Seasonal Magazine Latest Issue by John Antony

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VOLUME 11 ISSUE 9 SEPTEMBER 2012

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Business in Focus

LIC OF INDIA WONDERLA MANAPPURAM FINANCE MUTHOOT PAPPACHAN GROUP MATHER PROJECTS HEERA GROUP VYTHIRI VILLAGE

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MAGAZINE

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EDITORIAL

Vol 11 Issue 9 September 2012

let our young stand on our shoulders…

Managing Editor Jason D Pavoratti Editor John Antony Director (Finance) Ceena Senior Editorial Coordinator Jacob Deva Senior Correspondent Bina Menon Creative Visualizer Bijohns Varghese Photographer Anish Aloysious Correspondents Bombay: Rashmi Prakash Hyderabad: Iqbal Siddiqui Delhi: Anurag Dixit Director (Technical) John Antony Publisher Jason D

Is there a single step that leaders of today can take, to ensure that leadership is transferred to the next most capable hands? Well, there seems to be universal agreement that, such a single step is to find a younger leader. Corporate earnings season in India, this time around, was rife with examples of this phenomenon. But too bad that there is no comparable political earnings season every quarter, or such a precedent of making way for the young. Anyway, one such young talent that came into focus this earnings season was Francisco D’Souza. All of 44 years now, this young leader has rapidly transformed a former Y2K contractor like Cognizant Technology Solutions into a powerhouse IT Services outsourcer that is consistently beating industry bellwether Infosys for some quarters now.

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MEMBER

Media was flush with reports about how the ’The Kid’, as he was known in his MBA and early CTS days, was using his globalized early schooling years to manage the 1.45 lakh strong multicultural talent pool of Cognizant. A programmer since his school days, a gadget freak since the PDA days, and a follower of the ‘Maker Movement’ for the sake of his young kids, this young leader is intensely competitive, as seen from his recent operational style of leaving day-to-day control to others and focusing on a new set of initiatives that he calls the Emerging Business Accelerators. EBAs are unique future opportunities presented by new geographies, solutions, or technologies. D’Souza directly heads 4 of the 18 EBAs that CTS has so far identified. That is young energy in action. But to argue that D’Souza would have achieved that without the CTS framework would be an oversimplification. To give credit where it is due, CTS always enjoyed a blue-blooded lineage as it started as a partnership of Dun & Bradstreet and Satyam Computer Services (during its heydays before Raju started riding his proverbial tiger). D&B needs no introduction on its own, as the creator of one of the largest corporate databases in the world, if not for its subsidiaries like Hoovers and AllBusiness.com, and if not for the companies it has spun off successfully like Moodys and Nielsen, and later CTS. Any leader worth calling by that would also never forget what even the normally arrogant Sir Issac Newton once said:

being the good human being he was, admitted that it was a shame.

“If I have seen farther than others, it is because I was standing on the shoulders of giants.” Who were the giants on whose shoulders D’Souza stood? There were plenty like Cognizant’s renowned founder Srini Raju, its legendar y CEO Kumar Mahadeva, and most importantly, a soft-spoken laterday leader like Lakshmi Narayanan. After Mahadeva’s stormy exit in 2003, Lakshmi led the firm admirably for three years. Then he did something unthinkable for most leaders. The wise man that he was, Lakshmi knew what was going to hurt CTS or any other tech firm in the coming years - attrition of top talent that was still very very young. So he unilaterally shot off a circular to all senior managers that retirement age has been cut to 55. He also shot off a mail to young managers like D’Souza that this has been done to assure the young guys that there are plenty of opportunities for them in the top rung. The first casualty of the new circular? Lakshmi himself! That is how he got to play an instrumental role, together with the CTS Board, in identifying the best young candidate available - Francisco D’Souza. The rest is history. Since he took over, Cognizan’t CAGR has been 35% that propelled it from $1.4 billion in annual revenues to over $7 billion now. The CTS story is not any exception. Every conglomerate out there, which is serious about its future, is transferring leadership power to the younger generation. This earnings season 57-year old Anand Mahindra took over from uncle Keshub Mahindra, while Ratan Tata attending Tata Motors’ last AGM as its Chairman introduced shareholders to 44-year old Cyrus Mistry. During the meeting, one eager shareholder wanted to know why had Tata allowed M&M to overtake it in SUVs, and Ratan

But truth was a bit farther and more shameful. Truth was that Anand Mahindra has been in charge of M&M since he was 42 years of age and full of powerful ideas that became Bolero, Scorpio, & Xylo. By the time Anand took over in M&M, Ratan Tata was more than a sixty ripe years. Well, to give credit where it is due, Tata did beat a younger Mahindra to tasks like taking over JLR and turning it around against all naysayers. But that was the kind of aristocratic stuff that Tata’s age was more suitable for. Look at how he and his team bungled up in Nano. It is not only entrepreneurs but top executive positions that are going to the young. Consider the case of 42 year old Manisha Girotra, M&A specialist, who has headed UBS India as Chairperson and recently moved on to head Moelis & Company’s India foray. Also, don’t expect that every succession plan is going to be smooth. There has been plenty of unwilling leaders like Rahul Bajaj, who in their innocence, use to think that sons like Rajiv Bajaj may wreck their hard-won success. But the younger Bajaj has went on to prove that his young strategies have been the right strategies in a world of tough competitors like Hero MotoCorp and Honda. His risky strategy of forsaking the age old Bajaj brand for standalone brands like Pulsar and Discover has paid rich dividends. One reason why our politicians have not followed this model is simple enough. If out of designation, what would they do? Lakshmi of CTS perhaps had the best answer for this. The gentle leader that he was, he soothened senior managers’ feelings by promising all retired seniors use of one personal office room and all communication facilities at CTS campus, so that they can work as senior consultants of the company if they wish so. And miracle of miracles, that model too has been a resounding success at CTS. Lest anybody think that our most honourable office of the President of India is such an arrangement, let us stop here. Besides, the writing has been on the wall forever - the young must be called in for a nation to succeed. John Antony

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Contents

Banks, Borrowers & Investors, Bet on Chidambaram On August 18th, it was a case of just what the doctor ordered. Indian Banks who were reeling under the continuing hawkish stance of RBI found a welcome relief in Chidambaram, when the new FM asked public sector banking heads to cut rates aggressively and keep EMIs affordable, so that consumers would start spending again on twowheelers, cars, apartments, refrigerators, air-conditioners, televisions, washing machines, cooking ranges, mixies and grinders. Not that the banking chieftains were unaware of the strategy. In fact, Chidambaram was all praise for they bringing up bottlenecks like fuel supply

Meet Magsaysay Award Winner 2012 Luxury Cars Mercedes, BMW, Audi, Fail New Crash Test When a car's front corner hits something, what happens? The driver often gets seriously injured, the Insurance Institute for Highway Safety's new crash test finds. Results of a new crash test that focused on luxury cars are raising..

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6 Steps to Crack CAT 2012 and Enter IIMs

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Planning to appear for the CAT this year? Here is how to strategise your planning and preparation so that you can optimise your performance, in what is said to be the toughest entrance exam in the world today.

It had been only been a few days since the Magsaysay awards were announced but life was as usual for one of the winners. Not..

agreement, delay in clearances and approvals, land acquisition, and the issue of government entities like NHAI and SEBs not making payments in time. But they were unable to cut interest rates with no support coming in from the policy side. But for now, Chidambaram has distinctly taken a turnaround stance: “Keeping rates and EMIs affordable will keep the engine of manufacturing going and large industries continuing to produce these goods. The suppliers of parts and accessories in the small and medium enterprises will continue to do business.” he said. In short, revive investments is the new policy.

NEWSMAKERS

Meet India’s Richest Scientist

From Branded Useless by Family to Found Useful by NASA

It isn’t everyday that a theoretical physicist from a small Indian city is catapulted into the limelight — chased by the media and wowed by the public. But that’s what happened to..

Assam-born mechanical engineer Uddhab Bharali dropped out of college in 1987 because of acute poverty. Called 'useless' by his family and..

A Legend Called Bolt Legend'. A small word, but with such weight of meaning. Usain Bolt bandied it around a lot before the London Olympics, saying these would be the Games where he wanted to become one. He did. But not solely for the reasons he thinks. Becoming the first man to win the 200-metre sprint at two Olympics made Bolt a..

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Contents 7 VEGETARIAN Protein Foods Your Diet Must Include

Globalization is Passe, Cosmozation to Drive Research, Industry, Life?

Devoid of fat and cholesterol, here are the top healthy protein foods you should be eating everyday. Protein is one of the most important nutrients when it comes to the human body. Everyone requires proteins, albeit in different quantities depending on age, weight, activity levels and health..

Planning a Start-up? Participate in Start-up Competitions For a cash strapped start-up, getting free publicity through the right competition could be hugely helpful, says Anand Daniel, a venture investor with Accel Partners.

BUSINESS IN FOCUS

Manappuram Shows its Phoenix Like DNA The first listed gold loan player has rebounded remarkably from a string of adverse regulations against the gold loan segment, as well as..

Muthoot Pappachan Group Growing Steadily

Nobody disagrees that the once fast growing gold loan segment has now moderated its pace. But one of the leading players in the segment, Muthoot..

Mather Restructures to Scale Up in Size

Wonderla on a Steady Growth Path, Roadmap Includes IPO Arun Chittilappilly came into business at a young age of 23. But he was armed with a Masters in Industrial Engineering from Australia, and even more importantly, armed..

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Mather Projects, one of the leading bornin-Kerala developers is entering the next stage of growth. Moving away from a traditional family-directed management, Mather Projects is bringing in world-class professional expertise in operations project management, and marketing, as..

Smartphone Wars: Apple v/s Samsung

“Speak to Inspire, Listen to Learn”: Facebook COO “You’re going to neelent, skill, and imagination and vision, but more than anything else, you’re going to need the ability to communicate..

Vythiri Village: Have You Been to Wayanad Lately? 10 Rules for a Smart Investor Heera, the Professional Homegrown Developer

In this article, we highlight 10 points that would help you score more on the bottom line.

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Entrepreneurship

Planning a Start-up?

Participate in Start-up Competitions or a cash strapped startup, getting free publicity through the right competition could be hugely helpful, says Anand Daniel, a venture investor with Accel Partners. Recently, I had the chance to be one of the judges at a start-up competition. After the event, I was thinking through whether these competitions are helpful to the participating start-ups and if so how. Overall, my conclusion is that these competitions are indeed helpful but the start-ups need to be strategic about picking the right competitions and not overdoing it by entering too many of these. Start-up competitions help you in many ways. When you are participating in a start-up competition, there are a few things you must watch out for. Here are some tips:

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Use the Free marketing

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This is self explanatory, I guess. For a cash strapped start-up, getting free publicity through the right competition could be hugely helpful. To pick an example from my Boston days, the MIT 100K competition has led to the creation of about 150 companies over the years including successful ones like Akamai Technologies. The start-ups in

Tom Leighton, Co-Founder, Akamai Technologies

If an investor gets exposure to your start-up through the competition and likes you, he will most probably follow-up to take the conversation forward. Also, through these competitions, a start-up could meet experienced entrepreneurs who could mentor your start-up to success. of these competitions. If the competition has the right set of judges, the start-up will be asked some tough questions around their business plan. This would be a great way for the start-up to prepare for answering such questions and thereby refining their business plan in a lower risk environment.

2 Pick the right competition I think this is something that start-ups don't necessarily think about. I would

encourage the start-ups to think whether the competition serves the above mentioned benefits (and anything else specific to your company). In addition, is the competition in the right domain/ industry for your start-up (e.g. consumer start-ups vs enterprise vs medical technology, etc.). This is one common issue. When I look at some of the competitions over the past year that I have judged or attended, I find that some start-ups have entered almost all the competitions (and some have not won any of them). So much so, that someone called a start-up a "professional competitor". This might be alright if you are winning these competitions. For example, I know a start-up in the US that won every business plan competition they entered and ended up using that as seed money. But, if you entered a couple and didn't win, it's obviously not the end of the world. After all, I'm assuming your goal is to build a successful start-up and not necessarily winning these competitions. Please think about this. If anything, entering too many competitions might hurt your chances of getting funded by an investor (that is, if raising outside capital is in your plans), since they would wonder why so many other investors who looked at the company through these competitions did not invest in you.

3 Pick the Right Time This is also something to watch out for. If your business plan is premature and you will not be able to do a good job pitching/answering questions, you are better off refining your pitch before entering a competition. After all, the saying that "First impression is the best impression" holds true for start-ups as well. You want to put your best foot forward in these competitions and for that, you need to be really well prepared. By Anand Daniel, VC Investor, Accel Partners

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this competition get reasonable amount of recognition/free marketing through various media circles. Through these competitions, a start-up can also get exposure to investors and mentors in a lower risk setting. If an investor gets exposure to your start-up through the competition and likes you s/he will most probably follow-up to take the conversation forward. Also, through these competitions, a start-up could meet experienced entrepreneurs who could mentor your start-up to success. The structure around these competitions forces you to think through your business plan and helps you shape it better. Also, your pitching skills (either the short elevator pitch or longer version) will definitely get exercised and refined through the various stages

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Management

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“Speak to Inspire, Listen to Learn”

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“You’re going to need talent, skill, imagination and vision, but more than anything else, you’re going to need the ability to communicate authentically, to speak so that you inspire the people around you, and to listen so that you continue to learn each and every day on the job.” Former Google VP and current Facebook Chief Operating Officer Sheryl Sandberg, one of Silicon Valley’s inspiring figures, delivered this inspiring speech at her alma mater, the Harvard Business School, recently.

Earlier this month, Facebook launched a tool to support organ donations, something that stems directly from Kash’s work. Kash, we are all grateful for your dedication. So, it wasn’t really that long ago when I was sitting where you are, but the world has changed an awful lot. My section, Section B, tried to have HBS’s first online class. We had to use an AOL chat room and dial-up service (your parents can explain). We had to pass out a list of screen names, because it was unthinkable to put your real name on the Internet. And it never worked. It kept crashing...the world wasn’t set up for 90 people to communicate at once online. But for a few brief moments though, we glimpsed the future, a future where technology would power who we are and connect us to our real colleagues, our real family, our real friends. It used to be that in order to reach more people than you could talk to in a day, you had to be rich and famous and powerful, be a celebrity, a politician, a CEO, but that’s not true today. Now ordinary people have voice, not just those of us lucky to go to HBS, but anyone with access to Facebook,

Twitter, a mobile phone. This is disrupting traditional power structures and levelling traditional hierarchy. Voice and power are shifting from institutions to individuals, from the historically powerful to the historically powerless, and all of this is happening so much faster than I could have imagined when I was sitting where you are today and Mark Zuckerberg was 11

If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on. About six and one-half years later, when I was leaving Google, I took that advice to heart. I was offered CEO jobs at a bunch of companies, but I went to Facebook as COO. years old. As the world becomes more connected and less hierarchical, traditional career paths are shifting as well. In 2001, after working in the government, I moved out to Silicon Valley to try finding a job. My timing wasn’t really that good. The bubble had crashed, small companies were closing, big companies were laying people off. One woman CEO looked at me and said, ‘We wouldn’t even think about hiring someone like you.’ After awhile I had a few offers and I had to make a decision, so what did I do? I am MBA trained, so I made a

spreadsheet. I listed my jobs in the columns and my criteria in the rows, and compared the companies and the missions and the roles. One of the jobs on that sheet was to become Google’s first business unit general manager, which sounds good now, but at the time no one thought consumer Internet companies could ever make money. I was not sure there was actually a job there at all. Google had no business units, so what was there to generally manage? And the job was several levels lower than jobs I was being offered at other companies. So I sat down with Eric Schmidt, who had just become the CEO, and I showed him the spread sheet and I said, this job meets none of my criteria. He put his hand on my spreadsheet and he looked at me and said, ‘Don’t be an idiot.’ Excellent career advice. And then he said, get on a rocket ship. When companies are growing quickly and they are having a lot of impact, careers take care of themselves. And when companies aren’t growing quickly or their missions don’t matter as much, that’s when stagnation and politics come in. If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on. About six and one-half years later, when I was leaving Google, I took that advice to heart. I was offered CEO jobs at a bunch of companies, but I went to Facebook as COO. At the time people said, why are you going to work for a 23-year-old. The traditional metaphor for careers is a ladder, but I no longer think that metaphor holds. It doesn’t make sense in a less hierarchical world. When I was first at Facebook, a woman named Lori Goler, a 1997 graduate of HBS, was working in marketing at eBay and I knew her kind of socially. And she called me and said, ‘I want to talk with you about coming to work with you at Facebook. So I thought about calling you, she said, and telling you all the things I’m good at and all the things I like to do. But I figured that everyone is doing that. So instead I want to know what’s your biggest problem and how can I solve it.’ My jaw hit the floor. I’d

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an honour to be here today to address HBS’s distinguished faculty, proud parents, patient guests and most important the class of 2012. When Dean (Nitin) Nohria asked me to speak here today, I thought, come talk to a group of people way younger and cooler than I am? I can do that, I do that every day, I like being surrounded by young people except when they say to me, ‘What was it like being in college without the Internet?’ or worse, ‘Sheryl, can you come here, we need to see what old people think of this feature?’ When I was a student here 17 years ago, I studied social marketing with Professor Kash Rangan, and one of the many examples Kash used to explain the concept of social marketing was the lack of organ donors in this country, which kills 18 people every single day.

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hired thousands of people up to that point in my career, but no one had ever said anything like that. I had never said anything like that. Job searches are always about the job searcher, but not in Lori’s case. I said, you’re hired. My biggest problem is recruiting and you can solve it. So Lori changed fields into something she never thought she’d do, went down a level to start in a new field and has since been promoted and runs all of the people operations at Facebook and has done an extraordinary job. Lori has a great metaphor for careers. She says they’re not a ladder; they’re a jungle gym. As you start your post-HBS career, look for opportunities, look for growth, look for impact, look for mission. Move sideways, move down, move on, move off. Build your skills, not your resume.

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Evaluate what you can do, not the title they’re going to give you. Do real work. Take a sales quota, a line role, an ops job, don’t plan too much, and don’t expect a direct climb. If I had mapped out my career when I was sitting where you are, I would have missed my career. You are entering a different business world than I entered. Mine was just starting to get connected. Yours is hyper-connected. Mine was competitive. Yours is way more competitive. Mine moved quickly, yours moves even more quickly. As traditional structures are breaking down, leadership has to evolve as well. From hierarchy to shared responsibility, from command and control to listening and guiding. You’ve been trained by this great institution not just to be part of these trends, but to lead. As you lead in this new world, you will not be able to rely on who you are or the degree you hold. You’ll have to rely on what you know. Your strength will not come from your place on some org chart, your strength will come from building trust and earning respect.

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You’re going to need talent, skill, and imagination and vision, but more than anything else, you’re going to need the ability to communicate authentically, to speak so that you inspire the people around you and to listen, so that you

continue to learn each and every day on the job. If you watch young children, you’ll immediately notice how honest they are. As adults, we are never this honest, and that’s not a bad thing. But it’s not always a good thing either. Because all of us, and especially leaders, need to speak and hear the truth. The workplace is an especially difficult place for anyone to tell the truth, because no matter how flat we want our organisations to be, all organisations have some form of hierarchy. What that means is that one person’s performance is assessed by someone else’s perception. This is not a set-up for honesty. Think about how people speak in a typical workforce. Rather than say ‘I disagree with our expansion strategy’ or better yet, ‘this

At the time people said, why are you going to work for a 23-year-old. The traditional metaphor for careers is a ladder, but I no longer think that metaphor holds. It doesn’t make sense in a less hierarchical world.

seems truly stupid’, they say: ‘I think there are many good reasons why we’re entering this new line of business, and I’m certain the management team has done a thorough ROI analysis, but I’m not sure we fully considered the downstream effects of taking this step forward at this time.’ As we would say at Facebook on the Internet, three words: what the hell!. Truth is better used by using simple language. Last year Mark decided to learn Chinese and as part of studying, he would spend an hour or so each week with some of our employees who were native Chinese speakers. One day, one of them was trying to tell him something about her manager, so she said this long sentence and he said simpler please. And then she said it again and he said, no, I still don’t understand, simpler

a list of what you want to discuss?’ But everyone ignored me, they kept doing their presentations meeting after meeting, month after month. So about two years in, I said, ‘Okay, I hate rules but I have a rule, no more PowerPoint in my meetings and I mean it.’ About a month later I was about to speak to our global sales team on a big stage and someone came up to me and said, ‘Before you get on that stage, you really should know everyone’s pretty upset about the no PowerPoint with clients thing...’ What? So I got on the stage and said, one, I meant no PowerPoint with me. But two, more importantly, next time you hear something that’s really stupid, don’t adhere to it, fight it or ignore it, even if it’s coming from me or Mark. A good leader recognises that most people won’t feel comfortable challenging authority, so it falls upon authority to encourage them to question. It’s easy to say that you’re going to encourage feedback but it’s hard to do, because unfortunately it doesn’t always come in a format we want to hear. When I first started at Google, I had a team of four people and it was really important to me that I interview everyone, being part of my team meant I had to know you. When the team had gotten to 100 people, I realised it was taking longer to schedule my interviews so one day at my meeting of just my direct reports, I said maybe I should stop interviewing, fully expecting them to jump in and say no, your interviews are a critical part of the process. They applauded. Then they fell over themselves explaining that I was the bottleneck of all time. I was embarrassed, then I was angry and I spent a few hours just quietly fuming. Why didn’t they tell me I was a bottleneck, why did they let me go on slowing them down? Then I realised that if they hadn’t told me, that was my fault. I hadn’t been open enough to tell them I wanted that feedback and I would have to change that going forward. When you’re the leader, it is really hard to get good and honest feedback, no many how many times you ask for it. One trick I’ve discovered

is that I try to speak really openly about the things I’m bad at, because that gives people permission to agree with me, which is a lot easier than pointing it out in the first place. To take one of many possible examples, when things are unresolved I can get a tad anxious. Really, when anything’s unresolved, I get a lot anxious. I’m quite certain no one has accused me of being too calm. So I speak about it openly and that gives people permission to tell me when it’s happening. But if I never said anything, would anyone who works at Facebook walk up to me and say, ‘Hey Sheryl, calm down. You’re driving us all nuts’? I don’t think so. As you graduate today, ask yourself, how will you lead. Will you use simple and clear language? Will you seek out honesty? When you get honesty back, will you react with anger or with gratitude? As we strive to be more authentic in our communication, we should also strive to be more authentic in a broader sense. I talk a lot about bringing your whole self to work something I believe in deeply. Motivation comes from working on things we care about, but it also comes from working with people we care about, and in order to care about someone, you have to know them. You have to know what they love and hate, what they feel, not just what they think. If you want to win hearts and minds, you have to lead with your heart as well as your mind. I don’t believe we have a professional self from Mondays through Fridays and a real self for the rest of the time. That kind of division probably never worked, but in today’s world, with a real voice, an authentic voice, it makes even less sense. I’ve cried at work. I’ve told people I’ve cried at work. And it’s been reported in the press that Sheryl Sandberg cried on Mark Zuckerberg’s shoulder, which is not exactly what happened. I talk about my hopes and fears and ask people about theirs. I try to be myself. Honest about my strengths and weaknesses and I encourage others to do the same. It is all professional and it is all personal, all at the very same time.

