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Meeting With The Prime Minister

Today (10th Sepember 2015) I was reading an article authored by Mr. Mohan Guruswamy. The article expressed about the size and contribution of PSU in Indian economy where returns are not commensurating with capital investment.If we remove oil sector, then the correlation between return and investment will be depressing. Prime Minister, being the representative of the principal shareholder, would not like to take the lead as entrepreneur and expect private player to be leading the process. I agree with Sir. The good points agenda needs to be translated in opportunities. There has to be short term delivery with long term goals.

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Sunrise and Employment

About 15 years back I was travelling from Hyderabad and was waiting in an airport lounge with my brother, who was director protocol with the government of Hyderabad. I was lucky to meet a former principal secretary to the Prime Minister of India. At that point of time the debate about the pros and cons of India being a signatory to the WTO was a very widely discussed and a topic to be ponder upon.

We were discussing and one of the point raised by me is how to impart skill to the people so that they can be contributor in nation building and value creation. We discussed that it will take time, resource and energy to provide skills. Issue was how to do that? Who will absorb them? Do we have sufficient time? Is it doable? Dependency upon agriculture is reducing, I am not sure if it is due to WTO or otherwise. Today we have large work force waiting to be employed and agriculture cannot employ them.

Government initiated minimum guaranteed hours of work, irrespective of capability, skill and the purpose. Govt is running more this as its social responsibility rather than value creation. Public money is being used to dig the water hole and to fill the same. Probably workers and the systems managing them is happy as they get their bread so that at least suicide can be minimized or at best can be avoided.

Fortunately after 15 years there is a clear need to impart training and skills. The creation of NSDC is a step in that direction. Creation of a ministry to promote skills is commendable. The participation of private player in imparting skills is worthy of appreciation.

Today the grown up and smart India is looking for people. There is acute shortage of facility managers and security people at every level. Business is suffering, laws are getting twisted to fill the gap. Where is the skills? Who are being trained? Where the money is going? How to deal with this?

India is getting prepared for advanced defense technology, newer methods of supplying product, challenging book keeping, well informed clients and cut throat completion. I was talking to my son who loves to purchase by internet, was telling me the rule of the game is speed!

Does this mean we need more drivers? Does this mean we need efficient accountants who can run the book keeping? Do we need customer care officer who can deal with huge army of households’ clients? Do we need scientist and engineers? Do we need people supporting the R&D. Do we need advanced training center?

We need much more than above? Private players’ needs a workable business plans. Government incentive will play a very limited role. The poor needs to be trained and absorbed?  We need to find ways where private players take interest and initiative to venture in to this sector? The poor probably cannot pay? It is the corporate, the clients, and the infrastructure that need to pay.

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Welcome The Future

I had been given the  opportunity by a leading college of Delhi University to interact with students and  was requested to select the topic. My suggested topic was how to “Welcome The Future”.

I was amazed to see the response and participation of children, who were so curious to know about some basic life skills. They were very open in their interaction even before the respectable principal.

Students were asking question such as “we get envious if some one is succeeding”? They were getting angry. They were suffering from fear of unknowns. They were waiting to hear how to handle the events originating out of future? How if they do not perform academically? How to maintain calmness and gain confidence? How to use special power within? Some of the question were so sharp that only leading spiritual leaders could address. Since I am a very vivid reader of Bhagwat Gita, and  meditate and understand the pearls of wisdom, I was able to do justice to my assignment based on my practical and spiritual (extremely low) knowledge.

Students needs life skills training and support besides their academics one. I felt very charged to interact with children. It was heartening to see the complexity and some of the student were clearly demonstrating the leadership capability. I  am making this statement based on my on the spot observation as I do not know their academic standing or family background.

Colleges should take lead in handling the future brain and provide them personality guidance,ability to cope and convert the pressure into smiles, help them to be calm and compose! It is not that difficult to help them and it is doable.

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UPSC – Interview

India is a country of varied culture and profession. Some feels that a private job is better bet it gives you much more independence and one does not have to intimate about his foreign trip and many other such information. Other school of thoughts feels that government job gives a good career as it is associated with prestige,recognition and many more such things.

I happens to be lucky to interact with UPSC aspirants who have qualified their written examination waiting to be selected by UPSC just for interview. I provide interview guidance by way of interaction. I scan their personality and provide them the feedback.

