Secrets Behind How Oommen Chandy Survived - Exclusive Interview with CM of Kerala

Seasonal Magazine interviews Oommen Chandy, Chief Minister of Kerala State.

"Success breeds complacency. Complacency breeds failure. Only the paranoid survive." So wrote a business manager and author in the early 90s. The last four words became one of the best-known success paradigms of recent times, in everything from careers to business to politics. Not because it was very intuitive, but because the guy who said it had done the impossible.

Fleeing from communist Hungary to escape persecution, this Jewish youngster would land up in America, educate himself, get employed with a start-up, and turn it into the world’s 7th largest company with 64,000 employees, registering a 4500% increase in market cap, and making its founders, himself, and its early investors billionaires and millionaires. That is how Andrew Grove built Intel.

Counter-intuitive to the market wisdom of greater trust, win-win, and all such stuff. Until Grove said that, paranoia was a mental affliction, and paranoids were sympathetically viewed.

Grove ‘suspected’ everyone, from competitors to associates to employees. He equated someone wasting a key officer’s time to someone stealing an expensive office equipment. For Grove, every decision, every thing depended on raw data.

India too had many ‘Andy’ fans, most notably NR Narayana Murthy who used to tell about meetings, “In God we trust, everyone else brings data to the table.”

But it goes to his credit that for all his paranoia, Andy was one of the most approachable Big Business CEOs ever, shunning the corner office, always working from a small worker-cubicle, and allowing colleagues to argue and shout at him. Andy also never owned a jet, but had a modest home, a modest car, and a modest life.

Still, the counter-intuitiveness of Grove was telling. Not that “only the paranoid succeed.” But that, “only the paranoid survive.” Even mere survival required paranoia in Andy‘s wisdom! 

Now, try telling that to politicians. At least 99% would readily agree. From Washington to New Delhi to Thiruvananthapuram. After all, isn’t that what the success of K Karunakaran, EK Nayanar, AK Antony, or VS Achuthanandan taught us? All of them were alert, suspicious, and paranoid to a great extent.

Now, try telling that to Oommen Chandy. He wouldn’t agree.

Even after he has paid a heavy price in 2013 for not being paranoid about stuff that other leaders would have been paranoid about.

Why Government and CII Don’t See Eye to Eye on Recent Reforms

Seasonal Magazine interviews S 'Kris' Gopalakrishnan, President of Confederation of Indian Industries (CII) and Co-Founder and Vice-Chairman of Infosys Ltd.

Interview and Feature by Jaison D and John Antony:  

Nation is fast approaching election year. UPA Government which has already lost out on economic development during the last four years, is eyeing the only redeemer on the horizon, which is massive socioeconomic development. Does that make S Gopalakrishnan an unhappy man? Ideally, it shouldn’t be that way. Yet the CII boss doesn’t see eye to eye with the government on most recent reforms including Companies Bill, Land Acquisition Bill, and the Food Security Bill. At Infosys, he is Kris, its beloved Co-Founder and Vice-Chairman who helped it scale to massive heights, especially during his long stint as head of North American operations. But outside Infosys, Gopalakrishnan initially looked like an unlikely leader to lead CII during this tumultuous year. If not for anything, for the fact that software exporting companies like Infosys have gained massively due to the rupee rout. Yet, it goes to his credit that he has really felt the pain of the larger India Inc., which is evident from the 10-Point agenda it presented to Union Government in July to salvage Indian economy from the crisis it is finding itself in. Confederation of Indian Industry had recently published these 10 points, and it comes across as comprehensive and impressive, except for the fact that on super-critical issues like oil imports, CII has only painful solutions to offer like removing the subsidies. The 10-Point agenda as well as CII’s calibrated reservations to certain provisions in Companies Bill, Land Acquisition Bill, and Food Security Bill clearly reveals that it has a different development plan for the country than pursued by the UPA Government. CII’s view is simply that only double-digit growth or at least high single-digit growth can lift millions more from poverty. Dr. Singh and Chidambaram would have agreed with Kris on some other day, but not today. The 2008 world economic crisis and the unconventional monetary policies unleashed by US, EU, & Japan to contain it have shaken the very foundations of these UPA economists’ understanding of economics itself. That is why on one hand they have brought in a more updated professional like Dr. Raghuram Rajan to head RBI, and on the other hand are more keen to follow Congress Chief’s benevolent plans for the poor. They had pursued growth, but growth had failed them. In fact, growth pursuit has failed the entire nation, as it became clear that growth was not enough to bring in more equitability between the rich, middleclass, and poor. Vajpayee’s failure to get a second term, and Dr. Singh’s need to rely on NREGA to get a second-term were telling. Yet, Kris would disagree. Not just disagree because that is the industry’s stand, but because he can make incisive cuts into the logic supporting more benevolence as well as more regulation. Who will be right only time can tell, but Seasonal Magazine caught up with Kris to get his views on the wide-ranging challenges the nation, and particularly the industry, faces today.

Seasonal Magazine in conversation with S Gopalakrishnan, President, CII, and Co-Founder and Executive Vice Chairman, Infosys Ltd.:

Meet the Man Who Advises Manmohan, India's PM

Advisers came in various types. Duryodhana had Shakuni. Chandragupta had Chanakya. Akbar had Birbal. Nehru had VK Krishna Menon. So, who is TKA Nair to Dr. Manmohan Singh? Seasonal Magazine interviewed TKA Nair, Advisor to Prime Minister of India, to find out.

Interview and Feature by Jaison D and John Antony:

Bhagavad Gita’s Chapter 5 on Karma Yoga has this interesting verse: “One who performs his duty without attachment, surrendering the results unto the Supreme God, is not affected by sinful action, as the lotus leaf is untouched by water.” For the Adviser to Prime Minister of India, this is one principle that has always been of inspiration. This he didn’t tell us, of course, but then that is how TKA Nair tells everything - without telling.

When we set out to interview him, we were not intimidated by his personality - which is a perfect blend of dignity and modesty - but intimidated by the fact that TKA is infamous for not giving media interviews. When we pressed him for an interview on a specific day, he politely declined. But that request was over phone. So, how about just a meeting, we enquired. 

That was fine with him. TKA Nair loves meeting people. Because he is astute enough to assess people quickly in one-to-one meetings. The Adviser to Dr. Manmohan Singh obviously wants to know what he is getting into, always. 

Call it his superhydrophobicity or lotus effect. The leaves of the lotus flower doesn’t just possess very high water repellence, but dirt particles are picked up by water droplets due to a complex micro and nano-scopic architecture of the surface, which minimizes adhesion. It is not without anything that Nair has not just survived but thrived in the dog-eat-dog world of Indian bureaucracy and politics, with not even a blemish on his suit. 

For one who entered Prime Minister’s Office as a Secretary during the days of IK Gujral, TKA thrived to be a part of AB Vajpayee’s PMO, and scaled heights during Dr. Singh’s tenure, first as Principal Secretary and then as Adviser to PM with the rank of Minister of State. 

TKA has been noted by India’s topmost political leaders including Dr. Singh for his numerous skills, which include building difficult consensus be it with key opposition leaders or captains of India Inc. Nair has been an expert in developmental economics, and despite his soft-spoken nature, has made lasting changes to the PMO, almost all of them ending up with increasing the monitoring capacity or power of this topmost office. 

For instance, it was on Nair’s suggestion that Dr. Singh agreed that PMO should regularly and directly monitor the execution of massive schemes like NREGA, NRHM, & Bharat Nirman. 

Still, Nair ruffles few feathers, as he has that rare gift to wield power without showing off power. 

Another of TKA’s impressive skills that appeals to political bosses is his comprehensive knowledge about the aptitude and capabilities of hundreds of senior IAS officers. That makes him not only a team builder but a king maker. 

According to New Delhi grapevine, the list of senior IAS officers suggested by TKA for top posts, and agreed upon by Dr. Singh, is endless. It includes former CAG, Vinod Rai; former Cabinet Secretary, KM Chandrashekhar; and current National Security Advisor, Shivshankar Menon. 

But ask TKA about such things, and there would end even that remote chance for a media interview. We found it for ourselves during our first meeting with Nair. He was quite upfront about the fact that he wouldn’t be able to speak about any official or controversial matter. “I am still a government servant, and it is just not right speaking about such issues,” he says. 

But in the same breath, he adds, “There are so many other constructive issues to speak about.” So, we shared the detailed questionnaire we had prepared, and we could see his face alternate between smiles and frowns as he scanned the variety of questions we had prepared. 

Finally, he says, “See, if you ask me about Dr. Singh, I can’t say anything; if you ask me about Vinod (Rai) I won’t say anything. But, of course, there are other issues to converse here.” Then he adds, “Please also don‘t project me as a great figure, which I am not. I am just a small cog in the administrative machinery.” 

