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.

Roger Bate | American Enterprise Institute

February 19, 2013

The acquisition machine: Meet the man behind Motherson Sumi

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."

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.

"Housing.com and SoftBank Internet and Media entered into a definitive agreement under which the SoftBank Group will lead an investment of US $90 million in the company, along with Falcon Edge and other existing investors," a release issued here said.

The company will use the funds to map over 40 million houses across 300 cities in India and provide on-off buttons to home owners and agents. These on-off buttons will convert all the curated database into assets for Housing.com, and can be reactivated when they are again available in the market, the release said.

"Ever since we started the company we had a huge vision, to help millions of people struggling to find real estate that meets their requirements perfectly. We have put in all our focus into building great products and mapping every single house in the country, on the platform," its co-founder Advitiya Sharma said. Housing.com has raised more than USD 121 million in the last two years.

Commenting on the deal, SoftBank Corp vice chairman Nikesh Arora said, "The Housing.com team has a great vision and deep insight into what it takes to build great products, and transform the way people research and transact in real estate. We look forward to working with and supporting its growth." Morrison & Foerster and AZB & Partners acted as legal advisor, and the Raine Group acted as financial advisor to SoftBank.

Ashok Vemuri : IIM Ahmedabad : Employment

Vemuri, who joins iGate on Monday as CEO and president in place of his disgraced former Infosys colleague, is taking on a challenge that will truly test his mettle. The comparisons with Phaneesh will not go away easily, and iGate's big ambitions will present a daunting challenge.

Vemuri, 45, and his predecessor Phaneesh, 48, have several things in common: they both studied at the Indian Institute of Managementin Ahmedabad, they are long-time Infosys veterans groomed by software industry icon NR Narayana Murthy, and they are regarded as ace salesmen, easily among the best in the industry.

Mr. Vemuri joined Infosys in 1999. He previously worked in the investment banking industry with Bank of America and Deutsche Bank. He served as a Director of Infosys Limited from June 11, 2011 to September 12, 2013. He served as a Director of Infosys Technologies (China) Company Limited. He also served on the Board of Infosys Consulting and Infosys Public Services Inc. Mr. Vemuri received a Bachelor's degree with Honors in Physics from St. Stephens College, Delhi, and a Master's in Business Management from the Indian Institute of Management, Ahmedabad.

IT based serial entrepreneur : Ganesh Krishnan

Ganesh Krishnan is a serial entrepreneur and has launched four startups with an aggregate capital of

1.6 crore(US$260,000) and an aggregate exit valuation of $300 million.

Ganesh holds an undergraduate degree in mechanical engineering from Delhi Universityand an MBA from Indian Institute of Management Calcutta. His first entrepreneurial venture was in 1990, when he co-founded IT&T, a multi-vendor IT service and support company with 400 employees and 16 offices. IT&T was sold to iGATE in 2000. That same year, he started Customer Asset, a call centre and BPO company, with the help of his wife Meena Ganesh and funding from Softbank Capital and Newscorp. Customer Asset was acquired byICICI Bank in 2002, and later re-branded as Firstsource.

In early 2004, he invested in a Data Analytics firm, Marketics Technologies, where he served as the Chairman. In 2008, Marketics was acquired by WNS Global Services for Rs.342 crore (US$ 75 Million).

TutorVista was founded in 2005. Pearson Education acquired a majority stake (around 76%) in TutorVista in 2009 at a valuation of Rs.1000 crore (US$ 200 Million). Ganesh continued to serve as TutorVista's CEO till February 2013 when Pearson concluded 100% stake purchase.

WIPRO

Wipro was once ‘Western India Vegetable Products,’ a vegetable oil company in Amalner, Maharashtra. In 1966, he was just one term from finishing his engineering degree from Stanford, when he had to return to India because his father passed away unexpectedly.

As executive director and chief strategy officer, Rishad Premji has driven the investments and acquisitions mandate, which has been most apparent in the past two years. The chief strategy officer is a position even founder and chairman of HCL Shiv Nadar has occupied for many years in the Noida-headquartered contemporary of Wipro. What Rishad has managed to do in this period is work closely with chief executive: Abidali Z Neemuchwala from April 2015, and his predecessor TK Kurien. In the background, the industry is undergoing a metamorphic shift from being a people-outsourcing business to one that demands high technology prowess. “I have been in this job for little over six years,” said Rishad Premji in an interview to ET in mid-September. “There is so much change and opportunity as part of this change that it’s exciting. We (Wipro) have called out our strategy with Abid (Neemuchwala) over the last couple of years. We are focused on staying the course and are on this journey of executing.” Managers are used to a commonly marked email from the younger Premji on almost a weekly basis. And they are aware of a shift in the way Wipro is building capabilities because of the trinity of chief executive Neemuchwala, Rishad Premji, and global head of Wipro Digital Rajan Kohli. Rishad Premji explained the approach. “We have the appetite to be bold – be it organic investments, M&A, bringing in outside talent that thinks and functions very differently. Now, I also want to caveat everything I am saying, by adding that I still see a lot of opportunity in the traditional spend of customers. There will always be enough customers, in enough industries, in enough geographies that will still not be very mature in their global sourcing journey. So, there is still a lot of opportunity in the traditional run business.

Before heading Wipro Digital, Kohli faced the enterprise market heading the crucial BFS division and as chief marketing officer. Neemuchwala, who was with TCS before Wipro, stands out in terms of operational nous and responsible for the mature business. But it is Rishad who is expanding the playing field for Wipro. If Azim Premji built the foundation of this business with chief executive Ashok Soota in the 1980s, Rishad is taking Wipro to a newer technology arena, where people – and platforms – are crucial in the age of automation. The $475.7-million Appirio acquisition in November 2016 is seen as a statement in terms of how Wipro is looking at execution. “Investments like Appirio are getting incorporated in our regular work,” a senior manager says. “Its crowdsourcing platform TopCoder has a registered user base of 1 million, who can be assigned certain tasks or projects, and they come back with the output,” he explains. Such measures help in augmenting the team, as opposed to investing full-time Wipro resources, without affecting revenue, the employee explains. Apart from the acquisitions, Wipro Ventures has been developed as a start-up engagement model through a $100 million corporate venture capital fund. This focuses on cutting edge start-ups. As of March 31, 2017 it held nine such investments with a cumulative spend of $24.5 million in startups working in big data and analytics (Talena, Inc), artificial intelligence (Vicarious FPC, Inc, investments through TLV partners), IoT (Altizon Systems Pvt Ltd), mobility (Avaamo Inc), supplier collaboration platform (Tradeshift Inc), as well as fintech and security (Vectra Networks Inc, Emailage Corp, IntSights Cyber Intelligence Ltd)

Rishad says the strategy helps Wipro earn the brand permission to play upstream “where we traditionally did not play, at least not at scale.” He cites DesignIT, a strategic design firm Wipro bought – 300 strategic designers largely based out of Europe. “We spent a lot of time figuring out if we could culturally make it work,” he says. DesignIT had people that get compensated and think very differently from the traditional scaled-engineering model. To make this M&A work, the acquired company should not look down on the downstream business as well. “Today, we have grown those 300 people to 500 strategic designers and, most importantly, we have been able to maintain rates reflective of the value we bring to customers,” Rishad Premji says. “We’ve opened up conversations with a (client) stakeholder we didn’t reach before: the chief marketing officer.” It sounds like an echo of the ‘String of Pearls’ M&A strategy that Azim Premji ignited in 2005, which had integration challenges. At the time, organic growth demanded management bandwidth. Acquisitions like Nervewire and Infocrossing never worked out. For Rishad, integration has been the key challenge as more and more industries go digital, and traditional businesses will see growth at slower rates. “There is no clear startup point and end point, but we will continue on this journey of investment,” he says. For sure, faith in innovation-led IT has not withered for the Premjis. Azim Premji doesn’t leave a job half done. At Stanford, he completed his engineering degree program through correspondence in the late ’90s. In the 2006 address there he said: “Innovation is not just about incremental improvements in daily operations or one-off brilliant ideas. It is a culture that needs to be created consciously and pursued assiduously by the organisation—always, always nurtured.” In the digital age, the Rs 55,417-crore Wipro is showing just how.

