs unstoppable youngsters as innovators; second, that these unstoppable innovators must not merely be prolific in idea generation, but must have the innovation stamina, or the follow-through skills of advocacy and persistence; third, that innovators should not seek instant gratification as a reward, as the
Bhagavad Gita says; fourth and last, the leaders of a company must be so emotionally entangled with innovation and young people's aspirations that they do the job for which they are really paid, which is to groom younger people.
All good common sense, but conspicuous by their absence in far too many cases.
R Gopalakrishnan
October 3, 2013 Business Standard
Programmed for success
There was a very brilliant boy,
He always scored 100% in Science.
Got Selected for IIT Madras and scored excellent in IIT.
Went to the University of California for MBA.
Got a high paying job in America and settled there.
Married a Beautiful Tamil Girl.
Bought a 5 room big house and luxury cars.
He had everything that makes him successful but a few years ago he committed suicide after shooting his wife and children.
So, WHAT WENT WRONG?
California Institute of Clinical Psychology Studied his case and found “what went wrong?”
The researcher met the boy’s friends and family and found that he lost his job due to America’s economic crisis and he has to sit without a job for a long time. After even reducing his previous salary amount, he didn't get any job. Then his house installment broke and he and his family lost the home. they survived a few months with low money and then he and his wife together decided to commit suicide. He first shot his wife and children and then shot himself.
The case concluded that the man was Programmed for successes but he was not trained for handling failures.
now lets come to the actual question, What are the habits of highly successful people?
First of all, there are many people who will say you about success habits but today I am saying you even you had achieved everything then there is a chance to lose everything, nobody knows when the next economic crisis will hit the world. The best success habit according to me is getting trained for handling failures.
I also request every parent, please not only program your child to be successful but teach them how to handle failures and also teach them proper lessons about life. Learning high-level science and maths will help them to clear competitive exams but A knowledge about Life will help them to face every problem. Teach them about how money works instead of teaching them to work for money. Help them in finding their passion because these degrees will not help them in the next economic crisis and we don’t know when the next crisis will hit the world.
turnaround Success stories
I asked God to take away my habit.
God said, No.
It is not for me to take away, but for you to give it up.
I asked God to make my handicapped child whole.
God said, No.
His spirit is whole, his body is only temporary
I asked God to grant me patience.
God said, No.
Patience is a byproduct of tribulations;
it isn't granted, it is learned.
I asked God to give me happiness.
God said, No.
I give you blessings; Happiness is up to you.
I asked God to spare me pain.
God said, No.
Suffering draws you apart from worldly cares
and brings you closer to me.
I asked God to make my spirit grow.
God said, No.
You must grow on your own! ,
but I will prune you to make you fruitful.
I asked God for all things that I might enjoy life.
God said, No.
I will give you life, so that you may enjoy all things.
THIS DAY IS YOURS DON'T THROW IT AWAY
May God Bless You,
2/3 of worlds billionares built it from scratch
While inheriting a billion dollars is still the easiest way to land on our list of the world's wealthiest, it certainly isn't the most common. Almost two-thirds of the world's 946 billionaires made their fortunes from scratch, relying on grit and determination, and not good genes.
Fifty of these self-made tycoons are college or high school dropouts. The most famous billionaire dropout is Microsoft's Bill Gates, who finally got his honorary degree from Harvard University in June, 30 years after quitting the prestigious school to sell software. ''I did the best of everyone who failed,'' joked the world's richest man in his official graduation address. With failure like that, who needs success?
Other billionaires, such as media maven Oprah Winfrey, made their fortunes against far greater odds. Born in rural Mississippi, she spent her early years living in poverty on her grandmother's farm. Wanting a way out, she moved to Wisconsin to be with her mother, but was sexually molested by her male relatives. At age 14, she reportedly gave birth to a premature baby who died. Only after moving to Nashville to be with her father did her luck finally start to turn.
In honor of the world's self-made billionaires, we're recounting 10 of our favorite real-life Horatio Alger tales.
The stories of these bootstrapping billionaires are as diverse as the 10 individuals themselves. They range in age from 40 to 91, hail from diverse industries such as fashion and oil, and live in five different countries. Russia's richest man, Roman Abramovich, was an orphan. Apple's iconic Steve Jobs was adopted. Jobs dropped out of Reed College when he couldn't pay the tuition; his net worth today could support nearly 40,000 students at Reed for four years. Three others, including Ralph Lauren, are also college dropouts.
Another five are high school or grade school dropouts, proving that street smarts can often trump book smarts. The U.K.'s publishing magnate Richard Desmond, for instance, quit high school when he realised he could make more money working in the cloakroom of a club; at age 16, he borrowed his older brother's suit to get a sales job. He's been selling ever since, peddling music, porn and celebrity titles including OK! magazine
Asia's richest man, Li Ka-shing dropped out of school at age 15, after his father died, to work in a factory. Kirk Kerkorian quit during the eighth grade to take up boxing. He later flew airplanes on daredevil missions across the Atlantic during World War II, before sinking his money into his own airline and reinvesting profits in Las Vegas.
Sin City has also been good to Sheldon Adelson. The son of a Boston cabdriver borrowed $200 at age 12 to start selling newspapers; he later held stints as a mortgage broker, investment advisor and financial consultant. The high school dropout and Broadway enthusiast studied voice in his teens, but it was another kind of stage that called him--trade shows, where he made his first fortune.
Adelson later gambled on casinos in Las Vegas, Macau and Singapore, and took his Las Vegas Sands public in December 2004. Says Adelson, ''I loved being the outsider.''
Good luck and good timing is also helpful when creating vast fortunes from scratch. James Cayne, for instance, moved to New York to play bridge full-time; he was spotted by Wall Street legend Alan "Ace" Greenberg, who was impressed by Cayne's card skills and hired him to be a stockbroker at his firm Bear Stearns. Cayne is now chairman.
The world's wealthiest novelist, J.K. Rowling, was on welfare raising her little girl when her agent called to tell her that Bloomsbury would publish her book about an adolescent wizard named Harry Potter
KFC
At age 5 his Father died.
At age 16 he quit school.
At age 17 he had already lost four jobs.
At age 18 he got married.
Between ages 18 and 22, he was a railroad conductor and failed.
He joined the army and washed out there.
He applied for law school he was rejected.
He became an insurance sales man and failed again.
At age 19 he became a father.
At age 20 his wife left him and took their baby daughter.
He became a cook and dishwasher in a small cafe.
He failed in an attempt to kidnap his own daughter, and eventually he convinced his wife to return home.
At age 65 he retired.
On the 1st day of retirement he received a cheque from the Government for $105.
He felt that the Government was saying that he couldn't provide for himself.
He decided to commit suicide, it wasn't worth living anymore; he had failed so much.
He sat under a tree writing his will, but instead, he wrote what he would have accomplished with his life. He realised there was much more that he hadn't done. There was one thing he could do better than anyone he knew. And that was how to cook.
So he borrowed $87 against his cheque and bought and fried up some chicken using his recipe, and went door to door to sell them to his neighbours in Kentucky.
Remember at age 65 he was ready to commit suicide.
But at age 88 Colonel Sanders, founder of Kentucky Fried Chicken (KFC) Empire was a billionaire.
Moral of the story: Attitude. It's never too late to start all over.
MOST IMPORTANLY, IT'S ALL ABOUT YOUR ATTITUDE. NEVER GIVE UP NO MATTER HOW HARD IT GETS.
You have what it takes to be successful. Go for it and make a difference.
Jan Koum co-founder of Whatsapp
Jan Koum is CEO and co-founder with Brian Acton of WhatsApp, a mobile messaging application which was acquired by Facebook Inc. in February 2014 for US$19 Billion.
He was born in Kiev, Ukraine on February 24, 1976) Koum is Jewish and grew up in Fastiv, outside Kiev in Ukraine. He moved with his mother and grandmother to Mountain View, California in 1992, where a social support program helped the family to get a small two-bedroom apartment, at the age of 16. His father had intended to join the family later, but finally remained in Ukraine. At first Koum's mother worked as a babysitter, while he himself worked as a cleaner at a grocery. By the age of 18 he became interested in programming. He enrolled at San Jose State University and simultaneously worked at Ernst & Young as a security tester.
In 1997, Jan Koum was hired by Yahoo as an infrastructure engineer, shortly after he met Bzian Acton while working at Ernst & Young as a security tester. Over the next nine years, they worked at Yahoo. In September 2007 Koum and Acton left Yahoo and took a year off, traveling around South America and playing ultimate frisbee. Both applied, and failed, to work at Facebook. In January 2009, he bought an iPhone and realized that the then-seven-month-old App Store was about to spawn a whole new industry of apps. He visited his friend Alex Fishman and the two talked for hours about Koum’s idea for an app over tea at Fishman’s kitchen counter. Koum almost immediately chose the name WhatsApp because it sounded like “what’s up,” and a week later on his birthday, Feb. 24, 2009, he incorporated WhatsApp Inc. in California.
5 Things You Can Learn From The Story Of WhatsApp
This week we will look into how Jan Koum and Brian Acton met and how they changed the landscape of messaging. Koum and Acton founded one of the world’s largest mobile messaging platforms, which helped disrupt the telecom business. WhatsApp paved the way for other messaging apps and made instant messaging affordable and the standard of communication. Next to the extreme success they’ve had they stand out in being considered old for Silicon Valley, Koum is 39, Acton is 42.