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please...and so on and so on. Finally, in sheer exasperation, she burst out, ‘My manager is bad.’ Simple and clear and very important for him to know. People rarely speak this clearly in the workforce or in life and as you get more senior, not only will people speak less clearly to you, but they will overreact to the small things you say. When I joined Facebook, one of the things I had to do was build the business side of the company, put some systems into place, but I wanted to do it without destroying the culture that made Facebook great. So one of the things I tried to do was encourage people not to do formal PowerPoint presentations for meetings with me, and I would say things like, ‘Don’t do PowerPoint presentations for meetings with me. Why don’t you come in with

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Trends

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GLOBALIZATION IS PASSE, COSMOZATION TO DRIVE RESEARCH, INDUSTRY, LIFE?

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Mars has become a very busy place, being orbited by satellites and crisscrossed by Land Rovers. As if that's not enough, Curiosity, a roving science laboratory, just successfully landed at the planet's ancient crater to probe for signs that the planet was life-friendly in the past. Indeed, we are mapping and processing our neighboring planet so extensively that it feels as if Mars has already been colonized. There is even a Google Mars website if you want to see the planet's surface in technicolor. Man, despite our earthly crises, remains enthralled by the cosmos. NASA is planning manned missions to Mars in the 2030s with the cooperation of Japan and Europe and plans to establish a permanent station on the moon. China, too, hopes to have a manned station orbiting the moon, having sent a moon orbiter in 2010 to map it out and in 2013, it'll send a landing rover. All the while, our satellites, probes and telescopes are peering deep into the heavens looking for signs of extraterrestrial life.

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elcome to the postglobal age. We are now entering an age where human interactions reach beyond the stratospheres of our world towards the cosmos. Call it cosmozation, or better yet, empyrealization an age where man's reach for the heavens is realized. Neither words exist yet in the dictionary, but for that matter, neither did globalization three decades ago (so feel free to come up with a coinage that may be apropos to our post-global age.) Roland Robertson, a social scientist, defines globalization as "the compression of the world and the intensification of consciousness of the world as a whole." The world shrinks, geographical constraints are overcome, while identities become multilayered, complex. As a species, we may not always get along with each other, but these days, thanks to an integrated economy and unprecedented mass movement across the various borders, and modern technology satellites, cell phones, jet planes, the Internet, and so on we are, like it or not, constantly aware of each other's existence. Taking Robertson's definition a step further, it seems inevitable that the universe, too, shrinks and compresses as we explore and measure it, and as we infer profound implications from our discoveries. Cosmozation, or empyrealization, is then the process by which man's awareness and influence expand beyond our planet: We grow cognizant that we exist on intimate levels with the rest of the universe, that we are interacting with it, and, increasingly, having an effect upon it. While thinkers and writers still haven't come to terms with the full impact of the forces of globalization, another age is already upon us - one in which man's awareness expands beyond the globe as his relationship with the cosmos intensifies.

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There's a radical shift taking place in regards to our relationship with the universe. Not so long ago, until Copernicus came along, we assumed our world was the universe's center and, for that matter, flat and that the sun orbited Earth. Most of last century we

held on to the notion that our solar system was unique. And scientists just a generation ago assumed, too, that conditions on Earth a protective atmosphere, ample water and volcanic activity made it the only planet that could possibly support life. Now we know that the conditions on our home planet may be unique, but solar systems are not at all anomalies. In fact, we are in the process of accepting that we are very much part of the larger universe. Furthermore, by sending space probes to the edge of the solar system, by collecting moon rocks and comet dust, by landing probes on Mars to dig for soils and search for signs of life, we are in constant exchange with the universe. As astonishing discoveries are being

Using the Hubble Telescope to study Earth's atmosphere, Frank proved that Earth is constantly being hit by snowballs from space. The implications are enormous: If ice from outer space hits Earth regularly, it could be "raining" onto other planets too, providing much-needed water to support life. The universe is suddenly very wet.

made, that sense of self-importance has eroded, giving way to a more humble assessment of our place in the cosmos. Consider some of these recent discoveries: Using the Hubble telescopes and the Kepler observatory, which orbit Earth, and the Hale Telescope in California, astronomers have discovered hundreds of other solar systems, and nearly 800 exoplanets planets that are outside our solar systems. One planet in particular, 150 million light years away, is believed to have an atmosphere. We know that Earth is constantly bombarded by meteors when we look up into the night sky and spot shooting

A few years ago a meteorite from Mars found on Earth, known as the Allan Hills meteorite (or ALH 84001 to scientists), astonished everyone when some scientists claimed they found tantalizing traces of fossilized life within it. Their findings have been contested, but the

discovery fired up the imagination. Moreover, the Galileo space probe that orbited Jupiter showed us that on Europa, one on Jupiter's many moons, huge oceans lie beneath an icy surface. Scientists found active volcanoes as well that is to say, ingredients that could spark and possibly support life. More tantalizing still is the organic materials found in comet dust collected from the comet Wild 2. Here's NASA's press release on the comet dust brought back to Earth by the space probe Stardust: "These chunks of ice and dust wandering our solar system appear to be filled with organic molecules that are the building blocks of life." The finding surprised scientists because

many predicted that the space probe would find mostly ice. Instead, the finding could lend support to the belief that comets could have "seeded" life on our planet as well as others. Then, of course, there's the discovery of water on the moon. Scientists found this by deliberately crashing a rocket stage into the moon in 2009, and, in the floor of a permanently shadowed crater, found up to a billion gallons of water and ice near the moon's south pole. And if there's water aplenty in the universe, then why not DNA? "Panspermia" (originating from the Greek word for "all-seeding"), the hypothesis that seeds of life could have been delivered to Earth and possibly other planets is now revised; this theory of an interstellar exchange of DNA was championed by Francis Crick, who discovered the DNA molecule with two other scientists more than half a century ago, was ridiculed last century. But if scientists laughed behind the Nobel laureate's back when he first suggested it, no one is laughing now. Besides, there is such a thing as self-fulfilling prophecy: If Earth didn't receive DNA for a primordial startup way back when, we are now actively sending out our earthly DNA to space via the forms of various microbes that are riding along with our space crafts and satellites and shuttles that are scattered out into the universe. As a result, ours is no longer just a lonely blue planet amidst the heavens. As we send probes and manned missions to the comos and map the universe, as we enthusiastically search for signs of life elsewhere and collect comet dust - earth seems to exist increasingly as part of an open and intricately complex system. War and strife and revolutions and bloodshed seem endless on our home world, but when man gazes up at the night sky, it remains alluring and sublime. To paraphrase the great mythologist, Joseph Campbell, that sea on which humanity now sails is infinitely more vast than that imagined by Columbus. And with a rover named Curiosity actively searching for signs of past life on Mars, there's no doubt that our place is in space, and the cosmic age has indeed arrived.

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stars. But more astounding is astronomer Lou Frank's recent discovery. Using the Hubble Telescope to study Earth's atmosphere, Frank proved that Earth is constantly being hit by snowballs from space. The implications are enormous: If ice from outer space hits Earth regularly, it could be "raining" onto other planets too, providing much-needed water to support life. The universe is suddenly very wet.

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Newsmaker

Meet India’s Richest Scientist

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It isn’t everyday that a theoretical physicist from a small Indian city is catapulted into the limelight - chased by the media and wowed by the public. But that’s what happened to Ashoke Sen, a string theorist in Allahabad in the northern state of Uttar Pradesh, after he won the $3 million Fundamental Physics Prize this month.

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ussian entrepreneur and billionaire Yuri Milner has established the most lucrative science prize in history, which is double the 1.2 million awarded for the Nobel Prize. Milner, an investor in Facebook, Twitter, Groupon, and Zynga, has awarded nine scientists a total of $27 million for “advancing our knowledge of the Universe at the deepest level” as well as “communicating the excitement of fundamental physics to the public.” While the majority of laureates are based in the US, Sen from the HarishChandra Research Institute is the only Indian to win. There are two categories of prizes: Fundamental Physics Prizes recognizes transformative advances in the field, while the New Horizons in Physics Prizes are targeted at promising junior researchers. But the 50-year-old Russian billionaire, who dropped out of graduate studies in nuclear science during the late 1980s, still remains a bit of an enigma and his generous prize came out of the blue for many of the awardees. Sen, too, told the press that

he had never heard of the prize before. Sen studied at Presidency College in Kolkata, the Indian Institute of Technology in Kanpur, and obtained his doctorate at the Stony Brook University in New York. With $3 million, Sen is now one of the richest scientists in the world. In India, pursuing a sciencebased profession rarely brings wealth or recognition. SmartPlanet spoke with Sen about his work and new fame. You’ve received the most generous science prize in the world – how did you react when you found out? I came to know about it about a week before the announcement when I was in Germany for a conference. I got a phone call from Mr. Milner informing me of the prize. I was of course pleasantly surprised, and so was my family. Is there a great deal of competition among scientists in your field of research? What has been the pace of developments from the past century? There are a large number of excellent people working in this field and so there is a great deal of friendly competition. It

is hard to quantify the pace of movement in the subject, but there certainly has been a great deal of progress in the subject since its birth in the late 1960’s. How would this award contribute to your growth as a scientist and science in India? In India, often the parents discourage their children to go into science even if they are interested since it is not a lucrative profession. The result is that many young students who are good in science and want to get into science end up having to study engineering or other subjects. This prize may change this attitude by creating more awareness about science among people. It is often said that Indian scientists need the resources and environment of say - the top American universities - to grow? What do you think of research facilities available for theoretical physicists like you here? In theoretical physics one can in principle work from any place as long as one has a computer and internet connection. Also at present India has many excellent people working in string theory. So I think that the facilities and the research environment available in India are more than adequate to carry out research in theoretical physics. How are you handling all the media attention and fame? Fortunately since Allahabad is a remote place, much of the interaction with the media has been over telephone calls and e-mails, although I did have several news groups visit our institute during the last week. You are the richest scientist in India now. Would you mind sharing what you plan to do with the big win? –I have not finalized my plans, but I do want to use a significant fraction of the money towards promoting education in India at various levels. (By Betwa Sharma)

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Nutrition

VEGETARIAN

SEASONAL MAGAZINE

Protein Foods Your Diet Must Include

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evoid of fat and cholesterol, here are the top healthy protein foods you should be eating everyday. Protein is one of the most important nutrients when it comes to the human body. Everyone requires proteins, albeit in different quantities depending on age, weight, activity levels and health status. Protein is available in a variety of foods, most commonly vegetables. Studies have, however, discovered that meats have more protein content compared to veggies. To facilitate maximum protein intake, vegetables with a high protein content are mixed with other protein-rich foods. Vegetables are the perfect source of protein as they do not contain fats or cholesterol. Here is the list of top seven proteins food you don't want to miss

It contains two grams of protein per serving. Though it does contain calories, it is still a good source of proteins. Cooked sweet corn also increases levels of ferulic acids, which help reduce the risk of cancer.

Garlic Although garlic is never eaten by itself, it is still considered a vegetable and is known to prevent certain cancers like colon and heart cancer. It has cardiovascular benefits too, helps regulate blood sugar levels and was used as an antiseptic for gangrene during World Wars I and II. Garlic also contains speciality proteins.

Spinach It has proteins which contain amino acids, the building blocks of the body. Spinach contains 2.2 grams of protein per serving. It is a very, very important source and contains iron and calcium too.

Beans & Lentils They can be garbanzo, pinto, or soy -- all contain proteins. Lentils that are boiled and prepared contain about nine grams of protein per serving. Beans contain average protein levels of nine grams per 100 grams.

Watercress

Broccoli & Cauliflower

It is very high in protein content. Watercress is a tiny and leafy green vegetable, containing about three grams of protein per 100 grams of serving. It is a highly rated remedy for scurvy. It also acts as a stimulant and helps in optimal digestion. Watercress also defends the body against lung cancer.

They are protein-rich green vegetables that are easy to prepare . Broccoli & Cauliflower are high in Vitamin C content and acts as a dietary fibre. It also helps reduce the risk of prostate cancer.

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Sweet corn

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India Overseas

SEASONAL MAGAZINE

Why London is the Most Sought After City for Indian Firms?

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ondon is the most welcoming business city in the world for Indian companies, argues Gerry Grimstone, chairman of global assurance firm Standard Life. "When Indian firms choose to locate themselves in London, the ecosystem treats them the same as home-grown firms. Foreign firms have an equal status to British firms. This is so important," says Grimstone. "No other financial centre in the world is as welcoming as London is." Indian and British firms have a long history of cooperation, Grimstone explains. "India is one of the major investors in the UK in the same way that the UK is a major investor in India. "For someone of my generation, being born in 1949, it is a remarkable fact that in the last three years India has become the largest source of foreign direct investment into the UK. "To have thought, 60 years ago, that this is where we would have ended up - that is real connectivity." Britain and India 'complement' each other, he adds. "We're the world's oldest democracy, they're the world's largest democracy. We also have a shared language, a shared heritage and a common legal system." Indeed, company law in India is a near-replica of the 1948 UK Companies Act. "It makes it tremendously easy to do business -- both for Indian companies in London and London companies in India," explains Grimstone. London is the number one investment location for Indian companies. More than 50 per cent of Indian investment comes to the UK, and there are more than 700 wholly-owned Indian companies operating in London. "As you'd expect, there is particularly strong

Gerry Grimstone

representation of Indian financial and professional service companies operating in London, all helped by the very vibrant non-resident Indian community in the UK." Indian banks do 'very well' in London, says Grimstone. "They have complete freedom to practice when they're established. "They have an over 5 billion pounds deposit base now." The scope of Indian businesses in London does not stop at finance, however. It is estimated that 20 per cent of India's total IT revenues are generated here. There is also a lot of movement from British firms into India. Grimstone's business, Standard Life, has only had a presence in India for 10 years but it has become a major market for the global assurance firm. "From a greenfield start 10 years ago, we have created over 1 billion pounds of value in India, and that's from nowhere. "Today, in the private sector, we are

number two in life assurance and number one in asset management." He says the company has achieved this through adopting a local partner. "If the two partners respect and trust each other, it just works. "But they can't just do it by sitting behind a desk. I travel to Asia two or three times a month, and you need to be prepared to do that if you want to have connectivity." Grimstone adds that he hopes India will open further to British firms." As a friend of India, I have much hope that their rapid growth can be sustained and that prosperity can be created for all Indian citizens. But to do so, continued liberalisation of professional services is necessary. "I'm constantly encouraging my Indian friends to open themselves to the outside world. Indians have nothing to fear from competition with UK businesses. "It would benefit everyone."

Cover Story

Banks, Their Borrowers, & Their Investors, Take a Bet on Chidambaram obody could have missed the way in which BSE Bankex and NSE Bank Nifty reversed their trend starting from August 1st. Though the general market too had a turnaround, the movement in the key banking indices was more marked. That too, when questions about asset quality continued to gather wind, from the Q1 numbers. Was it just a case of the market welcoming freshness at Finance Ministry? Probably not, as mature segments of the market remembers the original 4X bull run in Bankex between 2004 and 2008, when Chidambaram was at the helm. Whatever valid points his detractors might have, the proactive reign of this 66 year old, at all the ministries he has handled, including his last stint at Home Ministry, is unmistakable. But it is at the Finance Ministry that he had his dream run, before the 2008 financial crisis hit. Is it because of his business education - Chidambaram is an MBA from Harvard Business School’s 1968 batch - alone, or something else? It has been recently said of Obama’s administration that there are experts from all fields, including economics, but that there is no one who understands business. Chidambaram is someone who has always filled such a void in the ministries he has been a part of. Also a lawyer by training, he hails from a royal family as well as a business family, being the grandson of Raja Sir Annamalai Chettiar, who was a noted businessman and one of the pioneering bankers of India. Chidambaram’s father too had varied business interests covering textiles, plantations, and trading. The family’s contribution to economic nation-building is also unmistakable, with Sir Annamalai and his brothers being

the co-founders of three largest Chennai based financial institutions - Indian Overseas Bank, Indian Bank, & United India Insurance Company. No wonder then that Captains of India Inc like CII President Adi Godrej and FICCI President RV Kanoria made a beeline for Finance Ministry to report industry’s longpending grievances, after Chidambaram took over. Bankers too weren’t behind. While private heavyweights like Deepak Parekh led the way, Chidambaram’s review meeting with public sector banking chieftains on August 18 th also broke new ground. In Chidambaram, the bankers, their industry clients, and investors see someone who understands business more than economy. While most bankers have made their viewpoint clear that, whatever said and done, interest rate has to be brought down to kick-start growth, it is reasonably wellknown that Chidambaram too shares that view. He is an aggressive type of politician who is willing to take painful decisions, and not someone who would leave things entirely to RBI‘s ethical economics, or hide behind myriad laws and complexities. Was this Chidambaram-instinct that PM referred to in his controversial remark of “unleashing the animal instincts of the industry” to again enter a growth orbit? But don’t ever expect Chidambaram’s new reign at Finance to be peaceful. It will be marred with painful changes and controversies, to say the least. But the answer that the banking sector - which indirectly drives all other sectors - is looking for is whether they can finally act on their own with animal instinct, under Chidambaram, to emerge successfully from the current economic stalemate.

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Since the last 4-5 quarters, the promise was the next quarter. That, cleaning up is getting finished, and that from the next quarter NPAs will go down. CDRs remaining are not very significant etc etc. But with country’s economic governance and industry’s core performance going nowhere, most banks have had to eat their words more than once during this period. FY’13’s first quarter too hasn’t been an exception. While reading results, banking sector analysts have come to expect either bad headline numbers, or if there are good headlines, expecting to find shocks in the fine print. No wonder then that 18 out of 24 public sector banking stocks are just off by 20% or less of their 52-Week Lows. And 14 out of 16 private sector banking stocks are off by just 50% or less from their year-to-date lows. Seasonal Magazine takes a long hard look at the banking sector’s performance in Q1, and tries to identify the survivors from the crash debris.

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As Banks Struggle with Boring Industry, and Banking Stocks Got Bombarded, will the New FM Work Wonders?

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PUNJAB NATIONAL BANK

Topline Growth Reasonable, Profits Dip Sequentially State-owned lender Punjab National Bank’s (PNB) net profit increased 12.76% year-on-year to Rs 1,246 crore in the quarter ended March 2012, which was lower than expected, due to higher non-performing assets (NPAs). Net interest income (NII) rose by 18.62% YoY to Rs 3,695 crore. Gross NPAs went up by 41 basis points quarter-on-quarter to 3.34% and net NPAs too jumped by 16 basis points QoQ to 1.68% in the June quarter. Gross NPAs stood at Rs 9,988 crore in the first quarter of FY13 as against Rs 8,719 crore in the previous quarter while net NPAs increased to Rs 4,917 crore from Rs 4,454 crore during the same period. Provisions were flat at Rs 1,032 crore as against Rs 1,027 crore quarteron-quarter. Capital adequacy ratio declined by 6 basis points to 12.57% versus 12.63% QoQ.

Mr K.R. Kamath, Chairman and Managing Director (right), Punjab National Bank, and Mr Rakesh Sethi, Executive Director.

UNION BANK OF INDIA

Good Topline & Bottomline Performance, Eyes Rs. 1000 Cr Capital Raise

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Chairman D. Sarkar (right) with ED S.S. Mundra

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Public sector lender Union Bank of India’s net profit rose 10.34% yearon-year to Rs 512 crore in the quarter ended June 2012. There was an increase in non-performing assets (NPAs). Net interest income increased 14.6% YoY to Rs 1822 crore, which was almost in-line with analysts’ expectations of Rs 1,831 crore. Gross NPAs went up by 76 basis points quarter-on-quarter to 3.76% and net NPAs jumped by 50 basis points to 2.20%. The bank has reported gross NPAs of Rs 6,541.5 crore in the first quarter of FY13 as against Rs 5,450 crore in the previous quarter while net NPAs during the same period increased to Rs 3,747 crore from Rs 3,025 crore. Provisions were up by 21% quarteron-quarter to Rs 518.5 crore in the June quarter. Net interest margin went down by 25 basis points to 3.01% as against 3.26% QoQ.

