The Value Elephant by Sanjay Kulkarni ; Published by Portfolio/ Penguin; Pages 314 ;Price Rs. 799/-
Sanjay Kulkarni was the Managing Director and Country Head of Stern Stewart Company in India—a firm dedicated to Value Management. He is presently part of “ Seven Capital Ventures “ and Director of Tranzmute Capital and Management.
The sub-heading of this book is “ The Head and Tail of Wealth Creation “. Investors and Business Managers stand to great gain from the insights in thisbook on both value investing and business values. The book provides excellent guidance and as affirmed by Adi Godrej “ challenges conventional norms and breaks common myths.”
The volume is based on the author’s enormously enriching experiences with investors, marquee organizations and business leaders of every hue and shape. In the very beginning Kulkarni asks, " What is Value Creation?”. He uses the term to describe “Benefits relative to Costs”. Based on his experiences in investing in stock markets, early stage ventures, Greenfield projects, acquisitions, etc, the book proposes the popular value investment approach and takes it from there. The basic premise is that value rests on three pillars—“ Growth, Risk and Operating Performance. He calls it the “ V-GRO” approach. The secret of this approach lies in honing a disciplined ability to assess the long-term performance expectation of companies. Investment success depends on one’s ability to identify and exploit opportunities as presented by Price-value mismatches. In exploring ”Value Management” Kulkarni lays stress on how to make businesses more valuable—based on Indian ethos and management practices. He draws lessons from the many Indian companies and leaders who built great enterprises like Godrej, Tatas and Reliance and led to impressive wealth creation.
The book offers assistance in three key functions. It helps to identify opportunities with price—value mismatch. Secondly it offers tips to make sound investment decisions. Third , it inspires superlative performance in people and business. The book is strongly based on fundamentals of economics and finance and in addition takes into account nuances of human behaviour drawn from psychology and behavioural sciences.
Kulkarni neatly divides his book into two parts. Part One is dedicated to Value Investment. Research suggests that a number of cognitive biases cause human beings to draw incorrect conclusions. As a smart investor, you could benefit from being able to recognize these biases and see how they can provide unique opportunities for you. What is required is a meticulous approach which requires an assessment of performance expectations from stock price, estimation of fundamental value and an ability to exploit the price-value mismatch.
The V-GRO approach evaluates growth, risk and operating performance expectations. It identifies opportunities with price-value mismatches. This approach helps, both qualitatively and quantitatively to make better investment and management decision. The V-GRO approach helps identification of under-priced yet strong performing companies. It is also apt to take one on a contrarian path. This calls for faith and patience in one’s investment thesis and patience to wait for the right opportunity to become available and then some more patience for the markets to recognize our investment thesis and help us exit. Value creation is not just identification of opportunities or investing after due diligence. It is also inspiring businesses to deliver superior performance.
The Second Part is on Value Management. This entails refining performance measurement systems, improving decision making mechanisms, motivating managers and creating follow up goal setting with an exercise to prepare a blueprint for execution. Decision making is managing multiple and conflicting alternatives, objectives and entities. Motivation is the single most important enabler for execution. One has to strike a balance between risk and reward, near and medium-term performance, external and internal motivation, teamwork and individual performance and part and whole of organization.
No strategy, however brilliant, succeeds unless managers know what they need to do differently, understand how and why they should do it and gather necessary resources for flawless execution. The organization must be moulded to its blueprint by matching talent to key initiative.
The volume is as relevant for an investment beginner as it is for an expert or professional. Kulkarni successfully combines cognitive and emotional biases while upholding a sound “ commonsense” approach in the practice of taking decisions.
P.P.Ramachandran
10 / 12 / 2015.
Wit & Wisdom of Nani Palkhivala ; Compiled by Jignesh Shah ; Published by Rupa ; Pages 134 ; Price Rs. 195/-
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Behram Palkhivala, brother of Nani Palkhivala has carefully preserved a good portion of Nani’s articles, speeches and interviews and write-ups on him over a period of sixty years. Since he had physical limitations he entrusted the work of selection from this massive material to Jignesh Shah, a practicing advocate and a reputed writer.
The best of Nani which is presented in the book under reviewwill perpetuate Nani’s memory. The younger generation who did not have a chance to hear or see Palkhivala will have a glorious chance to read the witty and scintillating sentences of Nani which have been carefully culled from his complete works. It will enable the new generation to learn what Palkhivala stood and fought for. He was the master of the spoken and written word.