Who are they?
Jan Koum is from the Ukraine and moved to Mountain View (California) when he was 16 years old. His family was financially challenged and they had to live of food stamps. It was not before he was 19 that he owned his first computer. Koum was part of the famous hackers network called w00w00, where other famous tech entrepreneurs Sean Parker and Shawn Fanning were also part of.
Koum went to San Jose State University to study math and computer science, he would eventually drop out after David File, a co-founder of Yahoo!, convinced him to work for him. Before dropping out of college he worked for Ernst and Young as a security tester.
Brian Acton grew up in central Florida and went to two different universities before graduating from Stanford University in 1994 with a degree in computer sciences. After getting his degree he started working for Apple as a software engineer. It was in 1996 that he started working for Yahoo! as the 44th employee. Acton began as a software engineer, focussing on Advertising and Data Processing.
How they met
Koum met Acton while he was working for Ernst & Young as a security tester and was assigned to inspect Yahoo!’s advertising system. Acton recalls that he found Koum to be very different from the other Ernst and Young people, he was more straight forward.
It turned out Koum liked Acton’s no-nonsense style: “Neither of us has an ability to bullshit,” says Koum. Six months later Koum interviewed at Yahoo! and got a job as a software engineer. During their time at Yahoo their friendship grew and by 2007 they both quit their jobs and traveled through South-America and played ultimate frisbee.
WhatsApp
Koum came up with the idea for WhatsApp in 2009 during a movie night at a friends place. It started out as an idea to send notifications to friends, but soon evolved to an instant messaging app. Acton got involved after a match of ultimate frisbee. Koum was telling Acton that he thought about giving up and wanted look for steady job. Acton replied by saying
“You’d be an idiot to quit now. Give it a few more months.”
By fall 2009, WhatsApp had no significant growth, but Koum persuaded Acton to join him. Both Koum and Acton were rejected for jobs at Facebook. Acton would also be turned down by Twitter. In October of 2009 Acton contacted several old Yahoo buddies and got together 250.000 dollars in seed funding. This earned Acton the title of co-founder and he received shares.
Between October 2009 and June 2015 a lot has happened. After getting investments from venture capitalist firm Sequoia and eventually being bought by Facebook, Whatsapp is still growing and it is reported to have 800 million monthly active users by April of 2015. Koum and Acton are still leading WhatsApp and still work together.
The key to success
So what made this collaboration successful? What is the secret ingredient that helped Whatsapp become the largest messaging platform in the world?
“We’re the most atypical Silicon Valley company you’ll come across,” Acton explains to Wired UK. “We were founded by thirty somethings; we focused on business sustainability and revenue rather than getting big fast; we’ve been incognito almost all the time; we’re mobile first; and we’re global first.”
“WhatsApp is simple, secure, and fast. It does not ask you to spend time building up a new graph of your relationships; instead, it taps the one that’s already there. Jan and Brian’s decisions are fueled by a desire to let people communicate with no interference,” writes Goetz, a venture capitalist at Sequoia Capital in Silicon Valley.
Acton describes the duo as Yin and Yang, Acton being the optimist and Koum more paranoid. Acton focusses on the financial side of the business and Koum looks at the product. Koum is the CEO and Acton the person that makes sure stuff gets done.
Koum and Acton wanted WhatsApp to be different, they did not seek attention and didn’t even have a sign at their office. Both men share a passion for hating advertisement and Jan even has a note from Brian on his desk saying “No Ads! No Games! No Gimmicks”. It makes sure that the WhatsApp keeps it focus on its core functionality, messaging.
Five things we can learn from Jan and Brian
1. You are never too old to start a business, not even a tech business. Acton even argues that their age is an advantage, saying that his vision is not clouded by the urge to be cool, they just want to be practical.
2. Persistence is the only way. The story of Koum is one of a lot hardship and let downs, Brian lost a fortune in the dotcom bubble and got rejected by multiple companies, but both men came out on top through hard work and perseverance.
3. Having a common interest is key to success. One might argue that if there was no ultimate frisbee, there would be no Whatsapp. These men became friends on the workfloor, but stayed in contact through their love for the sport. And it was at one of these matches Acton told Koum that he shouldn’t give up.
4. Make sure your co-founder is the yin to your yang. You can really see in this case how important it is that the person you work with fills the gaps that you are missing. Your co-founder should have all the qualities you don’t have.
5. Think long term, together. Acton and Koum had a clear vision of what their product was going to be. They both were on the same page and understood exactly what their product is and more important, what is was going to be.
Larry and Sergey of Google
After Page and Brin first implemented Page-Rank, they did not drop out of their studies right away, or quickly sacrifice their aspirations for a PhD. They implemented Page-Rank in a search engine they initially called Backrub, which became available on a server at Stanford. They wrote several papers about it, worked in the lab, and completed all the requirements for a PhD except the last one, writing a dissertation. They even took steps to making progress on that last requirement by making progress with implementing and refining their algorithm.
The popularity of their search engine with campus users encouraged Brin and Page to seek some revenue in new licensees (which they would share with Stanford). Things did not go according to plan. Despite their proximity to Silicon Valley, they did not find any takers for their algorithm. Odd as it might seem in retrospect for an invention that eventually became the basis for a multi-billion-dollar company, Brin and Page were not able to find any existing firms who wanted to license Page-Rank, or buy it, for that matter.
To say it simply, their invention did not stand out because they were merely a couple of smart kids trying to license an algorithm to revolutionize searching the Internet. In the middle to late 1990s there were a lot of smart kids claiming to be torchbearers for the next revolution, and plenty of other approaches to search. Brin and Page did not look any more distinguished.
More to the point, Brin and Page happened to have the dumb luck to live at a time of intense entrepreneurial activity. The prototype built at Stanford worked well, but did little to convince others in industry of the value of the algorithm. Everyone seemed to be a skeptic. The prevailing view dismissed their search engine, and characterized its approach as not valuable.
Think about that! Had somebody thrown enough money at them -- a million dollars, say -- those two might have stuck to their initial plan, and finished their dissertations.
Instead, as is well known, they got help from an angel investor (Andy Bechtolsheim), and they decided to go into business for themselves as Google....and one thing led to another, and today they own one of the most valuable pieces of real estate on the Web.
ZipDial: How a wacky idea went mainstream
A random email from an American with a Polish last name hit my Inbox in 2008 saying, “Dev Khare asked me to talk to you”. Within 30 seconds of the call I realised that I was dealing with someone special. Three months later, Valerie Rozycki joined mChek as the head of Strategic Projects. At all times, her work ethic and sheer thoroughness made her a pleasure to have on the team. Valerie & I were fighting am nesia on a late night flight back from Delhi and suddenly we had the craziest of ideas why couldn’t a missed call be used to trigger a simple transaction like checking one’s bank balance. That weekend, we worked on a business plan and discovered hundreds of use cases. A couple of months later, I decid ed to move on from mChek and was chatting with Amiya, my former colleague from Ketera. He asked me, “What next?” Not knowing what to say I told him: “Well, a friend and I have this crazy idea of doing polling using missed calls”.
His immediate response was: “That’s a GREAT idea.” The three of us then got together and started imagining what could be done and it was clear that all of us felt pas sionately about the possibilities.
Takeaway #1:
Don’t keep your ideas secret speak about them with trusted people.
We heard all the objections: Telcos won’t like it, businesses won’t pay for it, nobody is going to use it, how will you make money , etc. But one thing was clear to us trying it out wasn’t too expensive or risky and we never wanted to regret not try ing.
Takeaway #2:
When you set your mind to do something, the world conspires to make it happen for you.
Amiya started writing code and launched the product for the IPL in under 3 weeks and we pulled out all the favors we could.
Our first real success was in June 2010 with Pepsi. Within 30 days of existence, we were Live on TV for an ad from PepsiCo! We also launched a football score service in India that was very popular and had regular usage. Both these helped us vali date the service and some of our very early customers are still ac tive.
Takeaway #3:
The perfect prodf uct happens over time don’t over-engineer early on When companiesInn.com bought a 1,800 number and paid for a 1 year subscription, it validated that not just consumers would use it but businesses would also pay for it.
With a bit of money from family and colleagues, two of whom Bala Parthasarathy & Shripati Acharya later became my partners at An gelPrime, we launched the free cricket score service. Suddenly , we were processing 4 million trans actions per day especially if Sa chin was batting.
A customer once said: “We have no budget because our mobile mar keting is all committed to this BookCricket WAP game”. Val’s re sponse was: “I’m sure we can build it on ZipDial”. She later asked us, “Do you know what book cricket is?” and we both jumped up and said: “Of course we can build that on ZipDial”. That was perhaps our first multi-lakh rupee customer.
Takeaway #4:
Despite cynicism, we knew we had a WINNER Probably the single-biggest mo ment in ZipDial’s history was during the Anna Hazare anti-corruption movement in 2012. When all other TV channels were promoting various campaigns, Times chose to augment email, Facebook, Twitter and Google with ZipDial’s missedcall facility. While all the others combined had less than a lakh, we had more than 5 million unique users on ZipDial!
Takeaway #5:
Be bold, be adventurous! Val and Amiya took the business to the next level and kept getting into commercial agreements with virtually every brand in India, expanding to other geographies, and along the way working strategically with several players including Facebook and Twitter.