INDIAN BANK

Topline Performance Reasonable, Profit Growth Unimpressive Canara Bank’s first quarter net profit rose by only 7% year-on-year to Rs 775 crore. The net interest income (NII) inched up only by 3% from a year back at Rs 1,844 crore. An increase in bad assets affected the profit margin due to higher loan provisions. The bank’s gross nonperforming asset (NPA) ratio deteriorated to 1.98% at Rs 4,497 compared with 1.73% in the Jan-March quarter. Similarly, its net NPA ratio increased from 1.46% to 1.66% at at Rs 3,756 crore during the three-month period. Provisions (other than tax) & contingencies rose to Rs 462 crore as against Rs 419 crore. The bank’s capital adequacy ratio is at Rs 13.22% versus 13.76%, in the previous quarter.

Mr S. Raman, CMD, Canara Bank with Executive Directors Mr A. K. Gupta and Ms Archana S. Bhargava

Chennai-based public sector lender Indian Bank’s first quarter net profit rose nearly 14% year-on-year to Rs 462 crore, driven by higher interest income and lower provisioning against bad loans. Net interest income (NII) increased by 12% to Rs 1,153 crore. The bank has improved its asset quality on a quarter on quarter basis. Its gross non-performing asset (NPA) ratio dropped to 1.66% as compared with 2.03% in the JanMarch quarter. Net NPA ratio too fell from 1.33% to 1.04% during the same period. Provisions and contingencies (other than tax) stood at Rs 146 crore as against Rs 177 crore, recorded in the corresponding quarter of the previous year. Mr T.M. Bhasin, Chairman and Managing Director with Rajeev Rishi (left) and Mr V. Rama Gopal, Executive Directors.

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CANARA BANK

Reasonable Performance on Most Fronts

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STATE BANK OF MYSORE VIJAYA BANK

Revenue and Profits Grow YoY, Profits Dive Down Sequentially Vijaya Bank has reported its results for the quarter ended Jun ’12. Interest earned for the quarter was Rs 2,197.31 crore and net profit was Rs 111.36 crore. For the quarter ended Jun 2011 the interest earned was Rs 1784.96 crore and net profit was Rs 72.22 crore.

Topline Grows YoY & QoQ, Profits Get Destroyed Both Way State Bank of Mysore has reported its results for the quarter ended Jun ’12. Interest earned for the quarter was Rs 1,435.44 crore and net profit was Rs 39.79 crore. For the quarter ended Jun 2011 the interest earned was Rs 1176.26 crore and net profit was Rs 64.28 crore.

R Sridharan, Managing Director and Group Executive, State Bank of India (R) and Dilip Mavinkurve, Managing Director, State Bank of Mysore

STATE BANK OF BIKANER & JAIPUR H.S. Upendra Kamath, CMD, Vijaya Bank (left), and Ms Shubhalakshmi Panse, Executive Director,

DENA BANK

Reasonable Overall Performance, But Profits Dip Sequentially

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Public sector lender Dena Bank ‘s profit after tax grew by 42% year-on-year to Rs 238 crore in the April-June quarter of FY13. Net interest income rose by 37% to Rs 612 crore from Rs 447 crore during the same period. Provisions were increased 58% YoY to Rs 103 crore from Rs 65 crore in the same quarter. The bank showed marginal deterioration in asset quality. Gross non-performing assets (NPAs) went up by 20 basis points quarter-on-quarter to 1.87% in the quarter ended June 2012 while net NPAs stood flat at 1.01%.

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Nupur Mitra, CMD, Dena Bank with Mr A. K. Dutt, Executive Director

Overall Good Performance, Clouded by Spike in NPAs, Provisions

State Bank of Bikaner and Jaipur (SBBJ) reported a 31% year-on-year growth in its April-June quarter net profit at Rs 168 crore, aided by reasonable growth in other income and net interest income (NII). While other income component rose 63% to Rs 154 crore, NII increased by 33% y-o-y to Rs 656 crore. Its loan book expannded by nearly 21% to about Rs 48,800 crore. Net interest margin (NIM) rose to 3.90% as against 3.42% in Q1, FY12. Yield on advances rose from 11.51% to 12.11% quarter-on-quarter. Meanwhile, the cost of funds rose too from 6.95% to 7.12%. At the same time, provisions rose. The gross non-performing asset ratio rose to 3.71% (at about Rs 1,870 crore) as compared with 3.30% in Q4, FY12. The net NPA ratio too increased from 1.92% to 2.31% at Rs 1150 crore during the same period. Consequently, NPA provisions shot up more than two times from Rs 84 crore to Rs 208 crore y-o-y basis.

FEDERAL BANK

Q1 Performance is Solid, Recoveries Gather Momentum

P Jayarama Bhat, MD, Karnataka Bank Growth in core business helped Karnataka Bank record a 67.6 per cent growth in net profit in the first quarter of 201213. The bank registered a net profit of Rs 83.43 crore in the first quarter against Rs 49.78 crore in the corresponding period of the previous fiscal. A healthy growth in core business coupled with good recoveries enabled the bank attain the present level of performance. The net interest income of the bank increased to Rs 226.3 crore (Rs 153.68 crore) during the quarter. The bank almost maintained the interest spread at 4.66 per cent. It was 4.21 per cent in the first quarter of the last fiscal. The yield on advances stood at 12.79 per cent (11.75 per cent), and cost of deposits at 8.13 per cent (7.54 per cent) during the first quarter of 2012-13. The operating profit for the quarter increased to Rs 168.93 crore (Rs 107.08 crore) during the period. Recovery efforts has been beefed up, with the bank recovering Rs 56 crore during Q1. The bank recorded an 18.2 per cent growth in deposits and 19.68 per cent in advances. CASA (current account savings account) deposits increased to Rs 7,694 crore (Rs 6,585 crore), a 17 per cent growth during the quarter. The CD (credit-deposit) ratio went up from 65.32 per cent to 66.17 per cent. The bank is expecting a business growth of around 25 per cent in 2012-13.

Federal Bank has registered a 30.23 per cent increase in net profit at Rs 190.35 crore in the first quarter of 2012-13 against Rs 146.16 crore in the corresponding period last year. The operating profit stood at Rs 346.51 crore. The RBI tightening on the pure-play gold loan companies had a positive impact on the bank as its gold loan books soared 99 percent to Rs 4,256 crore during the reporting quarter. Accordingly, its asset quality too improved with the gross NPA bettering to 3.60 percent from 3.94 percent and net NPA to 0.62 percent from 0.74 percent. Total business touched Rs 88,601 crore, an increase of 18.28 per cent year-on-year. Total deposits rose 17.75 per cent to Rs 50,558 crore as on June 30, 2012. Retail deposits grew 31.36 per cent to Rs 43,376.46 crore, and CASA deposits by 25.34 per cent to 14,334.88 crore. Net interest margin for the quarter was 3.42 per cent. The Capital Adequacy Ratio , computed as per Basel II guidelines, stands at a comfortable 15.45 per cent. The retail and SME advances formed 55.74 per cent of the gross advances. The bankâ&#x20AC;&#x2122;s retail gold loan business grew 113 per cent. Lending to agriculture sector was at Rs 4,199.10 crore, a growth of 9.48 per cent. Net advances went up by 18.99 per cent, and this growth was contributed by the SME, corporate and retail segments. Total business touched Rs 88,601 crore, an increase of 18.28 per cent year-on-year. Total deposits rose 17.75 per cent to Rs 50,558 crore as on June 30, 2012. Retail deposits grew 31.36 per cent to Rs 43,376.46 crore, and CASA deposits by 25.34 per cent to 14,334.88 crore. Net interest margin for the quarter was 3.42 per cent. The Capital Adequacy Ratio , computed as per Basel II guidelines, stands at a comfortable 15.45 per cent. The retail and SME advances formed 55.74 per cent of the gross advances. Net advances went up by 18.99 per cent, and this growth was contributed by the SME, corporate and retail segments. The bank recently crossed a milestone in mid-August, when it inaugurated its 1000th branch, at Thiruvalla in Kerala.

Shyam Srinivasan, MD & CEO

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KARNATAKA BANK

First Quarter Performance Reasonable, Aided by RBI Reining in Gold Loan Companies

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KARUR VYSYA BANK

CENTRAL BANK OF INDIA

A Reasonable Turnaround From Earlier Poor Performance Public sector lender Central Bank of India’s net profit grew by 19.6% year-on-year to Rs 336 crore in the quarter ended June 2012. Net interest income increased 3.56% to Rs 1,377.7 crore during the same period. Gross non-performing assets (NPAs) went up by 4 basis points quarter-on-quarter to 4.87% and net NPAs rose by 13 basis points QoQ to 3.22% during the quarter. Gross NPAs in the quarter stood at Rs 7,510 crore as against Rs 7,273 crore in the previous quarter. Provisions were down to Rs 353 crore in the April-June quarter from Rs 392.7 crore in a year ago period. Capital adequacy ratio declined by 82 basis points QoQ to 11.58% versus 12.40%.

Quarterly Performance is Solid, Benefits to Pour in From Restructuring Karur Vysya Bank has reported a 25 per cent growth in net profit for the quarter ended June 2012-13 compared to the corresponding year-ago period. The bank’s operating profit grew 22.64 per cent and net interest income, by 23.9 per cent. KVB’s deposits growth is at over 30 per cent and advances, close to 33 per cent. Gross NPAs (non-performing assets) rose marginally to 1.53 per cent (1.48 per cent), and net NPA to 0.38 per cent (0.21 per cent). While the growth — both top-line and bottomline — has been on expected lines, the asset quality has been under pressure and the bank is expecting this to continue for some more time. KVB is looking at ways to reduce cost of funds, even while it finds the liquidity situation adequate. Though NPAs have risen, many of the accounts have already been restructured, which is mainly for technical reasons when the Technology Upgradation Scheme (for the textile industry) was discontinued for some time. Large accounts under consortium advances are opting for corporate debt restructure. KVB’s exposure to the textile industry, at around 6 per cent, is higher than to other sectors. In the bank’s exposure to power sector, two accounts came for restructuring. Karur Vysya Bank (KVB) has started implementing the recommendations of management consultancy Boston Consulting Group (BCG), including organisational restructuring and business re-engineering, in a bid to meet the private sector lender’s Rs 1.25 lakh crore business target by 2016. The bank appointed BCG in 2009 to prepare its long-term business plans. In all major business parameters, KVB’s growth in 2011-12 was higher than its compound annual growth rate for the past five years. During the year, the lender implemented the BCG recommendations like organisational restructuring at the central office and at divisional offices, ramping up key business development and support initiatives across the banking network and targeting the crucial areas for transmission. The organisational structure has undergone major changes with verticalisation of business strategy group, operations group, risk, inspection and audit and human resources departments. The business strategy group is further organised into business segments such as personal banking, commercial banking, corporate and institutional banking, international banking and treasury and funds management.

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K. Venkataraman, MD & CEO

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M V Tanksale Chairman, Central Bank of India

BANK OF BARODA

BANK OF INDIA

Good YoY Growth on Low Base, Sequential Dips in Revenue & Profits

Q1 Numbers Reasonable, Stress Develops on Asset Quality

Public sector lender Bank of Indiaâ&#x20AC;&#x2122;s net profit rose. But the bank disappointed the street on every count barring net profit and provisions. Net interest income increased 11% to Rs 2,044 crore in the quarter. Gross nonperforming assets (NPAs) went up by 22 basis points quarter-on-quarter to 2.56% and net NPAs too rose by 22 basis points to 1.69% during the same period. Provisions were lower during June quarter at Rs 472.2 crore as compared to Rs 567.2 crore in the previous quarter. Capital adequacy ratio declined by 53 basis points to 11.42% versus 11.95% QoQ.

Alok Mishra, Chairman, Bank of india

Bank of Baroda posted a 10 per cent growth in net profit at Rs 1,139 crore, as against Rs 1,033 crore earlier, in the June quarter. Net interest income increased by about 22 per cent to Rs 2,798 crore from Rs 2,297 crore during the same period last year. However, net interest margin during the quarter declined to 2.73 per cent from 2.87 per cent in Q1 FY12 on higher cost of deposits, and lower yield on advances. The public sector banking major doubled provisions to cover bad loans. The provisions against nonperforming assets rose 129 per cent to Rs 894 crore as compared with Rs 391 crore in first quarter of FY12. The bankâ&#x20AC;&#x2122;s provision-coverage ratio stood at 79.02 per cent during the quarter. Total restructured assets during the quarter stood at about Rs 771 crore (9 per cent slipped into NPAs) as against Rs 5,281 crore in Q4 FY12. Net NPAs increased to 0.65 per cent from 0.44 per cent on yo-y basis. BoB is not considering a rate cut on the lending side at this point of time, as it believes that the rates which it is offering on their housing and vehicle loans are competitive compared to what the market and competition has been offering. However, the public sector lender may opt for realigning rates going forward depending on market conditions and its appetite to increase portfolio. Given the bleak macro economic environment, the bank is expecting its asset quality too to come under stress, which may may result in slight increase in overall delinquencies and NPAs.

SEASONAL MAGAZINE

MD Mallya, Chairman

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ICICI BANK

Q1 Numbers Reasonable, Growth in Deposits & Consolidated Profit Slower India’s largest private sector lender ICICI Bank’s first quarter net profit rose by 36% year-on-year to Rs 1,815 crore driven by a drop in non-performing assets (NPAs) and a reasonable growth in loan book that expanded 22% y-o-y to Rs 2.68 lakh crore. Net interest income (NII) increased more than 32% to around Rs 3,200 crore during the three-month period. Fee income rose by 14.4% year-onyear to Rs 1,880 crore. During the quarter, the gross NPA ratio fell to 3.54% as against 3.62% in the Jan-March quarter and 4.36% in Q1, FY12. Net NPA ratio too improved a tad to 0.71% (at Rs 1,941 cr) from 0.73% quarter-on-quarter. The bank’s restructured assets fell marginally to Rs 4,172 crore compared with Rs 4,256 crore in Q4, FY12. However, it is still not clear whether any big account is likely to figure in their restructured book, going forward. Also, the bank’s deposits grew at a slower pace by 16% y-o-y to around Rs 2.68 lakh crore. The share of savings and current accounts to total deposits stood at 40.6% as on June 30, 2012 while savings account deposits increased 17% y-o-y to about Rs 78,000 crore. On consolidated basis, ICICI Bank reported 25% y-o-y growth in its Q1 net profit at Rs 2,077 crore.

YES BANK

Chanda Kochhar, Managing Director and Chief Executive Officer, ICICI Bank Limited.

SEASONAL MAGAZINE

Q1 Headline Numbers Good, Reliance on Credit Substitutes Evident

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Rana Kapoor, MD & CEO, Yes Bank

YES Bank ‘s first quarter net profit grew 34% year-on-year to Rs 290 crore, aided largely by other income that rose by 74% to Rs 288 crore during the three-month period. Net interest income increased more than 33% y-o-y to Rs 472 crore. Other Income was driven by services like Financial advisory, transaction banking, financial markets and retail banking fees. The bank’s loan book expanded a little above 16% to nearly Rs 38,500 crore, driven largely by credit substitutes by which the bank subscribes to non-convertible debenture or corporate bond issues of rated companies. Net interest margin (NIM) remained unchanged at 2.8% in Q1, FY13. Corporate & Institutional Banking accounts for 64.0% of the loan portfolio, Commercial Banking 20.2% and Branch Banking is only 15.8%. The expansion of loan book came up with a some bad assets. Its gross non-performing asset (NPA) ratio increased to 0.28% as against 0.22% in the previous quarter and 0.17% in the corresponding quarter of FY12. Net NPA ratio too was up at 0.06% compared with 0.01% in Q4, FY12 and 0.05% in Q1, FY12. Total deposits rose 15% to Rs 50,210 crore. The current and savings account (CASA) deposits rose by about 72% to Rs 8,170 crore, but on a small base. Consequently, the share of CASA to total deposits rose to 16.3% from 10.9% a year ago, but which is still quite low. The bank restructured loan book stood at Rs 197 crore or 0.51% of its gross loans.

KOTAK MAHINDRA BANK

Dull Growth in Q1, Margin Slide Continues, NPAs Rise Private sector lender Kotak Mahindra Bank reported only modest growth in the quarter ended June 2012, and there was also an increase in non-performing assets. Consolidated net profit of the bank rose by only 6.5% year-on-year to Rs 443 crore in the first quarter of FY13. Net interest income went up by 19.63% to Rs 1,100.6 crore during the quarter. Consolidated net interest margin (NIM) declined further to 4.7% in the quarter as against 5% in a year ago period. NIM has been steadily declining for Kotak Mahindra Bank due to rising credit costs. In the financial year 2009-10, NIM was at 5.8%, in FY11 at 5.2% and FY12 at 4.8%. In the first quarter of previous financial year 201112, net interest margin was at 5%. Consolidated gross nonperforming assets (NPAs) increased at 1.34% during the quarter as against 1.31% in previous quarter and net NPAs too moved up at 0.66% versus 0.51% QoQ. Advances grew by 28% to Rs 57,049 crore in the April-June quarter and Capital adequacy ratio stood at 17.5% in the same quarter.

Uday Kotak, Executive Vice-Chairman and Managing Director

AXIS BANK

Q1 Performance Moderate, Asset Quality Concerns Get Stronger NPAs. The deposits expanded 21% y-o-y to Rs 2.23 lakh crore. The number of savings account grew 26% to Rs 124 lakh. Capital adequacy ratio declined to 13.03% in Q1, FY13 as against 13.66% in Q1, FY12.

Shikha Sharma, MD and CEO, Axis Bank

SEASONAL MAGAZINE

India’s third largest private sector lender Axis Bank’s first quarter net profit rose more than 22% year-on-year to Rs 1,150 crore, aided by a reasonable loan book expasion that grew nearly 30% y-o-y to Rs 1.71 lakh crore. During the quarter, the net interest income increased satisfactorily by about 27% to Rs 2,180 crore. However, the net interest margin (NIM) fell by 18 basis points to 3.37% sequentially. Fee income rose by 9% y-o-y to Rs 1,155 crore. The bank has increased its share of retail loans to 24% of the total loan book as compared with 22% earlier. It has also brought down its credit exposure to small and medium enterprises to around 13% of the total loans from 15% earlier. Still, lender’s net non-performing asset (NPA) ratio increased to 0.31% from 0.25% in January-March quarter. Similarly, gross NPA ratio too rose to 1.06% as against 0.94% sequentially, clearly indicating rising stress on its assets. The lender restructured assets of Rs 628 crore taking the total value to Rs 3,827 crore, which is equivalent to nearly 2% of gross customer assets. Large and mid size companies formed most of the restructured loans to the tune of 80%. Moreover, it added fresh slippages of Rs 456 crore while upgradations were only Rs 62 crore. This has cumulatively led to the rise of

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SOUTH INDIAN BANK

Impressive YoY Performance, Topline & Bottomline Sluggish Sequentially The South Indian Bank registered a 49.17 per cent growth in net profit in Q-1 at Rs 123.04 crore against Rs 82.49 crore for the corresponding period. The total business has also gone up by Rs 10,729 crore from Rs 53,733 crore to Rs 64,502 crore during the period, registering a growth of 19.95 per cent. The total deposit increased by Rs 5,531 crore from Rs 31,622 crore to Rs 37,153 crore, registering a growth of 17.49 per cent. The advances increased by Rs 5,198 crore from Rs 22,151 crore to Rs 27,349 crore, registering a growth of 23.47 per cent. Current account, savings account (CASA) increased by Rs 1,046 crore from Rs 6,789 crore to Rs 7,835 crore, registering a growth of 15.40 per cent. Bank could maintain the stressed asset at low levels with the gross NPA at 1.08 per cent and net NPA at 0.35 per cent. The bank earned a total income of Rs 1,144.41 crore during the quarter as against Rs 820.34 crore for the corresponding period, registering a growth of 39.50 per cent. The net interest income has increased by Rs 91.82 crore from Rs 204.97 crore to Rs 296.78 crore registering a growth of 44.80 per cent. The net interest margin also increased from 2.77 per cent to 3.15 per cent as on June 30. The capital adequacy ratio stood at 13.16 per cent.

V A Joseph, MD & CEO, South Indian Bank.

DEVELOPMENT CREDIT BANK

SEASONAL MAGAZINE

Net Profit Rise Impressive, Deposit Growth Sluggish, Challenge is to Scale Up the Size

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Higher income and lower provisions helped Development Credit Bank (DCB) report a 111 per cent jump in net profit in April-June. In the reporting period, the private sector bank, which has just 86 branches, and presence in only 13 States and two Union Territories, reported a net profit of Rs 19 crore, against Rs 9 crore in the yearago period. As on June-end, the bankâ&#x20AC;&#x2122;s deposits grew by 14 per cent year-on-year to Rs 6,829 crore (Rs 5,980 crore). Advances grew by 29 per cent to Rs 5,449 crore (Rs 4,234 crore). Retail deposits (current and savings bank accounts as well as term deposits) accounted for 83 per cent of total deposits as on Juneend, against 82 per cent as on June-end 2011.

Nasser Munjee, Chairman, DCB

HDFC BANK

Reasonable Performance in Q1, Even Unreasonable Valuations Breached India’s second largest private sector lender HDFC Bank’s first quarter net profit rose nearly 31% yearon-year to Rs 1,417 crore, aided by strong loan growth and increase in other income. In April-June, the bank’s loans expanded by 21.5% to Rs 2.13 lakh crore. Consequently, the net interest income rose by 22.3% to around Rs 3,500 crore. Other income in the quarter jumped by 37% to Rs 1,530 crore. The main contributor to other income for the quarter was fees and commissions of Rs 1,140 crore while foreign exchange and derivatives added Rs 315 crore revenue. Credit cards, personal, auto and construction equipment loans contributed majorly to the share of retail advances. Its gross non-performing asset (NPA) ratio improved to 0.97% in Q1 as against 1.02% in Jan-March. The net NPA ratio remained unchanged at 0.2% during the same period. Total restructured loans were minimal at 0.30% of gross advances. Total deposits grew at 22% from a year ago to around Rs 2.58 lakh crore. The share of current account and savings account (CASA) stood at 46%. The bank managed to post more than 18% growth in

Aditya Puri, CEO, HDFC Bank

savings deposits. Capital adequacy ratio stood at 15.5% as against 16.5% quarter-on-quarter. The bank which has been growing its bottomline consistently by 30% during the past few years is expected to slow down sooner or later, capping it stock’s further upside as valuations have reached sky-high.

