An Open Letter to Madam Jayalalithaa, on Mullaperiyar

Dear Madam,

We start by thanking you heartily from the bottom of our hearts for reaching out to the people of Kerala through your open letter that appeared as full-page advertisements in major dailies today.

Your letter is remarkable in that it highlights the various strengthening measures carried out on the original Mullaperiyar Dam between the years 1980 and 1994. Many people of Kerala and Tamilnadu might be reading for the first time, the details you divulged today.

We appreciate your concern for the welfare of your state, Madam, as Mullaperiyar is enabling the people of Tamilnadu for both their agricultural and power needs.

At the same time, we have deeply felt that what Keralites are feeling is not a fear psychosis as you said, Madam, but real fear.

As you said the Mullaperiyar dam may never fail. The reinforcements you describe in detail are, in no doubt, providing comfort. But we would like to draw your attention, Madam, to a few factors that cause fear - not fear psychosis - in people living downstream of Mullaperiyar, who just happens to be people of Kerala:

Every other dam built on lime surkhi, anywhere in the world, has been decommissioned. Mullaperiyar is the only exception. Most countries including USA and China did that not because they didn’t know about the kind of reinforcements you describe, Madam, but because it didn’t make sense to them to continue with those structures as it is a proven fact that lime surkhi can degrade over time with seepages. It is telling that the original Mullaperiyar dam’s chief engineer didn’t project a life of more than 50 years for his creation.

Secondly, the Mullaperiyar issue of today is not the Mullaperiyar issue of 1970, 1980, 1994, 2006, or even 2010 - which are crucial dates you cite Madam, from your protracted legal battle with Kerala. Because, it was in 2011, precisely just a few weeks back, that significant earthquake activity was recorded in nearby areas of Mullaperiyar, for the first time. And that is why the tide of expert opinion is slowly turning in favour of Kerala’s safety concerns over Tamilnadu’s agricultural concerns.

While most of Tamilnadu’s defence is concerned with the risks from rainfall or floods, Madam Jayalalithaa, it can be easily seen by the unbiased eye that nobody has accounted for earthquakes, which have only occurred in the region recently.

Thirdly, nobody really knows what happens when a dam like Mullaperiyar collapses. The best example to cite Madam, is, of course, Banqiao-Shimantan dam collapse in China that happened in 1975. Even the full might of the Chinese Army and Air Force couldn’t control the resulting chain reaction along the downstream. Stunning the world by their rapid strategy, the Chinese military engineers acted swiftly to destroy many downstream dams through air-strikes to control the flooding. But the strategy failed at more and more downstream locations within weeks, if not days. Finally, the fury of the water had caused the collapse or destruction of an unbelievable 62 dams in that area.

Why? Simply because everybody underestimated the fury of the resulting wave from the dam break. The resulting flood waters had caused a large wave, 10 kilometers wide and  up to 7 meters high which rushed onto the plains below, at nearly 50 kilometers per hour, almost wiping out an area 55 kilometers long and 15 kilometers wide, and creating temporary lakes as large as 12,000 square kilometers.

Eerily, Banqiao and Shimantan were gravity dams, Madam, that you place so much trust in, and both had undergone the kind of reinforcements and repairs that you again trust in so much, and here is the eeriest point for your kind attention - the first dam that collapsed, Banqiao, was barely 25 years old and built on concrete by the Soviets with the latest technology available then. What comparison exist with the 116-year old Mullaperiyar, Madam Jayalalithaa?

As a media house closely following the arguments of both sides, we felt that it is our duty to highlight a way out from the present stalemate to you, Madam.

In our proposed solution, there is no new dam. Also, there is no need for eternal capping of water level at 120 feet. It is about a much simpler request.

You have clearly pointed out that the state of Tamilnadu is awaiting the decision of the Supreme Court appointed Empowered Committee, which is expected by February 2012. The dam break analysis taken up by Kerala may take four more months from February. Altogether our solution is about six more months of wait. By that time, Madam, it will also be clear whether earth-quake activity is increasing or disappearing from the region.