A year into ZipDial, AngelPrime was formed formally , but both my partners were actively involved in ZipDial from early days and still are people Val and Amiya turn to for advice and mentoring.
Fast-forward to today and it’s truly a pleasure to share with the world that Twitter has acquired ZipDial. Ultimately , it has been a great journey with a solid outcome for all and a measure of strong entrepreneurship, work ethic and innovation that led to this. Congratulations Valerie, Amiya & the ZipDial team.
Sanjay Swamy is Managing Partner, Angel Prime; Co-Founder, ZipDial
GMR Group :Grandhi Mallikarjuna Rao
Close to three decades ago, when people saw Grandhi Mallikarjuna Rao cycling 25 kilometres everyday around his village in Andhra Pradesh collecting money for the farm poduce he had supplied, they never thought he would one day own the first Indian company to develop an international airport.
For Rao, it has been a long journey - from handling a jute mill to doing global infrastructure projects. The turning point, self-admittedly, came in 1985 when Rao became a director in Vysya Bank.
"It was in the banking sector that I learnt the lessons of financial discipline and also how projects are structured," says the media shy chairman of GMR who has assets worth Rs 15,000 crore (Rs 150 billion) in airports, power and roads.
When Rao took over the reins of the bank in 1994, its non-performing assets had touched 15.6 per cent. Rao brought in ING as a partner and scaled down the NPAs to 4.5 per cent. He finally sold a 50 per cent stake in the bank and part of the Rs 380 crore (Rs 3.8 billion) from the sale went into the Hyderabad airport project.
Not many people know that Rao's entry into infrastructure was an accident. Rao was all set to invest in a brewery when Chandrababu Naidu tipped him off about the prohibition of liquor distilleries he would announce after coming to power.
Around that time the power sector was opened for privatisation and Rao focused all his energies on the Chennai power project, for which he got the licence. After three power projects in Tamil Nadu, Karnataka and Andhra Pradesh, the company has recently been aggressive about hydro projects with three power plants in Uttarakhand, Orissa and Arunachal Pradesh to be operational by 2010-11.
Rao forayed into airport infrastructure when he realised the uncertainty in the power sector. He was also among the first to be bullish about aviation - way back in 1999 when the Andhra government had just invited bids for the Hyderabad airport.
After Hyderabad was bagged, there were claims that the government would not create a monopoly by giving a second airport (Delhi/Mumbai) to the same developer. But notwithstanding protests from competitors about an unlawful bidding process, GMR got the Delhi airport project.
"Around Rs 34 crore (Rs 340 million) was spent for the bidding. It was a golden opportunity and Rao did not want to miss it," says a company insider and close associate of Rao.
Global benchmarks in sight, Rao even has international models for his family. There is a detailed family constitution detailing Rao's succession, qualifications of family members to enter the family business (they must be management graduates), their remuneration and perks, among other details.
"We decided on a legal framework so that the family stayed together and disputes were solved within it," he said in an interview to Business Standard a few years ago.
Thyrocare Technologies founder Dr.Arokiaswamy Velumani
He was rejected by many companies because he was fresher. Thyrocare Technologies founder Dr.Arokiaswamy Velumani who build a company from Rs. 10000 to Rs. 33 billion. Recruits only Freshers for all posts for his company.Owns no car, lives in a small quarter, but helms a Rs 1,320-crore company."
The son of a landless farmer from the nondescript village of Appanickenpatti Padur in Tamil Nadu, Velumani saw through school and college on subsidized funding from the government.
“My parents were very poor,” Velumani said in an interview. “They never had the luxury of buying me a pair of chappalsor trousers. I was born at the bottom of the ten slices of the pyramid. It wasn’t easy. But today, I am at the top of the very pyramid.”
Velumani’s career began with a job as a shift chemist at Gemini Capsules, a small pharmaceutical company in Coimbatore, in 1979. The 20-year-old chemistry graduate earned a paltry Rs 150 ($2.25 currently) every month. Three years later, the company shut down and Velumani suddenly found himself without a job.
He began with a master’s degree in 1985 and eventually completed his doctoral program in thyroid biochemistry by 1995, through a tie-up program that the University of Mumbai had with BARC.
14 years after he started work at BARC, Velumani put in his papers. He had decided that he wanted to use his expertise in thyroid biochemistry to set up testing labs to detect thyroid disorders. With the Rs100,000 ($1,500) that he collected through his provident fund, Velumani set up shop in Byculla, a middle-class neighbourhood in South Mumbai, which is a short distance from the Tata Memorial Hospital, a prominent cancer institute. He was 37-years-old then.
Velumani’s wife, who died in February this year, due to pancreatic cancer, quit her job at the State Bank of India to become his first employee. “As with any business, the initial years were difficult,” said Velumani. “But when you are passionate about something, those pains also become a pleasure.”
Succes stories Sun Pharma Dilip Shanghvi
Sun Pharma started in 1983 with just five people and five products.Today it commands the largest market capitalisation of Rs 21,271 crore (Rs 212.71 billion) in the pharma universe.
Thanks to a strategy that focuses on niche segments such as psychiatry and lifestyle drugs, the company has raced ahead, with its business growing four-fold between 1999-2000 and now, with revenues of Rs 2,237 crore (Rs 22.37 billion).
The story goes that the reason chairman and managing director Dilip Shanghvi decided to manufacture medicines for psychiatry, when he set up his first unit at Vapi in Gujarat, was that the number of psychiatrists was few and so it would be easier to reach out to them rather than sell to a whole lot of general physicians, which would require a large field force.
Whatever the reason, Sun, from the very beginning, has focussed on the high-margin chronic care therapy products that have made the company very profitable.
Together with a head for numbers, Shanghvi -- who started life as a wholesaler of pharmaceutical products in Kolkata where his father ran a business -- has a knack for turning around companies.
Most of his acquisitions have been of distressed assets. Known to be extremely conservative, with his feet firmly on the ground, 51-year-old Shanghvi has desisted from overpaying for assets or getting carried away by bids from peers, preferring instead to bide his time.
That's possibly why Sun hasn't made any big acquistions since it first bought into the Detroit-based Caraco Pharma in 1987 and took over, over a period of time for $50 million. Initially, the Caraco takeover seemed to be a wrong move -- it was in the red for several years -- and the Sun management perhaps miscalculated the timelines required to sort out some of the US FDA issues that Caraco faced.
Shanghvi, however, persevered and finally Caraco is making money. Industry watchers are convinced that Sun's more recent takeovers, including Valeant and Able Pharma, too will soon turn profitable.
Sun Pharma's buyouts have been well thought out. In almost every instance the company has managed to diversify into a new area. When it acquired Tamil Nadu Dadha Pharma it gained entry into the oncology space; with Milmet Labs it was able to acquire expertise in ophthalmology, while with Valeant it penetrated the controlled substances segment.
The story is much the same with its latest acquisition,the Israel-based Taro, which Sun has bought for an enterprise value of $454 million. The $300 million generics player, which has a subsidiary in Canada, is a strong contender in the dermatology segment which accounts for more than 50 per cent of its revenues.
Taro is strategically a good fit for Sun because, as the soft-spoken and down to earth Shangvi says, it will help Sun tap into the former's customer base in Canada, Europe and US and sell Caraco's existing portfolio of products to them. Taro may not be in great shape financially -- it made a loss in 2006 -- but then Shanghvi should not have too much trouble turning it around.
When Sun Pharma first started selling its products on a national scale, way back in 1987, it ranked a low 108 on the ORG list. By 2006-07, with a domestic market share of 3.2 per cent, it is ranked number six.
Mr Anji Reddy of Dr Reddys Laboratories - Indian Patents Act 1970 and US Hatch-Waxman Act 1984
Indian Patents Act 1970
It was the spring of 1970 and the then prime minister Indira Gandhi, in a deft political move, announced the promulgation of a new Act -- one that would usher in a new beginning for the pharmaceutical industry in India, 'The Indian Patents Act.'
Indian companies were now given the freedom to produce generic medicines that were patented abroad. . . healthcare would never be the same and would be affordable, and for Indian drug manufacturers this was a Godsend opportunity.
The Patents Act signalled the arrival of good times for the pharmaceutical companies. Soon after the Act was announced, hundreds of companies started reverse engineering of western pharmaceutical products. There was a virtual explosion in the pharma space, with entrepreneurs making most of this opportunity.
In the 1970 law the government stopped recognizing product patents on drugs. This permitted Indian drug companies to reverse-engineer Western pharmaceuticals without paying licensing fees. Foreigners' share of the Indian market collapsed from 75% in 1970 to 30% last year. In a poor nation with scant medical insurance and with serious public health problems, the patent abrogation made eminent political sense. It may also, at least transitionally, have spurred industrial competitiveness . Today drugs in India typically sell for just 3% to 15% of their U.S. price. V. Thyagarajan, managing director for India of GlaxoSmithKline, the national market leader, estimates that India accounts for 35% to 40% of the drug giant's global sales by volume but only 1% by value.
Anji Reddy, who founded Dr. Reddy's in 1984 with $40,000 in cash and a $120,000 bank loan, makes no apologies for his country's history. "We [Dr. Reddy's Labs] are products of that [1970 law]. But for that, we wouldn't be here. It was good for the people of India, and it was good for this company."