INDUSIND BANK

IndusInd Bank MD and CEO Romesh Sobti during a press meet in Mumbai

IndusInd bank reported a 31% year-on-year jump in net profit at Rs 236 crore supported by higher net interest income (NII) and other income growth. NII grew 24.1% y-o-y to Rs 484 crore while other income rose by more than 48% to Rs 319 crore during the quarter. Its loan book expanded by 31% yo-y to around Rs 37,200 crore. The spurt in loan growth however was on a lower base. Retail loans seem to have supported the bank’s loan escalation more than corporate credit. Deposits grew around 28% y-o-y to Rs 45,100 crore. The share of current account and savings account (CASA) stood at 27.86% as against 28.20% in the corresponding quarter of the previous year. However, CASA increased 26% y-o-y in absolute terms. The lender’s net non-performing asset (NPA) ratio remained unchanged at 0.27% quarter-onquarter while the gross NPA improved a tad from 0.98% (in Q4, FY12) to 0.97% in Q1, FY13. Its restructured book fell by 24 basis points.

SEASONAL MAGAZINE

Fair Performance in Q1, Aided by Lower Base in Last Q1

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Auto

Luxury Cars Mercedes, BMW, Audi, Fail New Crash Test

When a car's front corner hits something, what happens? The driver often gets seriously injured, the Insurance Institute for Highway Safety's new crash test finds. Results of a new crash test that focused on luxury cars are raising worries that most vehicles may not be able to provide protection from serious injuries in a common accident. Such fancy nameplates as BMW, Mercedes and Lexus all earned "poor" ratings in a test that simulated what happens when the front corner (driver side) of a sedan hits another vehicle or an object such as a tree or pole, according to the Insurance Institute for Highway Safety. Just three of 11 luxury cars from the 2012 model year passed the new crash test, which looked at frontcorner impacts, which are not well protected by vehicles' crush-zone structures. If luxury vehicles are failing at a high rate, it is likely that most cars won't do well, said David Champion, who directs Consumer Reports' auto testing program. "This is something that has not been on the top of most manufacturers' lists of things they have to do," Champion said. "It will take five to 10 years before every manufacturer works out how to do well in this test." Design changes based on the insurance group data would create safer vehicles and save lives, he said. In the insurance group's test, 25% of a car's front end on the driver's side is rammed into a 5-foot-high rigid barrier at 40 mph. The insurance institute plans to incorporate the same kind of crash in tests of other vehicles. "Nearly every new car performs well in other frontal crash tests conducted by the institute and the federal government, but we still see more than 10,000 deaths in frontal crashes each year," said Adrian Lund, the institute's president. "Small overlap crashes," which include the type of accident examined by the new test, "are a major source of these fatalities." The Acura TL and Volvo S60 earned "good" ratings, while the Infiniti G was rated "acceptable." The Acura TSX, BMW 3 Series, Lincoln MKZ and Volkswagen CC all received "marginal" ratings. The Audi A4, Lexus ES 350, Lexus IS 250/ 350 and Mercedes-Benz C-Class were rated "poor." The crash forces in such an accident are transmitted to the front wheel, suspension system and firewall, according to the trade group. In many instances, the front wheel pushes into the cabin, causing serious leg and foot injuries. The auto industry could provide more effective protection by designing the passenger safety cage to resist front-corner impacts. Crush-zone structures already built into modern vehicles are better at protecting occupants from direct hits from the front. "The problem of small overlap crashes hasn't been addressed. We hope our new rating program will change that," Lund said. "These are severe crashes."

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Ford India Recalls Nearly 1.3 Lakh Figos, Classics

Ford Motor Co.'s Indian subsidiary is recalling nearly 130,000 of its most popular cars for manufacturing defects that date back as far as 2008 and can cause fires and other problems, the company said. Ford said it will examine 111,000 Ford Figo and Classic models manufactured between January 2008 and December 2010 for a faulty rear twist beam, which can compromise brake performance and make the vehicle inoperable. Ford will also replace a hose in 17,655 Figo and Classic cars produced between September 2010 and February 2011 as a precautionary measure. The company says oil can leak from the hose, resulting in noxious fumes, smoke and in extreme cases, fire. The company said a small number of cars exported to South Africa would also be affected by the recall. No injuries have occurred as a result of the defects, Ford said. Like other global carmakers in India, Ford relies heavily on local suppliers to keep costs down. Toyota, Tata Motors, Honda and Maruti Suzuki have all had to recall cars in India in recent years, although none has been as big as the Ford recall. Ford's compact Figo, launched in 2010, made the American auto giant a real player in India's competitive small car market. Ford has poured hundreds of millions of dollars into India, part of the company's strategy to pursue growth in Asia over the next decade. In March, Ford laid the cornerstone for a new $1 billion factory in the Indian state of Gujarat.

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In-Focus

Wonderla on a Steady Roadmap Includes

SEASONAL MAGAZINE

Arun Chittilappilly

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Arun Chittilappilly came into business at a young age of 23. But he was armed with a Masters in Industrial Engineering from Australia, and even more importantly, armed with the inevitable and unconscious training from his father, who is Keralaâ&#x20AC;&#x2122;s most wellknown entrepreneur for more reasons than one. Ten years later, Arun has not only made Wonderla Bangalore - which was conceived and crafted under his guidance - a resounding success, but proved that this amusement park chain from the V-Guard Group can be replicated in any Indian city. Next Wonderla will be coming up in Hyderabad, and then the next one in Chennai. Arun also discloses that this fiscal will see Wonderla attracting investments from probably PE funds, with an eventual public issue and listing visible on the roadmap. Seasonal Magazine caught up with Arun Chittilappilly at his home in Kochi recently, and here is our conversation with him on Wonderla, his family, and his passions:

SEASONAL MAGAZINE

Growth Path, Eventual Public Issue

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How has been your new hospitality division faring at Wonderla Bangalore? Do you have expansion plans for that model at Bangalore or in Kochi? That is a relatively small operation compared with our mainstream business, as we have only 84 rooms. The first full month for that division was May and due to the peak season prevailing then, we had excellent business. Then, we had June which is one of the dull months for amusement parks, and so demand for rooms has been lower. But it will pick up when the footfalls bounce back in the coming months. We want to do a hotel in our Kochi park too, and are awaiting the clearance for the same. What percentage of your visitors opt for your overnight facilities? What kind of a capacity can you address currently? How much does it contribute to the topline / bottomline, approximately? We are aiming for a maximum of 23% of our visitors to opt for the overnight stay, as that is the maximum capacity we can address now. When running on full capacity the hospitality division can generate Rs 7 crore which is 6% of our topline, which is now around Rs. 114 crore.

SEASONAL MAGAZINE

What would be the rough share of your Bangalore and Kochi operations? Well, on footfalls, Kochi Wonderla fares slightly better than the Bangalore one. Last year, it was 1.2 million visitors in Kochi while 1.1 million visitors came to Bangalore Wonderla. But on revenues, Bangalore fares much better as the rates are higher there. Around 60% revenues are from Bangalore Wonderla and the rest from Kochi.

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You have a claim as the most visited amusement park chain with 1.5 crore visitors till now. Can you explain that? Yes, we crossed the 1.5 crore visitor mark sometime back. From our beginning around 12 years back, no

other park has had more visitors than Wonderla. But maybe some older parks have more visitors as they started much earlier than us. We can compare only from the time we started. Can you explain the stages at which the upcoming Wonderla parks in Hyderabad and Chennai are now in? Hyderabad Wonderla will be the next in line. We have finalized the land there and the project is currently at the funding stage, where we are exploring different options. Chennai will follow that, as we are yet to finalize which should be the land there. Is Wonderla planning any kind of stake sale like PE infusion or IPO during this fiscal or the next? Your 31% net profit margin is said to be a good attraction to investorsâ&#x20AC;Ś Yes, most probably this fiscal will witness a fund infusion by private equity firms, or we may even start moving towards our IPO. Regarding the margins, yes, we do have that kind of margins currently, and we think it is sustainable. Though the discussions are in the preliminary stages now, we think there would be ample investor interest in the company. Will you prefer institutional investors coming in to fund projectspecific SPVs, or will the infusions be into the whole company? It will definitely be at the company level and not project specific. The projects will be funded by the company primarily, and the PE infusions would be small and also intended to formalize the valuations. This is a roadmap kind of thing leading towards an eventual IPO, and will be undertaken systematically. Do you think this business has got high entry barrier and as such you are immune from competition? Well, the entry barrier is there, but it is important to clarify that it is not a financial barrier alone. I am not saying that the financial barrier is not important. If we take the case of Bangalore Wonderla itself, it was done on an investment of Rs. 110 crore. But

We think the company has proved a point, largely to itself, with the success of our second park. And that is the fact that this is a model that can be replicated in any Indian city. Until Bangalore succeeded that was a real question before us. Kochi and Bangalore are diverse markets on many counts. One is a conservative market with fewer entertainment avenues whereas the other is a cosmopolitan one with ample avenues.

Comparing the growth model of Wonderla with other group companies like V-Guard or V-Star, one challenge is obviously that growth is very location specific or in other words there is limits to growth at a particular place, and sustained growth will require new parks at new locations. How do you address this challenge? Though that challenge is really there, one point worth noting is that our first park at Kochi has still not stopped growing in not only revenue, but footfalls too. Annually, there is still a 5-6% growth in Kochi footfalls. Bangalore being the newer one, the growth rate is higher there. There is also the growth in margins possible due to the relatively smaller growth in expenses. But, of course, a time will

SEASONAL MAGAZINE

if some group, or we ourselves, were attempting to build such a park now in Bangalore, it wonâ&#x20AC;&#x2122;t be possible with even Rs. 250 crore. Even then, that financial aspect is not the real barrier according to me. The real challenge is that an amusement park of this scale is a complex affair which requires lots of engineering and technical inputs, not just in the creation but on an ongoing basis for its safe maintenance as well as to create new rides etc.

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come when we have to have new parks at other cities to jumpstart growth to the next higher orbit. You donâ&#x20AC;&#x2122;t find it very challenging? It is challenging, of course, but we think the company has proved a point, largely to itself, with the success of our second park. And that is the fact that this is a model that can be replicated in any Indian city. Until Bangalore succeeded that was a real question before us. Kochi and Bangalore are diverse markets on many counts. One is a conservative market with fewer entertainment avenues whereas the other is a cosmopolitan one with ample avenues. Kerala is like an extended city, whereas Bangalore and rest of Karnataka are largely distinct. But we could adapt perfectly to Bangalore, and that gives us the confidence that we can adapt to other markets like Chennai, Hyderabad etc.

SEASONAL MAGAZINE

Those markets too are very specialized with Hyderabad having destinations like Film City that take up a lot of tourist timeâ&#x20AC;Ś

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We have our own design and manufacturing facilities as well as a capable team for crafting many new rides from scratch. But we do that for only 20-25% of our rides. The rest are all outsourced partly or fully. If something can be easily outsourced, like fibreglass parts, we outsource it. The largest and most sophisticated of the rides are imported from the best ride manufacturers who supply to leading parks like Disney etc.

Yes, sure it is. Each city has such challenges. Chennai for example is a very mature market for amusement parks due to such parks being there for many years now. But we think Wonderla can make its own mark in any city, due to our superior offerings. Both Kerala and Bangalore was not devoid of competition either. But we have emerged as the most successful park. Another point that is giving us much confidence is that both the Telugu and Tamil people are well aware of the Wonderla difference as, many of them have already visited our facilities at Kochi and Bangalore. Are you sharply focused on Wonderla or do you contribute to other group companies like VGuard, V-Star, and your new real estate division, Veegaland Developers? On an operational level, I am sharply focused on Wonderla, but on a strategic or higher level we do discuss issues of other group companies or new ventures also. I make myself available for that, and I also take their opinion too on our issues. Your wife is very active in the management of Wonderla. Can you explain her role and contributions? Priya is very much a peopleâ&#x20AC;&#x2122;s person, a leader who is comfortable dealing with people. So she has naturally been drawn to head our HR department, and it is quite a task in itself as we have over 1400 staff. She also handles our F&B division, and when our hospitality division was started she was handling the interior designing. She has a natural flair for such tasks, while her training in counselling etc makes her a perfect fit for HR. After that unfortunate accident in Wonderla Bangalore, have you beefed up safety measures at all your parks? If one studies that accident in detail, it can be seen that it is not a security or safety lapse. But let me refrain myself from telling more as it is under investigation still. However, we have already taken measures on how to avoid even such rare incidents. We have installed special cameras there, and

now there is also a doctor in the park. It might appear overkill, but we are not taking any chances. Can you tell us something about your education, at what age you came into business, and how your education has helped you in your role as Managing Director of Wonderla? Well, I have always been a technology buff from my childhood days, and I naturally went in for my Bachelors in Engineering. I did that at MS Ramaiah Bangalore, and then I did my Masters in Industrial Engineering from Swinburne University of Technology. That was very useful for me as the University houses the Industrial Research Institute Swinburne (IRIS), which is a state-of-the-art research and development facility funded partly by Australian industrial giants. There I had a real brush with industry through their academic-industry interfaces, and later

it proved very useful while undertaking to lead Wonderla. I joined Wonderla when I was 24, and was there from the conceptualization stage of the Bangalore park. Tell us something about your hobbies and tastes. We heard that you are a sports car buff… My first love is music and at school I was part of the band, wearing the drummer’s role. Music is still very dear to my heart. As of cars, yes, it is more of a love for everything technological like cars, gadgets etc. I own a Jaguar XFR, which is a sports car but with four doors, and also a BMW 325i. But I don’t drive a lot, apart from the daily trips from home in Bangalore city to Wonderla, and prefer to fly down to Kochi. One success secret of Wonderla is said to be the expertise you and your

team has garnered in creating new rides. Can you explain these processes? We have our own design and manufacturing facilities as well as a capable team for crafting many new rides from scratch. But we do that for only 20-25% of our rides. The rest are all outsourced partly or fully. If something can be easily outsourced, like fibreglass parts, we outsource it. The largest and most sophisticated of the rides are imported from the best ride manufacturers who supply to leading parks like Disney etc. Your father is a very inspiring entrepreneur. Can you list a couple of lessons that you have learned directly from your father? There is so much to learn from him, but to answer you now, two of specialities readily come to my mind. One is that he is a very principled and

ethical person. There is no cutting corners for him. To tell you an example, our businesses can be done with substantially less staff. That way we can control expenses sharply, and boost profits. But he doesn’t believe in such unethical strategies. He wants to do business systematically and with whatever staff will be ideally needed to do that business. Secondly, he is a very committed person. He has the ability to take long-term calls on projects and issues, and not be deterred by short-term challenges. He has the big picture with him, and he doesn’t allow anything to distract him from that. His commitment is not hollow either, as he can put in the kind of extreme hard work required to make any commitment a success. At Wonderla, we have made sure that his values have become organizational values for the whole team to follow.

SEASONAL MAGAZINE

Resort at Wonder la, Bangalore

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Celibrity

A Legend Called Bolt egend'. A small word, but with such weight of meaning. Usain Bolt bandied it around a lot before the London Olympics, saying these would be the Games where he wanted to become one. He did. But not solely for the reasons he thinks. Becoming the first man to win the 200-metre sprint at two Olympics made Bolt a pioneer. But that feat, while historic, isn't in itself enough to make him legendary. Nor is becoming the first sprinter to win both the 100 and 200 races at two consecutive Games. That is the unprecedented sprint double Bolt completed on Thursday. And that, as far as he was concerned, was mission accomplished. No ifs or buts. "I am now a living legend. Bask in my glory," he said. But Bolt is selling himself short. His legend rests on more than just the new pages he has written in record books. He's a legend for the same reason Michael Jordan is. And that is neatly summed up in the words carved into black granite under the bronze statue of Jordan in Chicago, where the NBA superstar played his basketball with the Bulls. They read: "The best there ever was. The best there ever will be." Some people become legends for a legendary feat. Bob Beamon fits into that category. Before his leap at the Mexico City Olympics in 1968, the world record in long jump had taken 40 years to grow by 55 centimetres (1 foot, 9.6 inches). Beamon added that much again in one jump. His world record of 8.90 metres (29-2.3) was so long it had to be calculated the old fashioned way, with a tape, because the electrical measuring devices didn't stretch that far. Like Beamon's jump

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that set the standard for the next 23 years, Bolt's world records in the 100 and 200 made the seemingly impossible suddenly very real. That's the stuff of legends. In London, it felt almost disappointing that Bolt didn't break his world records again. But that is really a measure of how far Bolt has pushed the boundaries of sprinting. Even Bolt can't beat Bolt every time. But he gets very close. His 100 in London, at 9.63 seconds, was the second-fastest ever. And his 19.32 seconds in winning the 200 on Thursday was as fast as Michael Johnson ever ran it. Many thought the American's world record from the 1996 Atlanta Games was safe until Bolt sliced a couple of hundredths off it at the Beijing Olympics in 2008. Then, a year later in Berlin, Bolt cut that mark to a mind-boggling 19.19. Other legends, like Jesse Owens, were products of their time. Owens' four Olympic golds were one fewer than Bolt now has. But the legend of Owens rests largely on the fact that he was a black athlete and his winning at the 1936 Berlin Games made a mockery of Adolf Hitler's theories of white superiority. Unlike Owens, Bolt's color isn't a big part of what makes him legendary. Jacques Rogge, the IOC president, thinks it's too early to crown Bolt a legend. He suggests Bolt needs to compete in Rio de Janeiro in 2016 first. "The career of Usain Bolt has to be judged when the career stops," he said Thursday. "Let him participate in three, four Games, and he can be a legend. Already he's an icon." But Rogge was a Bolt party pooper in Beijing, too, picking holes in his victory celebrations, saying he should "show more respect for his competitors and shake hands." Rogge didn't get it then, and doesn't seem to get it now. Bolt is manna for the Olympics, for sport and for his sport.

Not only a superior athlete but charming, funny and, as far as we know, not doping. He loves the crowds and they love him back. In the 80,000-seat Olympic Stadium, they chanted "Usain! Usain!" They didn't do that for other athletes. After the 100 on Sunday, they yelled at him: "Do the Bolt!" He didn't get irritated, he didn't ignore them. He pointed his finger at the sky in his trademark pose, happy to please. He also stopped a television interview in midflow because the "Star-Spangled Banner" was playing in the stadium for Sanya Richards-Ross, winner of the women's 400 meters. How's that for respect, Mr. Rogge? Really, the Olympics couldn't ask for a better champion. "Everyone owes him a debt of gratitude," said two-time decathlon Olympic champion Daley Thompson, "because he's the guy who's bringing the crowds back." The Oxford English Dictionary is more helpful than Rogge in trying to understand Bolt's "legend" claim. It says the word can mean "an extremely famous or notorious person." Few people on this planet are more famous than Bolt. But it can also mean "a story," something recounted over and over. And that fits Bolt perfectly. For years to come, we'll talk not only about his Olympic triumphs, but about the way he won them. The magnificence of him erupting from the blocks and unfurling his muscular 1.95meter (6-5) frame. The sight of his long legs gobbling up the track. Just awesome, every time. On the biggest stage, he made us gasp, not once or twice but repeatedly. The best there ever will be? Even with Jordan, no one can really tell. But Bolt is the best sprinter there ever was. Everything he is and everything he has done are stories that will be told and retold. And that, like Jordan, Owens and others, is why Bolt is now a legend.

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Higher Education

6 Steps to Crack CAT 2012 and Enter IIMs

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aken by over two lakh students in the country, the Common Admission Test (CAT) is undoubtedly, one of the most competitive exams in the country. A prerequisite for entry into the prestigious Indian Institutes of Management (IIMs), performance in the CAT is also crucial for admission to a host of other top BSchools in the country including Faculty of Management Studies, Delhi, Management Development InstituteGurgaon, SP Jain Institute of Management and Research, Mumbai, Indian Institutes of Technology and the like. Since it is an entrance exam to MBA institutes, it tests the aptitude of the candidate in areas of Quantitative Ability, Logical & Analytical Ability, and Data Interpretation & Verbal Ability. These are supposedly the basic ingredients of a would-be manager. The CAT tests the ability of the student to find out how he or she uses the twin resources of knowledge and time to ace the test, given the performance pressure. CAT 2011 had introduced a few changes - it had two sections instead of three. The first section was Quantitative

1. Take the Initial Diagnostic Test The ideal way to start preparing for any exam is by taking a diagnostic test. This diagnostic test should ideally be of similar type as the previous CAT exam. You may take the test online/offline. Many students falter in preparation because they lack the overall view of the CAT exam and hence may waste precious time trying to do things that may not be necessary for the exam. A diagnostic test will tell you what to expect and how to plan your preparation for the big day. Most coaching institutes will provide you with a diagnostic test at the beginning of the classes. Ensure that you take one before starting your preparation.

2. Assess Your Strengths and Weaknesses Once the diagnostic test is written, the scores at the end give you a clear indication of how far you are from your goal of getting a good percentile in the CAT. When you sit to analyse your performance, you should see the gaps in the level of knowledge for each area separately. This ensures that there is a clear cut understanding on where one is going to spend the next few weeks/months of preparation before taking the exam.

3. Make a Study Plan Any plan, which tries to capture your work and attention for more than a month is going to fall flat. While you can make a broad plan for the next three months, the detailed plan should be made for only a week. The week plan could be as simple as completing two chapters of quantitative ability and one chapter of DI (Data Interpretation) etc. But, make sure that you stick to this plan once you have made it. Never try to pack too many things in a week and find it impossible to achieve the targets. The idea is to gain confidence as you go along and start accomplishing tasks so that you are closer to your goal.

