A decade sometimes makes me lose my
detailed memory. I remember most of the big things;
but forget many seemingly less important events. As
I strain to recall, the lesser things slowly start
surfacing — not as overarching explanatory patterns,
but as stories in themselves. And I find that the
shorter stories give a more granular feel of the
times than a grand unified narrative of the first
decade of this millennium.
Story number one. At the end of the 1990s, on a bus
from Johannesburg to Pretoria with senior members of
the Confederation of Indian Industry (CII). The
bitchy conversation at the back of the bus is about
poor Ratan Tata and his floundering industrial
behemoths. When would he be forced to sell TISCO to
Lakshmi Mittal? And Telco to whoever offered the
best price? I even remember a global consulting
major showing Bombay House how to shrink the empire.
Thank God Ratan Tata didn’t listen to the nay-sayers
and management gurus. Instead, he sold the obvious
side-show companies; cleaned the stable of powerful
satraps; systematically increased the shareholding
of Tata Sons in all the group companies that
mattered; recruited top class managers like Prasad
Menon (Tata Chemicals and now Tata Power) and Ravi
Kant (Tata Motors) to create strong businesses; gave
space to lifers like Muthuraman and Krishna Kumar to
grow the different companies; got TCS listed;
cleared the boards of the ancient mariners of Bombay
House; decided to create a conglomerate where at
least 50 per cent of the revenue would come from
global assets; acquired companies abroad, the
biggest being Corus and Jaguar-Land Rover;
introduced the Indigo and the Ace, and then produced
India’s most exciting technological wonder, the Nano.
The result: in December 1999, the market
capitalisation of the Tata Group was Rs.37,088 crore.
In November 2009, the market cap of a common sample
was Rs.169,779 crore. Note the phrase ‘common
sample’. What it means is that the November 2009
sample does not have TCS, because it wasn’t listed
in 1999. And TCS’ market cap alone is worth
Rs.147,000 crore.
The next story: Bharti Airtel. Late morning in
February 2002, at the office of Hemendra Kothari ,
then the Chairman of DSP Merrill Lynch. Two very
nervous men are pacing up and down — the other being
Sunil Bharti Mittal. The Bharti Tele-ventures IPO
has become a hair-raising, touch-and-go affair, what
with a Bombay biggie doing its damndest to tank the
issue. At the very end, institutional investors come
out of the woodwork and the IPO gets oversubscribed.
Today, Bharti Airtel is the number one mobile
operator in India. It has over 120 million
subscribers, operates across all 23 circles, and
accounts for almost 25 per cent of India’s mobile
connections. It is the third largest mobile player
in the world, bested only by China Mobile and China
Unicom. For 2008-09, its PAT was Rs.7,859 crore, and
the PAT margin was 21 per cent.
Story number three: Crompton Greaves, where I have
served on the board since 2003. In 2000, the company
was bathed in red with a negative PAT of Rs.147
crore — thanks to the history of being everywhere,
doing everything, operating at expensive locations
with excess managerial and shop floor staff, and not
collecting huge receivables. Enter Gautam Thapar as
the promoter vice-chairman and Sudhir Trehan as the
CEO. Three years of ruthless cost cutting and
continuous productivity increases raised EBIDTA to
Rs.170 crore and PAT to Rs.28 crore in 2003-04. The
productivity gains continued, but the gear shifted
to seeking a good, affordable international
acquisition. Two years later, Crompton Greaves
bought Pauwels, an international transmission and
distribution company with facilities in Belgium,
Ireland, Canada, the USA and Indonesia.
Acquisitions, productivity growth and cost
streamlining continued unabated. By 2008-09, on
consolidated net sales of Rs.8,737 crore, Crompton
Greaves earned an EBIDTA of Rs.1,054 crore, PAT of
Rs.560 crore, and had reserves and surplus of
Rs.1,758 crore as on 31 March 2009. In December
1999, Crompton Greaves’ market cap was Rs.260 crore.
In November 2009, it was Rs.14,455 crore — an
increase of over 55 times in a decade.
I could continue with many stories: the blitzkrieg
of ICICI Bank under K.V. Kamath, whose market cap
has risen almost 85-times from Rs.1,142 crore in
December 1999 to Rs.96,674 crore in November 2009;
or Axis Bank, which has grown at dizzying speed
without comprising the quality of its balance sheet;
or HDFC Bank, whose market cap has risen 24 times in
the decade to almost Rs.76,000 crore; or Mahindra
and Mahindra which decided to unleash a growth
strategy, new product launches and new businesses;
or the turnaround at Thermax; or the systematic
growth of L&T, BHEL, ONGC, the State Bank of India,
Hindustan Zinc, Sterlite and Sesa Goa. And many
others.
The list of winners is large. And, unlike what
happened between 1990 and 2000, there are far fewer
big-time losers. Which brings me to my first
hypothesis: the credit crunch imposed by Dr. C.
Rangarajan during the second half of the 1990s
separated the wheat from the chaff. Those who
weathered the punches between 1996-97 and 1999-2000,
and lived to tell the tale, have generally survived
and grown healthily in the first decade of this
century.
Second, corporate India is now globally confident.
In my CII days during the late 1990s and early
2000s, I was deluged members complaining about China
swamping our industries and the need to impose
anti-dumping and safeguard duties at the drop of a
hat. The bosses still bitch every now and then. But
they are secure in their ability to compete
globally, acquire international businesses and
manage a global workforce. We no longer position
ourselves as tiny tots in the big stage. We do as
capable players. The government too has changed.
Gone is the ‘wretched of the earth’ approach of
non-alignment and G-77. We now negotiate as a major
nation.
Third, being globally confident has sometimes led to
superciliousness. So, there have hubris; often
raised to a shrill pitch by television and the
press. The good thing, though, is that there were
wake-up calls: the monetary tightening from 2007;
and the global financial crisis from September 2008.
These forced our CEOs to cut out the twaddle, and
focus on the basics.
Fourth, cash is king. This basic Marwari premise,
epitomised a great Narayana Murthy quote, “Profits
are opinions. Cash in bank is fact” now prevails
over much of corporate India. Neither promoters, nor
CEOs nor boards are impressed by just top-line
growth; it has to be accompanied by a healthy
increase in EBIT, PAT, and cash and cash
equivalents. This healthy approach to business is
one of the best transformations of the decade.
Fifth, the decade has proven to the world the
capability of Indian managerial talent — of people
who are the vernacular medium types (VMT). Gone are
the upper class ‘people like us’ (PLU); or even the
‘people like them’ (PLT). Some of India’s best
entrepreneurs and managers are solid VMT. Their
first language is Hindi, Telugu, Tamil, Gujarati,
Marwari, Punjabi or Kannada. They speak English but
think in their language. And they think like
seasoned business people, not woolly-headed English
language public school types. Indeed, the most
significant sociological development in India’s
managerial landscape is the rapid rise of the VMT.
For all these good things, we have had a huge
national shame: Satyam. I’m still amazed that in a
great, internationally listed company of over 55,000
employees, half a dozen guys led by Ramalinga Raju,
could quietly siphon away so much cash, with nobody
being the wiser. That too had its silver lining.
Never before in the history of corporate India was a
sinking company rescued so quickly.
We are learning and growing. I, for one, anticipate
an even more dynamic corporate sector in 2020. When
I’m sixty-four.
Published: Business Standard, December 2009