Hatch-Waxman Act 1984
Reddy got another phenomenal break in 1987 when he got approval from the United States Food and Drugs Administration, USFDA, to make Ibuprofen. This was again a giant stride on DRL's road to success. And this approval to make Ibuprofen opened a whole new world of opportunities for Reddy.
Reddy was now ready to move beyond generic drug development and venture into new drug discovery capabilities and research. It was time to take big strides and during the same year, it made a global depository receipt, or GDR, issue in Europe to raise funds for expansion. The issue fetched a whopping $50 million.
In February 2003, when Pfizer's patent for Norvasc expired, DRL saw an opportunity. Pfizer still had sole marketing rights, but DRL decided to produce the drug with different components and through a different method.It also applied for approval from the USFDA, but Pfizer did not sit easy, it decided to take legal action against DRL. DRL promptly filed a motion to dismiss Pfizer's complaint. The new formula of DRL got the USFDA approval and a New Jersey court ruled in DRL's favour.
To crack the US market to get your product on a shop shelf means you have to win the right and that right actually comes from the courts of law. Reddy knew that if he wanted to succeed he would have to fight for this right. He had seen other companies from other countries succeeding in this. He had seen that other Indian companies were shying away from it but he was sure of himself that he would do it at whatever the cost and the cost was definitely high. Fighting in an American court against American companies in a very patriotic country is not easy. The American companies had far deeper pockets, but to his credit, Anji did win some stupendous victories and got some money back, but there were some expensive defeats also.
Pill factory to the world
Andrew Tanzer, 12.10.01
India's drug industry is growing beyond cheap knockoffs of Western innovation.
It's better to be a pirate than a killer," says Amar Lulla, the comanaging director of Cipla in Bombay. Lulla's outfit is the type of pharmaceutical manufacturer most associated with India: It ignores patents. Cipla's copy of Bayer's anthrax-fighting Cipro, fabricated by more than 100 Indian drug manufacturers, retails for 12 cents a pill in India, versus $5.50 in Manhattan. With reverse engineering, Cipla, whose revenue in fiscal 2001 was $226 million, makes and sells more than 400 of the world's 500 top branded drugs. Now meet the face of a new Indian pharmaceutical industry: K. Anji Reddy, 58, the soft-spoken founder and chairman of Dr. Reddy's Laboratories, whose headquarters are in Hyderabad. Reddy is lobbying the Indian government to adopt and enforce the international drug-patent regime, something that New Delhi under a World Trade Organization agreement has promised to do by 2005. Reddy aspires to build his enterprise into a research-based drug major. "We [in India] have brilliant people who are as good as or even better than anyone anywhere else in the world," he insists. "We're ready for 2005." India, with its flowering of English-speaking, scientifically literate people, just might rise above the business of making generic drugs and ripping off patents. It could become an innovator and a respecter of intellectual property. Dr. Reddy's invests 6.5% of its $276 million sales in research, a habit that it began in 1994. The results are impressive; the company has discovered three molecules it has licensed for diabetes drugs, two to Novo Nordisk, one to Novartis. Anji Reddy says that he's negotiating licenses for several more cholesterol, diabetes and cancer drug molecules discovered in his laboratory. For the three diabetes licenses, Dr. Reddy's should gross $72 million during the drug-development stage. After commercialization, Reddy's will earn royalties on overseas sales and hold comarketing rights in India, where 70 million diabetics live. Even this research-rich company gets a chunk of revenue from generics. Dr. Reddy's generics, though, are increasingly of the sanctioned variety--copies of drugs whose patents have expired. In August, U.S. drug regulators awarded Dr. Reddy's a so-called 180-day exclusive period for the 40-milligram generic version of Eli Lilly's Prozac, which had just come off patent. Merrill Lynch says that Reddy's took an 80% share of the 40-milligram market within eight weeks and estimates that it will net an amazing $45 million on $65 million sales of the generic capsule this year. Merrill forecasts that Reddy's will earn $69 million, 25% of aftertax revenue; that's a better profit margin than Merck's 15%. In April, Reddy's listed on the New York Stock Exchange and, with help from Merrill, raised $133 million. The share price has since more than doubled, to $21, and is this year's best performing ADR. At that, it is only 23 times current fiscal-year earnings and 20 times next year's projections, versus averages of 42 and 27 in the U.S. pharmaceutical sector. The company symbolizes enormous national potential. India missed the industrial revolution, but it is bursting with entrepreneurs and intellectual capital. "Our chemistry skills are among the best in the world," says G.V. Prasad, Reddy's CEO (and Anji Reddy's son-in-law). In India a chemist with a Ph.D. can be hired for $15,000, versus $100,000 in the U.S.
But you need patent protection to keep that talent from voting with its feet. "Since patents weren't recognized in India, the best brains went abroad," explains Satish Reddy, the company's chief operating officer; educated at Purdue University in the U.S., he is Anji Reddy's son. Ajit V. Dangi, the director general of the Organisation of Pharmaceutical Producers of India, estimates that 15% of the drug scientists in U.S. laboratories are Indian immigrants. But he foresees a "revolution" in the Indian industry, including an influx of foreign investment in research and clinical testing--if the Indian government implements the patent law. Will it?
Growing suspicion of US FDA on Indian generics.Indian cos on defensive after Ranbaxy episode. What is the truth.???
Cheap Indian generic drugs: Not such good value after all?
According to the US Food and Drug Administration (FDA), pharmaceutical companies in developing countries are increasingly falsifying data about the quality of their medicines. Moreover, a 2010 Pew survey shows that 54 percent of Americans distrust Indian drugs, and 70 percent distrust Chinese drugs. Although the FDA has stringent rules requiring generic-drug manufacturers to prove that their products work as well as the originals, many overseas manufacturers fail to ensure quality control after receiving approval from the FDA. Indian producers in particular strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practice, and often patients and well-informed pharmacists alike will overlook the flaws. As Indian products are increasingly imported to the United States, quality concerns will rise. One possible solution is to enact sanctions against companies that fail to provide quality products.
Key points
- Pharmaceutical companies in developing countries such as India are increasingly exporting potentially dangerous low-cost, off-patent drugs overseas. Some of these lethal products have even slipped past US Food and Drug Administration regulations.
- Some Indian drug producers strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practices, and US patients and well-informed pharmacists alike may fail to identify the resulting substandard medicines.
- To improve drug quality control and minimize the associated risks of substandard medicines, the United States should enact strict sanctions against companies with inadequate records of providing safe and effective drugs.
US citizens have grown increasingly distrustful of low-cost, off-patent pharmaceuticals from emerging markets. Over the past year, the US Food and Drug Administration (FDA) reported that foreign producers of drugs were increasingly falsifying data about the quality of medicines, and the FDA issued six warning letters to companies in Mexico, Poland, the United Arab Emirates, India, and Canada about the quality of active pharmaceutical ingredients, over-the-counter solutions, and injectibles.[1] In a 2010 Pew survey, 54 percent of Americans said they distrusted Indian drugs, and even more (70 percent) reported that they distrusted Chinese drugs. Overseas producers of intermediate ingredients and final products will need to raise their game if they want to maintain access to the largest market in the world.
Ensuring drug production quality is important for at least two reasons. First, even well-informed pharmacists cannot discern the difference between good and bad drugs just by looking at them; patients, therefore, have no chance. Furthermore, some deficiencies may likely go unnoticed even after detailed analysis of the product. Second, if patients cannot identify substandard medicines, then the drug may poison its consumer or, more likely, the drug
will fail to treat the relevant disease or condition.
Dr. Harry Lever is a cardiologist at the Cleveland Clinic, and, like all cardiologists, he prescribes diuretics—including furosemide—to help prevent heart failure. "Some of my patients," recalls Dr. Lever, "were taking the brand medication [Lasix]; then under cost pressure from insurers, I switched them to a generic and they reacted very badly [one patient added ten pounds of weight rapidly]. Only when I switched them back did they recover."[2]
"In a 2010 Pew survey, 54 percent of Americans said they distrusted Indian drugs, and even more (70 percent) reported that they distrusted Chinese drugs."
Dr. Lever, and virtually every other practicing physician in America, used to assume that generic drugs were as reliable and effective as their brand-name counterparts. After all, before generics can be sold in the United States, manufacturers must prove to the FDA that their medication works the same as the original drug. Unfortunately, some producers are failing to ensure that the drugs continue to meet those standards after approval.
Dangerous products from developing countries routinely slip through the world's best drug safety systems in small but nonnegligible amounts. Naturally, Western countries have tried to regulate the problem away, but these efforts often fail. This is largely because there is no such demand for Western safety concerns in emerging markets. Producers exporting to Western markets do not always pay close enough attention to quality control, and mistakes happen. Other producers, notably from India, have also gotten better at intentionally circumventing Western regulations. Even those making high-profile brands under the most scrutiny can get away with cutting corners.
Indians Shrug at Western Claims
Facing low demand for quality control, a weak regulator, and significant competition, Indian producers have a strong incentive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practice. As a result, Indian drugs have a higher risk of being substandard than those made in United States. Indian companies and regulators simply deny there is any difference in product quality between their products and those made in the West. Nevertheless, the unspoken but widely believed assumption is that US companies will spot any problems with imported ingredients, but when an inferior (allergenic) product was substituted for raw heparin by a Chinese producer, it fooled routine tests at the US manufacturer. Only after 149 Americans died was a new complex test developed to screen the counterfeit. Alas, products made by US companies with ingredients from India, China, or other emerging markets also pose risks.