4. Preparing for the Exam There are three levels of preparation that

are required to crack the CAT. They are Knowledge, Exam Strategy, and Confidence. You may start by working on improving your knowledge. CAT tests aptitude of a student in the following areas: 1) Quantitative Ability, 2) Logical Ability and Data Interpretation, and 3) Verbal Ability and Reading Comprehension. Each of these areas has to be thoroughly prepared for in the run up to the CAT. Since students from all back grounds (viz., BBA, BCom, BSc, BTech, MBBS etc) write this exam, it can be safely assumed that the subject knowledge required would be that of the Class X exam at least in terms of the areas that appear in the exam. However, the difference would be in the knowledge expertise and sheer practice in solving problems in these areas and hence a thorough study plan (even going to a coaching institute) is warranted.

5. Device an Exam Strategy Before writing the real CAT, it may be extremely useful to write some mock exams. The mock CATs will give you a real feel of the paper as well as help you to strategise the way you will attempt the paper. Writing mock CATs at regular intervals will not only help you hone your test-taking skills but will also enable you to identify your weak areas and help you concentrate on those.

6. Be Confident About two lakh students write the CAT and many have the ability to crack this exam. Incidentally, since the aptitude is of school level, many students can actually make it to the IIMs too. Knowledge and test taking skills can be learnt/developed by practice. However, what is of utmost importance is the confidence one has in oneself. CAT is as much a mental game as it is a knowledge and skills game. We have seen over the years that the best of the students don't make it to the IIMs but diligent, confident but may not be toppers from their colleges, make it to these coveted institutes. (By ARKS Srinivas, CEO, VistaMind Education Pvt Ltd)

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Ability and Data Interpretation and the second section comprised questions on Verbal and Analytical Ability. Each section consists of 30 questions and with a time limit of 70 minutes. A student can take only one section in the prescribed time. Another disadvantage being that a student cannot switch between sections. A peculiarity of CAT is that given infinite time and no pressure, any above average student can get a score good enough to get a 99 percentile. But the fact that the exam is time-bound and that there is infinite pressure to perform, only the best finally make to the grade. While the exam is easy, the fact that more than 2 lakh aspirants write the exam to compete for the coveted 4,000-odd best seats, makes this exam the toughest entrance exam in the world. Hence, to ensure that you come up trumps, you need a comprehensive strategy for preparation and for test-taking.

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In-Focus

Heera, the Professional Homegrown Developer

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or those who argue that there is a dearth of professional developers, who are homegrown in the state of Kerala, there is the case of Heera to deal with. But then, Heera Group was not founded originally in Kerala, but in the state of Goa, around two decades back. Firsthand experience in that Westernized state, known for its thriving tourism and hospitality industry, equipped Heera Group from early on, as it gained experience in fields like property development, hotel operations, tourism projects, and civil contracting. However, the seed of Heera goes back even further, and further West, when founder AR Babu was pursuing his Doctorate in Construction Management at University of Honolulu, USA. Based on his international exposure early on, Dr. AR Babu has

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always been a systematic entrepreneur, even in an industry like realty that relies more on chaos. A person known for his values, Dr. Babu has been very particular that Brand Heera is known for its transparency, fair play, integrity, and honesty. Heera Homes was one of the first developers in Kerala to go in for ISO 9001:2008, at a time when the certification was coveted and challenging to go for. No wonder then, that the Group had massive initial successes like Vaastugramam and Vaastuhills, and could deliver 1700 homes and over 30 lakh sq ft rapidly. Heera also has a project with 7-Star rating from CRISIL. This penchant for quality has always been the shadow of Heera, and in 2012, the Group would win a prestigious Spanish quality award - Century International Quality Era Award, Gold Category awarded at an august ceremony in Geneva, Switzerland. One among the 90 recipients, Heera

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stood shoulder-to-shoulder with a handful of winners from India like NTPC, NCR Corporation, & ICICI Bank, with previous Indian winners being IOC, Coal India, Reliance Infrastructure, & Tata Group. Dr. AR Babu attributes his success in Kerala real estate industry to Heera’s unwavering commitment to three ideals that homebuyers are always looking for - quality, economy, & comfort. The Group is also credited with its unique insights that earned it a huge NRI customer base. Today, Heera is among the first choices in key Kerala markets like its capital Thiruvananthapuram, economic capital Kochi, and plantation city Kottayam. How can it be otherwise with projects like Heera Grand Villae, a worldclass project that is designed to make you forget that you are at Vazhuthacaud, which in its own might is one of the most sought-after locales in Thiruvananthapuram. The low-rise, expansive apartment design mimics villalike comforts. Amenities include Wi-Fi enabled Air Conditioned Lobby, Video Door Phone, Guest Suites, Home Theater, Centralised Gas Connection, Health Club, Landscaped Garden, Open Party Space, Childrens Park, and lots more. Similarly, their latest project in Kochi, Heera Wind Faire, is something that is distinctly world-class in a classic Kerala setting. Wind Faire is coming up on the shores of Chilavanoor Backwaters, one of the best urban waterfronts in Kerala, home to projects from India’s best-known developers. The Heera project is just 100 metres from Thykoodam bridge on National Highway, and is one of the tallest residential towers in the city with 21 storeys housing 95 luxury apartments. Heera Breeze, coming up right in the heart of rubber land, Kalathipadi at Kottayam, is even taller at 25+ storeys, to leave aside much of the almost 3.5 acres as free recreational space. Apart from regular Heera Homes luxuries, Breeze features a Walkway, Proximity Sensor Entry Card, and Roof-Top Recreation Hall. Heera Homes has also benefited immensely from the youthful expertise of Director Subin AR, who joined the firm after his Bachelor of Administration (Honours) from Greenwich University, UK, and is currently spearheading Heera’s strategic, marketing, and business alliance efforts. Meanwhile, Dr. AR Babu continues to be a lifelong learner, having earned other professional qualifications like Diploma in Vaastu Sastra, and Certificate of Achievement in Low Cost Houses & Cost Effective Measures. Dr. Babu’s other interests include education and philanthropy. Under his guidance, the Group has started Heera College of Engineering & Technology at Thiruvananthapuram, and their charitable activities span medical, educational, & marriage assistance to economically challenged sections of the society.

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Insurance

LIC Makes Life Easy for All Here is how LIC makes life easy for all - the insured, their families, its agents, the homebuyers, the corporates, and the stock market investors - even while it has entered another fiscal which is expected to be tough for all life insurers. When the going gets tough, Chairman DK Mehrotra is guiding LIC to deliver more to all their stakeholders, despite LIC’s own struggles in the challenging economic environment. ncertainties on the family’s prospects after one’s death, especially if he or she is the only earning member, has been a fear of the human being from time immemorial. That LIC has addressed this fear to a great extent, in India, would be an understatement.

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But these are troubled times for even an essential sector like life insurance. So what does the market leader LIC do?

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Under DK Mehrotra, who is firmly in saddle now after some months of ambiguous succession plans, the insurance and financial services behemoth is delivering more to keep its hitherto unsurpassed edge in this

highly competitive industry.

is all about.

How about a policy that delivers sumassured twice? We must be kidding, right?

The legal framework behind it is solid, as in Jeevan Anand, the policy period doesn’t expire at maturity, but only at one’s death, and at both events, LIC guarantees to pay the sum assured.

Before answering that obvious question, let us ask you - would you like such a plan? For example, a life insurance policy that delivers the sum-assured together with any vested bonuses, on completion of maturity, and then again delivers the sumassured to one’s nominee, on your unfortunate demise? Make no mistake, that is double the sum-assured, once to you on maturity, and then to your nominee on your unfortunate death. We can hear you scream - where on earth is such a policy? Well, that is what LIC Jeevan Anand

If you need an example, we are ready with one. You are aged 30 years. You are willing to save enough annually so that you get Rs. 30 lakh by the time you are 45, so that you can start that business you always had the talent for. Under LIC Jeevan Anand, you will need to remit an annual premium of Rs. 2.29 lakhs for 15 years, for meeting such an objective. That is, you will be paying Rs. 34.36 lakhs as premium over 15 years to get a sum assured of Rs. 30 lakhs (plus

Thomas Mathew T. Managing Director, LIC

bonuses if any) at maturity. That is not a big loss, as your family will stand to gain another Rs. 30 lakhs whenever you leave this world! Yes, Jeevan Anand is made for the tough times the insurance industry finds itself in. LIC is going that extra mile to encourage both the consumer as well as its insurance agent to close that next deal, for the benefit of all, as early as possible. But then, there are consumers who aren’t satisfied with anything. What is the catch, they ask even with

It is on customer-friendly market moves that LIC continues to dominate the retail life insurance sector. No wonder then that, in Q1, LIC’s new business premium has grown by 8.3% to reach Rs. 14,451 crore, year-on-year. To put this growth in perspective, LIC’s 23 private sector competitors could together grow their new business premium by only 1.20% during the same period, to reach just Rs. 5000.33 crore.

Sushobhan Sarkar , Managing Director, LIC

Jeevan Anand. There should be one, they are sure. Well, the catch here is not a catch really, but just a caveat. In the unlikely event of one unfortunately passing away before the 15 year maturity period, LIC will be paying only one sum-assured, that is to the nominee, with whatever bonuses you would have got if you were alive on maturity. Ohhh, we hear some pessimists moan. But then, Jeevan Anand is not for such dyed-in-the-wool pessimists. For them, there are numerous other policies from LIC, as, after all, this giant became a giant only be addressing the mindsets of all types of Indians. But LIC’s intentions are clear. Not only does it want the consumers to take a quick decision on Jeevan Anand, but it wants them to go for it during their early years like 20s to 50s. It is on such intelligent market moves that LIC continues to dominate the retail life insurance sector. No wonder then that, in Q1, LIC’s new business premium has grown by 8.3% to reach Rs. 14,451 crore, yearon-year.

D.K. Mehrotra, CHAIRMAN, LIC

To put this growth in perspective, LIC’s 23 private sector competitors could together grow their new business premium by only 1.20% during the same period, to reach just Rs. 5000.33 crore.

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T. S. Vijayan, Managing Director, LIC

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On the housing finance front, LIC’s listed subsidiary had a rather dull quarter, owing to its margins getting squeezed. But the market supported the LIC Housing Finance scrip beautifully, as it knows that with the LIC pedigree behind it, LICHFL is still one of those stocks to watch out for in the long-term. The LIC/LICHFL duo has also put in its past the allegations regarding developer loans, as internal enquiries found that LICHFL hadn’t suffered any kind of losses due to the alleged deals. In fact, after nearly a year of introspection, LICHFL has again started moving quickly on the highermargin developer loans, even though it is still very choosy on these developer loans which have a typical tenure of 3 years. LIC Housing’s home loan customers are also happier, as the company will soon be converting many of its existing home loans, worth around Rs. 12,000 crore, from fixed-rate loans to floating-rate type. With the country’s interest rate already having peaked out, and expected to move down sooner or later, this move should be welcome. LICHFL continues to be a strong contender for a banking licence, thanks to LIC’s formidable backing on this issue.

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But it is on the stock market investment front that LIC really shines. Even while most institutional investors have burnt their fingers trying to time the market, and make short-sighted moves, LIC continues to make long-term prudent bets in the Indian market.

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Like its Chairman DK Mehrotra who feels that the Indian capital market story is intact for the long-term, LIC continues to invest in beaten-down blue-chips like Infosys and Reliance, as well as in large PSU stocks like ONGC and NMDC.

LIC’s buys into the Indian market have also been a relief to retail investors in stocks and mutual funds, as based on LIC’s support, at least the high-quality segments of the market have refused to fall beyond a point. Chairman DK Mehrotra expects market to scale back to 2008 levels on the longterm, and according to his wise counsel the stocks that are likely to most benefit are quality names in pharma, FMCG, and two wheelers.

Mehrotra who doesn’t see short-term upsides for the market, is spearheading LIC’s initiative on how to take a more momentous role in the Indian stock market. LIC’s basic challenge is that it has huge funds to invest, it has formidable research power to identify opportunities too, but that its hands are tied by existing regulations from buying more than 10% of any stock. Interestingly, in some blue-chips like L&T, SBI, & ITC, where it has more

than 10% stake due to various reasons, it is not selling any share at all, as it can’t buy back from the market due to the existing regulations. While Government is examining LIC’s request to allow it to invest up to 16% of any stock, LIC has trained its research guns on various mid-cap performers, and needless to say, LIC’s support has come in quite handy for many medium-sized corporates, as they were finding that their shares are being dumped by FIIs, due to their own overseas issues. LIC’s buys into the Indian market have also been a relief to retail investors in stocks and mutual funds, as based on LIC’s support, at least the high-quality segments of the market have refused to fall beyond a point. Chairman DK Mehrotra expects market to scale back to 2008 levels on the long-term, and according to his wise counsel the stocks that are likely to most benefit are quality names in pharma, FMCG, and two wheelers. With Rs. 45,000 crore earmarked by LIC to invest in Indian equities this year, no investor would be overlooking his sage advice.

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NBFCs

Manappuram Shows its Phoenix Like DNA

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The first listed gold loan player has rebounded remarkably from a string of adverse regulations against the gold loan segment, as well as allegations of corporate mis-governance. The firm has adapted rapidly to the dynamic changes in the industry, restructured itself for ensuring better corporate governance, and kept its commitments to most of its investors. The result is a phoenix like rise from a year long downfall. Here is what makes the company and its stock tick:

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id anybody say gold finance sector was in dire straits? Well, better put, the question should be, did anyone refrain from saying so? This notion was that widespread after RBI almost cracked down on the sector as though it was the next microfinance in the making. However, the first quarter results of India’s first listed gold loan firm would be a bad place to look for proof. Assets

Under Management is up by 20%, Net Interest Income is up by 32.60%, and Net Profit is up by 46%, on an yearon-year basis. Of course, there is a sequential dip in performance, but that isn’t much of a surprise, given the headwinds facing the industry. But even here, core metrics like spread and NIM have held their ground at 14% and 12.4%. If one is to annualize the numbers, Manappuram Finance Ltd or its investors are unlikely to be in any serious problem during this fiscal. But

it would be better to take Manappuram top management’s guidance for a year of subdued growth in FY’13, for safety’s sake. Now to the issue of how market has reacted. Market has an uncanny ability to arrive at the distilled truth. Even while investors keep on looking out for the next multi-bagger in the stock market, and burn their fingers on odd bets, scrips like Manappuram continue to fascinate for its sheer ability to rise virtually from ashes. Not once, but many times now, in its listed history. That Manappuram has been an excellent wealth creator for its early stage investors is an old story now. Forget early stage, even as late as between FY’10 and FY’11, the first listed gold loan player has been a 4X wealth multiplier. But even that is an old story now. Between May 10 th 2012 and 18 th August 2012, the Manappuram stock has doubled in its value. From Rs. 18.60 a piece to Rs. 37.60. Naysayers would say that, that was

Between May 10th 2012 and 18th August 2012, the Manappuram stock has doubled in its value. From Rs. 18.60 a piece to Rs. 37.60.

because of the steep fall, and they are right too, to an extent. But this is the Indian market where such resurrections are not the rule, but the exception, what with a stock market that increasingly looks like a battlefield full of oncevaliant corpses. Indian stock market investors enjoy no kind of capital protection, much like the rest of the world markets, or even worse, but anyone would agree that a 100% rise from a fall is more than enough to act as enough capital protection, at least for the nimblefooted investors. What made Manappuram do a phoenix play even during this ambiguous times - not only for the markets or financial stocks - but for gold loan companies in particular, is worth a contemplation by not only investors but by any midcap company. FY’12 was certainly not a good one for gold loan companies. While already suffering from rising fund costs, a series of regulatory moves came in as a double whammy, including capping of LTVs to 60%, and capping on the funds that banks can provide to gold loan companies. As if that was not enough of a headwind, Manappuram’s promoter group was pulled up by the regulators for some questionable practices in mixing the businesses of listed and unlisted entities. But all that are fast becoming history.

V.P.Nandakumar Managing Director & CEO.

Before we get into the general headwinds affecting the gold loan industry, it would be enlightening to look at the corporate governance allegations and how Manappuram’s promoter group dealt with it.

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What VP Nandakumar and his team really proved, during this past one year, is that it has that Phoenix like DNA. Resilience is built right into the organizational culture. To really understand that one has to have a working knowledge of this NBFC’s history.

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First of all, this is not the first time that Nandakumar and family have been alleged to have done less than satisfactory governance. But is that because of real corporate misgovernance or a traditionally different way of doing business, is the million dollar question.

Jagdish Capoor, Chairman, Manappuram Finance. Former Deputy Governor of RBI and Chairman of HDFC Bank.

In its early listed years, during a steep market fall, the regulators had found issue with the way the promoter group had assured many local investors of an informal buyback. Though Manappuram backtracked then to comply, why that happened is very interesting. The reason is that before it became a listed company, it had several decades of existence as an informal deposit taking entity. Thousands of families in and around Manappuram House in Valappad, has been trusting this moneylender family, which is rare in a Kerala society that traditionally doesn’t look too kindly upon this business. Why that buyback was attempted was simple - though capital market doesn’t provide any capital protection mechanism, Manappuram promoters wanted to honour an old commitment that their local investors’ money wouldn’t be lost. To cut a long story short, the second and recent round of corporate misgovernance issue is also about this different and traditional way in which Manappuram has been trusted by its investors in its local soil.

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Anyway, this time around the reaction from Manappuram was not just compliance. That was understandable too, as this time around much more was at stake for Manappuram, what with their line-up of the who-is-who of bluechip long-only funds.

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The way in which Manappuram dealt the issue is befitting a case study. Even while maintaining innocence, Nandakumar admitted regulatory noncompliances and quickly appointed a Board Committee of independent and respected veterans as well as appointed

KPMG to come up with rectifications.

Foreign Institutional Investors including Baring, Beaver, BRIC II, & Nambe, made huge buys into Manappuram stock in March, when Nandakumar had to sell a significant portion of his stake to raise funds to pay back some investors for regulatory compliance.

The Company followed it up with an even more powerful move of Nandakumar moving out of Chairman’s role, and appointing an Independent Chairman to head the Board. Long term independent director Jagdish Capoor became Chairman. Capoor is a former Deputy Governor of RBI and former Chairman of HDFC Bank. As part of the re-shuffle, Nandakumar also assumed more direct responsibility of operations - coming directly into the firing line - as the Managing Director and Chief Executive Officer. Interestingly, the market took his new assignment as a very positive move, as mature segments of the market

pay back some investors for regulatory compliance.

I. Unnikrishnan Executive Director & Deputy CEO

If that is the story behind how this Phoenix Bird again rose from its ashes, don’t expect the going to be smooth. In recent weeks, Manappuram counter was again rocked by a new controversy. An institutional advisory firm cautioned public investors that Manappuram was going to give unfair advantages to a couple of institutional investors. But conveniently forgotten was the fact that Manappuram and its NBFC competitors had earlier also accorded such privileges to large investors in their stocks. In the final reckoning, it was clear that these special privileges were designed to ensure that the company doesn’t go in for too much dilution and to ensure that promoters don’t sell stake in the open market without warning. In other words, these special concessions to some investors were largely in the interest of public shareholders. Unsurprisingly, the official resolutions that allowed these privileges were easily approved by the recent AGM.

At the same time, market was also cheerful of the fact that the other architect of Manappuram’s success, I Unnikrishnan, also continues to lead from the front as Executive Director and Deputy CEO. The proof of whether Manappuram’s restructuring had any bearing on its perceived corporate governance standards, came in the behaviour of institutional investors. And that was an overwhelming yes. Foreign Institutional Investors including Baring, Beaver, BRIC II, & Nambe, made huge buys into Manappuram stock in March, when Nandakumar had to sell a significant portion of his stake to raise funds to

On the stock side, what differentiates Manappuram from many competitors is their demonstrated willingness to share wealth. It is a story where investors wealth went up by more than 17 times of their investments.

The essence of Manappuram’s success is easy to fathom. On the fundamental side, they were pioneers in taking a traditional business like gold loan to the listed space, so that it could be scaled up to astronomical heights. On the stock side, what differentiates Manappuram from many competitors is their demonstrated willingness to share wealth. It is a story where investors wealth went up by more than 17 times of their investments. That too, when promoters held only a 32% stake. That is what made FIIs & DIIs scramble for their pie which now stands at around 37%, with another 13% with foreign corporate bodies. That leaves only a small portion with retail investors, and that is making this Phoenix fly again.

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remembers Nandakumar’s business acumen.

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In-Focus

Mather Restructures to Scale Up in Size

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Mather Projects, one of the leading born-in-Kerala developers is entering the next stage of growth. Moving away from a traditional family-directed management, Mather Projects is bringing in world-class professional expertise in operations, project management, and marketing, as well as strengthening corporate governance standards by inducting high-profile independent directors, so as to facilitate growth avenues like PE funds. Mather Projects is now led by family doyen KMI Mather, who will be the only family member in the Board, while much of the restructuring has been done under the guidance of family’s brightest star, the multifaceted and versatile talent, Shaffi Mather.