During interaction I learn so many things about the way these brilliant mind think about their future, future of their country. Most of them are representing weaker portfolio in terms of economic advancement and exposure. Most of them find it difficult to handle a tie and a coat?!

Most alarming factor for their being so successful is not their IQ, but their inner desire to be successful. Some of the student has mentioned that if they do not achieve UPSC, then they will be offered a private sector job with a salary that they can not survive. In the sense they are holding the degree of M.Com. Msc. etc. Based on these degree it is hard to get a rewarding career in Private Sector.

The purpose of this article is to stress upon that one needs to find ways to be successful. Just by blaming the environment, Government or its policy, success is not likely to follow. We can not make society responsible for our failure. Average is the synonymous of failure.

The younger generation is much more smarter both in IQ and EQ! They should recognize their talent and rewards themselves. We need to come forward and fined some time to share our experiences. We need to coach and mentor the new generation to make them better leader and positive thinker. All jobs are good and probably the best if some is handling this with zeal and passion.

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Middle Class and The Modi Government

It is heartening to note that Government of India under the leadership is thinking of providing relief by was of development to all section of the society and middle class is one of them. In Indian context middle class is the balance between ultra rich and special poor.

Middle Class is the force both as a leader and executor towards economic development and social up-liftment.

Almost all the policies that are being made is keeping in mind pro poor or ultra rich. In the name of development, we acquire land give it to ultra rich industrialist or we come with free food for special poor. While this is a absolute necessity to boost industry even at the small social cost, as the benefit in terms of employment and production will be huge. Similarly govt needs to prevent suicide and social humiliation of special poor.

Should we ignore middle class who is neither rich nor poor?! he has to adjust himself in the society of real rich and also give a friendly look to poor brother. they are caught between two  extreme and feels pressed from both side. Govt should formulate policies relating to mid income housing, provide necessary impetus for self employment, innovation and scientific incubation. Middle class should also play its role very progressively and judiciously.

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International Funding – Nuances and Challenges

Most recently, I had an opportunity to arrange funding to accomplish large acquisition. There were two major challenges that were moving concurrently was to negotiate the deal and in parallel negotiate the funding. Every move was very challenging and was full of permutations and combinations. Every decision that was taken had lot of “Ifs and Buts” Sometime it appeared that we are moving one step ahead and two steps backward. We were loosing directions dealing with risk, emotions, ego and opportunity.

Post signing of the MoU, with the target the most important challenge that was on the table was to arrange the funding, simultaneously with  various due diligence and holding up the relationship with Sellers.

We explored various routes such as equity funding, mezzanine funding, funding from India and funding from UK.

We analysed  the pros and cons. Cost, time and quantum was the deciding factors. There were regulatory challenges as well. We being a company having multi country setup, the regulatory requirements of various countries also had to be dealt with.

During the course of the fund raising we had the opportunity of meeting with various fund houses, brokers, fund managers, financial consultants, tax advisors and so on. We also had to look into the corporate structuring and the entity that we should utilize to acquire the company. it was interesting to consider various options based on taxation and ease of operation. We received opinions from various advisors and the opinions were conflicting. We had to choose the best out of  the best considering our current capabilities, management bandwidth and future aspirations. We had to make certain tough decision and also had to deal with some of the grey area. As a law abiding citizen we wanted to err on the conservative side of the law, and at the same time we had to make decision which was friendly to the deal.

Coming back on the topic of funding we started working on the theory of elimination, as which route should we follow. Equity has its own challenges and cost, aspirations of the investor is normally very high and there are lot more formalities and clarity of EXIT route. Mezzanine funding is very expensive but yes it can be quick.  Ultimately our decision was tilting in favour of banks borrowings. Bank funding also has its own limitations and certainly does not make the business very scalable. It is a good option for acquiring companies if taken as a part of mix funding.

We started meeting various banks and prepared a business model that was bankable. We had several round of discussion, with more than a dozen bank. Every bank were looking at the dea with a different perspective. Different set of questions were asked by the bank and we had to respond to all of them very convincingly and honestly. About 2 months of  detailed discussion, making us concerned and enthusiastic with every feedback that we were receiving. We did not lose our site and courage and it was heartening to see that out 12 targeted banks 6 agreed to meet our timelines and financial need.We had ample choice and we were enjoying the fruit of strategic thinking, hard work and continued focus. We were able to select the bank that was most friendly to the deal and the deal was closed.