The FDA cannot regulate the world, although it tries to regulate critical parts of it. The FDA maintains offices in 15 locations worldwide that collaborate with local governments, manufacturers, and organizations to attempt to regulate product quality. These offices and their 800 inspectors oversee foreign factory inspections, collaborate with local regulatory agencies, train managers to be knowledgeable about FDA regulatory requirements for imported products, and target imported products for testing. If any product undergoes a relevant change, then it can no longer be imported unless inspected again.[3] Moreover, according to the Federal Food, Drug, and Cosmetic Act, approval of foreign drugs must be product- and manufacturer-specific.
The FDA's foreign inspections require authorization from the relevant government on a nation-by-nation basis. Inspections last from three to fourteen days, and some nations accommodate the investigations willingly to improve their export market for products requiring FDA approval.[4] In addition, the FDA has confidentiality arrangements with the European Union, the World Health Organization, and 41 foreign agencies in 20 nations around the world to share nonpublic information about imported products.
However, these efforts frequently fall short. FDA monitoring in India or China—which are the biggest emerging-market producers and which have two and three offices, respectively—stretches resources. At best, the agency shows the flag once a decade, as compared with every two years for US-based producers. This is partly because FDA staff must first volunteer to undertake inspections abroad, and traveling to India and China is tiring and stressful. Unlike in the United States, inspectors are not given unfettered access to production facilities, so their inspection reports are less certain.
Moreover, if a plant manager is given several days' notice of an FDA visit, some problems can be covered up. Even if a few deficient factories are temporarily barred from selling their products to the United States, very little can effectively be done by the FDA to correct overall failings. To avoid shortages, noninspected sites are assumed to be working correctly, which is true for many—even most—but not all.
The FDA also does very little surveillance of products already on the US market. It is assumed that once a manufacturer has attained the required standard, it will be maintained. The main line of defense against substandard medicines is the adverse-effects reporting system administered by drug companies in the end market, which identifies problems after they have caused harm. And it is a system that Dr. Lever tells me he finds slow moving, since he has "repeatedly complained about certain products and seen no action."
Mistrust of Emerging-Market Regulators
In November, the FDA reported that the Gurgaon, India-based Ranbaxy Laboratories Limited had issued a proactive voluntary recall of its anticholesterol drug atorvastatin because of possible glass particles in the medicine. Though the FDA had not received any reports of Americans being injured at the time of the recall, the quality of Ranbaxy's drugs has been a hot topic in the pharmaceutical industry for some time. Ranbaxy is one of the largest and most respected Indian drug companies, and the FDA granted it the sole generic license for the manufacture of generic Lipitor (atorvastatin) beginning in November 2011. Lipitor is the most valuable medicine by sales in the world, therefore it was a coup for Ranbaxy to be awarded the license.
US-based Mylan Pharmaceuticals filed a suit against the FDA in 2011on the grounds that Ranbaxy had committed manufacturing violations at two factories in India, thus voiding its application to become the exclusive generic alternative.[5] Mylan criticized the FDA's perceived hesitancy in addressing these concerns by stating, "The FDA's indecision is depriving millions of Lipitor patients access to lower cost generic Lipitor. It's costing the public billions of dollars in savings, and costing generic manufacturers billions of dollars in lost sales."[6]
It was surprising that the FDA was prepared to overlook Ranbaxy's drug quality problems. In 2005, whistleblowers from Ranbaxy alerted the FDA that members of Ranbaxy's staff were deliberately cutting corners in producing HIV medication to be bought with US taxpayer funds. The FDA and US Department of Justice identified two questionable Ranbaxy plants and 30 suspect medications, yet only restricted their US-bound sales in 2010. Fortune Magazine and other media outlets raised concerns that the market for generic Lipitor was too important to be left to an Indian manufacturer with dubious quality control. These concerns were obviously justified considering that Ranbaxy is once again unable to sell its product on the US market.
"In November, the FDA reported that the Gurgaon, India-based Ranbaxy Laboratories Limited had issued a proactive voluntary recall of its anticholesterol drug atorvastatin because of possible glass particles in the medicine."
All producers occasionally have problems with quality. Johnson & Johnson famously had major problems with its production of Tylenol and other medications in 2010. However, the FDA is widely respected, and companies know that they will face heavy fines and even larger losses in market share if they do not address quality. India's drug regulators have not generated such respect, and, as such, Indian companies are less likely to be pressured to act responsibly.
On May 9, 2012, the Indian Government's Parliamentary Standing Committee on Health and Family Welfare (PSCHFW) presented a 118-page evaluation of the Central Drugs Standard Control Organization (CDSCO), the government's federal drug regulator. PSCHFW eviscerated the CDSCO for corruption, and concluded that many apparently independent expert health opinions about the safety of drug products "were actually written by the invisible hands of drug manufacturers."[7] Local media further alleged that CDSCO regulators got their posts based on who they knew, rather than their merit or qualifications.
Some high-level officials within the Indian pharmaceutical industry immediately issued denials.[8] The president of drug company Cipla boldly stated that "no company breaks the law," and Sun Pharmaceutical Industries said that it strongly denied any "wrongdoing."[9] Ranbaxy's former president Ramesh Adige was less confrontational and more optimistic that CDSCO would be able to prevent future problems.
The day after the report was released, Indian Ministry of Health & Family Welfare Minister P.K. Pradhan denied that the entire regulatory "system was rotten," and promised that specific failures would be investigated and "remedial action" taken. "We will be streamlining CDSCO and make the procedures more transparent," he concluded.[10] The Ministry of Health & Family Welfare then established a three-member committee to investigate the PSCHFW findings. Calcutta's Telegraph news-paper immediately noted that the committee did not have "representatives of civil society" with a working knowledge of the drug industry.[11]
While the committee could positively affect health ministry policies, its recommendations are unlikely to have an effect without better underlying business ethics and reporting of ethics violations. For instance, whistleblowers were critical to recent successful US prosecutions of major pharmaceutical companies such as GlaxoSmithKline (GSK), which was fined $1.5 billion for inappropriate drug sales and other offences. Three years ago, CDSCO established a similar and reasonable whistleblower policy, though not a single case has resulted from this policy. CDSCO recently broadened the reward system to include Indian pharmacists so that they could reveal on those selling fake or substandard medicines; still, there has been no obvious response.
This is not surprising. Companies in Europe and the United States have taken decades to change unethical behavior. As the GSK case reveals, individuals at all levels of authority can still act immorally. In spite of these possibilities, Western codes of conduct minimize manipulation and fraud. The FDA may be slow to approve new medicines, but no one accuses it of corruption. Its counterparts in India, China, and Russia do not share this reputation.
"The crux of the issue is accelerating the improvement of systems of oversight and information generation, and hence ensuring consistent quality of products."The crux of the issue is accelerating the improvement of systems of oversight and information generation, and hence ensuring consistent product quality, notably in India, which is the source of more finished products exported to the United States than any other emerging market. Addressing this problem will require changing the cultural norms surrounding drug safety.
Ranbaxy: Better than Most Drug Companies
When I investigated the Ranbaxy HIV drug problem (I was contacted by a whistleblower in 2004), nearly everyone I spoke with thought it quite likely that some midlevel managers, possibly under cost pressure imposed by senior management, would break quality-control rules to hit their targets. The standards that appeared to be ingrained in senior management were not always found in managers further down the chain.
One way to accelerate the development of quality-management systems is through greater integration of the practices of advanced countries' firms into Indian firms. Ranbaxy was recently bought by Japanese drug firm Daiichi-Sankyo so technology transfer and changes in management culture might improve the consistency of its products' quality. Other mergers and acquisitions are also occurring, but they are slowed by the negative environment for inward investment. And nothing halts foreign investment by drug companies faster than uncertain intellectual property rules.
Section 3(d) and Patent Abuse in India
In 2006, the Indian Patent Office refused to grant Swiss drug company Novartis a license for its blockbuster leukemia drug Glivec (imatinib mesylate). This action confirmed suspicion among Western policy experts that patent law was applied arbitrarily to support Indian interests. One of the most debated pieces of drug legislation in India is Indian Patent Act Section 3(d). This clause is designed to prevent "evergreening," in which minor changes to existing drugs are used by drug companies to get valuable patent extensions.
While Section 3(b) is a reasonable idea in practice, India's patent office has used it to deny patents for obviously beneficial drugs. Glivec is a salt variant (mesylate) of a previously known compound (imatinib). Only by making the salt (beta polymorph) version could a patient more easily absorb the product. Glivec is a superior product to the nonsalt variant, and most people would not view this modification as evergreening.
"Overturning Section 3(d) of the Indian Patent Law would immediately increase Western investment in Indian companies, and probably accelerate quality control."
However, the Indian Patent Office denied Novartis a patent, apparently under pressure from several Indian companies that wanted to produce the valuable medicine (most do not produce the beta polymorph version of the salt because it is harder to make, and hence less effective). Novartis appealed the ruling, and the case went all the way to the Indian Supreme Court. The court heard final evidence for the case in December 2012, and a decision is expected before the spring. Few people expect Novartis to win, and even if it does, it would only just begin the discussion of changing Section 3(d). Drug companies such as Roche, Bayer, Pfizer, and Gilead Sciences Inc., to name just the larger multinational players, have also had patents unfairly denied, and most are on appeal.