His modesty not withstanding, this cog is a pretty important cog in the machinery that governs India today. 

The latest instance has been government’s recent submissions to PAC titled, “VIP References for Coal Block Allocations”, which reveals that several prominent politicians including Central Ministers and Chief Ministers of all parties - including Narendra Modi - lobbied hard with PMO for getting coal blocks allotted in favour of certain companies. The written requests for all these have been received and recorded by none other than TKA Nair. 

But ask him about this, and we receive the reply that that question is also out of bounds. “See, I am privy to a lot of such information, but I can’t speak about it with media. It can only be shared according to accepted norms and rules,” he feels. 

When Dr. Manmohan Singh was invincible - returning to power in 2009 even after completing a full 5-year term thereby becoming the only PM other than Nehru to achieve that feat - TKA Nair’s job was obviously easier. 

But today, after reeling from the impact of a global economic crisis, when Dr. Singh has been facing flak for practically everything, TKA knows that he should be extra vigilant. 

Only time will judge Dr. Singh’s contributions to India and its economy. Meanwhile, Thottuvelil Krishna Ayappan Nair pulls on, believing in Karma Yoga, like the lotus leaf glorified in the Gita.

Seasonal Magazine in conversation with TKA Nair,  Adviser to Prime Minister:

You have been a part of PMO since the time of IK Gujral, serving in the offices of AB Vajpayee, and then with Dr. Manmohan Singh. Do you especially like this role of aiding the Chief Executive of the country, than any other role that you could have landed?

Being part of PMO has indeed been a great privilege. I think I was fortunate to be where I am today. Though I have been part of PMO when IK Gujral and AB Vajpayee were Primer Ministers, my role then was as Secretary. It was under Dr. Manmohan Singh that I became the Principal Secretary and later Adviser. On whether I like this role than any other roles, obviously yes. But it was not a result of any planning. It just so happened.

Being a Punjab cadre IAS officer who spent considerable professional time in Kerala too, you would have sufficient exposure to the strength and weaknesses of both states. What lessons should both states learn from each other?

That is a very interesting question. Both states are very developed in their own way, and they are far ahead of many Indian states in this regard. In fact, the rest of India has much to learn from both these states. Still, I would say that Punjab has a lot to emulate from the Kerala model, which leads the nation in important sectors like healthcare and education. By leading in those two sectors is how Kerala manages to record the highest Human Development Index in this country. If the whole country achieves Kerala’s HDI, that will be a major developmental milestone.

How will you assess the social commitment of our topmost political leaders of all parties - of the rank of PM, Cabinet Ministers, Chief Ministers etc. Is it worse than public and critics assess, or is it better than such assessments? Do they really have to work hard at these posts?

It is a very difficult question to answer. I am not even sure whether it is proper that I answer that.

But you can, as the question is not about leaders from any specific party or coalition or government…

Well, I would emphatically say that the top political leaders are much more socially committed than the assessment by critics, media, or public. I am not someone who harbours a very negative view on all politicians or politics as a whole. They indeed have to work hard.

What would be the most difficult thing that they are called upon to do on a routine basis?

I would mention something that readily comes to my mind. Managing conflicting interests in each issue is a major challenge. Almost every issue that reaches a PM, Ministers, or CMs involve these kind of conflicts. An elected administrator has to look after the interests of all sections of affected people in each issue. Managing such conflicts and developing an amicable consensus is a major challenge that they face every day.

So, you emphatically feel that our top politicians work hard on social commitment?

Yes. Even if you take a completely cynical view on it, we shouldn’t forget that all of them want to be re-elected by the people. So, no party or politician can afford to forget social commitment. If they does, it is nothing but political suicide.

Coming to the role of bureaucracy, and you being a top-most bureaucrat for many years now, how would you assess its effectiveness in this country?

First of all, I don’t believe in such elevated statures. In fact, anyone who has worked in government for some years, would agree with me in this regard, at least in private. We all are just small cogs in this huge machinery called government. When all major initiatives are fine-tuned and executed by thousands of officers at various levels, how can a single officer be credited with success? Of course, there might be some officers who believe in projecting such larger-than-life persona, or the media may be creating such image-building, but count me out of it.

You mean a single officer can’t make any drastic change?

He can, but what really works in the background is that such change is the net result of the planning and execution by hundreds or thousands of officers. If somebody wants to take credit for that, will he or she take the blame too when something goes wrong? The reality is that, forget officers, not even ministers or the prime minister himself has got such invincible or superlative powers to make changes on his own. Again, the blame too shouldn’t be the leader’s alone. It is not only a case with India, but with any truly democratic nation.

Earlier on, you mentioned the Kerala model. Have you analyzed how the state got such an edge and what could the rest of India do to emulate this?

Yes, I have often been surprised with Kerala’s development on these fronts, especially as I travel around a lot across India which enables me to compare. The most critical advantage that Kerala enjoyed was good leadership during its earlier decades. When I say this, I am not mentioning any specific party or politician or anything like that. This leadership quality even predates the official Kerala formation, to the time of the princely states. Not only were the early leaders very benevolent, but they also had the foresight to bring up the living standards of all sections of the society through a focus on education and healthcare. Those two are great equalizers, and that is how Kerala got a head-start in social development. Everything else followed. Any state would stand to benefit from following this twin focus.

Any other significant factors that you have analyzed?

Yes, the contributions of Christian Missionaries in the state has been very valuable. They focused largely on education, and also on healthcare, and went about establishing pioneering institutions across the state, that has thrived even to this day. It was not driven by profit motive, but by social commitment. I can personally vouch for this, as I am a product of such an institution near by my home. If St. Thomas College, Kozhencherry, was not there, I wouldn’t have had a college education.

Earlier, you mentioned how Punjab could benefit from following this model. What is there for Keralites to learn from Punjab?

I would say it is sheer hard work. Punjabis are extremely hardworking people. If Punjab has become the Granary of India or the bread-basket of India, it is not only due to the soil’s exceptional fertility; it is more due to Punjabis’ exceptional willingness to do hard work. That culture has spilled over to other sectors like steel rolling mills, infrastructure, small scale industries etc, where Punjab leads.

So, you mean to say Keralites are very lazy, comparably?

No, not like that. What I meant was that Kerala can be much more productive. Keralites are very hardworking, especially when outside Kerala. One only has to visit Gulf countries to realize this. In fact, this extreme hardwork of Non Resident Keralites has been an equally important reason for Kerala’s high HDI, especially in recent decades. All said and done, Kerala has remained a money order economy. But the real lesson is that if such hard work has been adopted inside Kerala too, this state would have been number one in all respects.

Kerala’s developmental challenges are not unique to the state. How would you advise states like Kerala?

Yes, Kerala’s scarcity of natural resources like mineral ores, oil, or even land, is a major challenge. Even the processing of the only available natural resource, black sand, involves many serious hurdles. Secondly, labour is quite costly over here, with wages being multi-times that of some other states, but which is a good thing that contributes to the higher HDI here. But such issues are really only a challenge for large-scale industrialization. What I have always maintained is that, in Kerala, development is indeed possible by pursuing service sectors like education, tourism, healthcare, knowledge industries etc, where the real strength is human resources. It is a well-known phenomenon that Middle East countries absorbed more Keralites than any other Indians because of the higher educational achievements of this people.

How should Kerala or other such states go about doing this development?

Well, let us speak about education alone. There was a time when Maharaja’s College, Kochi; University College, Thiruvananthapuram; or CMS College, Kottayam were ranked among the best colleges in the country. A time when educated Malayalis were known to deliver the best written and spoken English. But today discerning Malayali parents would rather send their children to reputed colleges in Delhi or Mumbai to get the best education. What went wrong? Though we were pioneers, we lagged behind in creating Centres of Excellence. Today, if you take any higher education stream, including science, humanities, engineering, medicine, or law, there is no Centre of Excellence from Kerala. It is not a matter of faculty remuneration, which is at par with the best in this country, and teacher compensation has grown multi-fold along the years. What is lacking is the vision and will to create Centres of Excellence. Motivating teachers should be a big part of this exercise. When I joined St. Thomas College, Kozhencherry, it was quite a young college; but what teachers lacked in experience they made up in their passion.

You recently visited Attapady on behalf of PMO and submitted a 12-Point Implementation Plan. Can you elaborate on the ground situation there?