YELLOW DIAMOND

How an Indore cloth trader built a snacks company now valued at Rs 2700 crore

Almost bankrupt in 2001-02, a wholesale cloth trader from Indore Amit Kumat has built a multi million dollar company Prataap Snacks Limited which listed on the Bombay Stock Exchange in September...

Harsimran Julka

Moneycontrol News

It was in the year 1992 that Amit Kumat, now 48, returned from the US after a masters degree in science from Louisiana State University, determined to make a difference in India.

Back in hometown of Indore, he could not find a job in an economy which was in shambles. He started assisting his father in his wholesale cloth shop in a busy bazaar of Indore selling stockpiles of nylon, cotton and linen by the tonnes.

“Those were the best two years of my life which taught me how to sell to an Indian customer who is extremely price conscious,” says Amit Kumat, now CEO of the Rs 900-crore company Prataap Snacks, which owns Yellow Diamond brand of chips, namkeens and snacks.

The company listed on BSE in September, this year and boasts of a valuation of about Rs 2700 crore on the Indian exchanges with Salman Khan as Yellow Diamond's brand ambassador.

Coming back to Kumat's story. The cloth business did well which led Kumat to start expanding in various areas. He started an SAP training institute, a chemical dye business and even a website called dealinchem around 1996-1999.

The family landed neck deep in debt

Come dot-com bust and all businesses started collapsing like a stack of cards. This landed the Kumats in neck deep of debt of over Rs 18 crore.

“There were days where I had to think twice over whether I should take a bus or simply walk. There were days where I used to wake up and wonder what to do all day as our offices had shut down,” says Kumat.

That is when Amit approached a family friend and a classmate of his elder brother Apurva Kumat for an investment of Rs 15 lakh in setting up a snacks business out of Indore.

Arvind Mehta, a family friend, who had a real estate business agreed to become a partner in the snacks business. Kumats started getting cheese balls manufactured in Lucknow, and selling them in Indore and other parts of the city.

The snacks business clicked. The trio set up a chips making unit in Indore and started making potato chips by the thousands every day giving competition to market incumbents such as Frito Lays, in certain pockets.

In 2006-07, they launched Chulbule, a rival to Kurkure, a popular snack made for the Indian palette by Pepsico India.

Seeing the success of Yellow Diamond, Sequoia Capital, a globally renowned venture fund approached them for investments in 2009.

However, the Kumat brothers and Mehta waited almost 18 months before saying ‘yes’ to a USD 30 million investment in the company.

With the money, they installed a chips making unit, a potato rings making plant and a namkeen production unit.

Now Rings constitutes almost 42 percent of the business and chips about 26 percent.

The company makes about 40 lakh packets of rings a day with a toy worth Rs 0.50 inserted in each packet.

The assembly machine inserts a toy in each packet. “Kids are the biggest consumers of Rings, with each packet costing just Rs 5 for the consumer,” Sumit Sharma, the company CFO informs me.

Name

“The company’s name was earlier proposed to be Diamond. However, the trademark was found to be registered thus forcing them to suffix ‘Yellow’,” Amit Kumat informs me during the working lunch.

“This also made perfect combination as Arvind bhaiyya believes in numerology and it exactly made 13 digits,” he adds while Arvind Mehta relishes the homemade besan laddoos.

The company which started with just three people now employs about 750 people directly and about 3,000 people indirectly through contract rolls.

The company’s immediate plans include expansion into Bangladesh with a new plant, launching the chocolate cake-biscuit and expanding India capacities with the proceeds of the recent public offer.

Yellow Diamond has also started exporting products to Canada and South East Asia.

The total size of the recent IPO was Rs 482 crore. Out of this the company raised 200 crore and the rest Rs 282 crore was diverted towards the major shareholders Sequoia Capital and promoter families which took a partial exit. The company also raised Rs 50 crore through a pre-IPO offer.

The company's market capitalisation based as of Friday's price on the BSE is about Rs 2,737 crore.

“My next milestone is achieving a market cap of a billion dollars (Rs 6500 crore) in next two years,” informs Kumat.

Whether Yellow Diamond will be able to achieve that, only time will tell.

Ranbaxy - Singh Brothers

A storied business empire has turned into debris over which preside two quarrelling brothers facing probes and various criminal charges. The latest is Religare Finvest, a Religare subsidiary, lodging a criminal complaint with the Economic Offences Wing of the Delhi Police against promoters Malvinder Mohan Singh and Shivinder Mohan Singh. They are accused of cheating, fraud and misappropriation of funds to the tune of Rs 740 crore. This is the sorry decline of a mega business house that had risen up from the ground within a few decades.

The beginnings
After Partition, businessman Bhai Mohan Singhcame to Delhi from Rawalpindi in Pakistan. He bought a debt-ridden company from his cousins Ranjit Singh and Gurbax Singh, whose first names combined in the name of their company — Ranbaxy. Decades later, it went on to become India's largest pharmaceutical company. Parvinder Singh, the father of Singh brothers, wrested control of the company from his father. The inherited company was later sold by Singh Brothers.

The whizkids
The Singh brothers studied at elite Doon School, prestigious St. Stephen's College in Delhi and then Duke University's Fuqua School of Business in the US. They have been known to be suave, sophisticated and savvy businessmen with elite education. After the death of their father Parvinder Singh in 1999, they inherited 33.5% stake in Ranbaxy. They sold Ranbaxy at its peak and got much media attention for the money it fetched. They sold the company to Japanese drug maker Daiichi Sankyo in 2008 for $4.6 billion, out of which $2.4 billion went to them. the sale proceeds was fuelled their ambitions and they invested the money for expansion of FortisHealthcare and Religare. Within a few years, they turned Fortis Healthcare into the country's largest hospital chain and Religare Enterprises into one of the largest NBFCs.