These challenges are significant because they increase antagonism between Western firms and possible domestic Indian partners, some of which are making short-run profits producing copies of Western products. Even if Novartis wins its appeal, the popular sentiment in India is against changing Section 3(d). Immediate access to cheaper medicine, even of uncertain quality, trumps any concern about long-run impacts.
Novartis had been intending to build research and production infrastructure in India, but because of the Glivec decision, it decided against that investment. Novartis continues to work in India and may invest in infrastructure again in the future. Though other companies have invested, many are sitting on the sidelines. The law has suppressed India's level of foreign direct investment and promoted distrust between major domestic and foreign players. Most importantly, quality-control standards have not risen as fast as they would have with that investment.
It is ironic that many of the larger Indian companies, which routinely copy Western medicines, often object when smaller Indian companies make poor-quality versions of larger companies' own products. If, for example, an Indian railway tender is awarded to a low bidder with known quality problems, larger companies will often privately complain to the authorities about quality problems, and even leak damaging information about the winning bidder to the press.[12] But these objections appear isolated and are merely devices for undercutting an opponent. They never represent a principled stand for higher quality.
Overturning Section 3(d) of the Indian Patent Law would immediately increase Western investment in Indian companies, and probably accelerate quality control. It might then even embolden Indian companies making good quality generics to oppose local companies that make poorer ones as a matter of principle—not simply expediency. Overturning Section 3(d) would be a start, but the Indian government needs to do far more than this to ensure better quality products from the firms it oversees.
Pharmaceutical Product Quality in India
Unfortunately, India's health sector investment has never been a priority, and the regulatory and insurance framework has not kept pace as the pharmaceutical industry has grown. Only 11 percent of Indians have health insurance, and they are mostly professionals who are more able to buy drugs out of pocket. For the remaining 89 percent without insurance, all drugs are bought out of pocket. Thus, the price of drugs is keenly monitored, and pressure is applied to keep prices low—probably the lowest in the world. Making drugs cheap enough to increase access to them is an admirable goal, but patients cannot routinely afford medication for diseases with long-term treatment regimens such as tuberculosis (TB), and hence skip treatment. India has the worst drug-resistant TB in the world.
Though the Indian government has promised cheap access to TB drugs, without a budget increase, it will only be able to afford products from potentially shoddy producers. As one local health expert (who did not want to be identified for fear of a backlash from Indian companies) said to me, "the health of the average Indian is at stake" because of these products. "In India, it is viewed as a low, or just a Western, priority to worry about quality," he concluded. In particular, he suggested that immunosuppressants and oncology products are not made well by mid-ranking Indian companies, and can be lethal. "Only by improving quality-control systems in production will quality improve. You can't simply test after the fact and assume you'll find problems," he said.
Conclusion
As an increasing amount of Indian products end up in the US market, quality concerns will rise. Because of corruption and lack of authority within domestic regulators and the FDA, respectively, the Indian companies themselves are almost solely responsible for performance. As such, and for the vast majority of the time, the top Indian companies are to be commended for delivering high-quality products with no effective governmental oversight. In that sense, their products are of incredibly good value. Their self-regulation is a classic reason why markets tend to work, with better products supplanting weaker ones. But it is hard for consumers to spot poor-quality drugs—in the case of asymmetric information, where the producer knows far more about the product than the consumer can ever know, there is often reason for regulation.
As such, it is ironic that so many health advocates, who are often left-leaning and antimarket, are the strongest champions of Indian drugs, when they would be appalled if US or European companies were subjected to such trivial oversight. The question remains, what added pressure can be applied to emerging-market producers with poor domestic oversight that will ensure consistent quality? The most obvious move is to enact sanctions against companies that fail to provide quality products. For donor aid contracts, this might entail a fine with injunctive threats to stop any company selling bad products from tendering in the future. Similar sanctions could apply to US importers if they sell poor-quality drugs to clinics and hospitals. Though private action against companies might assist in this matter, no meaningful deterrent can be provided without the threat of a closed market to offending companies, such as in the Ranbaxy case.
As the heparin case and other cases show, pharmaceutical purchasers may not be able to find extant problems with a product because comprehensive tests of the products are not always feasible. As quality problems become more obvious, US companies that derive all their ingredients from Western nations may present these as superior (less inherently risky) products and charge a premium. Such a divergence has already occurred in the food market.
For example, one may not know which exact cow produced a given gallon of milk, but one often knows the farm or the state from which the milk originates, especially if the product is expensive and from an organically reared cow. Similarly, consumers could demand greater knowledge of the drugs they buy, and some will undoubtedly want drugs made with fewer or no ingredients from India or China. It is likely that the best Indian companies, if they started to lose business and revenue, would establish their own independently verified quality-control systems and allow—even demand—that the FDA have unfettered access, which would ensure Western purchasers were satisfied with regulatory oversight.
At the moment, the market is not providing consumers with enough information about drug quality. Since regulators have proven less than capable of servicing a differentiated market, the burden falls on companies to provide and consumers to demand a new, multitiered market where very cheap drugs continue to exist, but without the provenance of more expensive varieties.
February 19, 2013

MOTHERSON SUMI SYSTEMS (Vivek Chaand Sehgal, chairman)
Car parts maker and engineering group Motherson Sumi Systems Ltd has agreed to buy Finnish truck wire maker PKC Group for 571 million euros ($609 million).
"Combining the two companies will create a leading supplier of wiring systems and components for the worldwide transportation industry," PKC said in a statement.
In times when 'under-promise and over-deliver' is the order of the day, few would dare to place lofty targets before stakeholders. And those who do this successfully tend to create history. This is exactly what billionaire Vivek Chaand Sehgal, co-founder and chairman of the $6.9 billion Samvardhana Motherson Group, is in the process of doing.
Sehgal's journey in the world of business started at the age of 18, when he tried his hand at silver trading. In 1977, he set up Motherson along with his mother to manufacture power cables. His foray into the auto component sector began in 1983, when his company entered into a technical agreement with Tokai Electric (now Sumitomo Wiring Systems) to manufacture wiring harnesses for Maruti Udyog. In 1986, Sehgal formed his first joint venture with Sumitomo Wiring Systems, which led to the establishment of the group's flagship company, Motherson Sumi Systems. Motherson Sumi is now one of the largest auto ancillary companies in India.
Success is best measured in numbers and Sehgal's company is easily a chart-topper by this yardstick. Sehgal says that modern-day gurus have taught him three things: top-line vanity, bottom-line sanity and that there's no better reality than having cash in the bank. Even though the company began its journey in the automotive sector in the 1980s, the company has grown at breakneck speed since 2000. Its revenues have grown at a compounded rate of 44 per cent between 2001-02 and 2014-15, while profit has grown at 35 per cent. A large part of this growth has come inorganically. His future projection too is a mix of organic and inorganic drivers.
Corporate history may be littered with failed acquisitions and joint ventures, but Sehgal has built his empire through a string of acquisitions - seven at last count. Some of these were made when the world was struck by the biggest financial crisis since the Great Depression. The first big acquisition was in 2009, When Motherson acquired the rear-view mirror business of Visiocorp plc UK and rechristened it Samvardhana Motherson Reflectec (SMR). This acquisition is relevant not only because it was made at the peak of the recession but also because the size of the company Sehgal was taking over was larger than his own. Today, SMR is one of the largest manufacturers of rear view mirrors in the world. This acquisition propelled the Samvardhana Motherson Group on to the world stage as an established global tier-I supplier.
In 2014-15 the company closed three other acquisitions - those of Stoneridge, a wiring harness business in the US; Minda Schenk, an interior and exterior plastic parts maker in Germany; and Scherer & Trier, an extrusion and hybrid parts maker, also in Germany.
The company has consistently achieved all the five-year targets it set for itself. After exceeding the $5 billion sales target in 2014-15, Motherson set a new target. Earlier this year, when investors pummelled the stock after Volkswagen was caught in a storm over its emission-cheating software - Motherson derives over 44 per cent of its sales from the Volkswagen group - Sehgal remained unruffled. He reiterated that the company was on course to clock revenues of $18 billion by 2019-20 and in the process, no customer, country or component would account for more than 15 per cent of sales. While there would be some impact on volumes in FY16 thanks to the Volkswagen issue, JM Financial expects consolidated earnings to grow at a compounded 35 per cent a year between FY15 and FY18, supported by 17 per cent annual growth in revenues and a 280-basis points margin improvement.
Given the company's past record of meeting aggressive targets, investors are buying into Sehgal's vision this time around too.
Setting high targets and achieving them have become a habit for Vivek Chaand Sehgal, chairman of the $7bn Samvardhana Motherson Group, and a man known for his deep-rooted belief in the Divine.
Some Success Stories turned Sour
Business Standard traces the life and times of the maverick businessman
On August 26 2014 , the Supreme Court of Seychelles declared Chinnakannan Sivasankaran, better known as Siva, bankrupt. An official receiver for Siva's global estate was appointed. It will be this person's job to compile a list of Siva's assets - homes, aircraft, yachts and other baubles - and sell them to pay back his creditors. Amongst Siva's creditors, the largest is BMIC, a Bahrain Telecom, or Batelco, company. In a statement issued from Manama in Bahrain, Batelco CEO Alan Whelan said that the bankruptcy will not "thwart our determination to recover the substantial monies that he owes us". Siva is learnt to have sounded out some Chennai lawyers to find out the implications for his assets in India.