I did a two-day visit to Attappady in mid-July to study the situation first hand. The situation there is really very heart-rending. As you know, as many as 54 children have reportedly died in the Attappady hills, allegedly due to malnutrition, in the past 11 months. I met with lots of tribal people, especially women, who complained about various issues contributing to the current crisis. One thing that is striking about Attappady is that the infrastructure there is not bad at all. In fact, it has significantly improved from, say, 10 or 20 years back when I visited, thanks to projects like Attappady Hills Area Development Society (AHADS), which was backed by a Japanese government loan to the tune of Rs. 177 crore. Though the ecological situation has improved, the living standards haven't. Evidently, there are gaps in infrastructure, execution, and monitoring. So, I have written a 12-Point letter to the Chief Secretary outlining the suggestions. It includes tracking of around 900 pregnant women and all babies under 12 months in the three villages of Agali, Sholayur, & Pudur. Joint teams of medical professionals and Integrated Child Development Scheme (ICDS) staff should visit each Ooru (tribal hamlet) once a week. The report also recommended micro-plans for procuring nutrient food requirements at each anganwadi centre (play school or day care centre), taking into account local sensibilities and local availability of edible items. Strict implementation of the midday meal programme should also be ensured at the anganawadis.

Land alienation and allegations regarding consumption of illicitly brewed liquor have also been mentioned in the report. Can you clarify?

The adivasis I met there, especially men, were unequivocal in their stand that they don’t want to be treated like beggars. What they want for the long-term is not food, but means to cultivate their own food. For this, they want to get back their alienated land, and I have addressed this issue comprehensively in my report, so that there is marked improvement in this regard within six months. Regarding illicit brewing and consumption, I am not quoting any government or media reports, but the tribal women themselves complained to me. Whereas long back they prepared semi-alcoholic medicinal brews with some herbs and roots, now it is the worst liquor imaginable with ingredients like crushed batteries. So measures to curb illicit brewing and consumption have also been detailed in the report.   

      

You are a history buff by education, and even by way of your initial teaching jobs. How has a history background helped you professionally? How relevant is a background in history for various occupations like IAS, Business, Law, Politics etc?

I wouldn’t say it was of much relevance. Forget history, no subject is exceptionally relevant to a long IAS career like what I had completed. I would say that it is relevant only as a backgrounder and of course for passing the IAS entrance. This career is all about learning on the job. If you are entrusted with a revenue job in Punjab, you have to prepare yourself for that by identifying and studying relevant real-world material. No academic course is going to prepare you for that. The learning never stops. When I visited Attapady, and interacted with the tribals there, it was the next round of learning.

You have a long association with KSIDC, and is still its Chairman. How far are you satisfied with the role KSIDC has played over the years? Do you think that much more could be done by a state development financier? Are there better models to emulate?

Institutions like KSIDC have played a pivotal role from many years back, in initiating industrialization in various states. What is especially noteworthy is that many of them including KSIDC was instrumental in pioneering public-private partnerships in the industrial sector, much before the PPP model was introduced in the infra sector. Rather than following a better model to emulate, KSIDC has been re-inventing itself by participating in infrastructure development, investments, promotion, venture funds etc.

As a veteran IAS officer who has scaled the apex of that career, what would be your advice for the youth, and especially for aspiring IAS candidates?

Firstly, IAS is not the ultimate career. The situation today is not the same as when I joined several decades back. Today, you can be a noteworthy part of nation-building whichever profession you are in. For instance, one can just be a journalist, or be a really good socially contributing journalist, who can contribute even more than an IAS officer. Or one can be a really good engineer. Or a really good entrepreneur employing thousands of people.

Do you think IAS officers need to be protected more in light of the Durga Shakti Nagpal episode?

The protective mechanisms are already there. But the more pertinent issue is the lack of motivation. Everything boils down to human resources. And humans can’t ever be conquered except through motivation. If a boss calls a subordinate “scum” all day, what he will get in return is work worthy of a scum. I was associated with many Indo-Japanese JVs, and it was stunning how the Japanese bosses treated their subordinates. If a Japanese worker had to be deputed to India, the company would first arrange an all-expenses paid survey trip to India for him to visit the actual factory and residential facilities, and only if he is satisfied, he is expected to take up the job. That is how the world operates, and Indian bosses have much to learn from it. On a personal front, I was very fortunate to have some of the most considerate of bosses, and I hope I too have extended the same to my colleagues.

You are known to be a very religious person, with a special adoration towards Sabarimala. Nobel laureate Amartya Sen says that he can belong to a majority community and still feel the insecurity of all minority communities. In this backdrop, how do you assess the current communalism versus secularism debate. How important is Nehruvian secularism as practiced in this country for its bright future?

How many of us have selected our own religion? Not even 1% of us, right? I became a Hindu because my parents were Hindus, and they too didn’t have any choice for the same reason. Because I was born a Hindu, I go to temples, but I am equally at home at any other places of worship. So, pursuing communalism in itself is absurd. How can any right-meaning person segregate himself into some religion that he was born into, something for which he had no choice? And when communalism begets hatred and eventual violence, it becomes quite dangerous. That is why secularism is absolutely essential for this nation’s continued well-being and prosperity. Amartya Sen is very right in this regard.

How to Succeed in Anything, From Cricket to Civil Service

Dr. KN Raghavan, IRS, Customs Commissioner of Kochi, has led a uniquely exciting and multitasking life which offers much to learn for practically anyone - Doctors, Civil Servants, Cricketers, Umpires, Cricket Analysts, Authors, Students, Multitaskers, & High Achievers. Because, Dr. Raghavan has done all those roles with élan. His is a life truly customised. Seasonal Magazine interviewed this high achiever to unearth his success secrets:

Interview and Feature by Jaison D and John Antony:

“Life is what happens to us while we are making other plans,” wrote American writer and cartoonist Allen Saunders way back in 1957. The quote became so popular that many repeated it as their own, including The Beatles co-founder John Lennon in a 1980 song, ironically just three weeks before he was murdered. The quote has also been attributed to many later day celebrities due to its re-tweetability and applicability for most people. How often do we go through life rueing at the bad educational or career choices we had taken or were forced to take. For many there seems to be no escape. As we advance in life, we realize that life can’t be customised to a great degree. Here is where the unique life and experiences of Dr. KN Raghavan, Customs Commissioner of Kochi, stands as a class apart. But the real value from studying his life is that there is so much to learn for practically anyone - Doctors, Civil Servants, Cricketers, Umpires, Cricket Analysts, Authors, Students, Multitaskers, & High Achievers. At the age of 14, when most boys were eager to follow their father’s successful career, Raghavan chose not to be a lawyer. At the age of 16, when most boys were still unwilling to lose their boyhood and become a man by taking up responsibilities, Raghavan became a cricket umpire. At 22 years, when most doctors were eager to begin a flourishing practice, Dr. Raghavan chose to be a civil servant, though medicine was not available as a subject for IAS entrance and he had to study fresh subjects like history and public administration. At the same age, though unsure about how a job like umpiring can co-exist with a demanding IRS career, he decided to pursue both by applying for and winning a position in the National Panel of Umpires and then the All India Panel, thereby setting the stage for a unique dual career. “When you want something, all the universe conspires in helping you to achieve it,” wrote Paulo Coelho in The Alchemist in 1988. Dr. Raghavan, IRS, knew it by nature. As luck or such ’conspiracy of the whole universe’ would have it, he found accommodating bosses who supported his umpiring hobby as much as they could. That is how Dr. Raghavan could officiate around 5 ODIs, not to mention numerous Ranji, Duleep, & Deodhar Trophy matches. And, wonder of wonders, IRS got a sharper officer due to his quick decision-making skills, honed on-field. But the really cool thing about him is that Dr. Raghavan also knew when to call its quits. That is how he retired as an International Umpire in April of this year. He had moved up too high in his IRS career by this time, to continue with a dual focus. Meanwhile, unlike those of us who complain of little free time to do anything extra in life, Dr. Raghavan found time to author two books, one on cricket and the other on history. His 2012 book, ‘Dividing Lines: Contours of India China Conflict - A book on the origins, events, and impact of the India-China War of 1962,’ went on to garner critical acclaim as the book busted several myths that India’s political and military establishment had promoted to cover up a massive defeat. But if you expect Dr. Raghavan to be a cynic, you will be disappointed to the core. He is the antithesis of a cynic, if there ever was one. A diehard optimist, he tries to find the good in everything from BCCI to IPL to political pressure on bureaucrats, as he begins all discussions from the fundamental premise that society is not perfect. When Seasonal Magazine met him in Custom House at Kochi, 50-year old Dr. Raghavan appeared as young, dashing, energetic, and enthusiastic as he should have been when he chose to be an umpire when he was just 16! Never ever during the two-hour interview did we find this senior bureaucrat bending his spine or slouching in his chair. Always sitting upright and alert, he lives up to the ’hawk’s eye’ for which he is famous on-field and in his IRS career. One can blame him only for a tad too much of optimism, but that is a risk he is obviously willing to take, that is, to err on the side of pragmatism.    

Seasonal Magazine in conversation with Dr. KN Raghavan, Customs Commissioner, Kochi:

You are just back from an Executive Education program. Can you update us on it?