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or the young and hip crowd of Kochi, Mather Group might seem to be a decadeold fine real estate developer with 15 top-notch completed projects to its credit. But discerning seniors in Kochi know better. Mather & Company was incorporated even before India obtained her Independence. In 1944 to be precise, which is 7 decades back. And Mather Group is no newcomer to the housing sector too. While the Group’s largest unit, Mather Projects Pvt. Ltd., might be only a decade old, other Mather Group companies were active in

building standalone homes much earlier.

successful firms like Mas Hotel, Mather Academic Services, Alliance Packages etc. In its core construction front, it started other companies like Mather Projects & Constructions Ltd., City Heights India Pvt. Ltd., Mather & Sons, apart from their first firm, Mather & Company Pvt. Ltd. Commercial-cum-office project Mather Square, and Kochi’s first mall, The Esplanade were two key projects during this time. Spearheading all these projects in the initial decades was the family doyen, KMI Mather, who has now come back into the limelight with a more proactive role at its branded housing division, Mather Projects Pvt. Ltd. KMI Mather is difficult to define as just a businessman. His other roles in the society clearly eclipses his role as an entrepreneur. He has been a sports

But it was in specialized construction and engineering avenues that Mather Group made its initial name. In the industrial construction and infrastructure space, Mather successfully undertook major works for clients like Indian Space Research Organization (ISRO), Vizag Steel Plant, and Kerala Government, to name just a few. These works included projects like large converter shops, bridges, coastal seawalls, spillway bridges, and massive industrial steel fabrication / erection works etc. At the same time, Mather Group also diversified into other domains with

N Asokan, ED & CEO

organizer par excellence as well as a key political figure in Kerala state’s politics. KMI has been a prominent patron of the game of football in the state, and he has been Kerala Football Association’s long-running President.

Mather el castillo

Traditionally, the Mather family, hailing from Chowwara near Aluva in Ernakulam District, has been very active in Indian National Congress, with KMI’s father, KCM Mather being a former KPCC Treasurer. KMI’s mother, TM Suhara, also hails from a traditionally Congress family, with her father being TO Bava, former Minister and KPCC President.

Anyway, KMI Mather’s comeback into the active business arena, through his new proactive leadership role at flagship Mather Projects Pvt. Ltd. is due to a variety of reasons. This firm used to be led reasonably by its Directors, Raffi Mather and Siraj Mather, for over a decade. Raffi is the elder son of KMI, while Siraj is Raffi’s cousin. During their management, the firm made its name in a few highquality projects, as well as in the area of branding. However, volumes were a casualty, as even after completing a decade of operation, Mather Projects Pvt. Ltd. had clocked only 10 completed projects. Making things worse, competition had heated up, with

Mather Veneziano

newer entrants both from inside and outside the state coming up with projects with both larger number of units and better completion times. Due to the peculiar nature of the real estate sector in Kerala, like delayed clearances, Mather Projects also experienced a few customer dissatisfactions due to missed completion deadlines. It was in this context that this reputed business family came up with the idea of restructuring Mather Projects Pvt. Ltd. in a thoroughly professional way. The mantle for this was taken up by KMI Mather, since he was the Chairman of this company. Under his direction, in order to facilitate and empower a new professional management which can be held accountable, existing Directors from

the family, Raffi Mather and Siraj Mather resigned from the company. KMI always had a secret weapon at his disposal, which was the expertise of his younger son, Shaffi Mather. Known from his school year onwards as a child prodigy, the brilliant Shaffi had went on to study dual MBA degrees from University of Bridgeport and University of Pittsburgh in USA. His specializations were Finance in Bridgeport and Strategic Planning, Policy, & Marketing in Pitt. Later, he would graduate from London School of Economics in Leadership & Excellence, under the prestigious Chevening Gurukul Senior Scholarship. A non-stop scholar passionate about learning new skills, Shaffi would also obtain a Master of Public Administration (MPA) with

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But KMI Mather decided early on in his life that his political role would only be a subtle one, as a supporter of emerging youth talents, and this role he had always done with elan. The support KMI Mather and his family’s Mas Hotel in Ernakulam have extended to then promising talents like the current Defence Minister AK Antony, current Kerala Chief Minister Oommen Chandy, and several other such highprofile leaders during their college years and early careers, is legendary in Kerala politics. Legend also goes that despite never being in political limelight, KMI Mather has been a master strategist behind the scenes, for Kerala’s Congress unit, which is of course something that this veteran businessman has never admitted.

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specialization in Public Policy from Harvard University’s prestigious Harvard Kennedy School. Also tucked under this youngest Mather’s belt are BCom and LLB degrees from Kerala. His career graph is also impressive, which started with a stint as Assistant Vice President at Westex International in USA, before he moved on to India, to take up position as Chief of Essel/ Zee subsidiary E City India Ltd. Later Reliance Industries Ltd would assign Shaffi the role of Senior VP & Head of their ambitious pan-India retail rollout of Infocomm and Webstores. But the interesting thing is that Shaffi is not known in India or abroad for any of these achievements. He is more known for his social entrepreneurship projects like a pan-India ambulance access service (1298), a cost-effective schooling and educational content development project, and a rural supply chain solutions organization. His social entrepreneurship projects have won wide acclaim and he had been invited by US President Barack Obama for a

Mather Esperanza

meeting of key social entrepreneurs. Shaffi has also taken his family’s political lineage to new heights. Currently he is Economic Advisor to Kerala Chief Minister Oommen Chandy, and is also contributing to the planning and policy wing of AICC where he is seen as a close confidante of Rahul Gandhi. On the academic side, he is a visiting professor at London School of Economics. It was under Shaffi Mather’s guidance that a new top management team was identified at Mather Projects Pvt. Ltd.

Mather Berry Woods

N Asokan heads the management as Executive Director and CEO. He has been a Board Member of the company, and is regarded as one of the foremost authorities in the operations and project management side of a real estate firm. Sales & Marketing is headed by Mathew Joseph, another accomplished specialist in his arena, who has also been inducted as a Board Member.

be available for providing guidance to the company when required. The promoter family will be solely represented by Chairman KMI Mather, while two new independent directors have been inducted - Navaz Meeran, Chairman of Eastern Group, and M Venugopalan, former Chairman of Federal Bank.

Strengthening corporate governance standards, Shaffi is not participating as a Board Member or Executive, but will

The restructuring is also designed to enable high-growth avenues like participation of high-profile PE funds, and even an eventual IPO. The Group has five ongoing projects El Castillo at Jawahar Nagar, Hacienda at Aluva, Esperanza at Seaport-Airport Road, Kakkanad, Berry Woods at Chembumukku, and Highlands at IT City. All of them are large apartment projects, which carry Mather’s signature of superior build quality as well as luxurious aesthetics. Highlands is also noted for its mass appeal, with a large number of units, and specially attractive pricing.

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The latest project from Mather is the newly launched Veneziano at Koonamavu, which is a lifestyle villa project, a traditionally strong segment of the Group. Living up to its name, it attempts to recreate Venice-living in a Kerala setting, complete with a freshwater canal right through its green campus.

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Powered by the recent restructuring, Mather Projects is also diversifying into other districts of Kerala, and is planning projects spanning 10 lakh sq ft, in the coming months.

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Auto

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Car Sales Struggle to Grow Even 7%, Even on a Low Base

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ue to tough market conditions, car sales in India grew by just 6.71 per cent during July, that too mainly on account of the low base in last year due to strike at Maruti Suzuki's Manesar plant. According to figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in July stood at 1,43,496 units as against 1,34,473 units in the same month last year. "Car sales are growing mostly due to diesel models, which have also started seeing moderation in demand except for one or two models. This year's car sales growth has also been magnified by the low base of last year due to strike in Maruti," SIAM Director General Vishnu Mathur told reporters. Country's largest carmaker Maruti Suzuki India had witnessed strike by workers at its Manesar plant in June last year that had severely hit production. The ongoing lockout at Maruti's Manesar plant, which was declared on July 21, will start impacting the industry's numbers from this month and going forward, he added. "There is nothing positive which has happened last month to spur growth, except for slight moderation in petrol prices. Otherwise, interest rates remain high and consumer sentiments are down," Mathur said. He said the industry is "hoping that the new finance minister would take up steps so that there could be moderation of interest rates and the gap in the prices between petrol and diesel fuels is reduced so that demand can pick up again." In the passenger car segment, market leader Maruti Suzuki's sales jumped by 8.32 per cent to 56,851

Sales of Toyota Motor Corp., Ford Motor Co., General Motors Co., Honda Motor Co., Volkswagen AG, BMW AG, Fiat SpA and Daimler AG's MercedesBenz declined. units. Rival Hyundai Motor India's sales increased by 7.84 per cent to 27,500 units. Homegrown auto major Tata Motors' car sales were up by 51.13 per cent at 21,153 units. However, sales of Toyota Motor Corp., Ford Motor Co., General Motors Co., Honda Motor Co., Volkswagen AG, BMW AG, Fiat SpA and Daimler AG's Mercedes-Benz declined in July. In July, total sales of

vehicles across categories registered an increase of 7.53 per cent to 14,46,959 units from 13,45,644 units in the same month last year. Commercial vehicles sales grew by 1.20 per cent to 65,008 units during the month, from 64,234 units in the year-ago period, SIAM said. "The real cause for concern is the CV segment. Both the medium and heavy commercial vehicles and light commercial vehicles are slowing largely because of overall economic slowdown," Mathur said. Medium and Heavy Commercial Vehicle sales declined 14.84 per cent to 23,171 units during the month compared to 27,210 units in July last year. According to SIAM, light commercial vehicle sales grew 12.99 per cent to 41,837 units in July 2012 from 37,027 units in July 2011. In the three-wheeler category, sales went up marginally to 44,286 units from 43,948 units in the same month last year.

Realty Trends

n today's context innovative options both in the residential units and loan offerings seem to be the need of the hour. The boom in real estate that has been fueled by the ever rising incomes of individuals in India combined with easy access to home loans has brought about such new and innovative options in the residential units. Luxury and lifestyle demand has seen the emergence of elegant builder floors as the preferred choice among many upwardly mobile Indians. This concept of building a three or four level high building over small or medium sized residential plot and then selling each of the floors to independent buyers is gaining rapid popularity in the metros as well as tier II cities across the country. The builder floors can be developed either by established builder, individual land owners or as joint venture of both the parties. There are several differences in the basic considerations of builder floors as compared to apartments in high rise buildings. Builder floors are low rise buildings with generally 4

floors or less whereas the high residential projects may have a large number of floors depending on the project clearances. In the builder floors only a single dwelling unit is provided per floor which implies that a single family has the entire floor to itself providing greater privacy. The high rise projects on the other hand have a number of 2, 3 or 4 BHK apartments on a single floor which implies more people sharing the same floor. The cost of builder floors are inherently higher as they cater to high end customers who prefer to enjoy better amenities and privacy at a higher cost. The high rise residential complexes cater to the average middle class who require budget housing solution with a ready to move in option. Economically speaking the apartments in high rise buildings are much more efficient in terms of cost as well as utilization of available space. High rise complexes with more number of units will generally have more common amenities such as swimming pools, community halls, club houses and children's park. The social life is also

more inclusive in case of the high rise apartments as more families reside in the same building. The USP of builder floors is that it allows one to own an independent dwelling unit without having to pay hefty amounts required for independent villas or bungalows. The price difference between an independent villa and the builder floor makes it a lucrative option for all those who want better lifestyle at limited costs. Along with the privacy and luxury of an entire floor to you also comes the freedom from paying maintenance fees and other charges commonly applicable in high rise apartment. Another USP is that builderfloor projects are quickly completed, whereas large projects are almost never completed in even double the stipulated time. The builder floors accord one the freedom to choose the locality of the house in more developed areas of the city. Tying up with independent land or house owners for developing builder floor can work out to be a great deal for buyers. There is a better opportunity for friends or likeminded people getting together and buying all the floors of the building so as to have a separate community that will not be disturbed by outsiders as is the case in high rise buildings that have a large number of apartments. Each floor has its own separate water and electricity connection which helps avoid disputes or misunderstandings which are common in larger communities where floors are shared by many families. Additionally the returns that can be expected from the sale of builder floors are much higher in terms of sheer percentages as the entire floor is being disposed at a time. A higher premium on the property is naturally expected as the new owner gets independence along with luxury.

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Builder Floors as a Realty Trend: How to Decide Whether it is for You?

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Newsmaker

By Shobha Warrier

Meet Francis Kolandei, Unkno wn in India, but he is this Y ear's Magsa war d Unknown Year's Magsayysa sayy A Aw ard Winner evious winner inoba Bha shan, Winner.. Pr Pre winnerss include V Vinoba Bhavve, T N Se Seshan, Jayapr ak ash Nar ayan, Baba Am vind K ejriw al. aprak aka Nara Amtte & Ar Arvind Kejriw ejriwal. It had been only been a few days since the Magsaysay awards were announced but life was as usual for one of the winners. Not very surprising as Francis Kolandei, a name not many in India, let alone in Tamil Nadu, have heard of, prefers to work silently. In fact, he hadn't even heard of Magsaysay awards till he was told that he had won one. He has been working for the last 33 years with the tribals living in the remotest parts of Tamil Nadu and later with the underprivileged women in some of the villages in Krishnagiri, Dharmapuri and Vellore districts, making them self sufficient. Today, his organisation, Integrated Village Development Program (IVDP), an NGO, works with 8,231 Self Help Groups (SHGs) and 153,990 people. IVDP has moved into their new sparklingly clean office only a month ago, and everyone, from the watchman to the women working in the office, is proud of it. The day I went to meet Kolandei Francis in Krishnagiri, there was a monthly meeting of the 350 women who were in charge of the various SHGs. In uniform, they sat in the conference room. Chaired by Muniratnam, the chief coordinator, the meeting discussed the previous month's work and planned for the coming month.

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Excerpts of the long chat I had with Kolandei Francis:

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You had a tough childhood. Do you look back at those days? How can I forget those days? I come from a very poor family in a remote place in Salem and my family went

through unimaginable poverty. Ours was not an isolated case; many families in that area were extremely poor. Though we had a small piece of land, our parents worked as coolies in the farm land owned by others. Later, my father got a job in the Railways as a gangman, and after that we moved with him to various places. But there was not enough money to even feed six children and two adults. But my mother had this desire to educate her children. Unfortunately, none of her children except me went beyond the 10th standard. It was not her fault. She tried to give education but they didn't make use of the opportunity. My mother was happy that at least one son of hers was interested in studying. To send me to school and the University, my mother started small businesses like selling milk, rice, etc. I used to help her sell in the evenings after school. Life was so

tough that everybody had to pitch in to make the family run. When I was ready to go Annamalai University my mother decided to mortgage the small piece of land. By the time I finished college, my mother had lost the land as the moneylender cheated her. Was it because your mother lost the only piece of land she had that later on, you chose to work with the poor who get cheated by moneylenders? It was not just one incident but my entire childhood and the poverty we underwent had a strong impact on me. And that is why I decided to work with the poor who get cheated. The hardship we went through cannot be explained in words. If I had not suffered the way I did, probably, I would not be doing what I am doing right now. I would have taken up a good job, got married and helped my mother like everybody else.

Why did you opt for priesthood after your graduation? After I graduated in 1969, I wanted to do social work. Coming from a Christian background, what came to my mind was to join priesthood. I thought I could help the poor only if I became a priest. What was your mother's reaction when you took the decision? She didn't like it a bit. She tried her best

to dissuade me. She said she suffered a lot to educate me and I shouldn't be deserting the family. I told her that I could not be like everyone else and help only my own family. I didn't know whether I would be happy being useful only to my family. Luckily for me, the moment I entered the seminary, my brother got a chance to work in Iraq, and that eased my guilt because I knew he would be able to help my family. She was happy that there was at least one person who would help the family. While you were in the seminary, you were sent to help the refugees of the Bangladesh war. In what way did it affect you?

Francis Kolandei

Yes, they sent me to help those affected by the war. I was on the Bangladesh border and there were many refugee camps there. The suffering and pain in the refugee camps had to be seen to be understood. Only those who witnessed it in person would know how bad the situation was. After the kind of poverty we underwent, the sufferings I saw in the refugee camps also impacted me deeply. Then and there, I started thinking whether I would be able to ease the suffering of such people as a priest. I was sent from the seminary to do my Masters in Philosophy in Pune and soon after that, I was in the drought hit areas of Maharashtra. Once again, I saw human suffering in front of my eyes. Looking back, I feel God wanted me to witness all kinds of human suffering so that I would be driven to do something to help people. When did you decide to give up priesthood? That was after I went to a very remote village. In 1975, I was sent to an interior village for one year. From Hosur, we travelled 75 kms to Anjetty, and from there, we walked 25 kms to reach almost the middle of a forest where many people lived. Those people had migrated from near the Mettur dam when the British built it. I stayed there for a year. Another person from the seminary also was there with me. The life in the village was very pathetic. There was no drinking water and starvation deaths also. There was no school, no hospital, no post office, no roads. If we wanted to travel out of the village, we had to walk 25 kms. If someone was very sick, he just died. What did you do in the village to help them? Children didn't study as there were no schools. So first, we started a night school for the children who went out in the day herding cows, sheep, buffaloes etc. We also started a first aid centre. During the day, we visited the homes and at night, taught the children. I knew, as a priest, I would be expected to complete my studies and I would be sent to another place after some time but I wanted to do more for those villagers.

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That is the way each and every human being behaves. There is nothing wrong in that too. But I was impacted by harsh poverty and I do not know whether it was a positive or negative impact.

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Another thing was, if I were a priest, people would have some pre-conceived notions about me. That was when the thought of coming out of priesthood struck my mind. How tough was the decision? It was a very tough decision. My mother initially disagreed with my decision to be a priest but she was aghast when I said I wanted to relinquish it. I told my mother not to worry about me or the people. In 1979, I came back to the same place in the jungle, after relinquishing priesthood, to work for the people there. I continued with the night school and the first aid centre. Some people from the church helped me by providing food, shelter, clothing, books, etc. for the poor villagers. I established quite a few night schools in that area. That was when Oxfam (Oxfam International is a confederation of 17 organisations working together to find lasting solutions to poverty and injustice) came to know about my work. They wanted to know what kind of help I needed. Other than the night schools and the first aid centres, I wanted to help the farmers who suffered from lack of water. It was not that there was no rain there. Because it was a hilly area, all the rain water flowed away. I had earlier seen someone doing rain water harvesting in Karnataka. Similarly, I wanted to have small ponds and check dams in that area so that the villagers got water throughout the year.

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How much difference did the check dams make? Immediately after the check dams were built, the water table rose. Once there was more water, farming turned more dependable.

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Is that when you decided to help them through loans? They needed additional money for farming but no banks were willing to finance them. Even today, banks do not finance the poor. So you can imagine how it was in those days. There were poor people who mortgaged their land for many purposes to moneylenders and finally lost it. If the villagers have to start anything, they need money.

Did you have any inspiration behind the model you worked on? Having lived in a remote village, you have no inspiration except the needs of the people. I would say a series of events took place in my life and one led to the other. Lack of water aggravated the poverty of the villagers. That is why we got water through check dams. Once you get water, you can start farming but you need money to start any kind of farming. So, that was the next step. What was the financing model you followed? There were 15-20 villages in the nearby area and altogether around 6,000 people. I formed men's groups. The reason behind making groups was if we give loans to individuals, they don't generally give the money back. In fact, first I started giving loans to individuals which was a failure. We got around Rs 20 lakh (Rs 2 million) from Oxfam and we distributed it among the groups as loan of Rs 2,000, Rs 5,000 and Rs 10,000 which could be rotated and given to those families who didn't get loan first. People took these loans to buy seeds, pump sets, dig wells, etc. Once they harvested, they repaid the loan. Though it worked well in the beginning, later, the men stopped paying back.

They looked at it as easy money. What I started in 1981 went on till 1988, not that successfully, of course. In the end, we lost a few lakhs. Is that the reason why you decided to work with women? Yes. I didn't want to stop helping the people though it was a failure working with men. That was when I thought of trying the same pattern with women. In 1989, I started with 10 women's groups of 15-20 women. But we told the women that we were not going to give them any loan but they had to start saving. They started with 50ps which became Re 1 and then Rs 5. We told them 50ps, Re 1 etc. is very little. So, quickly, the savings went up to Rs 10. The money they collected was rotated among them as loan after a resolution in the group. The interest paid by the person who got the lump-sum amount was added to the group's funds. You can call them self-help groups. That was how it all started. The money was not deposited in any bank at that time. It was not a co-operative as each group worked independently. So, it's not a micro-finance model? No, it is not micro-finance. In microfinance, somebody else lends the money and charges them interest. Here, the

When did you realise that the model you started was working? When I saw a change in the lives of 300-400 families, I felt the model could be replicated. Now that we could a make a difference in the lives of more than a lakh and half people, you can say the model has been successful. I am not talking about saving and giving loans alone. It is a holistic approach that we are following. I am talking about health, education, savings, etc. I am happy that things are moving in the right direction.

How different was working with women compared to men? They are very disciplined and regular in collecting, disbursing and repaying money. Had the money been given to men, they would have exhausted all that in no time. On the other hand, women makes use of it wisely. She sees to it that the family is fed properly, children are educated and well clothed and also money is saved. She thinks only of the family and not going to a liquor shop. This way, we could put an end to poverty and child labour. The biggest change we saw was, children were going to school. Because children go to school, there are no child marriages. A lot of our children, especially girl children, are going to Engineering and Medical colleges now. Though our

I have been working for the last almost 35 years all alone, and I have undergone a lot of hardships in life. I never expected or looked for any awards in all these years. Awards have not changed me and will not. It is the way my mother fought poverty that gives me the strength to wade through all difficulties. She is 94 now, and doesn't understand about awards but she understood that somebody had appreciated her son, and she was beaming, seeing my photo on TV. society is male centric, women are better managers of money. When money is given to the woman, she takes over the running of the family, that too in a better way. In front of our eyes, we saw their lives changing for the better.

How do you feel about getting such a prestigious award? I don't know what to say. I never expected any award. I have been working for the last almost 35 years all alone, and I have undergone a lot of hardships in life. I never expected or looked for any awards in all these years. Awards have not changed me and will not. It is the way my mother fought poverty that gives me the strength to wade through all difficulties. She is 94 now, and doesn't understand about awards but she understood that somebody had appreciated her son, and she was beaming, seeing my photo on TV. Do you think the model you follow is the best one? I will not say this is the only model but I would say this is much, much better than the micro-finance model. What we follow is a holistic approach. I plan to work only with these many people but I hope others will take up this model, improve upon it and work in other areas where there are poor people.