In a nutshell, Madam Jayalalithaa, our solution is just to lower the water level by 10 feet for these six months. That simple step will go a long long way in soothing the fear-struck Kerala people, and win their hearts for you, Madam, even much more than they respect their own political leaders. We are sure for taking such a timebound, reasonable step, you will be respected in Tamilnadu too.

Let both the people of Kerala and Tamilnadu as well as the experts decide later on when the Mullaperiyar dam should be eventually de-commissioned. We are sure you have been already advised, Madam, by your experts that every lime surkhi dam will have to be de-commissioned and a new dam built. But if the experts decide the current dam has 5 or 10 or 15 years more of life in it, so be it.   

But none of us should also forget, Madam, that Mullaperiyar is a unique affair due to another reason.

Rarely do you find in this globe, Madam, a dam built on the land of downstream people, but serving only the upstream population. That in itself is great magnanimity from the people of Kerala.

When such a dam ages and the people in downstream - who stand to lose their life and property - cries for help, don’t you think it is the duty of the upstream population - who faces no risk but has benefited from the magnanimity of the downstream people for more than hundred years - to heed those cries?

Tamilnadu was blessed with this dam. Now, it is up to you, Madam Jayalalithaa, to prove that Tamilnadu was worthy of that blessing.

Let you be able to act on your conscience, Madam, and thus proactively soothe the real fears of Keralites by lowering the water level by at least 10 feet, until further studies prove the safety of the dam conclusively in light of the recent earthquakes felt close to the area. It will take only 180 days of restrain. 

All the best to you and all Tamil people,

Thanking you,
With warmest regards,

The Editors
Seasonal Magazine

Manappuram’s MAcare Inaugurated in Kochi, Largest Diagnostics Centre in Kerala

Union Minister KV Thomas today inaugurated Manappuram Group’s diagnostics and dental care centre in Kochi. Branded as MAcare, this 17,000 sq ft integrated facility is the largest diagnostics centre in Kerala.

The International Dental Hospital was inaugurated by Hibi Eden, Member of Kerala Legislative Assembly.  The Pharmacy Division was inaugurated by Sebastian Paul, former MP.

Presiding over the occasion was Tony Chammany, Mayor of Kochi Corporation. The Welcome Speech was by Manappuram Group Executive Chairman, VP Nandakumar.

MAcare is a proposed 50-centre diagnostics chain promoted by Manappuram Group with an investment of Rs. 1000 crore. The highlight of the Kochi centre is its industry leading size, an exclusive Day Surgery Centre, and the latest diagnostics equipments.

Manappuram has also launched a retail jewellery chain, branded as Riti Jewelry, for which it is tying up Rs. 100 crore in PE funds shortly. According to Nandakumar, the Group is in talks with a few PE funds with which it already has associations for its listed and flagship company, Manappuram Finance Ltd (BSE: 531213, NSE: MANAPPURAM).

"Manappuram Finance, MAcare, & Riti Jewelry are All Independent Companies," says VP Nandakumar

Interview with Manappuram Group Chairman, VP Nandakumar:

 

 

MAcare, the healthcare divison of Manappuram Group is all set to unveil its flagship super-speciality diagnostic and dental clinic at Kochi on December 10th. The highpoint of the 17,000 sq ft air-conditioned clinic developed on an investment of Rs. 50 crore is that it goes beyond mere diagnostics, and will undertake Day Surgeries through keyhole and laproscopic procedures. This is just the begining for MAcare, with the full business plan being launching a 50-clinic strong medical chain across India within the next few years at an investment of Rs. 1000 crore. Meanwhile, the Group's flagship company, the listed Manappuram Finance Ltd (BSE: 531213, NSE: MANAPPURAM) has delivered yet another quarter of good results, with both income and profits more than doubling, and clearly outpacing most peers. Post results, Manappuram’s stock had resumed its upward journey, which incidentally had created many millionaires in India, especially in Kerala, during the last decade, in its equally good market-beating performance. Interestingly, many of them are not just investors, but employees at Manappuram who have been fortunate enough to be the beneficiaries of the first ESOP in this sector. Manappuram Chairman VP Nandakumar, a professional banker and noted entrepreneur, explains to Seasonal Magazine, why Manappuram Finance is all set to scale greater heights in the coming years, mainly due to a demonstrated culture of sharing, as well as professional management. Off to the interview with this business leader, who still finds time to tend to his numerous cows and goats, and his farm, and who even while touring Switzerland or Australia, admits to be more attracted by its animal farms rather than its investment banking businesses.