The unravelling
A business empire led by two savvy and hard-working young men started unravelling when the reports of financial wrong-doings started coming out. A substantial part of the proceeds from the Ranbaxy sale was transferred to several family-owned companies. This money is at the centre of probes and controversies, including links to the Radha Soami Satsang Beas, a spiritual sect which is headed by their relative. Singh brothers have been accused of siphoning off Rs 500 crore from Fortis, a publicly-traded company. Amid probes and mounting charges, they had to relinquish control of Fortis and Religare. The brothers face probes by several government agencies including Serious Fraud Investigation Office. Government agencies started probing the brothers' role in the wrong-doings after an internal investigation by law firm Luthra and Luthra found mismanagement of funds

The Daiichi case
The Ranbaxy sale had raised eyebrows not just for the huge money it fetched but also for a twist that came after the sale. While Singh brothers were selling Ranbaxy, the company was facing probe by the US Food and Drug Administration and the Department of Justice. It was accused of falsifying data and test results in pending and approved applications. Later, the USFDA banned more than two dozen Ranbaxy drugs from entering the country. Ranbaxy had to pay $500 million in fines and restitution to US authorities as part of a settlement. Daiichi won an award of $550 million at a tribunal in Singapore against Singh brothers for concealing information about USFDA probes. Later, the award was upheld by the Delhi High Court. Before the charges of financial wrong-doings at Fortis and Religare, the Daiichi episode had left a stain on the reputation of Singh brothers.

Brother versus brother
The relationship between the Singh brothers came under pressure after the accusations of financial wong-doings, leading to various allegations and counter-allegations. In September, Shivinder made scathing allegations against elder brother Malvinder and Sunil Godhwani in his petition filed with the National Company Law Tribunal (NCLT). He alleged that Malvinder and Godhwani, the former chief of Religare, colluded to divert Rs 750 crore from Religare Finvest Ltd., a wholly owned subsidiary of Religare, and another Rs 473 crore from Fortis Healthcare to RHC Holding Pvt Ltd., the flagship holding company of the Singh brothers. He also alleged that Malvinder forged the signature of his wife Aditi S Singh in RHC documents.

Shivinder alleged that the finances of the company were mismanaged while he had moved out in 2015 to serve full time at the spiritual retreat Radha Soami Satsang Beas. “I took public retirement to my spiritual home, Beas, to serve my Master, in 2015; leaving the thriving company I founded in ‘trusted’ hands and in a period of less than two years, it has moved towards disintegration and ruin of a national healthcare asset,” he said.

Later, Shivinder withdrew the petition on the ground that the brothers had agreed to settle things through a mediation by their ailing mother. However, he said, “In the event mediation fails, I intend to reassess and start a fresh action if that is what it takes to address all issues and start afresh.”

Brothers come to blows
The feud between the brothers peaked recently when elder brother Malvinder accused Shivinder of physical assault. Malvinder posted a video accusing his brother of hurting, threatening and bruising him. It was a sad reversal since the two brothers were known to be very suave and sophisticated. The video posted by Malvinder showed that the mediation had failed. Reacting to Malvinder's accusation of physical attack, Shivinder said it was sad and shocking to see the chairman of the group resort to such embarrassing tactics. He said he had pulled out of the negotiation process with Malvinder after the latter demanded Rs 1,000 crore for amicable separation.

With a never-ending stream of accusations, allegations and formal charges against the brothers and between them, it is unlikely that the brothers will emerge out of the mess anytime soon. Behind them lies a soaring business empire run to the ground in just a few years.

Fall of Singh brothers, Malvinder and Shivinder. AUG 17, 2018

Over the years, the brothers’ main holding company loaned about Rs 2500 crore ($360 million) to the Dhillon family and property businesses largely controlled by them, according to documents and people familiar with the matter. Some of those outlays were financed with money borrowed from the Singhs’ listed companies, and when combined with other Singh investments gone bad threw their empire into a debt spiral, a Bloomberg News analysis of public records and interviews with 10 people familiar with the finances of both camps showed.

Heirs to a generations-old business house once worth billions, the brothers have in the last six months seen a dramatic fall in their fortunes. They’ve had their public shareholdings seized by lenders. They’re under a criminal probe by financial authorities over Rs 2300 crore missing from their listed companies. They owe $500 million over fraud allegations related to the 2008 sale of drugmaker Ranbaxy Laboratories. They’ve also lost the family mansion. Both deny any wrongdoing.

Dhillon is a cousin of the Singhs’ mother, and he became a surrogate father to them after the death of their own in the late 1990s. Since then, the finances of the spiritual leader and the brothers have grown intertwined, with money flowing from the Singhs to the Dhillon family via loans through shell companies and an array of arcane financial instruments, according to the documents and people familiar with the matter, who asked not to be named because of the ongoing legal probes. Dhillon hasn’t been accused of any wrongdoing.

All members of the spiritual commune, including the guru, are expected to support themselves financially, and the sect’s representatives said the Master’s business dealings are a personal matter separate from his role at the spiritual group. The Singhs’ downfall comes as Prime Minister Narendra Modi pushes to increase transparency and attract more foreign investment to the world’s fastest growing major economy. But the brothers’ story is a cautionary tale to anyone doing business in India, offering a window into the opaque corporate structures common in the family dynasties that dominate Indian commerce.

“This opacity makes for risk,” said Arun Kumar, an economist with the New Delhi-based Institute of Social Sciences. “Legitimate business people may not want to come to India.”

The Singhs are famous for expanding their two public firms – hospital operator Fortis Healthcare Ltd. and financial firm Religare Enterprises Ltd.—at breakneck speed after reaping $2 billion from the Ranbaxy sale. Less known is the massive debt they took on to do so, all while they were financing a real-estate portfolio largely owned by their guru’s family. Malvinder, 45, and Shivinder, 43, haven’t been charged with any crimes. The brothers acknowledge having financial ties to Dhillon, and in written comments said they are in dialogue with the Dhillon family and its companies to address the money owed to them. But they also said it would be “untrue” to suggest that the guru was a cause of their group’s financial troubles. “Malvinder and Shivinder are unequivocal about this: Mr. Dhillon is their spiritual Master,” the brothers wrote. “He has only ever acted out of love and has only ever had their best interests at heart.”

They’re less generous to another follower of the spiritual group, Sunil Godhwani, whom they say was appointed to lead Religare at Dhillon’s recommendation. They say Godhwani was also in charge of their holding company, RHC Holding Pvt., and often took decisions without informing them. They say he was the architect of the financial structures, including the loans to the Dhillon family and companies, that led to their financial troubles.Bloomberg News has been unable to independently verify the Singhs’ claims that Godhwani ran their holding company in the period between 2010 and 2016, when most of the major borrowing, loans, investments and routing of funds occurred. RHC says he was president there between 2016 and 2017. Godhwani declined to comment, and he left his role as chairman of Religare in 2016. For his part, Dhillon also declined to be interviewed. A statement from J.C. Sethi, secretary of Radha Soami Satsang Beas, said Dhillon played a role helping the Singhs assert control of their father’s businesses following his death, and in guiding them after. But since 2011, ill health, including a battle with cancer, caused the guru to step back to focus on his spiritual duties, he said. “The Master can advise but he cannot make a choice for you,” he added. Representatives for the spiritual group said the Master has no role in its administration or finances. Earlier this year, Bloomberg News reported that the Singhs had taken Rs 500 crore from Fortis without board approval and that a New York investor had filed a lawsuit accusing the brothers of siphoning Rs 1800 crore from Religare. The Singhs say they didn’t do anything illegal. They say Godhwani was in charge of both Religare and RHC at the period in question. The movement of funds at Fortis were part of normal operations at the time, and only later became related-party transactions, according to the brothers. India’s stock market and fraud regulators launched investigations into financial irregularities at both companies, although they are yet to report their findings. Both agencies didn’t respond to requests for comment.