Well, I was selected by our department for this program by IIM Lucknow. It is a two month long program, part of it in IIM, and then we do the remaining at LSE, Cambridge, Amsterdam, and at World Customs Organization at Brussels. It was a hectic schedule, but a very enriching experience. 

You have a unique mix of experience, trained as a doctor, then an umpire, then a civil servant. How do you view this unique history of yours?

Well, like any other youngster doing his SSLC I too was considering the few options available before me like engineering, medicine, law etc. My father was a lawyer, so I had a rough understanding about what a law career was about, and I didn’t think I was cut out for that. Though I was reasonably good at maths, I was not inspired to pursue engineering, as engineers were finding it difficult to find jobs during that time. At least that is the impression I had from seeing the difficulty some acquaintances and relatives were facing in finding desirable jobs after engineering. Doctors, in contrast, were never out of work, as they could at least practice on their own, or so I reasoned! Also, the medical profession had the respect and esteem everyone appreciated. I also had the marks to get a second-group or science seat. I performed reasonably well in pre-degree too to get an MBBS seat and that is how I ended up pursuing medicine at Kozhikode Medical College.

And the other two professions, civil service and cricket umpiring, which happened first?

Umpiring, of course. That happened when I was just 16 years of age. There was a small announcement in the newspaper by Kerala Cricket Association regarding an Umpiring Clinic in which they were selecting candidates for umpiring. I knew I was too young, but still I applied with a couple of my friends. But after knowing the nitty-gritty, some candidates dropped out. I, however, liked the details provided by the famous umpire, Sriramulu, and stuck with it. Finally, I was among the 10 candidates selected for the KCA panel. It was the first time such a panel was being formed by KCA. I was lucky to be a part of that.

But nobody objected to your young age?

Yes, that was an issue. Sriramulu personally took me aside and told that I was too young for it, but that he is considering me as he sensed a potential inside me for umpiring. But he reminded me that I would have to work hard at it, due to my young age, so as to prove myself.

You were just 16 when this happened, so you were yet to join the medical college?

Both happened nearly simultaneously. I was soon umpiring matches, even though it was difficult finding time for it amidst a tough schedule like MBBS. Steadily, I gained experience, never missing a chance to umpire a match even if it required taking leave from college, or travelling. But by the final year of MBBS, the academic load became too much to handle on a shared focus, and I dropped umpiring temporarily to focus on my exams.

Didn’t your parents object to you doing umpiring, together with your MBBS?

Not much, especially my father who was very encouraging that I should pursue something which I was passionate about. But, as you would expect, there were some objections from the family, as an MBBS seat was hard to come by, and nobody could come into terms with the chance that I could end up wasting a precious seat!

What made you switch careers then to civil service?

Soon after enrolling for MBBS, it had become clear to me that I was not really cut out for that profession. Still, I was very particular that I should complete something that I had begun. I completed successfully and did my Senior House Surgeonship specializing in General Surgery. But my prime reason to look beyond medicine, was a realization that being a good doctor demanded extreme commitment to the profession. Doctors need to keep on learning and get updated on the latest developments in their speciality. My wife is a doctor, a very good doctor with a respectable practice, and seeing her work even to this day, by reading and attending seminars, I think I took the correct decision indeed!

Still, why did you go in for your PG in medicine?

The options before me were limited. Since I was internally planning to forsake medicine as a career, I needed to choose something that was equally or more good. I had developed some love and admiration for a career in civil service. But during those times, civil service was not a sure shot bet. Another personal problem was that due to me coming after MBBS, my age was higher and I had only one chance for attempting civil service before the age bar would cut in. The bar was lower in those days. Still another issue was that medicine was not an available subject for civil service entrance, and I had opted for history and public administration for my mains, which was additional work. So, as things stood, I realized that I couldn’t totally bank on a civil service selection. That is why I opted for a PG in medicine. But this time around, I decided to merge my passion for sports with my academics, and opted to do PG in Physical Medicine & Rehabilitation - which included domains like sports medicine - at Thiruvananthapuram Medical College. But when I got selected to IRS, I discontinued my PG.

Apart from umpiring, were you also playing cricket? What was your role in the team?

Yes, I was a wicketkeeper batsman. I was part of the Under-19 Cricket Team representing Ernakulam.

Which happened first - your return to umpiring or your selection to civil service?

Again, it was almost simultaneous. While I had taken a break from umpiring for my MBBS final year and house surgeonship, one of my fellow umpires in the KCA Panel got selected as a National Panel Umpire by BCCI. This was an inspiration for me, as I thought that if he could qualify I too could make it. So I started trying for it. By that time, the civil services results were out, I was selected, and I had opted for IRS. Soon, however, BCCI also selected me as a National Panel Umpire. To this day, I am grateful that the final selection procedure by BCCI and my IRS training at Mussoorie didn’t coincide. If it had, I would have been forced to forsake umpiring for my career!

Can you explain how your umpiring career took off from that selection?

Well, my first officiating of a Ranji match was in 1992 between Bihar and Tripura at Ranchi. Since then I have umpired numerous Ranji Tropy and Duleep Trophy matches. In 1996, I got elevated to the All India Panel of Umpires. This made me eligible to officiate One Day Internationals apart from other national matches. I made my ODI debut in 1998 for the match between India and Bangladesh, at Mohali. For the first Kochi ODI at Jawaharlal Nehru Stadium, between India and Australia in the same year, I was the third umpire. I was reserve umpire in three more ODIs - India vs South Africa at Kochi in 2000, India vs Australia at Vizag in 2001, and India vs Zimbabwe at Hyderabad in 2002.

And meanwhile, how did your IRS career span out? More importantly, how could you manage both for many years?

I joined IRS - Customs and Central Excise in 1990. I have worked in Central Service and in Kerala Service, as well as in Tamilnadu. In Kerala, I have been MD of Kerala State Co-operative Rubber Marketing Federation Ltd and CEO of Kochi’s Co-operative Medical College. I also had an overseas stint for four years from 2007 as First Secretary in the High Commission of India at Singapore. I was fortunate to have good support from my bosses to accommodate my umpiring activities. I also made it a point to reduce the number of matches, so as to fulfil my responsibilities as an IRS officer.

So, why did you finally quit from umpiring in April of this year?

There were a few reasons behind that sad decision. Over the years, my responsibilities in my IRS career had increased. It was getting increasingly difficult for me to find time for umpiring. Meanwhile, the umpiring field has also been undergoing a transformation. BCCI was increasingly in favour of full-time umpires as against part-timers. Since 2002, ICC had also constituted its Elite Panel of Umpires. For a while I mulled about attempting to gain entry to the ICC elite panel, but then official duties became paramount for me. Moreover from 2007 till 2011 I was posted at Singapore. So, there was a disconnect. That is why on April 3rd, I finally chose to retire as an international cricket umpire. I was a bit sad, but then I have to move on with my priorities. I have also been umpiring less taxing matches like Ranji Trophy, Duleep Trophy, Deodhar Trophy, other First Class matches, junior level matches etc which I can continue if I can manage the schedules.

Can umpiring be a prime career for an aspirant? You would be the best person to answer this…

It can be a prime career for aspirants especially in this new scheme of things, and in fact, that is the way ICC and BCCI are designing this profession, around full-timers. The days of part-time umpires are over. In another five years, there will be only full-time umpires. A new breed of young umpires are coming in, some of them are players, being involved with the game at various levels. So, it can definitely be a prime career, at least from now on. But there is a flipside to it too. For example, cricket has always remained a passionate hobby for me. That has been the case while I was playing cricket, and later too when I had to study cricket in-depth for umpiring. But when it becomes a full-time career, umpiring too will be subject to all the challenges of a full-time career like the need for networking, self-promotion etc. For me, it would have killed the passion or love for the game.

This has been very interesting, this unique mix of different careers. Do you think the rest of us, or at least our youngsters, should emulate something like what you have done?

I wouldn’t say so. Because, much of these diverse experiences were not precisely well-planned. It so happened when I pursued a couple of my passions and dropped some other options. Secondly, it is not easy by any means. I could do it, because of my good luck, as well as due to the understanding of my bosses. But having said that, pursuing multiple careers definitely has its advantages. For instance, in umpiring, you have to take decisions on the spot and it has helped me focus and sharpen my decision-making process in other fields too.

Coming to something regarding customs, there have been allegations that certain entities enjoy the so-called Green Channel clearance in Kerala. Is there any truth to such allegations?