You are all set to launch your first large-format diagnostic and dental clinic. Can you walk us through how this is going to be different in this overcrowded segment?

Our first large-format clinic is getting opened on December 10th at Kochi, and this is Kerala's largest such diagnostic facility. It will also feature a full-featured dental clinic. That combination is also rare, as nobody seems to have clubbed these two commonly in-demand healthcare services. But how this centre is going to be different from all others is entirely on different grounds, which has everything to do with offering world's very best, state-of-the-art health diagnostics. Just to provide an illustrative example, for early detection of breast diseases including cancer, the MAcare centre would provide the gold standard of triple test, which is a combination of ultrasound scan, mammogram, and fine needle aspiration cytology. MAcare Kochi will be home to Kerala's first installation of GE Healthcare's latest high-performance mammography machine.

Apart from early detection, any other specific value additions you are targeting?

Well, something that readily comes to my mind is a better user experience. Patients will be least inconvenienced here as we have invested heavily to bring in the world's latest and fastest diagnostic equipments including digital X-Ray, latest and fastest edition of various scanners, and automated microbiology, biochemistry, and pathology labs. On the dental side, MAcare Kochi will feature a full-fledged dental hospital, offering all basic services to advanced ones like latest implants, maxillofacial surgeries, and cosmetic dentistry.

What is this buzz we heard about MAcare entering surgical services?

Well, at the Kochi centre we are also building a keyhole and laproscopic surgery department. It will cater to the high-demand field of Day Surgeries. Today, the technology has advanced to such a stage that many common operations, especially in the abdominal and pelvic cavities, can be performed using these minimally invasive  surgeries. To patients, these procedures cause less pain and the recovery is much faster without any need for overnight stay at the hospital.

But that means, MAcare will need to invest in an excellent team of doctors too, isn't it?

We have already done that. What we have created is one of the best talent pools and facilities in super-specialities like Cardiology, Neurology, Nephrology, & Gastroenterology.

You have always maintained that MACare and Manappuram's jewellery foray are separate entities from the listed Manappuram Finance. Any change in plans?

Not at all. They are different entities, distinct from Manappuram Finance, and independently funded. They are being built from the ground up as standalone entities, already proven fit for major private equity deals, and will be developed with the distinct aim of sectoral domination as well as for going public. I expect MAcare and our jewellery chain to go for their IPOs by FY’15.

What about management structure? Will they too be different?

Of course. MAcare is separately and professionally managed with Dr. PD Prasannan as the Managing Director. Both the Director Board and top management structure of Manappuram Healthcare Ltd, which is how the company is titled, already have enough highly experienced doctors and management professionals.

Manappuram Finance has again delivered a good set of numbers, with both income and profits more than doubling. But the share price performance, though good, was not matching. What could be the overhang on the stock?

We don’t think there is any overhang as such, other than the general uncertainty in the markets. The stock has gained reasonably post results, and one thing you should take into note is that Manappuram stock’s volumes have shot up during the past few weeks. In NSE alone we see that per day volumes have crossed 25 or 30 lakhs. Evidently, there is good demand as well as churn in our scrip. But we don’t keep a tab on a day-to-day basis, and our belief has always been that our duty is only to focus on fundamental performance, and that the markets will take care of itself.

Recently, a noted FII had exited the Manappuram counter. Do you see any further exits or entries?

