Saturday 29 August 2020

How Arvind Kejriwal can gain from the turmoil in the Congress

I am convinced that if Arvind Kejriwal plays his cards well, he may emerge as the biggest gainer from the chaos in the Congress. 

Allow me to explain. 

While we do not know who the 300 Congressmen are who are supposed to have agreed with the sentiments in the letter, it is likely that that the political future of those who have lent their names to the letter is over. Unless there are compelling reasons why the Gandhis can do nothing to them. 

So, except for a few like Kapil Sibal whose legal acumen the party cannot do without or a Mukul Wasnik who is seen as a Dalit leader or Ghulam Nabi Azad who is seen as a Muslim leader, the rest have a serious problem of staying relevant. 

Shashi Tharoor may appeal to people like us but he cannot win an election without the backing of the party in a big way. Jitin Peasad, his lineage notwithstanding, is a nobody in UP. There seems to be no place in the party for the likes of Sandeep Dikshit who simply cannot be a sycophant. From among all those who signed the letter, Sandeep is perhaps the only person who can mobilise the masses to some extent. Which is why he can even pose a threat to the Gandhis if he gets a party to back him.

Prithviraj Chavan may have been the Chief Minister of Maharashtra but with his clean image, he is actually useless to the party. He does not even appear on party posters in Mumbai, that is how much of a non entity he is. As for Renuka Chowdhury, when was the last time anybody heard anything from her anyway.  

Manish Tewari too is no mass leader who will not even be visible without a party, his eloquence notwithstanding. Or Anand Sharma, I had even forgotten all about him until his name cropped up as a signatory. A scorned politician cannot really do much if his or her relevance comes from being accorded a position of significance by the High Command and not a mass following which neither of these gents have. 

Others like Veerappa Moily have very little value for the party as their utility to the party is questionable. They are no Jagjivan Ram who sent the shivers down Indira Gandhi's spine when he switched loyalties. 

The letter would have forced the Gandhis to act if atleast one of its Chief Ministers had joined them. It is also obvious that most of the signatories have the ability to lead a new political formation which could have emerged  if someone like Kamal Nath had supported them. It is widely accepted that he has the guile backed by financial muscle to pull off something like this. 

Where does this leave the signatories. Much like Trishanku, they are caught in nowhere land from which they can extract themselves only if they act decisively. Else they will be stuck in a corner somewhere, irrelevant and unsung and forgotten. Or they could make peace with the Gandhis and go grovelling but there is no guarantee that they will be accommodated. 

But if they wish to stay relevant, and if they do not wish to join the BJP, and if they want a national platform, Arvind Kejriwal offers a viable option for them to consider. AAP's sphere of influence may be limited, but its appeal is national. 

I hope some of them think about it. It will be good for the country. 

Will Arvind let them in? I don't know. But if he does, it will be the loudest declaration that he has come of age in politics.  

Saturday 15 August 2020

Innovation at the AGM

At the AGM of IRIS Business Services Limited, the firm of which I am the Founder & CEO, we broke new ground.

The law allowed us to have a virtual AGM, the law required us to allow only those shareholders to speak who submitted a request in writing in advance of the AGM.

At IRIS, we have always held the shareholder in high esteem, whether the person had 100 shares or 1 lakh shares. We have always adhered to the highest levels of governance, often going beyond what the law required of us. Which is why it did not seem right to us to take comfort behind the provisions of law and tell our shareholders that they cannot be heard unless they registered in advance. What if they wanted a clarification on an issue that cropped up at the AGM ?

One way would have been to open the floor up for discussions. But from our own experience, it was obvious to us that maintaining order may be difficult. Far too often have we have attended meetings where more than one person jump into say something when someone else was speaking. The administrative headache of maintaining order is just too much and the reputation risk from offending someone's ego who did not get to speak on demand even more. A moderated session is much easier to handle when there are not many people in a meeting.

As we explored the various options, we stumbled on to an option that was simple to execute. We created a group of shareholders on Whatsapp. To start with we included every shareholder whose mobile number was available with us, which, as we discovered, was not too many. Thats when we filed an announcement with the stock exchange announcing the formation of the group and shared a link to the group too, inviting shareholders to join. Within the next 48 hours, the numbers grew.