The Singhs’ rise as businessmen in their own right began in 2008, when they sold Ranbaxy, then India’s largest drugmaker, to Japanese pharmaceutical company Daiichi Sankyo Co. The sale occurred just as the U.S. Food and Drug Administration started raising questions about the Indian firm’s manufacturing practices and the safety of its drugs, although Ranbaxy denied the allegations at the time. The brothers went on to use their cash reserves aggressively to build up Fortis and Religare—which would each top $1 billion in market value as India’s demand for health and financial services surged. They took their father’s place in Delhi high society among other old business families, becoming patrons of Indian artists and socializing at exclusive clubs.

Then in 2013, Ranbaxy pleaded guilty to criminal felony charges in the US and faced $500 million in fines. In an arbitration tribunal in Singapore, its new owner, Daiichi Sankyo, accused the Singhs of concealing the extent of its regulatory problems during the sale. The Singhs say they didn’t conceal any information. By that time, Dhillon was playing a big role in the Singhs’ finances. He was their “central father figure” after their own died in 1999, they wrote in their statement. Sect members held key positions in the Singh empire: One became chairman of Ranbaxy’s board, helping ensure Malvinder’s swift rise to the top. Another devotee, Godhwani, led Religare. The Dhillon family would eventually become Religare’s second-largest shareholder, after the Singhs, with money lent to them by the

brothers, according to people familiar with the matter. Godhwani consulted with Dhillon regularly on Religare, as would the Singhs on Fortis, the people said. In 2015, the younger brother, Shivinder, briefly took a hiatus from the business to work at the spiritual group full time. A photograph on the sect’s website shows Dhillon with a white beard, white turban and flowing white tunic. But several people who know him say he’s fond of self-deprecating jokes, and in private is more charismatic everyman than ethereal mystic. As many as 500,000 devotees sometimes visit the ashram at once to listen to his teachings of how meditation, vegetarianism and high moral values can help one escape the cycle of death and rebirth. He emphasizes community service. On a recent Tuesday at the commune, a battalion of women volunteers sat at giant wood-fired griddles, making chapatis, the Indian flatbread. Some days they roll out more than 80,000 an hour to feed hungry pilgrims. Still, Dhillon hails from a family of major landowners in Punjab, and was himself a businessman in Spain prior to his ascension at the spiritual group. So he took an active interest in the Singhs’ holdings, the people said. “I think he’s a businessman in his mind first, and a guru second,” said Brian Hines, an American who was a member of the sect’s U.S. community for 35 years and has visited Beas. He now blogs critically about it, having since left.

By 2010, another business opportunity emerged. Towns outside India’s capital, New Delhi, were experiencing a property boom that was turning farmers into millionaires. The Singhs’ resources were marshaled to help the Dhillon family build a real-estate empire.

Two companies, Prius Real Estate Private Ltd. and Lowe Infra and Wellness Private Ltd., were set up by people close to the guru, and although partly hidden by layers of shell companies, the Dhillon family had ownership interests in both, people familiar with the matter said and filings show.Over the next two years, these firms together received about Rs 2000 crore in zero-interest loans from the Singhs’ private holding company or its subsidiaries, according to the people and the documents. Funds were then disbursed to other companies controlled by the Dhillons. The Singhs owned a 51 percent stake in Lowe.

These loans proved costly to the Singhs, coming on top of other major financial commitments that were underway. From 2011 onwards, the brothers’ holding company went on to sink at least Rs 1200 crore to cover losses at their investment banking venture Religare Capital Markets Ltd. Other loans went to Ligare Voyages Ltd., a money-losing charter airline.

The Singhs’ holding company also loaned at least Rs 700 crore to cover losses at a firm that had been spun out of Religare to manage the financial firm’s administrative costs. The loss-making firm’s biggest expense was rent, much of which was paid to buildings owned by the guru’s family, according to documents and people familiar with the matter.

In some cases, Religare had no use for all the space it was leasing from the guru’s buildings and large parts sat empty, the people said and internal documents show. RHC, the holding company, also made personal loans of Rs 500 crore to Dhillon family members, via a network of shell companies, people familiar with the matter said. The Singhs funded all these outlays to the guru’s businesses and to their own ventures with borrowing. And a substantial portion came from Fortis and Religare, often through the same network of shell companies used to lend to the guru’s family, people familiar with the matter said.

Taken together, the zero-interest loans to Dhillon firms and Singh investments gone bad created a crushing debt load that required even more borrowing to service. Their total borrowings hit about $1.6 billion by March 2016, filings show.As things deteriorated, funds at the two primary public companies controlled by the Singhs, Fortis and Religare, were continuously routed back and forth via shell companies to deal with cash shortages elsewhere in the Singh family empire, according to multiple people familiar with the matter. Then came the final blow. In 2016, the Singapore tribunal sided with Daiichi Sankyo in its long-running suit against the brothers, awarding the Japanese firm about $500 million in damages and interest. The Singhs are appealing the ruling. But with the added liability, outside lenders to the brothers were reluctant to keep the taps open, even as the brothers offered up their family home and company

By 2016, they couldn’t pay back the latest in the series of loans that had been going in and out of Fortis for four years, which amounted to about 5 billion rupees. When India’s central bank discovered 18 billion rupees taken from Religare had gone to subsidiaries of the Singhs’ main holding company, it demanded it be paid back, but it still hasn’t been.

Finally, banks seized assets backing their loans, including the majority of their shares in Fortis and Religare. They had to sell the home they grew up in to pay back another lender. The Singhs have said they are working to resolve issues with stakeholders.

Minority shareholders took over at Religare. A bitter takeover battle kicked off for Fortis and Malaysia’s IHH Healthcare Bhd in July agreed to take control of the hospital operator.

The New Delhi property boom Dhillon’s family companies invested in has since gone bust. And those real-estate companies have their own debt beyond what was lent by the Singhs, according to people familiar and documents.

Between personal loans and complicated company structures, it’s hard to tell exactly how much Dhillon still owes his nephews and what assets they still hold. For the Singhs’ other lenders, Daiichi Sankyo, or law enforcement seeking penalties, recovering this money from the Singh empire may depend on the terms of arcane debt securities, which aren’t public and can be changed with the consent of both parties.

Asked what the Singh brothers would do for their Master, one person who knows the family answered in one word: “Anything.”

LEADERSHIP

BE THE BOSS NOT A FRIEND

As a manager, all your relationships should be bounded and defined. They're not about liking, chemistry, or personality. Relationships that are personal can only produce disappointment in the long run.By Linda A. Hill and Kent Lineback

Do you consider your direct reports your friends? Perhaps you're driven by a deep need to be liked. Your first instinct in any interaction is to build close, personal relationships, and you will do almost anything to protect them. One new manager said he had to "fight the burning desire to be accommodating . . . so that [my people] would like me." To confuse being liked with being trusted or respected is a classic trap for all managers.

Perhaps you hate conflict. You avoid doing or saying anything that might cause tension or upset others. When strife of any kind arises, you leap to remove it or tamp it down. As another manager discovered about himself: "I don't react well in conflict situations. I back off. It really hurts me to have people get mad at me." Perhaps you're simply uncomfortable with the idea of disrupting others' lives. This aspect of being a boss unsettles many managers.

As one explained, "What really makes it tough is that you get to know the person fairly well and you know he has a wife and two children and owns a home and has debt like the rest of us. You're saying, 'Look, you aren't cutting it.' And you're assaulting their self-image and threatening their whole lifestyle."