That is a common misunderstanding. Green Channel clearance is something that 95% or 98% of travellers through our airports should enjoy, and are enjoying since many years now. Earlier this was not the case. Everyone had to open up their suitcases or bags before the customs personnel for searching and frisking. It was a sad state of affairs, especially in a state like Kerala. We always had a sizeable traffic of NRKs from Gulf, and most of them were not very affluent, and they had to go through this procedure every time they visited Kerala, after enduring the hardships in their workplace as well as a long travel. And most of the time there will be nothing to unearth, except for an odd gold coin or such small things. It was a very sorry state, as any person’s baggage is a very private affair, and forcibly inspecting it was akin to asking someone to undress for inspection. But thanks to modern technology like baggage scanners as well as better intelligence gathering and sharing, we could properly implement a convenient Green Channel mechanism in our airports. The idea is that for a 2% or less than that of erring passengers, the remaining 98% shouldn’t have to face this indignation and suffering. Other than this universal Green Channel available for all passengers, there is no selective or preferential green channels for anyone.  

Is gold smuggling again on the rise? There was a recent case of a family attempting to bring in gold bars. What could be contributing to this?

Yes, it is slightly on the rise again. The reasons are obvious. The import duty on gold has gone up significantly in recent months. Government had to resort to it, to control the influx of gold into the country, so as to limit the Current Account Deficit. But it also created an incentive for unscrupulous elements to smuggle in gold. However, we were well prepared for this, and that is why we could make some recent interceptions. But having said that, let me assure you that the level of smuggling seen now is nowhere near the organized smuggling by large operators that was recorded between 1963 to 1990 when the Gold Control Act was in force.

A customs official was recently found to have travelled in the cockpit just like a popular actress. Was this official from Kochi Customs?

Really? This is a shocking news to me. I was abroad for a few weeks and might have missed it. I can’t even imagine something like that could have happened because cockpit is such a sacrosanct place as far as a flight is concerned. Absolutely nobody who is unauthorized should be allowed access to a cockpit.

Coming back to cricket, what is your opinion regarding the recent fight between BCCI and Sports Ministry to bring it under RTI?

Firstly, even by any stretch of imagination, nobody can argue that BCCI is not a public body. So, it should indeed be under RTI purview barring may be some information like why one player was selected and not another or such game related data. But having admitted that, let me also point to you that BCCI is a thoroughly professional body, which has nothing to hide. I was a part of BCCI for many years, and I know that they work very professionally. Also, just because some other sporting bodies have come under RTI doesn’t mean that they are anywhere near BCCI in professionalism or achievements. When I was a young boy, India was the world leader in hockey but nothing at all in cricket. What is the situation now? The credit for improving cricket in this country largely goes to BCCI. We may find fault with certain actions of certain leaders in BCCI, but the fact is that most of them have contributed immensely to promoting cricket in this country. It has always been like that whoever has been leading BCCI. I am sure that if and when BCCI finally comes under RTI, everyone would be left wondering what was the reason to resist such a move.

Rahul Dravid has recently come out against the BCCI. Why are players so reluctant to come out such when they are on active duty?

I think it is because players are greatly appreciative of the work BCCI has been doing. Be it Dravid or Tendulkar, they should be knowing more about the professional support of BCCI, as they have been beneficiaries of it. BCCI has also tremendously improved during the last three decades. You can see it in the way cricketing infrastructure has come up in all nook and corner of the country. You can see it in the way national players are emerging from even Tier-II cities. Dhoni is from Ranchi, Sehwag is from Najafgarh, which were scenarios unthinkable twenty or thirty years back, when Indian cricket was a three-city affair.

Do you think player selection is fair in this country, at all levels, including the national selection? What do you think about the Parvez Rasool episode?

Selection is absolutely fair at most levels, especially at the higher and national level. People mistakenly think that it is biased, basically because there are so many talents to choose from. If we entrust the selection independently to three most qualified selectors, they will not come up with identical teams. Because selection still has a subjective element to it. Ultimately, the proof of whether selection was good or not lies in the performance of the team, because we are competing with the world’s best. Regarding Rasool, my personal opinion is that he should have been played, but then the judgement of the selectors and Captain is final in that regard. Rasool will get his further chances and he will surely come up.

How come a player like Shikhar Dhawan could make a comeback after many years since his debut, while Tinu Yohannan couldn’t and lost it forever?

Tinu was playing brilliant during his debut period. Then there was a prolonged slump in form. Shikhar Dhawan too had a similar brilliant debut and then went out of form for long. But why Dhawan could make a comeback and Tinu couldn’t is also a function of the respective Ranji sides that they are representing. A strong Ranji side like Delhi gave Dhawan ample opportunities to demonstrate his talent again and again. Such opportunity can’t be expected from any side that gets defeated in the first or second round of Ranji. Then there are the temperamental differences between players. Cricket is as much about temperament as it is about talent and hard work.

It is well understood that umpiring has its flaws. So, there is need for something like DRS. But BCCI says it is full of irregularities. Is it really so or is it more about DRS' application failures? Can it be denied that BCCI is using its clout over other national bodies to resist this technological advancement that they somehow doesn't like?

It is universally accepted that human beings make mistakes and umpires are no exception to this general rule. Studies conducted amongst international umpires have shown that most of umpires in the panel make one wrong decision out of 25-26 decisions that they are called to make. In fact Simon Taufel, the Australian umpire who is considered to be the best, makes one mistake in 28 decisions. So it can be taken that human beings of that level are capable of getting correct decisions in 95-97% of the decisions. Now, what is aimed by introducing technology in the form of DRS is to attain 100% accuracy. DRS has been used in many series even now involving teams other than India but it can be seen that the results have not been satisfactory. BCCI's major objection is to the fact that this technology is not owned by concerned cricket boards who organise the matches and are responsible for its proper conduct within the laws of the game. The technology as well as the infrastructure required for preparing the pictures for review are owned by the broadcasters who are entities of purely commercial nature. Since the entire conduct of game including appointment of umpires, scorers, and other match officials is the responsibility of the cricket boards, it would not be proper for decisions to be arrived at based on data prepared and provided by entities other than the said cricket boards. At the present juncture, some of the cricket boards (eg: Zimbabwe, Bangladesh etc) do not possess the financial resources for owning the required technology and infrastructure. Further there are also doubts that the technology involved is not fool proof especially when it comes to hot spots and snickometer. The recent England-Australia series where DRS has been used has highlighted the limitations of technology currently employed. Hence BCCI is well within its right to insist that unless the technology involved is sufficiently fool proof to convince the players about its absolute accuracy, it is not fair to employ it. It is not fair to rush in with a less than perfect technology and make the players suffer. Players accept that umpires are also human and hence prone to make the occasional mistakes but when it comes to technology they seek nothing less than an absolutely fool proof one. Finally there lies the question of the number of reviews allotted per side which is two  at present. The number of reviews have been limited to keep loss of playing time on account of such referrals / appeals to the minimum. However this can result in the near comical situation that took place in the first Ashes test where everyone except the bowlers and umpire saw clearly that Chris Broad was out but nothing could be done as Australia had exhausted their quota of reviews. So there is scope for improvement in this area also. BCCI feels that unless these aspects are considered, and solutions acceptable to players and officials are reached, DRS should not be employed. I think there is lot of merit behind BCCI's line of thought. It is better to be certain about the accuracy of the technology before rushing in with an incomplete or inaccurate one. Regarding BCCI's use of financial muscle to stall use of DRS , I feel that this allegation is not correct. As said earlier, BCCI has only sad that they would not be using this and England and Australia have used this during the Ashes series currently under progress. In every international body or multi-lateral organization there is some amount of muscle flexing by its prominent members and if BCCI uses that to the benefit of Indian cricket and its players I would not criticise them.

Dalmiya has recently come out against the failure to correct problems in the Duckworth Lewis system for 15 years. Why can't BCCI endorse Jayadevan system (VJD method) which is used in some domestic leagues? Is it because of its usage in the rival ICL?

Regarding Duckworth Lewis method for determining the target score in rain affected matches, I would say that too much should not be read into Dalmiya's statement which was made in another context. Over a period, Duckworth Lewis has been subjected to lots of improvisations and the one employed at present has the advantage of having stood the test of time and gained the confidence of players and officials. The method suggested by V Jayadevan (VJD method) was certainly much superior to Duckworth Lewis when it was first mooted but for some reason BCCI was not able to get other test playing countries to agree to replace Duckworth Lewis with VJD method at that juncture. Now it would not be easy to get players, officials, and other cricket boards to consider VJD method as Duckworth Lewis after its various improvisations has won the confidence of all concerned.  I may be wrong on this but to the best of my knowledge modifying or changing Duckworth Lewis and replacing it with VJD is not under active consideration of BCCI at present. Having said that, I still maintain that VJD was much superior to Duckworth Lewis when it was first mooted by Jayadevan. On the suggestion that it was BCCI's animosity to ICL that caused its lack of support to VJD method, I do not think this is correct. Jayadevan had brought out his method of calculation much earlier than 2007 when ICL was launched. It might be a fact that ICL has used VJD method but that is not the prime reason for BCCI not using this method. As I said earlier, it was BCCI's failure to convince other test playing nations of ICC that remains the root cause for it not being used in official matches of BCCI.