We told members that the group had been formed to facilitate live interaction between shareholders and the management. We requested them to post questions on the group with the assurance that all questions received until the end of the AGM proceedings would be answered.

It worked out very well. More than a dozen questions, every one of them meaningful and insightful, were asked. Every one of them was answered and it looked like every attendee went away happy. It is possible that a few questions may have come from people other than shareholders too, but we were okay with that. The link to the group was available publicly and we did not think it necessary to keep people out.

I think with this initiative we broke new ground when it comes to engaging with investors. I am also glad that we did it. I would strongly recommend this to every listed company and especially to small caps who are victims of a trust deficit because of the shenanigans of a few.

If any CEO or CFO or IR professional wants to know more, I am happy to help, Do reach out to me.

Sunday 26 July 2020

Thank you Azim Premji for the valuable lesson you taught me

Azim Premji turned 75 on July 24. Happy birthday, sir. Way back in 1994,  I learned a valuable lesson from you which has stayed with me to this day.  

It happened like this. 

I had just embarked on my entrepreneurial journey. I had meetings set up in Singapore and I needed a laptop to carry with me for the demos I wanted to show. So we placed an order for Acer of which Wipro was the distributor. We had only one condition, that they be delivered in time for me to carry them on my trip. 

At IRIS, the company of which I am the Founder & CEO, we were doing some crazy stuff and I was hoping to show it to some potential investors to raise funding. 

Come Friday before the Saturday when I was supposed to leave, there was no sign of the laptop or the salesman who had sold it to us.  I was livid. So I called Mr Premji's office in Bangalore and demanded to speak to his secretary. Some guy who identified himself as the security guard on duty, picked up the phone and told me that the secretary was not available. I became even more angry. I stepped up my demand a notch and asked him to put me through to Mr Premji. "Who's calling," the chap asked. "Tell him it is an irate customer," I told the chap. After a short wait which to me seemed interminable, someone else came on the line." How may I help you," the voice asked. 

"Now who's this," I must have screamed into the phone. "This is Azim Premji," I should have recognised the voice from the couple of previous occasions I had met him when I was a journalist. My voice froze. I started stuttering, I had not expected this. I told him that I was looking for his secretary. "I don't know where my secretary is but perhaps you could tell me what this is about,: he said. So told him. He apologised profusely, leaving me totally embarrassed. "I can imagine what you must be going through," he said, as we concluded our conversation. The bottomline was that there was nothing that he could do in the limited time that was available. 

As it turned out, the Singapore trip was a washout. In none of my meetings could people relate to what I was trying to talk to them about. A demo would not just have helped, it was critical. 

It was on the flight back as I was trying to find if there was anything good that had come from the trip, that it struck me that Wipro must be amazing organisation for  the security guard to not think twice of putting the call through to the boss. The guard  clearly used his intelligence to decide that the call could be important to his boss. Clearly, he was not scared of the consequences. Anybody else could have just taken my number and told me that he would have the secretary call me back. But he didn't. It is clearly a reflection of how Mr Premji must be treating his subordinates, I concluded.   In hierarchy bound Indian society, this was stunning. 

I forgot about my Singapore meetings. I had learned a valuable lesson from Mr Premji for me to internalise. I knew the kind of organisation that we had to create here at IRIS.  If any of my colleagues at IRIS believe that we have created a different kind of organisation, they should thank Mr Premji for the lesson that he taught me.   

Tuesday 31 March 2020

Work From Home: Thoughts for employers and employees

I have always been a huge votary of the work from home idea.  I have never believed in having office timings, I have not ever bothered if people came into work or not. So long as the work got done, none of this should matter, I would argue.  I believe that people should be mature enough to deliver on the responsibilities assigned to them and that managers should know how to make them accountable.