Perhaps you've made a rational choice: you think close personal relationships are the best way to influence people. When you ask people to do something, you're saying, in effect, "Do it for me because we're friends." What could be more compelling?

If you create or allow close personal ties with your subordinates for any of these reasons, you will struggle as a manager. You won't be able to make tough but necessary people decisions or evaluate people accurately and give critical but helpful feedback. If you try to stay on good terms with everyone, you'll make exceptions for individuals that others consider undeserved or unfair. Relationships that are primarily personal can only produce disappointment for your people in the long run and make you much less effective.

Do you tend to create such relationships? Think of your people one by one and ask, "If his performance slipped and didn't improve, would I be able to terminate him? If she made repeated serious mistakes in spite of careful coaching, could I cut back her responsibilities or tell her she won't get a raise?"

If you're reluctant to discipline or terminate someone because of the harm it might do to your relationship, then your ties to that person will prevent you from doing your job as the boss.

Consider the differences between being a boss and being a friend.

Friendship exists for itself

Friendship is not a means to some other end. As social beings, we need close, supportive connections with others. That's not, however, what drives the boss–subordinate relationship. That tie exists to accomplish work. If something prevents a direct report from doing his or her job, then the relationship must end.

Friends are equals

Bosses and direct reports are not equals inside the organization. Even if the boss keeps her stick of authority hidden most of the time, she will still need to use it on occasion in ways that may not please her subordinates. Not many friendships can survive such status inequality when that happens.

Friends accept each other as they are

Friends don't actively evaluate and try to change each other. They certainly don't make their friendship contingent on such change. Yet an effective manager must constantly assess his people's performance and abilities and press them to develop and change. Such benevolent but real pressure is an important, unavoidable part of managing.

Friends don't check up on each other all the time

Managers continually press their people to report on progress, evaluate themselves, and commit to future results. Friends do have expectations of each other, but they're mutual, not one sided, and less demanding.

As a practical matter, you cannot be friends with all your people equally

If you choose to make friends of your people, human chemistry will come into play, and you'll develop closer ties with some than others. You can imagine the havoc that will wreak with your efforts to manage a smooth-working team, especially a virtual team with far-flung members.

If you create friendships with your people, if you try to motivate them through the personal ties you've created or allowed, you're likely to find yourself having to choose between maintaining the ties or obtaining the best results possible. If you maintain the ties, you will compromise results or make unethical choices that harm others not for a greater good but for the good of a friend. If you choose work and the work group over the wishes of a friend, as eventually and inevitably you must, the friend will feel betrayed.

Sooner or later you must decide against, disappoint, criticize, discipline, demote, or even fire someone who works for you. To someone who thought you were friends, those actions will feel like a personal betrayal and will damage or destroy that person's commitment to the work.

Another paradox: Caring, even close, but focused on the work

Your relationship with your people should be driven by neither control nor friendship, defined by neither affection nor authority, though affection and authority should certainly be pieces of the puzzle.

In a word, the boss–subordinate relationship is another paradox, one of the most profound you will encounter as a boss. It's a paradox because it must be genuinely human and caring—even close, since you and your people strive toward a common, worthwhile purpose. But it must remain a relationship that never loses sight of one fact: it exists to accomplish work. It is a means to an end. You and your people need to connect as humans but always, in the end, to focus on the work. You and they need to be friendly— no one will work hard for a cold, distant, uncaring jerk—but ultimately not friends in the true sense of the word.

We've heard some say, "Then it's just manipulative. You only care in order to get work from people. You use them. You don't truly, genuinely care about them." We understand how someone might reach that conclusion. We're sure many managers feign concern only to get what they want.

Still, we maintain, it is possible to care deeply while focusing on the work. Consider other relationships. Do you expect or want your lawyer, doctor, accountant, or therapist to be your close friend? You want them to care deeply and genuinely for you. But you want their insights and expertise, and you don't want those clouded by affection for you. Think of a great teacher you had. You wanted her on your side, caring for you, but you understood that if you didn't know the exam answers, she would grade you accordingly. Think of a coach. Again, you wanted him to care for you and help you develop, but you both accepted that his ultimate goal was to field the best team. Whether you made the team, whether you played or sat on the bench, depended not on his feelings for you but on your performance.

Management is no different. It works best as a cordial, genuinely caring relationship, but it's not about the relationship. It should be an open, positive relationship, but one in which there is ultimately some distance, a line never crossed. If you create relationships in which the primary goal is to sustain the relationship rather than do work, you will be creating a trap that sooner or later will snare you.

Why it's hard to get the relationship right and keep it right

Given its paradoxical nature, the boss–subordinate relationship is easy to get wrong. Instinct, gut feel, and natural chemistry are poor guides. They'll push you away from people you instinctively don't like and pull you toward those to whom you feel naturally attracted.

Yet, it falls on you, as a boss, to work with and create the right relationships with both. All your relationships should be bounded and defined. They're not about liking, chemistry, or personality. While those factors don't disappear, and you will have to deal with them, they do not and should not define your fundamental relationship with your people

Linda A. Hill is a professor of business administration at Harvard Business School. Kent Lineback spent many years as a manager and an executive in business and government. Reprinted by permission of Harvard Business Review Press.

Thapar Crompton group

The New Delhi-based Avantha Group had its roots in the Thapar Group, an iconic Delhi-based business conglomerate founded in 1919 by Karam Chand Thapar. Gautam Thapar belongs to the third generation of the family.

Thapar completed his schooling from The Doon School and went on to pursue a degree in chemical engineering at Pratt Institute in the US. After finishing his engineering degree, Thapar struggled to find a suitable job in the US.

Joining the family business was not an option, as the business was run mostly by his uncle Lalit Mohan Thapar. KC and LM were not on speaking terms. He eventually returned to India in 1980 after a surprise call from his uncle, asking him to join the family business.

Thapar was asked to take charge of the falling Andhra Pradesh Rayons (APR), where he started working as a factory assistant. Soon, he got an additional assignment to nurture the chemicals division of Ballarpur Industries, the group's new export-oriented paper and pulp manufacturing business. It was going through losses due to labour, water and power issues.

To everyone's surprise, Gautam turned around the business and showed profits within a year. He killed the company's expansion plans, sold off a few assets and dealt with the labour problem firmly. Gautam caught Lalit Mohan's attention, and started rising rapidly through the ranks.

In 1999, the Thapar family business assets went through restructuring and they were divided among the four sons of Karam Chand Thapar.

Thapar Group: Division of businesses

Man Mohan Thapar and his family got JCT, JCT Mills and JCT electronics.

Brij Mohan Thapar got Crompton Greaves, BILT Chemicals and Bharat Starch. Other than that, Greaves Cotton, Premium Transmission Limited and English Indian Clays went to Gautam's younger brother Karan Thapar.

Inder Mohan Thapar's son Vikram and grandchildren Varun & Ayesha were given KCT Coal Sales, ICPL, Water Base and Tiger Bay restaurant chain.

Lalit Mohan Thapar got BILT. Since he was a bachelor, he named Gautam Thapar as his successor.

After the division of the group business, Gautam Thapar started functioning autonomously to grow his share of the business. By now, he was also handling LM Thapar's business, and consolidating all the units under his leadership. He also bought out his brother Karan Thapar's holding in Crompton Greaves by the end of FY2005-06.