How do you assess the whole Sreesanth match-fixing episode? Is this as nasty as Delhi Police would have us all believe?

It is difficult to comment on it as it is still with the courts. I know Sreesanth for long, from when he was a young boy. It is difficult to imagine that he would do something like this. Because, cricket is what made Sreesanth. Difficult to think that he would spoil that very foundation. But we should take the case by Delhi Police seriously. Because rarely does such cases spring out of thin air. It is very noteworthy that Delhi Police could file the charge-sheet quickly. It is a feat in India, especially in such cases. All we can do now is keep our fingers crossed regarding Sreesanth. 

According to you how can Indian cricket be cleaned up?

In my opinion, the dirty aspects of Indian cricket began with IPL and ends with IPL. But that doesn’t mean that IPL is necessarily a bad thing. Not at all. The overall impact of IPL has been good as it gave more opportunities for more young players to emerge on the national stage. IPL also helped in popularizing cricket further, and it has been good for all concerned including viewers, BCCI, government, and advertisers. But IPL needs to be cleaned up a bit. Like how the cheer girls have gone, I expect the after-match parties to be curtailed. Cleaning up IPL is so easy as better models regarding code of conduct is already available. For instance, access to players is strictly prohibited during ODIs. It is almost like they are in confinement. The same model should be applied to IPL too.

Do you think betting, spot fixing, and match fixing are rampant in cricket? Do you think betting needs to be legalized in India?

Betting may be rampant, but not spot fixing, and certainly not match fixing. But all these can happen because high-stakes betting drives the need for spot fixing and even match fixing. So, betting should never be legalized. Such strange ideas - that if it is too popular or too difficult to control then legalize it - have never worked anywhere. 

What would be your advice for Kerala Cricket, Cricketers, and KCA?

I would say that KCA has been doing a good job, especially since the last few years. Turfs and camps have come up at many places across the state, and the results are showing. As you know, three of our players, Sanju Samson, Sachin Baby and VA Jagadeesh, have been selected for the Indian A Team recently. Such focus should continue from the part of KCA as Kerala Cricket still has a long way to go.

Coming to something official, how do you assess the issue of Durga Shakti Nagpal? Do you think civil service officers need more protection? As an IRS officer, how would you assess the political pressure on these kind of jobs?

It is very difficult to comment on a contemporary issue like Durga’s suspension which is still an evolving one. Personally, I don’t think there is any need for additional protection for civil service officers. The system already has the necessary checks and balances, and grievance redressal mechanisms. Regarding my own experience, I have completed 23 years of service in the Centre and various states including Kerala. I can say with certainty that I have never been pressured by any politician or party. But then it also depends on your conduct as an officer. If we give out the right signals about our intention to keep our integrity, nobody would bother us. In the final tally, what everyone appreciates and wants is an honest officer. I have not worked in many states to comment on the situation there, but I am confident that an honest officer can indeed survive in this country. Often the problem starts when an officer takes refuge with a politician to get any undeserved favour. Then it is a given that the politician would want a favour in return. Civil service officers should steer clear of such practices, and everything will be fine.

You come across as a diehard optimist…

Yes, I have often been blamed for being too much of an optimist! But my reply is that though the society is not perfect, it is not all gloom and doom. There is every reason to be optimistic about the future, as long as we are improving.

Manappuram Finance - How Robust is the Rebound? - Exclusive Interview:

As of today’s high of Rs. 12.90 in NSE, Manappuram Finance has rebounded by over 31% from its 52-Week Low, within days. The trigger has been the disclosure of a significant 2% accumulation of the stock by Baring. Seasonal Magazine interviews Manappuram Finance’s MD & CEO, VP Nandakumar:

From Rs. 0.15 in 2003, it went to Rs. 94.95 by 2010. Which makes Manappuram Finance stock a 633X bagger within 7 years, qualifying it among India’s best performing wealth creators. Initially, the investors were largely people who knew this business and its promoter, ex-banker VP Nandakumar. But when the growth pace accelerated around 2007-08 onward, and Manappuram became a well-researched company, some of the largest and most celebrated PE funds like Sequoia - of Apple-Google fame - came in to support, and exited soon with more than 5X returns. That was the time when Manappuram was featured even in New York Times and Wall Street Journal as the poster boy of the new wonder business - organized gold loans - in India. But times have changed. The growth and rise of Manappuram was not just the product of Nandakumar’s visionary leadership and wealth-sharing attitude, but of the unprecedented rise in the value of gold between 2007 and 2012. It goes to his credit that he made the best use of this rare window of opportunity to expand Manappuram’s branch network at a blistering pace, across India. Under his guidance, Manappuram also went in for a mammoth QIP at the peak of this bull run in gold and gold loan stocks. But times have changed too much. Starting in 2011, the regulator of the sector, RBI became extremely cautious regarding an impending fall in gold price, and the impact it would have on all gold loan operations in the NBFC and banking space. They put in place several restrictions on the unbridled growth in the sector, including a severe cap on Loan-to-Value, as well as on caps on how much banks are allowed to lend to gold loan companies. The sector went in for a toss. And has not quite fully recovered ever since. Manappuram’s stock started correcting from Rs. 94.95 and recently went as low as Rs. 9.90, which is nearly a 90% erosion in value from the peak. The fall was dramatic, only falling short of the spectacular rise, just a few years back. Meanwhile, gold corrected much more than anyone had anticipated, before finding support from the physical demand in India and China. The recent stability of gold is inevitably bringing up the question - Can Manappuram, the gold loan stock with the longest listed history, bring back the wealth-creation magic? Because, here is a promoter who has once proven that he has no issues sharing immense wealth with all kinds of investors, from retail to high-profile institutional investors. Even today, the kind of foreign institutional investors betting on Manappuram reads like a who-is-who of bluechip investors - GMO, Bric II, Baring, Sanlam, Wellington, Morgan Stanley, HSBC, Smallcap World Fund, Beaver, AA Development Capital, and Hudson Equity Holdings. Seasonal Magazine caught up with VP Nandakumar to find out how authentic is the hope all stakeholders still have in this organization.               

Seasonal Magazine in conversation with VP Nandakumar, MD & CEO, Manappuram Finance:

Are you shocked at the way things have panned out in the gold loan sector? Was any of these issues anticipated 1 or 2 years back?

Not really shocked at the developments. While I don’t deny the developments during the past two-years have been dramatic, Manappuram is a very old company to be affected fundamentally by such cyclical issues. Manappuram, which was founded by my father VC Padmanabhan, has been in gold loans since 1949. Like many businesses, gold loans too have some cyclical issues, may be not annual problems, but occurring every few years. Ever since I was a small boy, often visiting my father’s office, I have been witness to some of these issues. But they keep changing, of course. And it has been 27 years since I directly took over the leadership role at Manappuram Finance, and we have seen many ups and downs. We have survived all those, and still grown dramatically, especially during the last 10 years. Coming to your question of whether all this was anticipated, well, some issues like gold price correction was anticipated as it had kept on appreciating, outperforming all other assets. So, some correction was indeed anticipated. But nobody can ever claim to have an accurate handle on the extent of correction.

Was last quarter’s loss a one-off affair? What really contributed to it? Didn’t it show that apart from sectoral woes, Manappuram had some unique issues? 

No, we didn’t have any unique issues other than the one with Manappuram Agro Farms, which has been sorted out long back. It was done in good faith, but since RBI opposed it on technical grounds, we complied. There are no other such issues pending. What happened in Q4 was that we went in for cleaning up and strengthening our balance sheet. It was an inevitable step for any gold loan company, given the dynamic changes in the industry like the gold price correction and change in LTV norms. Due to this bold and transparent move, what I can vouch for is that Manappuram Finance has got the strongest and cleanest balance sheet among all gold loan companies. On whether it is a one-off affair, yes that has been our intention and hope. I feel that our competitors might not have yet taken such a step, and that is why that loss appears unique in the industry.   

One problem with Manappuram seems to be the funding crunch. How are you planning to address this issue? 

We have no funding crunch as such. Today, we are the most well capitalized gold loan company. This is partly thanks to our visionary capital raising around two years back through a QIP. Secondly, despite a media perception to the contrary, banks are still positive towards the gold loan companies even under the new RBI guidelines. And lastly, most gold loan companies including Manappuram have moderated their growth plans in FY’14. So, there is no funding crunch whatsoever. That is why we are not currently looking at NCDs either.

Coming back to the issue of gold prices correcting. Do you think the correction is almost over now, and that Indian and Chinese demand for physical gold would act as a support? 