Palkhivala grew up and made his mark from the chambers of Sir Jamshedji Kanga — a towering personality with an indelible stamp of greatness.
When Sir Jamshedji completed 60 years of practice, Chief Justice M.C. Chagla unveiled his portrait in Bombay's High Court library, describing Kanga as the "uncut diamond of the Bar" — "uncut" because he was so child-like, but never childish. Next to his own father, Nani loved his senior. It was but natural then that a good deal of Kanga's qualities would rub off on to his illustrious junior: phenomenal memory, innate simplicity and high values, even forgetfulness for names! .
When Nani wrote his truly monumental work, the book on income-tax he put Kanga's name as the first co-author. But Kanga, with characteristic greatness, acknowledged that the entire work was Nani's, taking solace in the reflection of St. Paul : "I have fought a good fight. I have finished the course. I have kept the faith". Nani also fought a good fight: for liberty and freedom when those concepts needed fighting for. And he finished the course: when, almost single handedly, he prevented a major political party with a two-thirds majority in Parliament from changing the Constitution "to suit the times", He argued the Golaknath and Keshavananda cases. It was his persuasive arguments that convinced seven of the justices to accept as law that there were certain "unamendable" features of the Indian Constitution. By doing so he kept the faith — the faith of the spirit of our written document of governance.
Nani was a phenomenal success, not only in the law but in public life as well. His name became a household word with the citizens of India. To the common man and woman who read the daily newspaper, he was "our Nani": a champion of human values, of freedom and of liberty.
A few extracts are given below.
On Dadabhai Naoroji’s election to the House of Commons by a majority of three votes ; There was a special virtue in the narrow majority ; it relieved the voters of the effort to articulate the name Naoroji—they dubbed him “ Narrow-Majority”
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Chief Justice M.C.Chagla ; He wrote his judgements even as the grass grows—effortlessly, spontaneously, They are tinged with the essential characteristics of his own personality—sweetness and light.
Stability is anathema to the North Block.
To preach the virtue of stability to our Finance Ministry is like seeking to preach the value of peaceful coexistence to Genghis Khan.
The story goes that when other nations remonstrated with God that he had been very partial to India and had given it disproportionately large natural and human resources, God answered,” To offset these benefits I shall give India—the Indian Government”. For more go to the book !.
P.P.Ramachandran
15 / 11 2015.
Leading from The Heart by Moid Siddiqui ; Published by Sage ; Pages 192 ; Price Rs. 350/-
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Moid Siddiqui, the author of the book under review is the Managing Director of Intellects Biz which has acquired name and fame for its novel training workshops on Management. He is a Triple Post Graduate in Sociology, Political Science and Business Management. He bagged the Al India Management Association’s Best Management Book Award of 1995-96 for his book “ The Brave New Manager”. Two of his other books, “Corporate Soul” and “ Enrich Your Personality” won awards from the Indian Society for Training and development. He has also to his credit books on religion and spirituality. He has played important roles in several public and private sector organizations like BHEL, NHPC, HMT and Nagarjuna Group.
This is a different type of book on Management and interprets management taking its rationale from Sufism. There is a passionate commitment in the entire work motivated by his thorough comprehension of Sufism. In the beginning itself Siddiqui declares loudly and clearly, “Fill your heart with so much love and passion that that there remains no place for hatred. For this you are required to undertake a great journey—a journey from your head to heart. The common DNA of all great leaders is that they travelled from head to heart—that is they led from Within.”
Moid has emphasized the human aspects of management. He has practiced successfully and strongly commends genuine efforts towards self improvement and battling the almost daunting challenge of daily life. Reading the book will enable us to unleash our native nobility and regenerate our innate sense of goodness and justice and crush negative and crassly materialistic values.
The book is divided into eighteen chapters, each devoted to expansion of one idea and how it is ingrained in the core principles of Sufism. What the corporate world needs is more than intellect or knowledge—wisdom and virtuous leadership. The book is an attempt to rebuild confidence in ancient values, virtues and wisdom.
Moid explains the concept of Sufism. It is mysticism or soul power. Sufi mystics are enlightened beings who are capable of establishing direct bonds with the Supreme Being. Moid quotes extensively from the great Sufi philosophers like Al-Ghazali, Mulla Nasruddin, Kahlil Gibran, Jalal-el Din Rumi,Omar Khayyam, Hafiz and others. Sufi sagacity is the guiding force for the corporate world. Moid demonstrates this with the help of telling examples from the life and works of the above Sufi Mystics.