In 2007, after the demise of LM Thapar, he became the rightful owner of his part of the business as well, and consolidated all his inheritance under one banner: Avantha Group. It had exposure to sectors such as paper, pulp, power, industrial solutions, consumer electricals, food processing, chemicals, farm forestry and information technology-enabled service (ITeS), among others.

The two flagship companies of the diversified conglomerate, Ballarpur Industries (BILT) and Crompton Greaves, were over $1 billion companies each. Crompton Greaves clocked total revenue of Rs 6,900 crore during 2007-08, while BILT earned consolidated revenues of Rs 2,849 crore, delivering combined revenue of $3.5 billion.

A decade later, the tables turned on Avantha.

What went wrong?

Expensive global pursuits: After consolidating his companies under one umbrella, Avantha Group became one of India's largest conglomerates. In 2010, at the age of 49, Thapar was ranked #28 in the Forbes' List of India's richest businessmen. Around that time, Thapar had begun aggressive expansion overseas. Between 2005 and 2012, Crompton Greaves had made 10 overseas acquisitions.

BILT also made an ambitious acquisition of Sabah Forest Industries, Malaysia's largest pulp and paper mill, for $261 million in 2006. However, it failed to scale up its Malaysia operations, as the cost of importing from that plant to India became higher than buying it locally, making the acquisition unviable.

Most of these acquisitions were funded through debt and none of the companies were able to fully integrate these acquisitions into ongoing businesses. The combined borrowing of Crompton Greaves had topped Rs 7,500 crore as on March, 2014.

Power failure: In 2008, Thapar announced his entry into power generation, and committed to invest at least Rs 5,000 crore ($1.3 billion) to build two power plants in Madhya Pradesh and Chhattisgarh with capacities to produce 600mw each. Thapar consolidated the group's independent power projects under Avantha Power and Infrastructure and planned to combine his electricity distribution and generation businesses to double the group's consolidated revenues to around $10 billion in five years. It became Thapar's pet project.

However, the Avantha group's foray into the capital-intensive power business didn't see success and it further added to the debt burden. The group kept on pumping money into the power ventures even when it was fast losing its ability to service existing debt.

Since, its lenders sold the 600MW thermal power plant in Chhattisgarh under Korba West Power to Adani Group. The other thermal power plant in Madhya Pradesh, Jhabua Power, with 600MW operational capacity and additional 660MW capacity under implementation, has also been put on the block by the lenders.

Getting rid of the cash cow: In 2015, Thapar put Crompton Greaves up for sale in order to cut debt. However, he didn't find any suitor. Thapar then decided to hive off Crompton Greaves' consumer electricals business into a separate entity, CG Consumer Electricals, in order to find separate buyers for the consumer electricals and power and industrial solutions businesses.

Soon he found a buyer for the consumer electricals business and sold his entire 34.37 per cent stake for Rs 2,000 crore to private equity players Advent International and Temasek.

The consumer electrical business was contributing more than one-fifth of Crompton Greaves' combined revenue. With the industrial segment bleeding, the consumer business was the cash cow supporting the B2B businesses.

No funds came into the company from the deal, as Thapar cashed out his stake, leaving Crompton Greaves (CG Power and Industrial Solutions) struggling with growing debt and no cash flow.

Crompton Greaves Consumer Electricals, currently commands a market capitalisation of Rs 15,000 crore, having almost doubled its value since the demerger. The power and industrial solutions business has lost 80 per cent of market capitalisation in the same period.

Instability in top management: Avantha Group was always known for having a stable top management. Sudhir Trehan was Managing Director for Crompton Greaves for more than a decade until he retired in April 2011. Similarly, Rajeev Ranjan Vederah was at the helm of BILT as Managing Director for eight years and later became non-executive vice-chairman post retirement.

Trehan is credited with making Crompton Greaves a truly global company. It was under his leadership that Crompton Greaves made those global acquisitions. After his retirement, the company failed to integrate those acquisitions.

Trehan was succeeded by Laurent Demortier in 2011, and then replaced by KN Neelkant in 2016. Neelkant was said to be Thapar's blue-eyed boy, handling his favourite baby - the power generation segment as CEO of Avantha Power and Infrastructure before taking charge of Crompton Greaves.

Various employees and ex-employees at Crompton Greaves that ETMarkets.com spoke with said they were shocked by this sudden change in top management. "The new bosses were not able to match the vision that Trehan had, and that was the reason the acquired global businesses failed," one of the ex-employee of Crompton Greaves told ETMarkets.com.

Gautam Thapar was recently ousted from his position as chairman of CG Power and Industrial Solutions by the company's board after a probe revealed financial irregularities and corporate governance issues, casting doubts on the group's

RANA KAPOOR -YES BANK –Success and Failure

Just a year back, last September Kapoor had compared YES Bank shares with diamonds. "Diamonds are forever: My promoter shares of @YESBANK are invaluable to me," he tweeted on September 28, 2018. "I will eventually bequeath my @YESBANK promoter shares to my three daughters and subsequently to their children, with a request in my Will stating not to sell a single share, as diamonds are forever!," he had said

Kapoor and family held 10.66 per cent stake in YES Bank back then, making him the largest shareholder (and promoter) of the mid-sized private bank. Madhu Kapur, wife of later Ashok Kapur, who was the co-founder of YES Bank, held 7.6 per cent.

The bank has been in trouble for over a year now since the Reserve Bank of India (RBI) turned down re-appointment of co-promoter Kapoor as CEO and MD on worries over corporate governance and risk management issues, among others.

The current management led by Chief Executive Officer Ravneet Gill took charge in March.

Data further revealed that Madhu Kapur and her family-owned firm Mags Finvest now hold 8.33 per cent promoter stake in the banks against 9.17 per cent earlier.

Dalal Street mogul Rakesh Jhunjhunwala’s success story with Indian stocks has all the stuff that legends are made of. Often referred to as India’s own Warren Buffet, Jhunjhunwala was just another Mumbai chartered accountant until one day he decided to break ranks and plunged headlong into the stock market with just Rs 5,000 as capital.

By September 30, 2018, that capital had swelled to Rs 11,000 crore, marking out the trailblazing journey that he charted out to become one of India’s most successful stock investors.

Born in Mumbai on July 5, 1960, Jhunjhunwala is probably the perfect example of a common man with an exceptional intellect. The Big Bull credits his father for developing his early interest in the stock market. RJ says he used to often hear his father, an incometax officer, discuss stock market with his friends. As he grew up, RJ’s curiosity about the stock market grew, and he would often question his father about stock price fluctuations. His father advised him to read newspapers as he felt it was the news that made stock prices to fluctuate. “This was the first and a very valuable lesson that I learnt from my father about the stock market,” Jhunjhunwala reveals in a video now available on YouTube.

But this journey of becoming the king of Dalal Street hasn't been an easy one. It’s been an awe-inspiring tale of a boy hailing from a humble middle class household and his rise to the Forbes' List of billionaires. Jhunjhunwala's rags-to-riches story has been truly inspirational! Where it all started? The market honcho soon got fascinated by Dalal Street and expressed his desire to pursue a career in the stock market. However, his father asked him to first get a graduate degree. Jhunjhunwala graduated from Sydenham College in 1985 as a chartered accountant. After graduation he again discussed his plan with his father. His father permitted him to do so on the condition that he would not support RJ financially, nor should he ask any of his friends for money. He should earn and invest his own money.