For Siva, the India-born 58-year-old citizen of Seychelles, this was actually his second brush with bankruptcy in less than a year. In October 2013, WinWinD, his Finland-headquartered wind turbine venture, submitted a voluntary bankruptcy petition because it had "been incurring heavy losses for the past several years" and its debts had ballooned to around ^300 million. "The efforts of WinWinD in trying to arrange for necessary funding and approval for restructuring process has not been successful and hence this decision," the company said at that time.
Disbelief about the news of the bankruptcy looms large in Siva's native Chennai. One industry representative insists that when he spoke to Siva last week, he was "cool and calm, and showed no sign of agitation". Siva could not be reached for this report. His senior executives in India too were not available for comment. The Siva group's website still claims that it is a $3-billion conglomerate with interests in "oil palm, commodities trading [minerals], agro exports, shipping and logistics, wind energy, realty & hospitality and education/e-learning", but it is clear that it will take Siva some effort from here to restore his glory.
Not so long ago, Siva was known as the country's most astute deal-maker (to close a deal, he could leave India for the United States in an hour's time), the serial entrepreneur with the Midas touch, who made obscene sums of money in all deals, except one (much of it later). Born on July 29, 1956, Siva started his innings in business in 1985 after he purchased Sterling Computers from Robert Amritraj, father of former tennis star Vijay Amritraj, and launched personal computers for as little as Rs 33,000 - rival machines cost as much as Rs 80,000 at that time. Success was instant. Sterling was catapulted to the top three computer companies of India. Siva would now operate out of the presidential suites of the Ritz-Carlton and Pan Pacific hotels in Singapore and developed a fondness for Rolex gold watches, Montblanc pens and fine food. But it was telecom that would give Siva's business - and reputation - a big boost and ultimately cause him a great deal of heartburn.
In 1992, Siva won a five-year contract from state-owned MTNL, which ran telecom services in Delhi and Mumbai, to print Yellow Pages in its directory for a period of five years. (Allegations of favouritism were made at MTNL at that time for awarding the contract to Siva, but nothing came out of them.) It took Siva little time to sense that the telecom sector would soon be thrown open to the private sector. The possibilities thrilled him. Siva shifted base from Chennai to New Delhi, operating out of a five-star hotel. In 2004, Siva managed to get cellular telephony licences for Delhi and three other telecom circles: Uttar Pradesh (east), Haryana and Rajasthan. Within no time, he sold these licences to his old acquaintance from Chennai, Shashi Ruia of Essar, for $105 million. "He was sharp, well-informed on telecom, a keen negotiator and a man of honour when the deal was done," Ruia had told Business Standard in mid-2004.
All of a sudden, Siva was loaded. In 1996, he purchased rapper MC Hammer's house in Fremont, California, to set up his base in the United States. The same year, he started to acquire shares in Sunil Mittal's Bharti Telecom. By early 1997, he was sitting on around 10 per cent in the company and demanded a slot on its board of directors. Mittal, no less a negotiator, refused. Eventually, Siva sold the shares to Mittal at Rs 90 apiece; his acquisition cost had been Rs 100. This was the only instance when Siva lost money. But he was still rich. Siva in 1997 bailed out an Indian-owned bank in Thailand along with Hong Kong-based tycoon Hari Harilela. Meanwhile, the Ruias offered him shares in Tamilnad Mercantile Bank. But the Nadar community, which owned the bank, opposed the deal. Two years later, in mid-1999, it bought out Siva's stake. His net gain in the transaction was substantial. Siva next sold Dishnet DSL, the country's first internet DSL provider he had launched in 1998, to VSNL for Rs 270 crore. He even wrote to Rebecca Mark, the CEO of Enron India, to buy the troubled energy company's India business for Rs 1!
Siva found it hard to stay away from telecom. He bought the licence for Tamil Nadu and then acquired the one for Chennai from RPG Cellular. From here, he decided to expand his footprint. In March 2004, Siva applied for the licence in the eight circles of Madhya Pradesh, Assam, North East, West Bengal, Bihar, Orissa, Himachal Pradesh and Jammu & Kashmir. Letters of intent were issued on April 6. The company submitted compliance to the letters of intent on April 20 for seven circles, and sought additional time for Madhya Pradesh. The next day, the company applied for licences for Uttar Pradesh (east) and Uttar Pradesh (west) as well. On May 7, licences were issued for all the circles, except Madhya Pradesh. Then, on May 26, Dayanidhi Maran took over as the Union telecom minister. Siva was now bombarded with queries from the department of telecommunications. His expansion plans got badly stuck at Sanchar Bhawan, the DoT headquarters. "The clarifications sought, besides being vague, were also irrelevant for consideration of application for grant of the universal licence," the Shivraj Patil Committee appointed to report "on the examination of appropriateness of procedures followed by department of telecommunications in issuance of licences and allocation of spectrum during the period 2001-2009" said in January 2011.
More was in store for Siva. In June 2004, one month after Maran had become the telecom minister, Siva had entered into an agreement with Hutchison to sell his Tamil Nadu operations for Rs 1,200 crore - this would have given him the funds to roll out in the rest of the country. The rule book said that any transfer of equity would require the assent of DoT. Thus, on June 28, Siva sought DoT's approval for the stake sale, and provided all relevant documents by August 14. But DoT did not give its nod, nor did it provide any reason for the inactivity. On March 3, 2005, Dayanidhi Maran sent the file back on the pretext that a report on mergers and acquisitions was awaited. The same month, Siva cancelled the deal.
It later also came to light that state-owned BSNL, during those days, did not provide interconnectivity to Siva's Aircel. In 2005, BSNL was the dominant provider of fixed-line services with 40 per cent of the 40 million subscribers, and was a sizeable player in mobile services too with 23 per cent of the 48 million connections. If BSNL did not provide connectivity to any operator, it was doomed. Finally, in August 2005, BSNL did relent and agreed to give Aircel access to points of interconnection, but only in 76 of the 461 points. In December 2005, Siva announced that he would sell Aircel to Maxis of Malaysia, promoted by Tatparanandam Ananda Krishna, a Malaysian of Sri Lankan origin. In March 2006, Maxis informed its shareholders that the Aircel deal had been completed. Things now began to move fast at the DoT headquarters at Sanchar Bhawan. All the clearances came quickly.
Siva was known to be close to the leadership of the Dravida Munnetra Kazhagam, Maran's party, as well as Murasoli Maran, the minister's father. Legend has it that at an industry interaction in 1989, where other businessmen were paying inane homilies, Siva's plain-speak made quite an impact on the chief minister and DMK chief, M Karunanidhi. Then why did Maran turn against Siva? Unconfirmed reports suggest that Maran did not like Siva's closeness to Ratan Tata, then Tata Sons chairman. Siva had helped Tata Teleservices source cheap equipment for its rollout by playing off a US multinational against a European giant. He subsequently bought 10 per cent in Tata Teleservices. On the other hand, there was a "chemistry problem" between Tata and Maran. It reportedly arose when Tata decided to get into DTH. The Sun TV network also had an eye on the space and was keen to tie up with Tata. But Tata had decided to go ahead with The British Sky Broadcasting Group.
On Monday, June 6, 2011, Siva dropped a bombshell when he came to the Central Bureau of Investigation headquarters in New Delhi and claimed that he was forced by the Maran brothers, Dayanidhi and Kalanithi, to sell Aircel to Maxis. He provided CBI with a list of 10 witnesses, most of them based abroad, to support his charge: bankers, venture capitalists and lawyers. Maran refuted the allegation and said newspaper reports "clearly prove that this particular company was parading itself even before I became the telecom minister". But that didn't cut much ice. Last week, CBI filed a charge sheet saying that the Marans received Rs 742 crore for coercing Siva to sell Aircel to Maxis in the garb of investments in Sun Direct (the DTH operator) and South Asia FM.
Even after he had sold Aircel, Siva continued to nurture telecom dreams. The telecom ministry, now under Andimuthu Raja, had declared its intent to hand out more licences on first-come, first-served basis. The price for a pan-India licence (22 telecom circles) was Rs 1,658 crore. One of the companies to get those controversy-ridden licences was STel. (It had got six circles: Orissa, Bihar, Himachal Pradesh, Northeast, Assam and Jammu & Kashmir). Siva had acquired 51 per cent of it. While there were rumblings that licences had been handed out by Raja at throwaway prices, Siva, in November 2007 wrote to Mamohan Singh, then prime minister, that he would pay the government a revenue share of Rs 6,000 crore over 10 years for a pan-India licence. A month later, it raised the offer to Rs 13,752 crore. Using this as the benchmark, the Comptroller & Auditor General said in its damning report the loss to the government in the spectrum allocation came to Rs 67,364 crore. In September 2011, it transpired that there wasn't complete agreement in the CAG team over the calculation because the company had subsequently withdrawn the offer.