But alas, that is not how the real world is. It does not have to be that way, but then that is how it is. Most of our companies work in a time clock punching world. We live in a world where HR keeps an eye on how many hours you put in but not whether you did any work during those hours that you clocked.  Much too often to my liking I run into a colleague in the elevator who would tell me that he had to stay late to log the hours that HR expected of him. We live in a world where managers are aware that somebody who clocks the hours may not be delivering but won’t take action until delivery on the task has been compromised. The blame for this would be assigned to everything except the manager’s unwillingness to put in place a system to continuously monitor people for the work they do and not the hours they keep.

Here at IRIS, a company of which I am the Founder & CEO, everybody loves the flexibility that I have ensured is never taken away from them. They love the flexibility of coming to the office when they wish and if they wish, they love the flexibility of being able to spend their entire afternoon at the local mall without being questioned. The managers have stopped criticising me for allowing such flexibility because they too have benefited greatly from it or maybe they simply know that this is a subject on which I am inflexible.

There have been huge abuses of the system. A colleague was granted permission to work from home on the day of his marriage. I learned about it only because I happened to call him for something at the precise time the nuptial vows were being exchanged. Yet another colleague spent a week working from home when she was actually shopping for her wedding. The abuse that left me wondering whether I should laugh or cry was by a colleague on our inbound help desk setup for clients was given permission to work from home when she had exhausted her maternity leave but wanted to be at home for the baby. When asked how she could work from home given her role, her supervisor blamed it on my unwillingness to entertain any discussion on limiting flexibility. 

He is right, because the only time I veto my colleagues is when colleagues curtail such freedom. But he is wrong, because he I never told him to not set up systems to make her accountable. In the 25 years I have been an entrepreneur, my biggest failure has been to get my colleagues to embrace the idea whole heartedly and make it a success. My colleagues in HR don’t take the initiative to roll it out either, they take refuge in my frequent comment that it is up to the line managers to formulate a framework with HR in a supporting role to help with the execution of the system.

That is really the nub of the matter.  Work from home fails because we refuse to even try and measure performance.  It is uncharted territory. But people like status quo and are simply unwilling to tread outside their comfort zones.  Even when some people were willing to explore the idea, they are persuaded by reluctant colleagues who give reasons why it is simply not feasible. I may be the CEO but my writ clearly does not run on this issue. But I continue to persevere.

Because I believe that except in manufacturing companies and services companies where one needs customer facing people, work from home should be possible in almost all other areas. In fact, given the automation that is happening around the world, it may be possible to work from home even in manufacturing companies, with a need to go work only if and when physical attention is needed. A friend of mine consults for a company with a factory in Germany which is controlled from a small office in Powai in Mumbai, he tells me that there are no shop floor workers!!

To make work from home work for the company, managers need to change, managements need to change, the rule book needs to change.  We have to stop looking at employment through the prism of work hours and work days. In a world where the employee can work from anywhere and any time, the work leisure divide is set by the employee and not by the employer. But then it will work only if the employee is mature enough to understand the significance of the flexibility being accorded by the organisation.

The approach to compensation has to undergo a radical transformation. It cannot be a time and material approach to fixing compensation, it would be ideal instead to try and fix compensation based on an estimate of the value of saleable output generated by the employee. It gets tricky when not all output is for immediate sale or when there are people who are not creating output for sale, these have to be dealt differently. In the perfect work from home world, the nature of the contract between an employee and an employee will change.

Many managers hate the idea of allowing their subordinates the opportunity to work from home because they simply are not used to being precise in their instructions to their subordinates. I believe that allowing subordinates to work from home will make a supervisor  better, the operations of businesses will become more efficient.  Meetings will be productive and the respect for each others’ time will increase in tasks that require collaboration.

Work from home will also need fundamental changes in law. I remember a visit a PF inspector paid to our offices in our early days.  He wanted to know why we don’t take the attendance register more seriously than we did.  After listening to my spiel on how I believed in giving my colleagues total freedom to come when they wish and go when they wish and come to office only if they wish to, he told me that the attendance register is actually a right of our staff. He told me that the attendance register was not so much about employers keeping an eye on their staff as it was about the staff having a record to show that they are employed in the firm.