Jhunjhunwala, also known as the ‘Big Bull’ of Dalal Street, entered the stock market with a meagre Rs 5,000 in 1985. Sensex traded at 150 points back then. The Big Bull soon realised that to become a successful investor, he would need more funds. He requested one of his brother’s clients to lend him capital and, in return, promised to give higher returns compared with bank fixed deposits. From the very beginning, RJ’s risk-taking ability, imagination and wisdom earned him huge profits. His first big profit was Rs 5 lakh which he earned in 1986. He bought 5,000 shares of Tata Tea at Rs 43 and the stock rose to Rs 143 within three months, giving him over three-times profit. In the next few years, Jhunjhunwala made good profits on a number of such stock bets. During 1986-1989 alone, he earned Rs 20-25 lakh. RJ’s major investments included Sesa Goa, which he had bought at Rs 28 and then increased his investment at Rs 35. Soon, the stock rallied to Rs 65. In 2002-03, he bought ‘Titan Company’ at an average price of Rs 3, and he is still counting his profits on that investment. During his long career in the stock market, Jhunjhunwala has successfully invested in a number of multibagger stocks such as CRISIL, Praj Industries, Aurobindo Pharma and NCC.

But he has also had his share of failures. After the 2008 global recession and in the subsequent years, Jhunjhunwala's stock prices fell by 30 per cent, but he bounced back and recovered the losses by 2012. RJ‘s life is a fitting example of the adage that one has to devise ways to solve problems through experiences and lessons learnt from life. Jhunjhunwala today manages a privately-owned stock trading firm called RARE Enterprises – a name derived from the first two initials of his and his wife Rekha Jhunjhunwala’s names. Big Bull’s philosophy Rakesh Jhunjhunwala believes in order to become a successful investor, one has to make mistakes and learn from them. “If you do not believe the markets are supreme, you will never admit that it was your mistake. If you don’t admit that it is your mistake, you will never learn. To succeed in the stock market, one not just needs the ability to learn from mistakes, but also to blame only oneself for it,” he says. “I don’t blame promoters of companies. I blame myself. The promoter is what he is. I have to recognise it if he is not what I expect him to be,” he remarks. Jhunjhunwala says there are no shortcuts to success. “One should always rely upon the knowledge readily available in the market to become a successful investor,” says he. Jhunjhunwala’s knowledge of stock market and philosophy of investment has earned his shareholders huge profits. Being a philanthropist, RJ believes in charity and tries to help the poor. He feels it should not be done with any expectation of good results.

Dalal Street mogul Rakesh Jhunjhunwala’s success story with Indian stocks has all the stuff that legends are made of. Often referred to as India’s own Warren Buffet, Jhunjhunwala was just another Mumbai chartered accountant until one day he decided to break ranks and plunged headlong into the stock market with just Rs 5,000 as capital.

By September 30, 2018, that capital had swelled to Rs 11,000 crore, marking out the trailblazing journey that he charted out to become one of India’s most successful stock investors.

Big Bull’s philosophy Rakesh Jhunjhunwala believes in order to become a successful investor, one has to make mistakes and learn from them. “If you do not believe the markets are supreme, you will never admit that it was your mistake. If you don’t admit that it is your mistake, you will never learn. To succeed in the stock market, one not just needs the ability to learn from mistakes, but also to blame only oneself for it,” he says. “I don’t blame promoters of companies. I blame myself. The promoter is what he is. I have to recognise it if he is not what I expect him to be,” he remarks. Jhunjhunwala says there are no shortcuts to success. “One should always rely upon the knowledge readily available in the market to become a successful investor,” says he. Jhunjhunwala’s knowledge of stock market and philosophy of investment has earned his shareholders huge profits. Being a philanthropist, RJ believes in charity and tries to help the poor. He feels it should not be done with any expectation of good results.

Coffee Day Enterprises Ltd (CDEL) late VG Siddhartha

Coffee Day founder paid the price for borrowing huge sums at exorbitant interest rates, reveals part of the probe report not made public

Founder of Coffee Day Enterprises Ltd (CDEL) late VG Siddhartha slipped into a financial quicksand after repeatedly borrowing funds at very high cost, charming banks and PE firms with his flamboyance. He pledged personal assets, including that of family members, and reached a point of no-return after he failed to find an investor to rescue his company, an investigation report tabled before the company board reveals.

The 15-page executive summary of the report seen by BusinessLine has several details of the various transactions carried out by Siddhartha which were not detailed in the report submitted to the stock exchanges on July 24. The latter had said Mysore Amalgamated Coffee Estates Ltd, an entity belonging to Siddhartha, owes ₹3,535 crore to CDEL’s subsidiaries.

The full report traces his entire investment journey pointing out that the auditors failed to raise any red flags in their report. “The silence of every watchdog that refused to bark emboldened him to carry on with his “business model,” while simultaneously silencing all his critiques(sic), both within the company and outside,” the report points out.

Debt-driven model

Virtually every personal asset of Siddhartha or his immediate family members had been pledged to facilitate borrowings. To repay every loan taken from PE investors by promising them higher returns, he resorted to further borrowings creating a pyramid of debt. The report pointed out that he had created a debt-driven model to fund his companies and when the value of the shares, or the value of the business were not outpacing the interest costs, “Siddhartha began to sink deeper into the proverbial quicksand eventually to get buried by the hydraulic pressure of debt and his own promises. In retrospect, Siddhartha was the hero and villain of the piece,” the report said.

In August last year, following the untimely death of Siddhartha, the Coffee Day Enterprises board had commissioned a probe under Ashok Malhotra, retired DIG, CBI to investigate the veracity and the claims made in a purported letter left behind by the founder.

The report said Siddhartha was hopeful that an investor would value his business to its fullest potential and buy his holdings and in the process bail him out but unfortunately for him, he couldn't find such investors. Before Siddhartha passed away, there were media reports that a soft drinks major was keen on buying his chain of restaurants, Cafe Coffee Day for about $1 billion. But the talks reportedly fell through at the last minute.

Higher interest rates

With little or no capital, the late founder was borrowing at exorbitant interest rates as high as 18-20 per cent per annum and at times even higher, “investing in businesses hoping that the returns from his businesses would not only pay for interest but also pay him for his (other) ventures.” However, the proverbial knight in shining armour never came and Siddhartha paid the ultimate price for his own decisions, the report said.

Siddhartha had furnished personal guarantee and mortgaged his personal assets as collateral for the loan taken by Coffee Day Enterprises and its subsidiaries aggregating to ₹5,245.73 crore.

The executive summary also pointed out that whenever any of the board members raised questions about his transactions, Siddhartha would charm his way by citing the business model of other companies. “More importantly, the towering personality of Siddhartha effectively dwarfed every other person on the board who were charmed by him to believe rather than question his business model.”

The investigation report said that Siddhartha had structured the company and its subsidiaries in a manner that everyone worked in strict silos. He had created multiple finance teams that operated within strict Chinese walls, each virtually unaware what the other was doing. “This structuring, though perfectly legal, was fatal to the very idea of internal control and internal checks,” the report said.