Batelco bought 49 per cent in STel in 2009 for Rs 1,000 crore. By then, opposition to the allotment of inexpensive spectrum had gathered momentum. The United Progressive Alliance government came under fire. Raja was removed. Several people, including Raja, were taken into custody. Finally, in February 2012, the Supreme Court cancelled all the 122 licences allotted by Raja. STel, which had about 3.6 million subscribers in five circles, had no option but to shut shop. That is when BMIC, which owned 42.7 per cent in the company, invoked the "put" option under which in an exigency like this Siva had to buy out its stake at the price at which it had been bought: $212 million. BMIC says Siva never paid up. According to one account, Siva wrote to Singh, then prime minister, within days of the Supreme Court verdict to demand Rs 1,700 crore for surrendering the licences. All his entreaties fell on deaf ears. Last month, BMIC got an order from an English high court to freeze Siva's assets worldwide. A few days later, Siva was declared bankrupt in Seychelles.
What went wrong? An answer possibly resides on the Siva group website. "Foresight is a gift," it says. "And when you combine it with skill and commercial acumen, the result is often breathtaking."
THE SERIAL ENTREPRENEUR No conversation with Siva can end without exchanging notes on food. Seafood is his all-time favourite. At meals, he would serve the finest of the world cuisine. Overindulgence would frequently lead to serious guilt pangs. That propelled Siva to foray into the health business. In the early 1990s, when he was operating out of a five-star hotel in New Delhi, Siva had two snazzy treadmills installed in his suite. Several unsuspecting visitors were made to use them. He then started a state-of-the-art gym in Chennai which was used by top cricketers. In the same vein, he set up a chain of health-food restaurants that were designed like a sushi bar. He chose to call them Aiwo. Two were opened in Singapore and one in Chennai. Though Siva wanted to take it global, Aiwo has morphed into a weight-loss clinic called Ken, with a branch each in Mumbai and Chennai. He even invested in the Chiva Som Resort in Thailand, Asia's first spa destination.
In April 2004, Siva bought coffee chain Barista from Turner Morrison and Tata Sons for around Rs 65 crore. He was quite charged up with the acquisition. He told Business Standard that he would make Barista "the Starbucks of India" and would expand its network from 100 outlets to 3,000 in three years' time, including one in this newspaper's office. He also wanted to expand the menu to include falafel and sushi. Before three years passed, he had sold Barista to Lavazza of Italy for $100 million because he had decided to "focus and expand in the business of renewable energy". That quest made him acquire WinWinD in 2006.
In 2007, he bought 49 per cent into Sahara group's Aamby Valleyproject, on the condition that Sahara would buy back his shares at a pre-determined price three years later. He got Rs 1,680 crore from the sale. In 2008, Siva bought a Norwegian shipping company called JB Ugland Shipping for around $300 million. An information memorandum for a private placement of debentures by Siva Ventures in June 2009 disclosed that Siva had taken the 931-hectare Coetivy Island in Seychelles, 290 km south of Mahe, on a 99-year lease to develop a mega township. That is what seems to have taken Siva to that country.
For all his profitable deals, Siva left behind a trail of failed ventures. He had tied up with Subhash Chandraof Essel to get into DTH but the project never got off the ground. He had announced a $1-billion undersea cable line from Chennai to Guam but Sunil Mittal got a similar project up and running first, which ended the viability of Siva's plan. At various times, he is known to have dropped plans to buy VSNL from the government (the Tata group bagged it), set up a 2,500-apartment residential complex in Chennai, erect a chemicals plant at Cuddalore and acquire a factory to make tungsten for defence. Serial entrepreneur for sure, but the tag would often hurt Siva when he went out to recruit people. "He looks at each business for not more than five years," says a Chennai-based industry watcher. "That's why the best talent doesn't join him."
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Success stories - IIT IIM
Sachin Bansal : IIT Delhi : Entrepreneur
·
CEO and Co-founder of
flipkart.com
·
Sachin spent his early
years in Chandigarh. He graduated from IIT-Delhi with a degree in Computer
Engineering. In 2006 he joined Amazon.com in India which
he later left to set-up Flipkart.
·
As CEO, Sachin
oversees all the customer facing activities of the company ranging from
technology to marketing. He is also in charge of Flipkart’s corporate divisions
which include the finance and legal departments.
·
An avid gaming
enthusiast, Sachin likes to spend most of his free time with his family.
Binny Bansal : IIT Delhi : Entrepreneur
·
COO and Co-founder of
flipkart.com
·
Born and raised in
Chandigarh, Binny went on to get a degree in Computer Engineering from IIT
Delhi. He had a brief stint at Amazon before taking the entrepreneurial plunge
with Flipkart.
·
At Flipkart, Binny
oversees all operational activities that come into play from the time the
customer places an order till the time of delivery. This spans across divisions
like warehousing, logistics and customer support.
·
A big fan of Salman
Rushdie as well as Stieg Larsson’s ‘Millennium’ series, Binny is also
passionate about soccer and NBA. An active sportsman, he used to captain his
school basketball and soccer teams.
Bhavish Aggarwal : IIT Bombay : Entrepreneur
Olacabs was founded in January 2011 by IIT Bombay alumnus Bhavish Aggarwal and Ankit Bhati.
·
Bhavish worked for Microsoft after
college for two years and then left Microsoft and started an
online company to sell short duration tours and holidays online.
·
While running that
business for a couple of months, he took a car rental from Bangalore to
Bandipur and had a very bad experience.
This is
what happened-
The driver stopped the car in the middle of the journey and
demanded arenegotiation of what Bhavish was paying. After being
refused, he proceeded to abandon him en route his destination.
·
This is when he realized
how his plight was probably similar to a lot of customers across the country
who were looking for a quality cab service, but ended up with a one
that stood them up, arrived and dropped them off late or did not
stick to their promises, and came with drivers that were nightmares behind
wheels.
·
For the first time, he
saw the amount of potential that a cab booking service could have, and hence,
he changed his business from the earlier mentioned start-up to the one we today
know as – OlaCabs.
·
This was in December
2010, where he was joined by his co-founder Ankit Bhati in his start-up
journey. His parents didn’t agree with his idea in the
beginning of course, like all Indian Parents won’t.
They were thoroughly displeased with his decision to become a ‘travel
agent’, but when OlaCabs received its first round of funding from two angel
investors, they started to believe in the change he was planning to bring.
Ola translates
to 'Hello' in Spanish. probably to indicate that their
services are as easy and friendly as that, just like saying a 'hello'.
Instead of buying and renting out their own cars, OlaCabs partnered with a
number of Taxi Drivers, and added a touch of modern technology to the whole set
up, where people could book cars at short notice through their call centers and
from their app.
Advitya Sharma : IIT Bombay : Entrepreneur
All they were looking for was a home
to rent, but what the group of 12 engineers from IIT-Bombay found was a
blockbuster career path that has catapulted their fledgling venture into one of
India's hottest startups.
In 2012, when Advitya Sharma and 11 of his friends hunted for a
house on an online realty portal, they were drawn to an advertisement that
promised a threebedroom flat in Mumbai's tony suburb of Bandra for a paltry
rent of Rs 15,000.
"Only later did we realise that
it was a fake posting just to attract tenants," said Sharma, who teamed up
with his friends to launch their own portal — Housing-.com — that would carry
only listings verified by the company.
That night, the team sat down and
made a plan. "We figured real estate needs a platform that can give people
valuable, authentic insights to help them make a decision, so we built
it," said Rahul Yadav, CEO
of Housing.com.
Short of cash and with no job in
hand, the youthful team with an average age of 22 years started approaching investors.
One of their first investors, former Network18 Group CEO Haresh Chawla, invited all 12 founders to dinner
at his home in 2012. "He loved us so much that he immediately committed to
invest Rs 1.5 crore in our product and team. That was our first
validation," said Sharma.
Interestingly, Housing.com started with a brokerage model but
the team soon realised that business needed a lot of local knowledge.
"Without wasting time, we pivoted to a marketplace model in December
2012," said Sharma, who took six months to convince his parents that he
would not take a salaried job.
"My parents had notions that I
was getting into the 'dirty and dangerous' business of buying or selling of
real estate," said Sharma, whose father is a neurosurgeon
based in Jammu.
Thereafter, the company raised $2.5
million from Nexus Venture Partners, of which almost $1 million was used to buy
the Housing.com domain name. The purchase remains the costliest domain purchase
by any Indian startup ever but the ambition of the company was to build a
global brand and the expenditure has proven to be worth it.
Today, Housing.com has a team of
1,500 people across 45 cities. The founding team is based in Mumbai and spends
most of its time in office brainstorming and the rest playing football, just outside the office.
"We constantly think about how
can we build a product that helps people find a house they'll love," said
25-year-old Sanat Ghosh, a co-founder who heads the technology product team.
"And to see so many people use Housing everyday just fuels our energy even
more."
This was not their first startup
however. At IIT-Bombay, the team had tried to build Exam Baba, a website that
would carry scans of exam papers of previous years. "Professors at IITs
don't change exam questions drastically. Our team got called to the dean's
office and we were made to shut down the website," said Sharma, whose
passions include football.
Now each member of that team has an
exciting memory to share about their new venture. "Housing was in Mumbai
for the first six months and then we just expanded to the top 10 cities in one
single shot, once we were clear what was required to be done," said Ravish
Naresh, 24, another cofounder.
"We're building this company not for the next 5, 10
years, but for 50, 100 years and we intend to map every city of the
country," said Yadav.
It has raised US $90 million in Dec 2014 through
private equity infusion from SoftBank Group along with Falcon Edge and
other existing investors.