What I am sharing above is only tip of the ice berg. It was a continuous efforts of 6 months to close a cross border transaction. At the end it the success that matter!

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M&A Talent retention and recruitment

It was announced by the H’able Finance Minister and rightly so that the Indian economy is the only progressive economy amongst the BRIC nation. Probably it is true that if we ignore some of the smallest economy, India is the fastest growing economy of the World. Though the Governor RBI has cautioned the nation about  exercising due care as the fast acceleration brings its own challenges.

The growth for any nation is good and most welcomed social phenomena that guarantee the improvement in wealth creation and quality of life.India has changed rapidly and so is the aspiration and ambition of people. Indian entrepreneurs are taking a big jump and acquiring company outside India, bigger than the size that they are managing.

Growth in India supported by large M&A needs talent who can independently manage funding and transactions. Post acquisition challenges are many fold as the issues such as culture, uncertainty, ambiguity, new finding and blending of thoughts become so crucial that the management of these proceeds over other activities. New issues erupts, change in forecast of financial number,new findings, new set of rules needs very proactive and aggressive management. Accounting and issues such as profit protection and computation of goodwill takes central attention.

To manage a transactions and integration requires special skills and care. It not only needs a subject matter expert, but a person having managerial skills of highest order. One needs to display confidence and vigor and should be able to bring cheers in the new team, who would be reeling under confusion and uncertainty relating to their future. Under the new investor, since they do not have relationship, they become uncomfortable about what to ask and what not to ask? That inhibition ads fuel. So it becomes incumbent upon the new set of management to ensure that the right message is being communicated at the right time.

The people who can manage these events are important to be in the systems to travel through confusion and uncertainly while keeping the supreme business interest at its epitome. The business sense of acquisition can not be compromised. Financial performance as has been agreed is  key to the future success as there are many covenants that may have been agreed with banks and the breach of the same could be very expensive.

It becomes an important HR functions to retain, recruit and train the people. Recruitment of talents takes its own time and their blending with new culture and new systems requires time to deliver. Post M&A does not give so much time, and hence retention of people becomes most crucial. The most important thing to retain talent is to give them clear direction, purpose, respect and recognition. Leaders needs to deliver their best and respect and recognition helps increasing their passion in whatever they are doing. Financial emoluments supports their passion and it has to be there to keep them engaged in whatever they are doing.

I have seen  many instances that post acquisition, the people engaged in acquisition lose their interest for want of respect and recognition. That is fatal for post acquisition management and corporate should be trading this very carefully. The ambition to grow is a powerful tool, and the need to maintain the momentum is equally important.

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Negotiation

After 20 years of working and being rated as one of the best negotiator by my corporate, I still contemplate, is negotiation an art or science? Is it a mind game or a game of fairness? Is it the science of equilibrium where two opposite force become equals or is it the game of patience or time? Can we be fair? Should it be WIN WIN? Or is it a compromise?

I do not think I can answer for sure in what category I can put negotiation in but one thing is clear that negotiation between two unequals can never be fair? I do not know for sure if negotiation between two equals can always be fair. There are many quotes available on negotiation there is many coaching centre to coach and train about negotiation? But one thing I am sure it is the necessity which beings us on the negotiation table. Whether as a buyer or  a seller, an advisor and his client, A voter and a leader, and employer and employee. One thing I am pretty sure that the strength of one over another plays a desisive role in negotiation.

I had done many negotiation with big corporates and when the logic fails they say this is how we are? Choice is yours? The other party thinks about and succumb to pressure probably he needs  the big brother to survive? I know people mention that you should analyse if your services are crucial, is it most needed, you should know how and when to say no etc etc.

It is my believe arising out of experience that the smartness does play a crucial role in having better terms in negotiation but ultimately it is the need that make one the winner! If big brother needs you more probably you have more head room, ultimately it is your need that will take you in or out of negotiation. Generally the side which is more stronger, win the game.

But it can not be concluded like that? If one has done a fair amount of research, and has done the need analysis, has developed insight and endurance to negotiate he could do better. Better informed person about, customer, competitor and his own capability can achieve very good result. Everything in our life is negotiable? It is not only business that negotiate. We negotiate almost every time to achieve better results. Our each negotiation should be well observed and should help us in increasing our sharpness.