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money is owned by the people themselves and the interest is also shared by the members. That was the time Tamil Nadu government started a scheme linking self help groups to banks. That was ideal for us as we also needed bank loans. After the groups deposited whatever they had saved, we got them loans of Rs.10,000, 15,000, 20,000, etc. The bank only charged 12 per cent interest from these people unlike the micro-finance model. That is why I am not happy with the Bangladesh model of micro financing.

When did you come to know that you have won the Magsaysay award? Actually, a few months back, some people came from the Philippines and they told me that they were research scholars. They were here for a few days speaking to me, the members, banks, etc. But I had no idea it was to evaluate us for the award that they were here. Only now, I realise that was their purpose.

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Indian Boy Discovers Nothing Small, But a Comet!

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ith the discovery of a new comet, a Delhi boy has become the first school student in India to have achieved this feat. A Class XII student of Ahlcon Public School in Mayur Vihar, Prafull Sharma discovered the new comet SOHO 2333 using data from the National Aeronautics and Space Administration (NASA), and European space agency's spacecraft-based observatory SOHO. SOHO 2333 is a fragment believed to have separated from a relatively larger comet Machholz when it last came close to the Sun in 2007. The British Astronomical Association also confirmed the find and included it in their list of newly discovered comets. According to the experts, SOHO comets are small comets that are usually found in close proximity of the Sun. Comet hunter Sharma has been studying about them since 2007. His first step in this direction started at his school club Ahlcon Space Club. "It all started from the space club in my school, and then I travelled to Patna in 2009 to witness the solar eclipse, followed by the ring eclipse in 2010 in Kerala. In 2011, I joined the All India asteroid search campaign and did a project with Lapalma Observatory in Spain. I

discovered an asteroid then. I joined the Sun Grading Project in January, following which SOHO 2333 happened," said Sharma. Stating that

It all started from the space club in his school, and then he travelled to Patna in 2009 to witness the solar eclipse, followed by the ring eclipse in 2010 in Kerala. As a part of the space club, the school arranged for a telescope on the terrace to help Prafull in particular and to encourage all other students.

Ahlcon Public School, New Delhi

Sharma has the potential to join the big league in comet research, principal of Ahlcon Public School, R K Sharma said: "As a part of the space club, the school arranged for a telescope on the terrace to help Prafull in particular and to encourage all other students." As per the official list of the SOHO comet discoverers till August 1, a total of 85 comet hunters have been granted 'SOHO numbers' of which Sharma is the 83rd member. Sharma has been associated with Delhi-based NGO Science Popularisation Association of Communicators and Educators (SPACE), is part of a world-wide team of comet hunters who scour through images of the sun transmitted back to Earth by Solar and Heliospheric Observatory (SOHO). On the significance of the discovery, Chander Bhushan Devgun, chairman of SPACE said: "It's significant as small comets are not detected visually as they have to be discovered by SOHO method. Moreover, such discoveries are crucial in understanding the dynamic nature of comet population. Also he is the first Indian school student to do so. Before SOHO 2333, last year he discovered an asteroid as well." Sharma aspires to pursue aero space engineering after his class XII exams.

Tech Wars

Apple Vs Samsung: pple is fighting tooth-and-nail, a second time in its life, to protect what it thinks is its own baby - the iPhone/iPad family of technologies. Its smart rival, Samsung of Korea, is equally determined to prove it has rights to bring out its Galaxy family of products. In its latest salvo, Apple has claimed that late Steve Jos was shell shocked on seeing a Galaxy S in 2010. He should be, as he and Apple had lost an earlier war for dominating PCs, as Microsoft and PC-makers like IBM, Compaq, HP, & Dell took away 90% of the market from its greedier arms. History is repeating itself with a clutch of phone-makers dominated by Samsung and backed by Google are set to do a likewise assault on iPhone/iPad. An Apple Inc expert witness testified this week that consumers would be willing to pay $100 for three patented smartphone features that are at issue in its high stakes trial against Samsung Electronics Co Ltd. John Hauser, a marketing professor at MIT, said he surveyed consumers over the Internet about how much they would pay for some of the technology in the lawsuit, like scrolling and multitouch, which Apple claims Samsung stole from the US company. However, Samsung hammered Hauser on whether his study actually relates to real

world customer decision-making. Additionally, Apple patent portfolio director Boris Teksler described the company's licensing strategy, saying he could count "on one hand" the number of instances it has permitted other companies to use its design patents. Teksler did not name those companies. Apple and Samsung are going toe-to-toe in a patents dispute mirroring a struggle for industry supremacy between two rivals that control more than half of worldwide smartphone sales. The US company accuses Samsung of copying the design and some features of its iPad and iPhone, and is asking for a sales ban in addition to monetary damages. The Korean company, which is trying to expand in the United States, says Apple infringed some of its key wireless technology patents. As the second week of trial drew to a close in a San Jose, California federal court, most of the testimony focused on technical patent features. However, toward the end of the day Hauser said tablet consumers would be willing to pay $90 for the same patented features as what they would pay $100 for on smartphones. That information could be relevant when calculating potential damages for Apple, which is seeking over $2.5 billion from Samsung. Samsung attorney William Price asked Hauser why he didn't tell jurors what consumers would pay for features like additional computer memory on different tablet models. Those could be compared to the real world prices that Apple charges, Price said. While Hauser said he was confident in his methodology, he eventually acknowledged that his results do not necessarily correspond to what customers would actually pay for such technology in the real world. "This relates to it but it's not it, no," Hauser said. Teksler took the stand after Hauser finished. While Apple is open to licensing certain categories of patents, Teksler said, it is highly resistant to giving other companies access to technology it deems core to its "unique user experience." All of the patents in Apple's lawsuit against Samsung fall into that special category, Teksler said. After Samsung released its Galaxy S phone in the summer of 2010, Teksler said, former Apple chief executive Steve Jobs and current CEO Tim Cook, personally contacted Samsung to complain. Apple is one of Samsung's biggest customers for smartphone and tablet component parts. "We were quite shocked," Teksler said. "They were a trusted partner." Teksler is expected to continue testifying on Monday. The case in US district court, Northern District of California, is Apple Inc vs Samsung Electronics Co Ltd et al, No. 11-1846.

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Ba oyale in U SC our o Batttle R Ro US Cour ourtts tto Decide Smar tphone's FFutur utur e Smartphone's uture

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NBFCs

Muthoot Pappachan Group Growing Steadily Due to DIVERSIFICATIONS and Rapid Adaptability Nobody disagrees that the once fast growing gold loan segment has now moderated its pace. But one of the leading players in the segment, Muthoot Pappachan Group, is one of the least affected, thanks to their rapid adaptability and truly diversified nature, with significant operations in automotive, hospitality, real estate, and a few more. It has welcomed RBI tightening gold loan norms, as it expects the move to be of long-term good impact to the sector. MPG companies are partners with renowned international auto and hospitality brands like Jaguar, Land Rover, Honda, Yamaha, Hilton, Taj etc. On its core gold loan front, the flagship Muthoot Fincorp is at the forefront of the dynamic changes happening there like formation of SRO, better KYC etc. Its instant loan product â&#x20AC;&#x2DC;Express 3 Minute Gold Loanâ&#x20AC;&#x2122; has been a huge hit due to its well-conceived nature. The strong familial ties between the brothers of the promoter family, Thomas John Muthoot (Chairman), Thomas George Muthoot (Director), & Thomas Muthoot (Executive Director) is also a definite plus for the group.

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old loans are not what it used to be. Walk into any branch of Muthoot Fincorp and you would realize the positive changes sweeping across the gold loan business in the country. All frontline gold loan companies including Muthoot Fincorp have bettered implementation of Know Your Customer (KYC) norms. Whereas earlier identity proofs were largely driving licences and PAN cards, now the tamper-proof biometric Aadhaar Card is also allowed as a verification tool. Muthoot Fincorp has also been in the forefront of creating a Self Regulatory Organization (SRO) for the sector viz. Association of Gold Loan Companies. Since the creation of AGLOC and its promotion as an SRO, it has been instrumental in campaigning at regulators like RBI for their cause. The AGLOC guidelines are designed to serve newer entrants into the field so that the whole sector doesn’t get a bad name.

Some of the best practices followed by Fincorp and now being encouraged to follow by all players through this SRO include proper release of pledged gold, ethical recovery of interest dues, and systematic procedures for auction of pledged gold on non-repayment of dues. Muthoot Fincorp, like the other leading players, is concerned that several recent regulatory moves by RBI would not only slow their growth rate, but push gold loan seekers once again into the vicious grip of unorganized moneylenders, known for charging high interest rates as well as unethical recovery and auction mechanisms. Indian gold loan industry is estimated at Rs. 375 billion, of which 75% is estimated to be with unorganized moneylenders. In the remaining 25% with the organized sector, NBFCs and Commercial Banks are neck-to-neck with 50% each. While Muthoot Fincorp is adapting itself rapidly to the dynamic changes in the gold loan market, its parent group, Muthoot Pappachan Group (MPG), is well poised to continue growth at a rapid pace due to significant diversifications into many verticals like automotive, hospitality, real estate, alternate energy, healthcare, & entertainment. MPG group companies are leading distributors in Kerala for world renowned auto brands like Jaguar, Land Rover, Honda, & Yamaha, while its hospitality division is partners with reputed brands like Hilton, Taj etc. Muthoot Pappachan Group is also going through minor internal reorganizations to make their companies more focused on their respective core businesses. While Fincorp will dominate the Group’s gold loan business, MPG’s listed arm Muthoot Capital Services will shed its minor focus on gold loans and focus strongly on its growing business of auto-loans , especially in two-wheeler / threewheeler space. Fincorp also has a growing business in the Self Help Group / Microfinance

segment which is largely targeted at rural women’s groups. On its core gold loan business, Muthoot Fincorp has spearheaded the move to transform the nature of these loans from the traditional distress loan model to an enabling tool for young executives and relatively low-income groups for buying homes, cars etc as well as for MSMEs to make the best of seasonal opportunities in their business segments. And the real beauty of these loans branded as Express 3 Minutes Gold Loan - is that all it takes is 3 minutes

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for your gold to safely turn into instantly usable cash, which is a far cry from public sectors banks. The company is also bullish on the emerging prospects of its housing finance division that caters to the affordable segment. The real inflexion point for Muthoot Pappachan Group will come when it will eventually go for its second public listing - for its larger Fincorp division, which will prove to be a huge value unlocking opportunity. Thomas George Muthoot, Director, Muthoot Pappachan Group, answers Seasonal Magazine’s queries on the group’s performance and various initiatives: You are one of the larger NBFCs offering gold based financing to MSMEs. Can you provide an overview of this business? Muthoot Fincorp Limited, the flagship Company of the Muthoot Pappachan Group (MPG), caters to the financial needs of retail, small time traders as well as SME customers. A large chunk of our customers are traders / SMEs who come to us for their various business needs. Also most of these customers are loyal customers who come to us on a regular basis. Your Smart+ Gold Loan is said to act like a personal loan. Can you elaborate the main advantages for using this type of loans? Smart+ Gold Loan scheme is an innovative Gold Loan scheme with the additional benefit of repaying the loan in equal monthly instalments. The tenure available at present for Smart+ Gold Loan scheme is 6, 12, 18, 24, 30 & 36 months. This scheme is mainly aimed at customers who have regular income / the salaried class. Unlike banks, to avail this scheme, there are no security cheques to be given. No hidden charges and no additional documents like salary certificate, bank statement etc is required. A valid photo id proof is the only document to be submitted. Your popular product is the Express

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Thomas George Muthoot

We have launched our home loan division Muthoot Housing Finance Company Pvt Ltd (registered with NHB) in 2011 and is operational in Maharashtra and Gujarat. It targets those customers who require only smaller loans, 6-12 lakhs, for more affordable homes, and as such doesn’t catch the fancy of mainstream home loan players. It is a fast growing segment, thanks to mass housing schemes, as well as the emergence of new players like us that are focused on this segment. 3 Minute Gold Loan. Is it really possible for a new customer who comes in with pure gold ornaments and sufficient documents to get money within 10 minutes from any of your branches, if not 3 minutes? What are the main documents a customer should bring along? Everybody has to face times when quick finance is required, be it for business, child’s education, a new home or an emergency. Our Gold Loan product ‘Express 3 Minute Gold Loan’ is designed to meet the quick and easy need for liquidity. Our simple and uncomplicated procedure ensures that the loan is disbursed quickly. Targeted at the middle to lower income segment, the average ticket size is comparatively lower which enables disbursal in 3 minutes in such cases. We follow KYC norms as per the regulator’s guidelines & any of the following documents are

acceptable for availing the Gold Loan - Passport / Govt of India Election ID card with address proof / PAN card with address proof / Driver’s licence / any Govt departmental ID card. What were the highlights of Muthoot Fincorp’s FY’12 performance, and are those trends continuing in Q1 of this fiscal? Last year we expanded in various states of the country and recorded close to 50% growth vis-a-vis the previous FY. Q1 in the fiscal has been slow and our growth is in line with the Industry average. Will Muthoot Fincorp be going in for any kind of stake sale during FY’13, either to PE funds or are you planning for an IPO? We are in talks with multiple PE funds, but we have not yet decided or zeroed down on any of the PE funds as of now.

The company ownership is currently 100 per cent within the family. Most of the major gold loan players including Muthoot Fincorp are of the general opinion that the regulatory actions that were imposed on the sector during last fiscal will be hampering growth. While some of the players have explicitly admitted that they are slowing down significantly during this year due to this, on branch expansion etc, what is your take on this? Muthoot Fincorp Ltd welcomes the RBI’s move. Though it has a impact in the short term, it would definitely be beneficial in the long term. The capital adequacy (12%) and LTV (60%) norms will strengthen the long established and well managed existing companies in the gold loan industry and curb the reckless practices of recent entrants into the industry. Muthoot Fincorp already has a capital adequacy of 15% as against the requirement of 12% to be achieved by April 01, 2014. Last time when we talked, two non gold-loan areas that you were bullish

On its core gold loan business, Muthoot Fincorp has spearheaded the move to transform the nature of these loans from the traditional distress loan model to an enabling tool for young executives and relatively low-income groups for buying homes, cars etc as well as for MSMEs to make the best of seasonal opportunities in their business segments.

The real beauty of these loans - branded as Express 3 Minutes Gold Loan - is that all it takes is 3 minutes for your gold to safely turn into instantly usable cash, which is a far cry from public sectors banks.

on were affordable-segment housing finance and microfinance to SHGs. How has been growth on these two fronts? We have launched our home loan division Muthoot Housing Finance Company Pvt Ltd (registered with NHB) in 2011 and is operational in Maharashtra and Gujarat. It targets those customers who require only smaller loans, 6-12 lakhs, for more affordable homes, and as such doesn’t catch the fancy of mainstream home loan players. It is a fast growing segment, thanks to mass housing schemes, as well as the emergence of new players like us that are focused on this segment. Our customers are mainly in the suburbs of Tier-1 and Tier-2 cities. Our home loans are proving to be a great enabler for our segment of customers. On the microfinance front, we are engaged in proving Group lending facility through our product Muthoot Mahila Mitra (MMM). With focus on inclusive growth, the Microfinance division aims to serve the section of society which is at the bottom of the pyramid. Currently we have over 3.25 lakh clients. We are bullish on both these segments. Apart from Fincorp, can you briefly explain the expansion plans of your other core divisions like automotive distribution, hospitality, real estate development etc?

Muthoot Pappachan Group has diversified into other businesses including hospitality, real estate, automotive dealerships, and alternate energy. Recently we launched our healthcare division with a Trauma Care Centre – Muthoot Lifebrigade in Kottayam. We are looking at expansion in each of these verticals. In Automotive, the Muthoot Pappachan Group has automotive dealerships in various locations across Kerala. It has dealerships of Jaguar, Land Rover, Honda cars, Honda and Yamaha bikes. Coming to our Hospitality division, Muthoot Plaza, the one of its kind star hotel in Trivandrum (Thiruvananthapuram) is to become the Hilton Garden Inn. The hotel will reopen after renovation as Hilton Garden Inn in the 4 star business hotel category. The iconic Vivanta by Taj (previously known as Taj Green Cove) at Kovalam, is one of the internationally renowned Taj Hotels and also one of the jewels in Muthoot Pappachan Group’s (MPG) Hospitality Crown. The Muthoot Sky chef offers in-flight kitchen services, with a facility spread over 32,000 square feet, and serves airlines such as Air India, Indian Airlines and Qatar Airways. Other clients include charters and VVIP flights transiting Trivandrum. In Real Estate sector, MPG Hotels and Infrastructure Ventures is a real estate development company headquartered in Trivandrum. The Group is currently developing 6 hotels, to be operated by international brands, as well as commercial and residential spaces in India. Muthoot Technopolis, located in Kochi, is an IT park, with a builtup area of 355,000 square feet wherefrom global IT Majors are operating. Coming to Alternate Energy, MPG has been setting up wind farms in Tamil Nadu, India since 1993. The total installed capacity in wind power is 25 mega watts. MPG has put plans in place to double its wind power generation capacity in the near future. And in Entertainment, the Group owns the 943 seater DTS Sound “Kripa Cinema” in Trivandrum.

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Newsmaker

From Branded Useless by Family to Found Useful by NASA Assam-born mechanical engineer Uddhab Bharali dropped out of college in 1987 because of acute poverty. Called 'useless' by his family and labelled a lunatic for his desire to invent things the likes of which the world has never seen, today he has been shortlisted by NASA for a breakthrough innovation. ill Gates once famously said: If you are born poor it's not your mistake, but if you die poor, it's your mistake. Uddhab Bharali was born to a businessman father in Lakhimpur, Assam and was only four years old when he first realised that his parent was a complete failure careerwise. Not only did he fail in business, but each of his initiatives nudged their family closer to debt and poverty. By the time Bharali reached primary school, he had already seen the worst of times. "We had only one cow for the entire family and we had to divide the milk among five people. Sometimes my mother would feed us peanuts with the milk. That was our only food for the whole day," he says. The fact that he was academically extraordinarily bright was of no consequence at home. He had no role models to draw inspiration from and no time or money to indulge in leisure. Bharali, who received his schooling at the Government Secondary School, Lakhimpur, was often asked by his teacher to stand outside the class because he asked 'difficult questions' in mathematics. But despite puzzling his teachers and peers, he was twice rewarded with a double promotion at

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school. "After completing first grade, I was promoted to third grade and from Class VI, I was promoted to Class VIII. I loved mathematics. I even tutored some of my classmates to help them get good grades," he states. "When I was in Class VIII, I could solve some of the toughest problems from Class 11 and 12 textbooks. Even college students would come to me asking for my help," continues Bharali, who graduated from school at 14, but had to drop out of engineering college because he could not afford to pay the fees and had to care for his family. And that is what he is doing even today Bharali currently lives with his widowed mother, wife, an eight-year-old son and two younger sisters in North Lakhimpur. As the years passed, debts rose and the Bharali family owed a sum of Rs 18 lakh to the bank. The odd jobs that he took up were not enough to support his large family and that's how, he says, he stumbled upon the idea of innovation by accident. "In 1987, the bank authorities told us that we would have to vacate our home if we did not pay them the money. I was aware that a company was looking for innovators who could design a polythene-making machine. But since the existing product was available for a price of Rs 5 lakh, I knew that if I wanted the deal, I should try to create a design which would cost less than that," says the innovator, who duplicated the exorbitantly priced original for a fraction of the cost and sold it for Rs 67,000. Although this was ample evidence of Bharali's extraordinary talent, there were no takers to help him put his intelligence and talent to good use. In 1995, things worsened when Bharali lost his elder brother to liver sclerosis. That's when he realised that as the only earning member, it was upto him to take care of his family's needs. He was also devastated at how poverty had affected his loved ones and therefore pledged not only to earn enough to sustain his family, but also to help resurrect the lives of others living below the poverty line. With that dream in mind, he concentrated on making products to serve rural and commercial purposes. Even when he found it difficult to pay off his debts and avail

of funding for the project, he believed that someday God would answer his prayers. And indeed, they were. In 2005, Bharali's talent came to the attention of the National Innovation Foundation, Ahmedabad and they took him aboard as a grassroots innovator. In 2006, his design for a pomegranate de-seeding machine was recognised as the first of its kind not only in India, but across the world. And since then, there has been no looking back for him. "America had been struggling with this concept for over 30 years. I am glad to have succeeded in achieving this feat," says the recipient of the President's National Grassroots Innovation Award 2009, which turned his fortunes overnight. The serial innovator, who has more than 98 inventions to his credit, was also recently shortlisted for his desktop pomegranate de-seeding machine by the National Aeronautics and Space Administration (NASA) for its prestigious Technology Award; the results will be announced in September. Another of his innovations, the mini CTC tea plant, which aims to help smalltime tea pluckers and farmers, has also been nominated by the the World Technology Network for the World Technology Awards 2012. In the following interview, Bharali emphasises the importance of being self-sufficient, tells us why he prefers being known as an innovator rather than an entrepreneur and shares some of his biggest dreams for India's future. How young were you when you

launched your first innovation? What was it about? I was 23 when I duplicated the polythene machine. It was created more out of desperation rather than inspiration. After the death of my father, my family owed a debt of Rs 18 lakh. There was no way I could earn that much money doing menial jobs. I designed a duplicate of the existing machine that cost Rs 5 lakh for Rs 67,000 only. And the impressive part was that the raw materials cost me only Rs 22,000. That's when I realised that if I set my heart on something, I could definitely come up with better technological innovations. What inspired you to continue with your work? What do you hope to achieve through your innovations? Through my innovations, I want to reach out to those who are living below the poverty line, nationally and internationally. I don't want to make any profits for myself. I have made that clear to my family as well. Sometimes they think I am crazy, but I think it is the money and want of luxuries that drives you crazy. I believe that if you cannot help society through your knowledge and capabilities, you are living a worthless life. Today, people from all over the world call me to know more about my work and life. Some of them have even offered me crores of rupees to work with them, but I refuse their offers. I cannot work like that. I earn enough to sustain myself.