Unfortunately, no one including me can be a prophet regarding gold prices. What you mention, that is, Indian and Chinese demand for physical gold acting as a support, is precisely what we are witnessing now. Nothing more can be said. Gold is so very much a part of global economy and heavyweight nations’ monetary policy, that it is next to impossible to predict its price trajectory. The recent correction in gold was partly due to dollar strengthening. But from a purely Indian context, I feel that rupee weakening substantially is something that is going to help gold prices. But having said all these, I personally feel that gold wouldn’t correct much from this level. It might remain at the current level for longer than expected, before eventually moving up.

The issues faced by gold loan companies have highlighted the problem of focusing on just one asset class. Do you now think that Manappuram Finance should have a diversified portfolio? 

No, not at all. And I don’t think anybody who takes an objective look at the NBFC sector would disagree with me. What has thrived the most in this sector is a mono-line focus. And it is not just about gold loans. You take any asset class, and you can see this in action. We see it in HDFC which does only home loans, we see it in Shriram Transport Finance that does only commercial vehicle finance. Shriram’s big break had come in an even narrower niche, which is used-truck financing. Such players have clearly outperformed jack-of-all-trades NBFCs in sheer growth momentum. Same is the case with a gold loan company like Manappuram that has a sharp mono-line focus. In fact, we grew dramatically only because of our mono-line.

But haven’t there been exceptions like L&T Finance Holdings?

L&T Finance is not the rule, but the exception. And if you look deeply, it is really a holding company of many niche or mono-line NBFC operations. Despite their significant size, in most of their segments, I think they won’t be in the top-three. That is because, it is much more challenging to scale up a multi-line operation.

Still, don’t you think diversification from a single asset class would have been more risk-free?

Well, it is really all about a trade-off. Between growth and short-term risk. Mono-line NBFCs are much easier to scale up. There is tremendous growth potential that can be rapidly executed. The flipside of it, the so-called risk, is only cyclical or short-term in nature. Just because gold is currently going through a corrective phase, we can’t come to the conclusion that gold loans as a mono-line business is risky. Such cyclical issues crop up in every sector. Would HDFC diversify from home loans, or Shriram from truck finance, if those sectors enter a trough? No, in my opinion. They would simply wait it out. This is not something that I am saying hypothetically. It has happened in those sectors, and they have waited, and they have thrived subsequently. I think gold as a loan asset is even more well-poised for recovery. So, we will focus on the prudent mono-line model, and simply wait it out.    

Do you think that some in the regulatory bodies like RBI unnecessarily focused on gold loan companies and their funding banks, thereby crippling the sector? 

Not really. I think the limit on LTV and some other changes brought forth by RBI has been good for the sector. At least now there is a level playing field. Earlier, some companies were giving 90% or even 100% LTV on gold loans, which was clearly not sustainable. It was not only the small firms, but even big banks like HDFC Bank was reportedly doing it. So with regard to changes like in LTV, the regulator’s move has been beneficial to the industry. But having said that, there have been some other moves from the regulator which are aimed at all NBFCs, and which have been imposed on gold loan NBFCs too. I think those changes are not fair, considering that the average tenure of gold loans are around three months. It doesn’t make sense when a regulation intended for 5-year car loans or 15-year home loans are imposed on three-month gold loans. The sector has been hurt to that extent.

How far have you trimmed your employee base? Do you subscribe to the view that you expanded too fast, especially into less understood markets like North India? 

We have trimmed our employee base by less than 15%, and that was solely due to Sunday being made a holiday for all our branches. Under the new circumstances that the gold loan business is operating, we came to the conclusion that it would be better if Sunday is kept a holiday. Coming to the second part of your question, no, I don’t ever think that we expanded too fast into markets like North India. As I said before, gold loans are also of a cyclical nature. There will be some window of opportunities when we can expand fast, and some other time-periods when we should be lying low or consolidating. So, if we hadn’t utilized that opportunity, we would have lost out. And there has been absolutely no problem with any of our geographical expansions. Regarding North India, maybe an organized gold loan sector was new to them, but our services are still very much in demand there.

What all are the other issues faced by NBFCs like Manappuram? It is said that you have issues with excise and service tax… 

Well, I too heard the media rumours. All I can say is that we have not received any communication regarding any fresh tax claims. Whatever taxes are applicable, we have paid, and we are up-to-date. I don’t know whether any other gold loan companies have such pending issues. What I feel is that when gold loan stocks get corrected, media invents these rumours on hearsay. The market correction might have more to do with the tapering off of QE3.

How would you guide for Q1 and the whole of FY’14?

We don’t usually provide guidance. All I can say is that we expect a bounce back to profit, sooner rather than later. The business just has to adjust to the new norms regarding the gold price correction and lower LTV. It won’t take more than a couple of quarters for Manappuram Finance, as the difficult clean-up of the balance sheet is behind us now. Branch wise, we won’t be expanding much during this fiscal, but in FY’15, we plan to add around 400 to 500 branches more to the Manappuram network.

How are your other diversifications panning out, like Riti and MAcare?

Both are doing well, but we are not hurrying up things. Riti as you know is again in the gold business, and the current changes affecting gold retailers are applicable. Regarding MAcare, we are performing well, but we are executing the expansion judiciously, as we will wait for each major branch to break even, before launching a new one. Being in the medical diagnostic business, it is a very capital intensive operation.

How would you assess the gold import situation in India, and government’s unsuccessful efforts so far to curb imports? Do you have any holistic alternatives to suggest? 

There are two aspects to this issue. One is the newer speculative demand for gold as seen during the last 4 to 5 years, which is reflected in the demand for bars, coins, e-gold, ETF etc. For controlling Current Account Deficit, the government might be able to control such demand to a large extent, by restricting imports and banning sale of gold coins by banks etc. But the other conventional aspect of gold demand is fully socio-cultural in nature as far as India is concerned. Gold remains one of the foremost assets of Indian households, together with land and bank deposits. Even if one doesn’t have any land or deposits, he is likely to have gold. Gold is not only an integral part of Indian family formation through marriage, but it is bequeathed across generations. No amount of government efforts can curb this demand, which is largely a demand for gold jewellery. Similarly, no amount of awareness-building regarding gold as a locked-up asset is going to work. Because, gold loan companies like Manappuram have proved that gold jewellery is as liquid as cash. We are proud that we could unlock this treasure and bring it to productive work. 

Have any large institutional investors bought into Manappuram stock in recent months?

Most probably, yes. Manappuram as you know is known for high FII stake. So, some churn is inevitable. We had Hudson paring their stake a bit and GMO coming in during January. Some funds like Baring, which clearly understand the potential of gold loan business, might have averaged at lower prices to account for the new norms the business find itself in. Many of the smaller deals go unreported immediately as it is not necessary. We have to wait for the quarterly shareholding to get an updated picture. 

Are you hopeful of reigniting investor interest? Is gold loan here to stay as a viable business? And can it stay as a listed business? 

There is no need to reignite investor interest. It will happen automatically. In fact it has already started happening. It is a function of the market plus a function of the sector plus a function of how well we are strategically performing in it. I think Manappuram still has one of the best and most diverse foreign institutional investor profile among all NBFCs. Coming to the second part, well, of course gold loans will continue to be a viable business in India forever. Some sections of the financial media mistakenly think that we are doing less brisk business now. In fact, going by the number of transactions, we are doing more than ever, but due to gold price correcting and the lower LTV in place, the total value or volumes have come down. That is why I remarked earlier that it would take a couple of quarters more for the business to adjust to new norms. And answering the last part of your question, Manappuram was the first listed gold loan company, and therefore has the longest listed history, and we don’t find any reason why gold loans can’t be a listed business anymore.  

Do you have any plans for QIP like issues? And are promoters planning to up their stake substantially?

No QIP is in the horizon for one or two fiscals, as we are more than adequately capitalized. I would definitely like to up the promoter stake, as I had to pare some stake last year to raise some money and repay investors in some promoter group companies. But all that is behind us now, and I would be mulling the ways and means to up the promoter stake in Manappuram Finance in the coming quarters.

Will UCO Bank CMD Arun Kaul's Strategies Deliver? - Interview

Seasonal Magazine interviewed Chairman of UCO Bank, Arun Kaul, to find out the strategies of UCO for the Q2 and full of FY'14:

Despite a difficult FY’13, there are obviously some strong points to UCO’s Q4 as well as FY‘13. For instance, it was on the back of a remarkable 44.39% rise in Operating Profit in the last quarter of FY13, that the Bank registered 19.41% growth in Operating Profit during the fiscal, to reach a figure of Rs. 3357 crore. Q4’s Net Interest Income has increased by a robust 28.3% to mark Rs. 1348 crore from Rs 1050.6 crore in the year-ago period. Growth in Operating Profit and NII are reasonable indicators that the bank’s core performance is still healthy. 