The quality of leadership is known from the preparedness of the leader to face any unexpected situation and hard work on private stage. Leaders must offer guidance but refrain from ready-made solutions. God asked Noah to build an Ark first and then only saved him from the deluge. A visionary leader dreams and supports it with planned action. Vision without action remains a dream.
Living life successfully is maintaining balance between two extremes. On that rests success. A thin line separates the genius from the insane; both are unreasonable and they challenge man-made laws. Both try to create melody but the only problem with the insane is that his musical instrument is out of tune.
A positive perspective creates harmony and coherence—a negative perspective leads to disharmony and chaos. Harmony makes things grow—disharmony creates decadence. The role of a good leader is to create harmony. If he leads people by creating disharmony, following the policy of divide and rule, then he is not a leader but a misleader. Today many misleaders are respected because people do not understand the real characteristics of leadership or the levels of leadership consciousness. Great leaders always see the big picture by developing a holistic pattern. Managing conflict perspectives is an art every leader must master.
There are three types of leaders. Those in absolute harmony with their inner core. They are spiritually inspired. The second have softer outer core but are hard inside. Third group are those whose exterior is hard but from inside they are soft.
Moid recounts the charming story of the turnaround of Singareni and the lessons he learnt from R.H.Khwaja who did the miracle.
The book is an eye-opener to all management students and practising managers.
P.P.Ramachandran
1 / 11 / 2015.
Unified Financial Code by S.S.Tarapore ; Published by LexisNexis ; Pages 166 ; Price Rs 295/-
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The book under review is authored by S.S.Tarapore who has acquired fame for his contributions on different aspects of our economy. His credentials are impeccable. He distinguished himself as Deputy Governor of the R B I. He had a long stint in the I M F and headed several important Committees, especially the two Capital Account Convertibility Committees. He was a member of the Narasimhan Committee. He is the Bhishma Pitamaha of the Indian economic scene .
This book is a critical analysis of the “ Financial Sector Legislative Reforms Commission Report”. Tarapore vehemently criticizes the recommendations of the Commission which will result in emasculating the present regulatory framework. He is firmly against the reduction in the role of the R B I Governor and the paramount role of the Central bank.
Tarapore tackles the dangers flowing from the thoughtless implementation of the FSLRC report. The Committee was appointed in 2011 and it decided to abrogate all existing legislation relating to the financial sector and replace them with a totally new framework. The Commission was tilted against the R B I . Its report failed to ensure that the vital aspects of the existing laws are retained. What is abrogated includes the State Bank of India Act, the Bank Nationalisation Acts.
The author argues rightly that it will be necessary to carefully analyse every sentence of the existing financial laws together with every sentence of the projected Indian Financial Code before Parliament agrees to any large scale repealing of the existing laws.
Tarapore spells out that centralization of regulatory powers with Government would run counter to its avowed aim of “Minimum government with Maximum Governance”. The latest Finance Bill ( 2015 ) had clauses restraining the power of R B I and setting up of an independent Public Debt Management Agency. The Finance Minister, however, deleted such clauses from the Finance Bill.
The FSLRC report should be referred to a Standing Committee on Finance, which should study in detail the recommendations. After their scrutiny only specific financial alterations could be considered by Parliament. The current multiple regulators have developed some experience and we ought to depend on them rather than experimenting with an untested Unified Financial Authority.
Tarapore debunks the allegation that R B I is reluctant to give up operating the debt management of the Government. Dr.Raghuram Rajan has declared that the R B I was in favour of setting up of the PDMA but this should be done in an orderly fashion.
The FSLRC downgraded Governor to a “ Chairman “ and Deputy Governor to “Member”--- a retrograde act. The author warmly welcomes the historic agreement on the Monetary Policy framework and hopes that the MPC will become operational He is in favour of the Urjit Patel Committee recommendation, according to which there would be three executive members and two external members to be appointed by R B I and there would be no veto for the Governor. This would ensure that the R B I can be made fully accountable for its actions.
The Commission has failed to study the subject of “Financial Inclusion” and given it short shrift. Also it has provided no safeguard against Cartelisation. It recommends merging Bank Deposits Insurance Funds with the funds required for operating the Resolution Corporation. By this, the former funds would be used to bail out non-bank financial companies. Deposit Insurance should be kept separate from the Resolution Corporation.
In July 2015 Government released a “ Revised “Indian Financial Code” which attracted strong criticism from seasoned commentators. The Revised Code suffers from serious lapses. Tarapore is convinced that the leitmotif of the Report, the I F C Code and the Revised Code is based on “..a morass of anger, confusion and hatred of the Central Bank of the country.”