If you are familiar with our shareholding pattern, you will know that around 32% of the shares are held by FIIs or international PE funds. All are noted players. You can verify it by checking the biggest investors who hold more than 1% in Manappuram. Be it CLSA, Merrill Lynch, Wellington, Hudson, or the around 15 such investors. So one player exiting or two others entering are not big issues. As I mentioned just now, it is something that the market takes care of. We are not overly bothered with such movements.

But why the high churn, really? Have you thought about it?

Well, we think it is largely due to the internal dynamics of these PE funds. After all, these are done by individual fund managers, who have their own personal objectives like incentives or bonuses. It is a highly competitive field, with a high percentage of performance-linked pay, as well as high attrition. Most managers don’t stick with a fund for more than 3 years. So that is one of the main reasons for this kind of churn.

There are numerous NBFCs in the fray now, some bigger and many smaller than you. Since last several months, the market also has another listed player in gold loans, Muthoot Finance. In other words, there are lot of investment opportunities before investors. What according to you is the main attraction of Manappuram counter now?

Well, if you meant pure financial attractions for our stock, the main factor that will play to our investors’ advantage is that we have a very high capital adequacy ratio, and what that means is that there is no need to raise further funds for a long time. In other words, no urgent necessity for an equity dilution for the next one-and-a-half years. Looking at the financials of some of our peers, we see that they will soon require urgent and significant Tier-1 funds to go forward. That will entail significant dilution for their investors.

Why should it necessitate significant dilution? That kind of a dilution was for Manappuram too isn’t it, during the last QIP for Rs. 1000 crore?

No, our equity was not significantly diluted. The dilution you see is due to the last bonus and not the QIP, which amounted to only a 22.5% dilution. The same may not be applicable for any of our peers going in for fund raising now, as the valuations are relatively very low now than when we went for QIP. Due to this precise reason our stock may be positively re-rated than our peers, soon.

You mentioned this as the pure financial factor. Are there any other fundamental reason?

Well, there are many reasons favouring a counter like ours among the NBFC pack, and I personally think it is not decent on my part to talk about it. It is the job of analysts or financial journalists. But one thing I would like to underline is that it is difficult to find as ardent a wealth creator as Manappuram Finance in not only this sector, but in the entire midcap space. It comes directly from our culture of sharing wealth.

Can you elaborate this sharing culture?

There are lots to say on this front, but the core point is that we have a specific track-record in sharing prosperity. The promoting family led by me, has kept only around one-third of the wealth, and has shared around two-thirds of it with our stakeholders. By stakeholders we don’t mean just our investors, but also our employees. We were the first in this sector to provide substantial Employee Stock Option Plans. Due to our ESOP, many of our senior employees are today millionaires. Among retail investors, we have virtually lost count on how many we have made millionaires.

But can’t this sharing culture be learnt by other organizations? Is there any other factor that attracts high-profile investors?

Theoretically yes, but then why every other IT company is not an Infosys, or why every other IT promoter is not Murthy? We think sharing is something in our culture, our blood. The point is we have a demonstrated track-record in sharing. And the bigger story is not about the stock making money for everyone. It is about building and sustaining a thoroughly professional organization. Though promoters now hold around 36% share, I am the only one in the Director Board. No brothers, sisters, wife, children, or that kind of hanky-panky. All other directors are thoroughbred professionals, many of them better qualified and experienced than me, and they are either Executive Directors or Independent Directors of good standing.

You mentioned ESOP. But even in companies like Infosys, what we have found is that ESOP and all has to stop after several years. Are there any other unique employee benefits?

Ok, forget ESOP for a moment then. We encourage our suitable employees to go for their MBA, if they don’t already have one, and fund their MBA program fully. That way, we are not only making the whole Manappuram team more professional, but proving to them the long-term commitment we have for them. This is definitely not an NBFC which is staffed by underpaid, and therefore grumpy, retired bankers coming to while away their time.  Manappuram will always be a young, forward-looking organization.