Above all else, the staff need to recognise that it is entirely upto them to make work from home a success.  Companies need to recognise that a work from home possibility will do the company a lot of good. Managers need to recognise that it will make them a lot sharper.

I just hope my managers are listening.

Friday 27 March 2020

RBI has begun well, but the task is half done

RBI's announcement earlier today is certainly very good for banks. But for RBI's initiatives to actually end up helping the real economy in any significant manner, a lot more needs to be done. 

It is not really a moratorium
Whether or not to extend a moratorium has been left to the banks. What RBI has said is that if a bank reschedules a term loan to a borrower to allow the borrower the flexibility of not paying the next quarterly instalment, the bank need not recognise it as a default. Though if a borrower simply refuses to pay the next instalment, banks get the same benefit of not having to classify it as substandard. 

Similarly, banks have been given the flexibility of  rescheduling the interest dues from borrowers without having to worry about the loan being classified as substandard. The interest is deferred for a quarter but the borrower would probably have to find the resources to pay up thereafter for the bank to escape the requirement of classifying the loan as being in default.

Both of these initiatives help the bank hugely but do little by way of providing succour to the borrower who has to hope that cash flows after a quarter recover enough for things to be back to normal and even better than normal to support the repayment of deferred interest. 

Forbearance must be extended to credit card dues
Forbearance to credit card dues is something RBI may wish to consider. Many MSME promoters use their credit cards to borrow to keep their businesses going. Ironically, while they are able to service the expensive loans that these are, banks find them lacking in credit worthiness to borrow similar amounts of money at lower interest rates! If the forbearance is not extended to credit cards, lakhs of SMEs will be hit very hard. Defaults are inevitable. It is important for RBI to bear in mind that these businesses turned to credit cards because banks turned them away.  

Liquidity is the need of the hour
What is needed is liquidity, what is needed is an infusion of funds as an extra ordinary measure. Until things get back to normal, companies will be incurring much of their regular expenses with no inflows. It is inevitable that this will put many of them in a huge liquidity bind. It is important that these firms, many of whom, are fundamentally sound don't go belly up because of liquidity issues. 

The time is ripe for a new metric: Loan Book Ratio.
Banks have been prescribed several ratios that they need to adhere to and conformity with each of them is non negotiable. SLR or Statutory Liquidity Ratio is about investment by banks in government securities. CRR or Cash Reserve Ratio is about the percentage of balances held in cash by the bank.  Then there is the priority sector metric with sub targets. 

Perhaps, to ensure that RBI gets banks to lend to industry, it is time to impose a Loan Book ratio. The Loan Book Ratio would be the percentage of assets in a bank's book that it has lent to the real economy. 

If the liquidity provided by RBI to banks is used by the latter to buy bonds in the secondary market, it defeats the purpose of increasing liquidity to boost economic activity. It is probably time for banks to report their Loan Book Ratio on a weekly basis so that the transmission takes place. 

Friday 20 March 2020

Coronavirus: What you can do to help

Coronavirus: What you can do to help


Whether you are healthy or not. Whether you are a student or a working professional or a business person. Whether you are a man or a woman with two kids to take care of. There is something that each one of us can help with. Because there is much to be done. 

Starting today, 32 of us will be working closely with the staff of the Navi Mumbai Municipal Corporation (NMMC). You can do the same, with the local government in the place where you live.

What will be doing for them? Several things, starting with these.
  • Today, a few of us will be working alongside NMMC officials to conduct a door to door survey in one locality. 
  • A couple of us will be working with the staff at NMMC HQ to help them get their data organised.
  • Another set of volunteers will be calling every person in home quarantine twice a day, to talk to them, to reassure them, to comfort them and to help them procure essentials.
  • A few of us will be working with the local police to reach out to senior citizens living alone to see if they would like our help to procure food, medicines or any other essentials.
  • We will be reaching out to as many building societies as we possibly can to get them to identify a resource person in their building who we will then connect with the government officials if a need arises.

Through all this, we will be working with the government officials. Our approach is to strengthen their hands by providing more human resources at their disposal.