This is a stirring call for Parliament to give careful consideration to the recommendations of the Commission and not allow itself to be bamboozled into making fundamental changes in the present financial legislative structure.
The book is compulsory reading for bankers, economists, planners and laymen too.
P.P.Ramachandran,
102, Crystal Enclave,
St.Anthony’s Road,
Kalina, Santacruz East,
Mumbai, 400051.
26 / 10 / 2015
A Governors’ Raj by Michael Fenwick Macnamara ; Published by Sage ; Pages 250 ; Price Rs 895/-
The author of this book was an Australian civil servant who has carefully studied the principles of the administrative system practised in British India. He has a commitment to India being a member of the “ Kipling Society” as also the “Indian Military History Society”.
The book analyses the role of Governors in the sphere of fashioning out government policy. He has chosen the period of the Viceroyalty of Lord Irwin which stretched from 1926 to 1931. During this period several British initiatives and significant policy changes were discussed, developed and determined. Important events of the Irwin Viceroyalty are Gandhi’s Dandi March, Bardoli Satyagraha, the Simon Commission, the Irwin Declaration and the First Round Table Conference.
Irwin’s Viceroyalty provides an ideal framework for studying the role of the Governors and the degree of their influence on the Viceroy. What has emerged clearly from the study is that even an impressive personality like Irwin relied on local advice, especially that of a couple of favourite Governors.
During the period 1926-1931 Lord Irwin worked with 17 Governors and 3 Secretaries of State. Recorded evidence reveals the importance of Governors like Hailey, Lytton, Marris, De Montmorency, Harcourt Butler, Kerr, Muddiman and Wheeler. The book analyses what the Governors of the Irwin era actually did and achieved within the Raj. Governors through the system of diarchy ostensibly demonstrated the genuineness of British constitutional intentions. They also evolved strategies to deal with national movements. At the same time Governors continued to provide to the people of India government and administration, including civic, social and economic works and infrastructure necessary to protect the welfare of the subjects. Irwin depended heavily on his Governors, some of whom had a long career in India and were the most senior, knowledgeable and experienced members of the I C S.
The author points out two overarching policies. The first was to provide sound government and administration through various techniques which included the deliverance of constitutional reform. The second was to deal directly with nationalism and emergency within the laws of India.
Chapter One of the book defines the Governors’ status in British India and the nature of their relationship with the Centre. Chapter Two examines the Montford reforms. Governors did not use the complexity of diarchy to confuse national aspirations but attempted transparently to deliver the policy outcomes demanded by these reforms. The next two chapters analyse closely the degree to which the Governors influenced Irwin in making important policy decisions. Four chapters ( 5—8) show how the Governors interacted with the Viceroy and the British government in dealing with the different manifestations of direct nationalism. These included communal disturbances, revolt, civil disobedience and non-co-operation, trade union activities and above all the acts of Gandhi.
A major challenge Irwin’s Viceroyalty faced was making terms with rising Indian nationalism. The complexity of the advice given by the Governors, the differing policy approaches to the problems at hand and the decisions taken by Lord Irwin are explained thoroughly. Governors were “ wellsprings of wisdom “. Irwin’s consistent skill lay in the willingness to take advice from his Governors and work with them within a “ Governors’ Raj”.
It will be illuminating to present some material from the book connected with Gandhi’s Salt Satyagraha. “ Gandhi’s Salt March launched on 12 March, 1930,was arguably the most important and sensitive confrontation with which the Governors and Lord Irwin had to contend. ..It was provocative in its intent and offered the British opportunities to enforce the law. Governor Hailey viewed it as a ploy to provoke British retaliation. Bombay Governor Sykes wrote to the Viceroy—I wish to discuss methods by which it was proposed to deal with various possible activities of Gandhi and his followers, what were the possibilities of violence and whether any action was necessary against Gandhi. Bombay did not want to prohibit the March as long as it was peaceful…In the event Gandhi was arrested.”
This is perhaps the first time that an attempt has been made to study beyond the Viceroy and the Secretary of State and reach out to the Governors some of whom played an important and decisive role in policy making.The book is very well researched and throws a flood of light on a number of subjects hitherto neglected or treated inadequately. The author has provided a rich bibliography and reference material. This is a book not to be missed by any student of the History of India’s Independence struggle. It will fascinate the layman who is interested in the History of our country.
P.P.Ramachandran.
11 / 10 / 2015
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