Is Manappuram planning for a banking license?

We have not applied yet, though from the discussion papers which are ought, we seem very eligible. Let the full norms come out and then we will take a call on it. We are not too eager, but not ruling it out either.

Let me repeat an oft-repeated question at you. Are you eyeing a major risk from a potential bust in gold prices?

Not at all. I think gold has already gone through its brief and shallow technical correction, and it is set to zoom once again, and probably set to make stunning highs by March 12. In fact, I remind everyone close to me to not miss the gold rally, as it seems to be a sure-shot bet to me, as of now.

Why are you so bullish on the yellow metal?

The answer is obviously gold’s safe haven status, as you might be aware. During the last few months, I was touring UK, Switzerland, Australia, Middle East. There is still significant uncertainty in those markets, except Middle East which has started booming on oil again. The situation in US also continues to be grim. All such volatility and uncertainty revolves around major currencies, and gold is the obvious safe haven even for mid-sized funds.

Some pockets of the market is sensing a risk from the days-past-due issue facing NBFCs. Is there a significant NPA risk faced by Manappuram when RBI revises NPA classification to 90 dpd?

There will be a change in NPAs, but we don’t expect it to be significant in the case of gold loans companies like us. Currently, the NPAs are calculated at 180 days-past-due, and when it get revised to 90 there will obviously be a small change. But on the longer run this is a non-issue as we now go in for auctions after 15 months only, and now we may need to do it at 12 months. That would be the only lasting change brought by the dpd change. Anyway, most of our loans are of the shorter, 100 days duration.

What about Manappuram Group’s foray into jewellery retailing?

It is progressing satisfactorily. Jewellery business is on since the last one year, now there are 17 showrooms, with a majority of the shops in Bangalore. We have recently branded it as Riti Jewelry.  Eventually, we will go in for a nationwide rollout for both the diagnostics division as well as the jewellery chain.

What all constitute Manappuram’s CSR activities?

We have adopted 7 panchayats in and around our hometown of Valappad, in Thrissur District of Kerala, for the purpose of providing free comprehensive health insurance for all BPL families. Under this unique scheme, in tie-up with Oriental Insurance, Manappuram Foundation has covered the health of more than one lakh fellow-citizens belonging to more than 20,500 families. The scheme has greatly benefited these economically challenged neighbours of Manappuram, with disbursements of over Rs. 3 crore in the past year alone. I want Manappuram to be the best practical example in not only wealth creation for its various stakeholders, but in sharing our good fortune with our less fortunate neighbours. 

“Musli Power Xtra Will Storm the Market Again,” says Founder

Interview with Musli Power Xtra Founder and MD of Kunnath Pharmaceuticals, KC Abraham:

When we met him with our hard questions, he was still to get the favourable court order executed in his favour by Kerala’s Department of Drugs. But KC Abraham showed us a copy of the court order, the legal advice that he has received, as well as a copy of the national level lab test result that disproves adulteration - all of which have already given him his characteristic energy back to take on his detractors head on. Abraham’s plans are getting bigger - to almost unbelievable levels - as he speaks about targets of Rs. 1500 crore turnover, booming demand from overseas, and going public through an IPO. Seasonal Magazine quizzes Kunnath Pharma founder on the future of the controversial ayurvedic formulation he invented:

What do you feel regarding the whole episode of ban and the now possible revocation?

In two simple words, it is the triumph of truth and justice. Musli Power Xtra stuck with those values, and these values saved us at the end of the day.

That is a very general or vague claim. Can you be more clear?

Isn’t it very clear? We have never adulterated our medicine. But some concerned authorities weren’t believing. But our customers knew better. You will be surprised to know the number of calls I personally received from users, on the day the test result was published. Almost all of them said only one thing - we knew Musli Power was clean.

How come they know it?