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Prime Minister – Ambassador or Philosopher

The time India has elected its new Prime Minister, the optimism has increased and its citizens expected that their quality of life will change overnight. Poor felt that they would have food with dignity, student felt that they would have better and advanced educational institution with  higher capacity, Mother felt that household expenses would reduce, young felt that there would be employment opportunities and industry felt that there would be ease of operations and cheap money and the list goes on.

The title of this article is influenced by the statement made by John Chambers at at Digital India event and I quote “PM Modi will change the world.He has a global vision, he understands global trend.

There is no doubt that PM Modi is one of the best orator, a statesman of outstanding capability has an aura that even his opponents appreciate. He talks with great authority and conviction. Clarity of thoughts is absolutely visible. I review his speeches with great interest whether this be in  the UN, Japan, Saudi Arabia or to business leaders.

His objective is very clear. To unite the world to fight terrorism and to attract investor to build India a capable economy to full fill the desire as listed above.

The question here is, should he be ambassador and be painting the future of India or he should be a philosopher to ignite the mind, or he should be doing the both.

Mr. Prime Minister, efforts at your personal level is commendable. Handling so much travel is not easy. There is huge protocol and speeches need to be prepared and delivered. A slightest slip of tongue will color the 1st page of the global dailies. I am sure your these efforts will bring enduring benefits and values. Your intention to support quality and equality is beyond doubt and visible.

Sir, India also need to take care of hungry and wet eyes, we need to prevent suicide and provide employment to the young son of an old mother. It is good to be ambassador to ensure future investment and also to become a philosopher to teach and unite the world. People respect you and want to hear you, but you need to provide accelerated solution to the poor mother and his young but hungry son.

I believe India should be taking steps to give confidence to the domestic leaders and create employment. It should be above politics and there is a need that employment should reach to the door steps of people. It should be a holistic approach with a serious focus on education. I love your speech of ” Standing India” but we need strong feet with powerful muscles to stand in this era of global village and competitive world.

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Accounting, Auditing and Challenges

As an accountant I always argue with myself about what are we doing? Are we the necessary evil or a value creator? Why do organisation needs an accountant? I know accountants are being referred as bookkeeper and the books of the company should be in order. There are countless stakeholders and probably the number of stakeholder will increase to manage this global village. We call it Global village due to the fastest way of communication and integration of Global thought process! Is it so? As an accountant are we used to work in global village? Is the village global for us? We are dealing with IFRS? is the interpretation identical in this village? i do not think so? This interpretation is subject to culture of the country, ethical standards of business practices, experience of the interpreter, and of course the value! If it is a village interpretation should be the same.

I have been confronting with the situation where I am subject to various interpretation of IFRS and at times it is frustrating. Auditor in one jurisdiction specifies different disclosures and in another jurisdiction the different one. How do we deal with it. We have the same Board approving the financial statements of the same period but in 2 or may be more than 2.

Is the auditing risk has increased so much that, an auditor to be in the business needs to be an entrepreneur! Where he needs to calculate his risk based on the audit fee or he should follow the standards in letter or in spirit or in both. This is quite tough. One has to be in business and also to meet the compliance requirement.

There is serious amount of conflict. CFOs are expected to publish accounts, accept responsibilities, and so will the auditor. Board rely on the reports of auditors and CFOs, and the accountants in any form needs to be courageous and technically sound to give that confidence to the Board and to the investor as large. He and his team needs extensive and regular training to gain confidence and transfer that confidence above.

It is possible if the ethical standards of the Company is high. The board is ready to cooperate with the accounting need and let go certain events even if those events are commercially friendly. The accountants need to be proactive and innovative to see the things in right perspective and advise business people by offering solutions. I should not be misunderstood, in no way innovation means compromise in any form. Our experience teaches us how to find the solution. With forward looking and having the better understanding of the laws and judicial announcement we can help in value creation.

the job of an accountant is not only that of a book writer or production of MIS but is much beyond. he is an advisor to the Board, a controller, a whistle blower, negotiator, risk assessor, acquisition and most importantly be with business and provide a 360 analysis of the decision. He is competent to understand and analyse the situation very fast. He is the best judge and decision maker whether to move or not. He is the chief intuitor! the 6th eye of the organisation. He should work very hard to protect his image, and create value for himself! He is the trustee of the money and resources and is also responsible for the best allocation to have best results!

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