How can you get started ? I will tell you what I did. I called the Municipal Commissioner. Within an hour he had connected me to three of his officials who have been coordinating with me ever since. I urge you to work with the local authorities.  

I would recommend that your offer will really be useful if you go in a group. It becomes easier for them to coordinate with a group than having to deal with each volunteer individually.

Does this not expose you to risk? Yes it probably does. But then, have you wondered why the civic authorities should put themselves at risk? And no, this is not what they signed up for. 

So, our volunteers will take the same precaution that civic authorities are taking.

Get out to Volunteer.

Remember, there was life before Corona Virus. And there will be life after Corona Virus. Because you would have done something about it.

Saturday 15 February 2020

Should AAP fight elections outside Delhi?

Caught up in the euphoria of its victory in Delhi, AAP has decided to fight local elections across the country if news reports are to be believed. Gopal Rai, a senior leader has made an announcement in as many words.
In Navi Mumbai, where I live, elections to the Navi Mumbai Municipal Corporation will be held on April 10. Even before the Delhi elections AAP announced that they will contest all seats to the NMMC. I will analyse the Gopal Rai announcement by exploring if AAP should contest the elections to NMMC.
First the facts. There are 111 wards that make up the NMMC. 56 seats are reserved for women, 55 are open. So, first things first, AAP needs 111 candidates to fight elections.
Next, it is pertinent to know that there are some 800 booths. Assuming that the party needs to have atleast 1 volunteer per booth, they need 800 booth managers.
What does AAP do to have a reasonable shot at victory? The area has some 1.2 million voters. The biggest ward has 12000 voters, the smallest 8000. The turnout percentage is about 50. Which means that an average of 5000 votes will be cast in each ward. If the unity of the Maha Aghadi holds , there will be two formations pitted against each other. On one side will be the Sena - NCP - Congress combine against the BJP. Assuming a close to even split of votes between the two sides, a candidate of AAP can win with just 2000 votes in a ward. If the Aghadi unity does not hold as I suspect, polling even 1500 votes can get AAP a victory in a ward.
The question then is what will help AP get these votes? Why will 1500 votes go AAP way? Even for the best product in the world with the best marketing strategy, distribution holds the key. AAP's message about good governance will certainly resonate with the local population. But they still need to get 2000 voter to the booths to vote for them. The BJP had 1.10 lakh personnel working on the ground in Delhi backed by a high decibel campaign, yet they lost. The Shiv Sena has over 5000 workers on the ground I am told and have been around for ages. The NCP has lost its force to the BJP but even so, they have over 3000 people on the ground. The Congress has less than 1000.
In sharp contrast, by all accounts AAP has fewer than 100. If that is correct, it would mean that they don't even have enough candidates to field in all the 111 booths, what to speak of having enough booth managers. I am sure that this number will increase if they started a mobilisation drive. But will that get them the numbers they need to put up a decent fight in the elections? One metric my friends in political parties work with is to have 1 mobiliser per 100 votes which can go down to 1 mobiliser for 500 votes if the party is well established locally and is seen a viable alternative.
The damage to AAP will be immeasurable if they lose the elections badly. Imagine losing your deposit in an election where only 2000 votes are required to win. When AAP won the first time in Delhi, they made the huge mistake of thinking it is easy. Arvind Kejriwal allowed his state units to field candidates with catastrophic consequences. The do gooders and well meaning folks in the party with no political sense set the party back by a few years and it is they who were the first to criticise the leadership when the elections did not yield the desired outcome.
I would have though that the lessons from those days have been learned. But I was shocked when AAP fielded candidates in the last Maharashtra assembly elections and cut a sorry figure. I was told that the decision to fight the elections was taken to keep the local cadre motivated. I can think of a hundred other ways of keeping the cadre motivated without having to suffer the ignominy of the defeat inflicted on AAP.
The message of AAP is too powerful to be squandered lightly. But that is exactly what could happen if a decision is taken to fight elections without a strong local organisation. I hope Arvind Kejriwal is listening.

Letter to my colleagues

May 20, 2024 Dear colleague,  You may have seen from the financial results for the year ended March 31, 2024 that IRIS is now in the 100 cro...