You don’t understand. These are patients who have tried everything under the sun, and got dejected. These are patients who are suffering from the harmful side-effects of equivalent allopathic drugs. They know better about Musli Power Xtra, that it is effective and clean, free of side effects. But the authorities wanted analytical test results from India’s most well-equipped Government run lab. Now it has come. No tadalafil, sildenafil, or any steroids, as alleged. That is the truth part of this affair.

And the justice part?

Well, some time back we were running from pillar to post, in search for justice. We were alarmed that even a clean, effective product like Musli Power Xtra was being targeted. We told our honest story to many in authority, but we didn’t get justice from any quarters. Not from the state, not from the centre, not from any bureaucrats, not from any politicians. They weren’t just being indifferent. But we finally got justice from the courts. That is why we say that our recent success is the triumph of truth and justice.

But you are still barred from giving advertisements…

Not really. We can give ads but can’t cross the line of the magic remedies act. We welcome that. No one is above law. In fact, even much before this issue was brought up in court, we had revamped our entire ad campaign to strictly adhere to the magic remedies act. Musli Power’s new slogan - ‘For Healthy, Happy Family’ - reflects it.

But even that was challenged in court…

Yes, it was objected to, but it was overruled by the court with some conditions. Musli Power Xtra can use it, as well as two formats of advertisements, and another thing is that in the coming days, Kunnath Pharmaceuticals will vigorously start fighting for our legitimate rights to advertise, as a legal entity that not only stand in no violation of law, but is also a responsible corporate citizen that diligently pays all kind of huge taxes to the state and central governments.

A couple of moments back, you told the authorities were not just being indifferent. Why? Are you repeating that Musli Power Xtra is being targeted? By whom?

I won’t say all the authorities, but definitely, some of them are working on the behest of vested interests. We have always said that MNC pharma companies are behind this whole affair. The sale of allopathic erectile dysfunction drugs like Viagra, Cialis, Levitra and its clones were getting seriously affected due to the popularity of Musli Power Xtra.

But that is just an assumption of yours as the bereaved party, isn’t it?
 

Let me ask you a question in return. Why has there been no action against so many blatant violations of the drug adulteration rules and the magic remedies act? Simply because, they haven’t been as successful as Musli Power Xtra. The moment your sales surpass certain figures, and start hurting these allopathic monopolies, they will be after you in various guises.

What are your re-launch plans for Musli Power Xtra?

We have already kick-started a re-launch program in New Delhi. A three-month promotional program is being organized as part of the major trade fairs happening there in this season. We are there in the Delhi IITF-2011 at Stall-27 of Kerala Pavilion. This has been the seventh year of our participation in that big fair. Apart from good discounts, the free service of two doctors who are infertility specialists employed by Kunnath, is being provided there. In Kerala, as a first step, our illuminated vehicles announcing our renewed presence in the market, are travelling to all towns. As a re-launch offer, we are also providing 33% capsules extra, free of cost.

What has been your core learning from getting banned and this coming-back-to-life episode?

Number one, entrepreneurial success of anyone is not tolerated at all in Kerala. Number two, any businessman who has been a resounding success in Kerala should be admired above all. Anyone can learn valuable lessons in survival from them. Number three, however nasty or powerful your enemies are, you can survive if you fight for truth and justice. Number four, it is very very important to grow fast, grow exponentially, if you are to protect your brand, your company.

So, how are you planning to implement these lessons?

We are already planning to expand our factory facilities, from Kerala, to Rajasthan, where we already have a large presence in farming our herbs. On the farming front too, we will de-risk by expanding to places like Tamilnadu and Karnataka, from just Kerala and Rajasthan. We are considering some huge lands near Ooty and Sirsi-Banavasi. Coming back to the market after a lull, we are moving out from targets of hundreds of crores in turnover to thousands. Within the next five years, Musli Power Xtra will be targeting a turnover of Rs. 1500 crore. Demand is booming from overseas markets, and we are systematically pursuing suitable tie-ups in each country. For the current year, our target is to double from last year’s Rs. 55 crore to around Rs. 100 crore. Kunnath Pharma is also actively planning to become a listed public company by going in for our IPO within the next few years.