Siddhartha had several companies which were not part of CDEL but significant sums of money flowed from it to them and back making it impossible for anyone within the subsidiaries to monitor the flow of funds. Siddhartha was the sole command when it came to deployment of the finance raised within the company or its subsidiaries. “By this Siddhartha ensured that he and he alone knew the real financial picture of the company and its subsidiaries,” the report said.

Prashant Tandon

The Day-Job Life!

Prashant started his career soon after he completed his Chemical Engineering from IIT-D!

He joined Unilever India as a Business Leadership Trainee in 2002. For a period of one year, he was well-groomed by the company by receiving cross functional training across various divisions and geographies which was mainly aimed at providing them with a thorough experience of how the company did business. And soon after the process was over, he was taken aboard as a Production Manager in July 2003.

His work was so commendable that, just after giving in another one-and-half year to the company, he got promoted as the Regional Production Manager in November 2004. At this post, Prashant was mainly responsible for the product development function wherein he went on to execute the largest re-launch of a brand across 13 countries in Asia.

After completing nine months on this post, Prashant moved to Stanford University in California to pursue his MBA in 2005.

Now unlike others, instead of wasting time Prashant decided to gain some more working experience and Joined McKinsey & Company as a Summer Associate in 2006 for roughly four months.

Soon after he completed his MBA, he flew back to his motherland and joined MapMyIndia as their Vice President in July 2007. The company being a start-up, his job profile included setting up the sales organization and systems to launch a new product in the market. Other than that, he was also a part of the core team which developed and executed the strategy for the firm.

But for some reason, this unlike his other stints was rather short and lasted only for 3 months, after which he again joined McKinsey & Company in India but this time as a Senior Associate in 2007. For the next almost 3 years, he dealt with M&A, Joint Ventures, Alliances, Partnership Strategy, basically, Corporate Finance. Along with that, he also took care of Growth strategy for the Access control companies, developing a Growth strategy for leading Tech firms, conducting Private Equity Due diligence in Insurance, etc.

In April 2010, Prashant took the scariest step of his life and left McKinsey, and started HealthKart.com!

Headquartered in Gurgaon; HealthKart in a nut shell is an e-commerce store that aims to be a one-stop shop for all the health and fitness related products.

Due to excessive amounts of fake products constantly being uploaded in the market, a strong focus on the authenticity of their products is on their priority list.

Talking about HealthKart, they follow a traditional retail model, wherein, they stock most of the items that a consumer sees on display, and one can place their orders online.

HealthKart is one store, that not only has the reach to the remotest parts of the country which is denied of organised retail, but also is known to be the only one which offers far more as compared to the physical stores.

Some of their product list includes: Proteins Supplements, Vitamins & Supplements, Ayurveda & Herbs, Health Food & Drinks, Fitness and Wellness related products. Other than that, free services like diabetes management, tools for weight management & growth charts, vaccine reminders are also offered by HealthKart.

To manage their logistics like warehousing and deliveries, the company has partnered with a range of other companies. While Safexpress takes care of their warehousing needs, the delivery end is handled by companies like Blue Dart, DTDC, Chotu, AFL, FedEx and India Post, and many others.

The Idea

So while he was working with McKinsey, he noticed that Health sector was known to be one of the most unorganized sectors and availing good quality health products was an extreme pain-point in India. Clearly, there was a dire need of a company that could offer something in this genre. Additionally, another huge challenge was that there was barely any access to high quality products from all over the world, more specifically in the Tier II and Tier III cities.

And being a health conscious person himself, Prashant always wanted to do something in the Healthcare industry too.

The best part here was that, Prashant had already been working in the Healthcare segment since a pretty long time. Hence, as he saw an opportunity, he decided to grab it.

Quickly he got in touch with another IIT-D friend of his, Sameer Maheshwari and shared the idea with him. And as soon as he got on board, with a personal savings of Rs.15 lakh together they started Bright Lifecare Pvt. Ltd., the parent company of HealthKart.

Their beginning was rather unusual. Even though they were clear in the heads that they wanted to do something in the Healthcare sector, but exactly what they wanted to do was yet uncertain. Hence, before they started the portal, they went on to try their hands into different sub-sectors.

From getting into public healthcare, to providing practice management software to independent physicians and small clinics, they literally tested waters with at least two to three different business models. But nothing seemed to be appealing to them.

Nevertheless this turned out to be a learning phase out of which they gained gaining enough experience and understanding of how the healthcare industry works. And when the talk happened, they realised that they actually should and also wanted to be in the B2C (Business to Consumer) segment.

Hence, E-commerce played its role and with 4 team members this gave birth to HealthKart.com and later 1mg.com

Vijay Shankar Sharma (PAYTM)
In college, Sharma faced a difficult transition with English not being his strong suit. “I taught myself English by memorising rock songs and simultaneously reading translated textbooks in English and Hindi,” he said in an interview.

Amid the rigours of being in an engineering college in Delhi, Sharma used his spare time to build. He initially wanted to go to Stanford University, because that is where internet giant Yahoo was conceived, but realised that his financial resources would not allow it.

And, for a second time away from home, he took it upon himself to learn a new skill — coding. His friends and he took on the task of building a content management system (CMS), but the storm clouds were gathering.

He quit his job at a multinational to focus on business and set One 97 Communications in 2001 with the money he had made from his job. What he didn’t realise is that his partners would leave him bankrupt shortly after the first round of funding. He was eventually formed to sell 40% of his company for ₹8 lakh.

But Sharma was resilient. One 97 Communications, now the parent company of Paytm, experimented in the space of content, advertising and commerce. It wasn’t until a decade later that Sharma got the idea to enter the digital payments ecosystem.

Paytm comes to life

To put his money where his mouth is, Sharma put up 1% of his equity as collateral — worth around $2 million in 2011. And, with that, the first avatar of Paytm was born.

“Some other entrepreneur would have sold the equity and started their own company. But I aspire to build a 100 year old company,” the billionaire told in a 2016 interview.

Paytm entered the market at an opportune time. Mobile devices were getting less expensive, access to the internet was getting cheaper and everyone wanted to be online.

Sharma kicked off Paytm as a prepaid mobile and direct-to-home (DTH) recharge platform. In 2013, the company added data card, post-paid mobile, and landline bill payments to its list of services.

But the big change came a year later, in 2014, when the Paytm Wallet was launched. Ride-hailing app Uber and the Indian Railways even listed it as a payment option on their platforms.

The company went steamrolling ahead at full speed, adding more use-cases to its roster. In 2017, Paytm became India’s first payment app to cross over 100 million app downloads.

It wasn’t all smooth sailing, though. Paytm’s popularity came at a cost. While more and more people were signing on, the company was also making headlines as users took advantage of its services to conduct scams and frauds.

Demonetisation

Sharma’s debut on the Forbes Billionaires List in 2017 happened just a few months after India's massive demonetisation exercise. It put a sudden halt on cash payments, which led to a boost for digital payments. And, as a result, Paytm gained ground.

In April 2018, Paytm was in the spotlight again with China’s Alibaba Group and Japan’s SoftBank Group investing $453 million in Paytm Mall. In August, Paytm got another infusion of capital with Warren Buffet’s Berkshire Hathaway announcing a $300 million investment.

After firming up the market share and business model, Paytm went for IPO in 2021.

Success Stories and some not so successful

Coffee Day founder paid the price for borrowing huge sums at exorbitant interest rates, reveals part of the probe report not made public

Debt-driven model

Higher interest rates