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So, how do you finance your projects...the infrastructure, workforce, raw materials etc? Although I started innovating to help poor people live better lives, I realised that by doing so, I was not able to generate enough money for my research and raw materials. I ended up making and distributing products free of cost to people. So I decided to commercialise my designs and make money through royalties, which I would use to meet my research and philanthropic needs. Of the 25 per cent profits I earn through royalties every month, I spend 10 per cent on an old age home, 10 per cent on an orphanage and keep five per cent for myself. I have also started a small research and training institute where I pick illiterate students, educate and train them for three months on technology and its applications. How do you ensure that your devices are available at subsidised costs? Do you make enough profits now? When I design a product, I ensure that it can be used by the illiterate and the handicapped. Most of my products consume low power and are easy to operate. Another important factor I keep in mind is that none of my products should reduce employment opportunities in any way. I know that a lot of poor people in our country are dependent on manual labour for a living and if I introduce technology that runs on power, I may rob them of their very source of living. I refuse to make such designs. My designs are manually operated and demand comparatively less labour costs. Most of your innovations have been in the field of agriculture. Why? In India, agriculture and farming are the primary sources of livelihood for many. Farmers are not only illiterate, they are also poor and cannot afford to buy expensive technology, even if it's available. It's a vicious circle. So I try to create technology that is available cheaply and requires less expertise. In the case of poor farmers, I design it free of cost.

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Tell us about your desktop pomegranate de-seeder that was shortlisted by NASA. What inspired you to make it and what does it do? I am always working on more than one project at the same time. And when someone tells me that something is impossible to achieve, I am more committed to proving them wrong. When I learnt that American scientists had been unable to find a solution to de-seed pomegranates for the last 30 years, I challenged myself to find an answer. But pomegranate is a rare fruit in Assam. I would travel over 500 kilometres to buy two or three kilos of the fruit for my research. No matter how hard I tried, I always ended up crushing the seeds. Frustrated, one day, I kicked one of the fruits. When it rolled onto the floor and hit a stone, it immediately opened and the seeds got shaken loose. I observed that although the process took place quite naturally, none of the seeds were crushed. I got my idea there. For the next 72 hours, I locked myself up in a room trying to crack the design for this product. When I presented the prototype in November 2006, it surprised even the American innovators. It has the capacity to de-seed over 50 kilos of pomegranate per hour without crushing them. The machine was later redeveloped into a desktop model to suit smaller needs and was shipped to Turkey and the USA. I am happy that NASA shortlisted my innovation. Also, your mini CTC tea plant has been shortlisted for the World Technology Award 2012. What's unique about it and what inspired you to create it? Assam is a major producer of tea. A lot of tea pluckers here rely on big tea plant owners who give them a poor rate for their crop. But they are too poor and illiterate to understand that they are being taken for a ride. So, I designed this tea plant which will cost the investor anything between one to six lakhs. But, this is purely a one-time investment that will help them earn better from their crop. When we did a test run, we realised that tea pluckers who earlier received Rs 9/kg for the tea crop, could

now get upto Rs 20/kg if they were to invest in this plant. You charge a higher fee to government clients than private ones. Why's that? I've always believed that government officials are corrupt and hence, I don't give them any discounts. I charge Rs 24,000 per month for private organisations and Rs 48,000 if I am designing something for the government. What were the challenges you faced as an innovation entrepreneur when you started off? How did you overcome them? In India, there is limited funding available for research and development. Even if you are allotted funds, you have to work in government laboratories and the visibility and scope of success is limited there. My struggles ended only after I was taken under the wings of the National Innovation Foundation. They are one of the few organisations who value the efforts of grassroots innovators and encourage them. One of your dreams is to build a mechanised toilet for the handicapped. Can you tell us more about it and how it will help people? Yes, that's one of the long pending dreams. It worries me to find that handicapped people are dependent on others for their daily activities. So I designed this toilet and shared it on the website for others to see. When the prototype was developed, it was realised that the device leaves a foul smell three hours later. To eradicate that problem, I will need to make some adjustments to the current low cost model and the research and raw material will cost me up to Rs 10 lakh. I don't have that much money. I have approached a few people who have shown interest in developing the design. I hope it will be introduced soon. What are your big dreams for India? Another big dream is to power an orphanage which will both senior citizens and poor children. I don't want

a situation. Your action is the solution.

any contribution for that because I plan to run it with the money I earn from my innovations. I am already taking care of 20 such kids providing them food and lodging and as they grow up, I intend to absorb them into my training cell and make them self-sufficient for life. Your innovations are renowned the world over. How do you conduct research for international clients? Do you visit these countries to study their behaviour and needs? Today, a lot of my clients are international from Turkey, USA, Ethiopia and Indonesia to name a few countries. Different people have different problems and want solutions. Some of them have invited me to their countries, but for some reason or the other, it's never worked out either I could not leave my family or because I had some prior commitments. I have travelled to Mumbai and Pune to visit my clients and discuss work, but never travelled outside the country. I may be going to New York for the first time in November. You also hold training programmes targeting youngsters for the application of technology. How do you pick them and what does the training include? I select upto 10 illiterate students and invite them for a three-month training programme where I exclusively teach them how to use technology. I don't teach them history or geography. I also give them a stipend of Rs 100-300 per month for the first two months. This is more like pocket money. The challenge is that by the third month, these students have to earn themselves a stipend of Rs 2,000 through their merit. I can easily train them and leave it at that. But any education is incomplete unless you can put it to good use and any training is incomplete without a challenge attached to it. You must be working on more than one project at a time. How do you multitask? Even now, I have 53 projects on hand and I am currently responsible for an average of eight projects a month. Once I take up a project, I ensure that within 48 hours I crack and send the client a

Who is your greatest inspiration and why? Frankly, I have never had any inspirational figures in my life. Most of the innovators I know start off as social innovators and end up entrepreneurs. They design products with the intention of making more and more money. I don't approve of that. That's why I stay away from luxuries and lead a simple life. However, the one person I really admire is Prof Anil Gupta, head of NIF, Ahmedabad. His efforts to find and encourage grassroots innovators in the country are truly laudable.

Prof Anil Gupta, head of NIF, Ahmedabad

formula. I believe that if an innovator can't come up with a solution in 48 hours, s/he is not dedicated to the project and will not come up with a good solution even if the next one year is spent on it. Once I crack the formula, in the next 28 days, I have to come up with a prototype. If I get bored or stuck with one project, I leave it and switch to the next one. I can't sit idle or rest as long as work is pending. I lock myself up for hours without eating or sleeping till I crack a formula. A lot of people get annoyed by that habit. But that's how I multitask. It's what I love doing. Have you ever failed at launching something? How do you cope with failure? Failure is an excuse that cowards make. Everyone fails, but the challenge is to make the impossible possible. The lack of action is what makes failure sound so depressing. I have seen so many low moments in my life. Had I sat back and complained, I would never have known what I was capable of. A lot of people say that the government is indifferent towards the North-Eastern population. I would like to ask them: So why don't you do something about it? Do something so that the government is forced to pay attention to you and your people. That's what I am doing. Unless you make some moves, you can't overcome your situation. Failure is just

What would you say life has taught you? When I first started innovating, I told people that I wanted to create designs that would surprise the world. Everyone in Lakhimpur laughed at me. Some of them even called me a lunatic. I thought at least my family would support me. Forget supporting, most of the time they called me a 'useless, good-for-nothing' fellow because they knew that every extra penny I earned was spent in serving poor people. And that is what annoys me the most. On one hand, there are people who appreciate and bless you for the good work, but your own family and society demand that you be selfish. I have seen the worst of poverty as a child and I won't blame anyone for it. I won't complain because if I do that, I will be insulting the talent that God gave me. I have learnt that any life is incomplete without struggle and with every struggle, you step closer to success. What's your advice to India's youth? I want to tell the youth of the country that if you have goodness in your heart, you can conquer the world. I believe that the money you earn is of no use if you can't use it to bring happiness to someone's life. I also want to appeal to parents. I want to tell them that they must raise their kids as human beings first and engineers and doctors later. If they can't become good human beings, their education and success makes no difference to society. (by Divya Nair)

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Stocks

10 RULES FOR A SMART INVESTOR

1. Don't be Stubborn

IN THIS ARTICLE, WE HIGHLIGHT 10 POINTS THAT WOULD HELP YOU SCORE MORE ON THE BOTTOM LINE.

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David St Hubbins memorably said in the movie This is Spinal Tap, "It's such a fine line between stupid and clever." In investing, the line between being patient and being stubborn is even finer, unfortunately. Patience comes from watching companies rather than stock prices, and letting your investment theses play out. If a stock you recently bought has fallen, but nothing has changed with the company, patience will likely pay off. However, if you find yourself constantly discounting bad news or downplaying the importance of deteriorating financials, you might be crossing that fine line into stubborn

territory. Being stubborn in investing can be expensive. Always ask yourself, 'What is this business' worth now? If I didn't already own it, would I buy it today?' Honestly and correctly answering these questions will not only help you be patient when patience is needed, but it will also greatly help you with your selling decisions.

2. Listen to Your Gut Any valuation model you may create for a company is only as good as the assumptions about the future that are put

into it. If the output of a model does not make sense, then it's worthwhile doublechecking your projections and calculations. Use valuation models as guides, not oracles.

3. Know Your Friends, and Your Enemies What's the short interest in a stock you are interested in? What funds own the company, and what is the record of those fund managers? Does company management have 'skin in the game' via a meaningful ownership stake? Have company insiders been selling or buying? At the margin, these are valuable pieces of collateral evidence for your investment thesis on a company.

4. Recognise the Signs of a Top Whether it is tulip bulbs in 17th century Holland, gold in 1849, or Beanie Babies and Internet stocks in the 1990s, any time a crowd has unanimously agreed that a certain investment is a 'can't-lose' opportunity, you are probably best off to avoid that investment. The tide is likely to soon turn. Also, when you see people making investments that they have no business making (think bellboys giving tips on bonds, auto mechanics day-trading stocks in their

shops, or successful doctors giving up medicine to 'flip' real estate), that's also a sign to search for the exits.

5. Look for Quality If you focus your attention on companies that have wide economic moats, you will find firms that are virtually certain to have higher earnings five or 10 years from now. You want to make sure that you focus your attention on companies that increase the intrinsic value of their shares over time. These afford you the luxury of being patient and holding for a long time. Otherwise, you are just playing a game of chicken with the stock market.

6. Don't Buy without Value The difference between a great company and a great investment is the price you pay. There were many fantastic businesses around in 2000, but very few of them were attractively priced at the time. Finding great companies is only half the equation in picking stocks; figuring out an appropriate price to pay is just as important to your investment success.

7. Always have a Margin of Safety Unless you unlock the secret to timetravel, you will never escape the

inherent unpredictability of the future. This is why it is key to always have a margin of safety built in to any stock purchase you may make - you will be partially protected if your projections about the future don't exactly pan out the way you expected. Having a margin of safety is a recurring theme among several great investors. This is no accident; margin of safety really is that important.

8. Think Independently Great investors are willing to go against the grain. You should find zero comfort in relying on the advice of others and putting your money where everyone else is investing. Quite simply, it pays to go against the crowd, because the crowd is often wrong. Also remember that successful investing is more about having the proper temperament than it is about having exceptional intelligence. If you can keep your head while everyone else is losing theirs, you will be well ahead of the game - able to buy at the bottom, and sell at the top.

9. Expect Surprises to Repeat The first big positive surprise from a company is unlikely to be the last. Ditto the first big negative surprise. Remember the 'cockroach theory.' Namely, the first cockroach you see is probably not the only one around; there are likely scores more that you can't see.

10. Prepare for the Situation to Proceed Faster than you Think Most deteriorating businesses will do so faster than you anticipate. Be very wary of value traps, or companies that look cheap but are generating little or no economic value. On the other hand, strong businesses with solid competitive advantages will often exceed your expectations. Have a very wide margin of safety with a troubled business, but do not be afraid to have a much smaller margin of safety for a wonderful business with a shareholder-friendly management team.

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VYTHIRI VILLAGE

Have You Been to Wayanad Lately?

ayanad is the quintessential paradox in destination Kerala. Awesome beautiful, but little by way of comfortable and reasonable stays. At least until recently. Take the case of the dusky beauty, Vythiri, in Wayanad. Until recently there was only a couple of staying options, which is akin to no option at all. Exotic Vythiri can any day upstage any beauty of Kerala - right from Munnar to Kumarakom. Yet more tourists thronged to see these popular beauties rather than the hidden charms of Vythiri, due to the superior traveller facilities there. All that is set to change. Or it is already history, after one of the finest hospitality entrepreneurs in the state - NK Mohamed - set his eyes on Vythiri and started Vythiri Village, a luxury resort aiming for 5-star status. Mohamed is the man behind ‘The Kadavu’, the 5-star riverside resort in Kozhikode that redefined the segment in the state. One might have heard of

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many aspirations that drive hoteliers, and the list is likely to be dominated by the aspiration to make the best of a naturally fast growing industry. But NK Mohamed forsake his engineering background as well as a career in government, and pursued hospitality for a strange match with his personality. Mohamed has always believed that the greatest quality that man has ever cultivated is the ability to conduct oneself in any given situation. NK calls it ’the code of manners’. Always someone who walks the talk, Mohamed has always been known for his humble, polite, & suave nature, despite being a man of sheer gumption. He looked around and found that hospitality was the industry to be in, if he wanted to pursue that passion. Vythiri Village has benefited from the growing expertise of Mohamed and his core team, as this is their fourth and latest project, after The Kadavu, Greeshmam Resort, and Oriental College of Hotel Management. Expect nothing less than fine treatment when you land at Vythiri Village. Starting from the traditional

welcome and welcome drink, one will unmistakably feel that special touch - staff who are perfectly helpful without being a bit obtrusive. If anyone thought that calling a resort as ‘a village’ is overkill, be prepared to trek all the 20 virgin acres. The land is an absolute delight, in the lap of mistladen Wayanad hills, 2600 ft above sea-level, and featuring a soothing stream right through. Cross the stream, wading through clean water, or walk across on the inspiring hanging bridge on a nostalgic trip. Tranquil views of Chembra Peak and Karanchi Stream is for you to enjoy. Your days will begin with birdsongs and your nights will end with spicy aromas, and the best part is that nothing is engineered for you here,

The highlights of the resort are Nawa Spa and the diverse Ayurvedic treatment and rejuvenation facilities available. Outdoor activities are courteously assisted by staff and include hiking, trekking, cycling, and sight-seeing.

everything comes natural. There are ample options for accommodation ranging from Deluxe Rooms , to Suites, to Cottages. Accompanying dining options are also ample, from Continental Plan (CP) that includes complimentary breakfast with the accommodation, to Modified American Plan (MAP) that includes breakfast and one of lunch/dinner, and American Plan (AP) that includes all three. And the pleasant surprise is that Vythiri Village doesn’t cost a bomb. Rates start from Rs. 7300 for Deluxe/CP to just Rs. 11,000 for Cottage/AP, and there are all flexible options in between. Rooms feature 32" LCD TV, Mini refrigerator, Tea /coffee maker, Safe locker, and an Ergonomic work area. Resort

facilities include Multi cuisine restaurant, Doctor on call, Laundry facility, Ozone treated swimming pool, a world class spa, Gymnasium, Health club, Game room, Playstation, Souvenir shop, Business centre, Cycling facilities, Outdoor and indoor game facilities, Conference hall, Board room, and Travel Desk. The highlights of the resort are Nawa Spa and the diverse Ayurvedic treatment and rejuvenation facilities available. Outdoor activities are courteously assisted by staff and include hiking, trekking, cycling, and sightseeing. Some of Wayanad’s finest destinations are very accessible from Vythiri Village, and these include Pookode Lake, Chain Tree, View Point, Banasura Sagar Dam, Soochipara Falls, Kanthanpara Water Falls, Edakkal Caves, Kuruva Island, Muthanga Wild Life Sanctuary, Chembra Peak, Pakshipathalam, Tholpetty Wildlife Sanctuary, Karapuzha Dam, and Thirunelli Temple. A half-week or week spent at Vythiri Village is destined to earn anyone and their family a renewed zest for life.

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Turnaround

Why August is Special to Wockhardt August has been a special month for Habil Khorakiwala. Two years back, it was in a painful August that his baby Wockhardt sinked to its twoyear low. On 2nd August 2010, Wockhardt hit Rs. 138.20. And two years later, in this August, it has hit not only its 52-Week or 2-year high, but its all-time high of Rs. 1303 in NSE. Which is, needles to say, a 9.5X wealth creation within not just 2 years, but within a very dull 2 years for the overall market. And that makes it perhaps India’s best turnaround story under CDR. Though there are several reasons for the miraculous turnaround, the key point was Khorakhiwala’s insistence that, come whatever may, neither the original equity would be expanded nor the promoter stake would be diluted. In what seems to be a stock-market fairytale, Wockhardt‘s Promoter Holding during all-time lows and all-time highs stand at a solid 73.64%. Obviously, the prosperity of their stock has always been very important to Khorakiwala. At Wockhardt, the wealth creation of that 73.64% stake is the principal way by which the promoter enjoys the fruits of their toil. It is a befitting lesson in listed company management to all the serial diluters out there in the Indian market. Wockhardt wouldn‘t have been where it is today, if it had agreed to such dilutions in its core equity. Instead, even while going through severe financial stress, Khorakiwala pressed for the safer route of issuing optionally convertible preference shares with almost a decade of time-frame and low interest rates, to their major lenders. Though it expanded capital by over Rs. 700 crore (of preference shares), the core equity of Rs. 55 crore remained intact. What the Wockhardt promoters have really demonstrated is confidence about their company and their stock. And that is what has made it into a listed pharma giant with Rs. 14,000 crore in market-cap.

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fter defaulting on $110 million in overseas bonds in 2009 and renegotiating payment on 13 billion rupees in loans, the generics maker is nearly free from a sometimes bitter process of debt recast and is enjoying a furious stock rally. While Wockhardt’s imminent emergence from India’s corporate debt restructuring (CDR) system is widely seen as a turnaround success, it comes as the central bank pushes for tighter rules around the process as more companies take advantage of it. “We are one of the very few companies in the CDR who have come out and paid everything,” Wockhardt Chairman Habil Khorakiwala recently said at the company’s headquarters in suburban Mumbai. This year, Wockhardt has seen its shares soar nearly 350 percent to record highs, lifting its market value to $2.45 billion. Its forward priceto-earnings ratio of 12.7 times is lowest among larger-cap Indian pharmaceutical companies, most of which trade at around 20 times or more. It recently ran advertisements to claim about its success: 23 percent sales growth in the last fiscal year and a net debt to equity ratio now below 1, reduced from 5.5 times in March 2010. After three years of keeping a low profile, Wockhardt will hold its first investor relations meeting next week. “We are becoming more or less a very normal company,” said Khorakiwala, 69, who formed Wockhardt in the mid-1960s after taking over his father’s Worli Chemical Works. Khorakiwala, who is Sweden’s honorary consul general in Mumbai, also controls a hospital chain, Wockhardt Hospitals. Wockhardt, which racked up debt when it spent $453 million on three overseas acquisitions, was pushed over the edge by losses of 5.55 billion rupees on foreign exchange and derivatives during the global financial crisis in 2008. The company, which generates 75 percent of its sales abroad, entered India’s CDR process in June 2009 to restructure about 13 billion rupees in loans, largely from Indian banks, led by ICICI Bank. Its foreign banks settled separately.

Dr Habil Khorakiwala Chairman

Wockhardt tried to ease its debt load in 2009 by selling its nutrition business to Abbott Laboratories Inc, but holders of its U.S. dollar convertible bonds blocked the move in court, saying they were not consulted. Last year, it announced a $355 million deal to sell the nutrition business to France’s Danone, which bondholders ultimately went along with. That deal closed last month, several months later than expected.

Under a court settlement, Wockhardt will pay bondholders a last tranche of 2 billion rupees this month. It expects to exit the CDR process in a month or so from now. Still pending is a 9.4 billion rupee defamation suit brought by Khorakiwala against the trustees of the bondholders. Big companies rarely fail in India, where domestic banks, especially state lenders, tend to help companies through tough times by easing loan terms. Critics worry about moral hazard in the CDR process, which spares banks the need to declare a loan as non-performing or endure the lengthy process of forcing liquidation. For stressed borrowers, an easing of terms is better than the alternative. Reserve Bank of India Deputy Governor K.C. Chakrabarty said recently that India’s restructuring process is skewed: “It’s heavily biased in favour of public sector banks. It has substantial bias towards more privileged borrowers vis-a-vis small borrowers.” A central bank panel has proposed that banks book higher provisions against restructured loans. Starting in two years, it wants most such loans declared as non-performing. CDR cases are surging in India. In the June quarter, 41 cases worth 205 billion rupees were referred to the CDR cell, from 18 cases worth 46 billion rupees a year earlier. Since the process began in 2001, 57 cases worth 430 billion rupees have exited, of 292 accounts worth 1.5 trillion rupees. R.S. Setia, general manager in charge of credit monitoring at state-run Bank of Baroda, said the Wockhardt case, which it was not involved in, has been especially successful. “This should be a lesson for other corporate houses who believe in making hospital their permanent homes for short-term benefits,” he said. “CDR enables a borrower to overcome temporary problems, but some corporates don’t want to exit it.” Wockhardt’s reputation and share price took a hit and it was forced to sell assets during its restructuring but its business remained robust. While Khorakiwala led promoter group had to pledge most of its 74 percent stake as collateral, it did not suffer equity dilution. “If your business model is strong, the CDR is a good mechanism to deal with on a short-term basis,” Khorakiwala said. “It did help to stabilise the company, so we could focus on our operations, and that’s what resulted in the turnaround situation.”

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