There is also a marginal dip or containment in Net NPAs on a QoQ basis. The Capital Adequacy Ratio stood at 14.22% as against 12.35% on a YoY basis and 13.19% on a QoQ basis. What all these shows is that the top management headed by veteran banker Arun Kaul has been hard at work, and that the chief promoter, Government of India, is backing his team’s efforts with the requisite capital backing. 

Though UCO is a relatively small bank by net profits - it is the 18th ranked among 24 listed PSU banks - it has several important contributions to the Indian economy. UCO is not only the lead-bank in 34 districts, but these districts are spread over 7 Indian states, thereby making UCO’s contribution to the Indian banking system very important. And even with its small size, UCO accounts for more than 2% of both Indian deposits and credit. 

And there are even more unique contributions from UCO’s part to the Indian economy. UCO has been handpicked by the Indian Government for maintaining the over Rs. 12,000 crore current account deposit for India's oil payments to Iran. What this means is that UCO Bank’s funding profile is much more improved than peers, owing to the reduced cost of funds. And it helps not just the bank, but India’s economy too. India’s crude oil import from Iran by IOC under the mechanism facilitated by UCO was worth $7 billion during the last 13 months that this arrangement was in place. All of it was done in rupee-terms saving dollars during a period when the Indian currency saw a steep fall against the dollar. Though it is difficult to quantify the exact gains for the rupee from UCO‘s participation, currency experts feel that had the mechanism not been in place, the $7 billion outgo pressure could have pushed down rupee further during FY‘13. 

Strategy-wise too, CMD Kaul’s initiatives have delivered. The bank recorded stable operating costs in FY’13, as reflected in lower cost-to-income ratio of 39.3%. UCO Bank has also taken the pioneering first-step in being stringent with apparent wilful corporate loan defaulters. In an unprecedented move that took even the biggies of PSU banking, like SBI, by surprise, UCO published in leading dailies the defaulting status of Nitin Kasliwal of S Kumar’s in what is obviously a ‘naming and shaming’ strategy towards a big shot. S Kumar’s and its Reid & Taylor clothing brand, are well-known in the country thanks to its endorsement by Bollywood superstar Amitabh Bachchan, but owes over Rs. 100 crore to UCO Bank as a defaulted loan, even while it remains a reasonably profit making company. 

The move is now widely regarded as not only a first step by any Indian bank against corporate bigwigs, but as a follow-up to Finance Minister P Chidambaram’s extortion to PSU banks to go after the prosperous promoters behind sick companies. Such firm convictions from the part of Arun Kaul is what makes the market believe that UCO Bank would be one of the first beneficiaries when the economy improves.

Seasonal Magazine in conversation with Chairman Arun Kaul to find out the prospects of the Kolkota headquartered lender:

UCO Bank’s FY’13 net profit is down sharply. What were the issues contributing to it?

During the year 2012-13, banking industry faced various critical challenges with stress building up in the corporate sectors, infrastructure projects getting stalled, and exports declining. The Net Profit of the Bank for FY’13 was Rs. 618 crore as against Rs.1109 crore last year. The decline was mainly because of rise in Gross NPA percentage that reached 5.42%, due to this challenging economic environment in the country, and because of some legacy issues that are being addressed with full vigour. From Rs. 756 crore in FY’12, Bank’s Provisions towards NPA surged 135% in FY’13 to touch Rs. 1779 crore.

Apart from these two issues, were there any other factors affecting profits?

Yes, Bank’s provision towards pension and other employee benefits rose 29.11% to reach Rs. 757.94 crore. But despite all these, what I would stress is that on an operational and strategic level, we performed very well.

Can you explain the operational aspects of your performance in FY‘13 as well as Q4?

Definitely. Despite the backdrop of a very challenging environment, UCO Bank posted a higher Operating Profit growth of 19.41% YoY during FY’13 against 4.32% growth during the year FY’12. This yearly growth was significantly contributed to by Q4. It was on the back of a remarkable 44.39% rise in Operating Profit in the last quarter of FY13, that the Bank registered 19.41% growth in the fiscal, to reach a figure of Rs. 3357 crore. This not only reflects UCO’s strong operating efficiency, but the fact that this improved situation has been most recent.

That definitely also means that you are experiencing growth on the income front. How did NII and total income grow in FY’13?

Bank’s Total Income clocked a growth of 13.5% YoY at Rs. 17,704 crore on the back of 14.5% increase in interest income that reached Rs. 16,752 crore.  The Net Interest Income of  Rs. 4,582 Crore registered a handsome gain of 17.42% YoY during FY13.

Apart from the rise in income, what all contributed to the operational improvement?

There were two major factors aiding operational excellence. Firstly, UCO Bank’s Cost-to-Income Ratio declined from 42.24% in FY12 to 39.33% in FY13, reflecting continued improvements in operating efficiency. Secondly, during FY13, UCO Bank’s Business-per-Employee grew by 7.70% to reach Rs 13.43 crore. In the ultimate analysis, any Bank’s results depends to a large extent on the productivity of  its employees, and the full team of UCO has delivered on that front.

Coming back to bottomline issues, you mentioned the impact of rising NPAs and provisions. How are you strategically battling it?

We are focusing on Cash Recoveries as well as prudent handholding in deserving cases so that potential accounts are upgraded. With macro forces badly impacting the banking industry’s asset quality during FY13, the Gross NPA percentage of UCO Bank reached 5.42%. Nonetheless, focused and persistent recovery efforts resulted in 25.8% YoY increase in Cash Recovery that reached Rs. 828 crore. In FY13, Bank could also upgrade accounts involving Rs. 673 crore to standard category, up from Rs. 417 crore during the last year.

Margins are under pressure in almost all banks including UCO. What have been your strategies, and how far have they delivered?

Regarding margins, our strategies are mainly about upping CASA deposits and growing our retail business. And these strategies are already showing results. The domestic CASA deposits registered a YoY growth of 63.50% and Bank’s CASA-deposits-to-domestic-deposit ratio stood at 34.96% as on Mar’13, up from 23.85% a year ago. During FY13, UCO Bank also took some major initiatives in the Retail Banking space. The Bank launched several new deposit products and mobilized around Rs. 13,500 crore of deposits through these schemes.

Can you provide details about some specific products that were successful?

A current account scheme christened ‘UCO Care’, having special features like 90% OD facility against liquid collaterals, free NEFT, account statement, debit card & other facilities, was launched during the FY and is getting good response from public at large.

Every PSU bank is said to be focusing on retail, but what are the specific strategies for the same at UCO? And how far has been the delivery?   

Our specific strategies have been to increase our reach, as well as to leverage technology. During the year, 220 branches were opened, 698 new Ultra Small Branches were started, and the ATM network of the Bank was also expanded with the installation of 698 new ATMs during the year.  Regarding delivery from these strategies, in FY’13, new client acquisition i.e. those who had no relationship with UCO Bank before 1st Apr’12, stood at 29.35 lakhs, which translates to a rate of almost two and half lakhs new customers per month.

And regarding tech, how is UCO Bank leveraging on it?

UCO Bank uses technology to the optimum level for efficient service delivery, fast product launches, improving visibility and outreach, cutting costs, having incisive data analysis, and in ensuring better control and monitoring. Leveraging technology, the Bank has been introducing new customer centric products and facilities at regular intervals.

How is UCO Bank faring on the Capital Adequacy front?

As on 31st March, 2013, UCO Bank’s Capital Adequacy Ratio stood at a high level of 14.15% under Basel II as against 12.35% a year ago. The Tier I Capital also rose to 9.06% from 8.09%  last year.

Public sector banks are going through a period of manpower crunch, while courts are finding problem with banks recruiting from B-School campuses. How are you addressing these issues?

In order to tackle the twin issues of superannuation of large number of employees on one hand, and growth of business and branch network on the other, UCO Bank has been consistently recruiting employees at all levels for the last three years. During FY13 itself, 1874 officers in different levels and 592 clerks were recruited. Thereafter too, Bank has issued appointment letters to 1000 Probationary Officers and 1000 clerks.  The Bank also conducts round-the-year trainings and workshops to ensure all-round development and grooming of officers as well as new recruits.

From a shareholder point-of-view, how would you assess growth at UCO’s core metrics in FY’13?

Despite the difficult environment prevailing, with the help of sound financial management, UCO Bank’s Net Worth grew by 12.15% y-o-y to touch Rs 8,869.17 crore. The Bank’s Book Value per Share improved from Rs 94.72 in FY12 to Rs 97.19 in FY13.

Based on all the strategic planning you described, and hard work from the UCO team, how will you assess the anticipated performance in FY’14? 

UCO Bank is set to become one of the prominent turn-around stories in the banking sector, with FY14 performance expected to be much better than the preceding year.