Update on ‘An enigma called Siva’

1 11 2016
C.Sivasankaran ( better known as Siva) is in the news for his mention in the Tata vs Mistry saga.
Many years ago I wrote a post on Siva in this blog, that I rarely update these days. Siva was known for his friends like Tata, Ruia, Mallya and Subroto Roy. I am indeed chuckling when I read my own comment “He has a friend in Mr Tata, whose sense of ethics and morals are unquestionable”.
Much has transpired after that. The 2G scam broke out. The Radia tapes happened. Siva declared himself bankrupt in 2014 in a Seychelles court ( He is a citizen of Seychelles).in order to avoid paying his dues to his creditors, which includes Tata Capital.In 2016, this bankruptcy order has been lifted. Siva is back in business launching a taxi aggregator in Chennai called UTOO, competing with the likes of Uber and Ola.
Eight years ago when I wrote it, I saw him as an enigma but today I am more likely to put him in the cabal of crooks with his friends like Mallya, Ruia and Subroto Roy.

Why isn’t Infosys Getting into Banking?

16 07 2010

Infosys Technologies (Infy)  is the bluest of the bluechips in the Indian IT sector. It is usually the first company to declare its quarterly results. The results and guidance given by Infy sets the mood for the earnings season. Like every quarter, Infosys declared its results for the Q1 2011 on the 13th of July.  The market was not enthused as there was a dip in the profits and the guidance is nothing spectacular.

It now appears that Infosys has become a prisoner of its own success. It has become huge with a turnover of nearly Rs 25,000 crore and a workforce of 114,000. Just running this large enterprise and maintaining the profit margins in a volatile environment seems to be keeping the top team entirely occupied. The business model of the company remains largely unchanged in the last 15 years. US (67 %) continues to be the major market. Banking, Financial Services and Insurance (BFSI) remains the biggest vertical, accounting for 35% of all business. Application Development and Maintenance (ADM) accounts for about 40 % of all the services. Consulting and BPO businesses may provide them the breadth of services, but they remain small. Unlike, other Indian IT companies, Infy has not made any major acquisition in India or abroad.

What was a growth stock is slowly becoming a dividend-yield stock. With no major growth plans or big ideas, it will be difficult for the Infy stock to keep its P/E ratio at 25-30 that it commands today.

Now here is a piece of unsolicited advice to the management of Infosys – enter the banking business, by getting a banking license.  RBI has said they would be releasing a few licenses as per the new policy. They could also be looking at acquisition opportunities for the old private banks which may come up for sale. Given their conservatism/arrogance the second option looks unlikely.

Here are a few reasons why Infosys could get into banking:

  • Infosys is a big brand and a solid reputation as a respectable and ethical company. Infosys Bank should command a lot of goodwill from customers as well as investors from Day One.
  • Infy would be having good knowledge of the Banking and Financial Services processes  worldwide thanks to it being their major vertical. Infy also has its own Core Banking Solution Fiancle which may be deployed in the new bank. This would bring down the investment cost significantly. The BPO arm of Infosys can handle a part of the customer service.
  • Infy being headquartered in Bangalore, availability of experienced bankers to handle specialised positions should be easy. Karnataka is home to several banks and bankers. Banking is in the blood of Kannadigas. Mohandas Pai , though Director HR, is basically a Finance person and handles the HR function like an accountant. He could be an asset for the Infosys Bank.
  •  K.V.Kamath, the man who transformed ICICI Bank is already on the board of Infy. He could be given a special assignment to set up this new bank. Great professionals don’t retire. Look no further than E.Sreedharan who took up the Delhi Metro assignment, after being well past 70 years of age.
  • Infy already has its first set of customers. It has 113,000 employees.
  • Infy has a huge cash balance of nearly 15,000 crores. Instead of keeping them as FDs with State Bank and other PSU banks, it could easily deploy a part of this for its Banking business.
  • Infy Bank may not require a public issue. But if its IPO does come out, it can command a huge premium and will be a sell-out.
  • The promoters are occupying the top job by turns. How about the promoters’ children ? They would be ready for jobs now. The Infosys Bank could well be a place for them.
  • Financial inclusion is one of the stated goals of the UPA govt and PM. Infosys could easily deploy its Foundation to get some aam aadmi  to open accounts with the Infy Bank and thereby improve its CSR image further.

If all the above reasons are not convincing, then here is one more. Infosys may have technology in its name, but it is hardly a technology company in a classical sense. It is a huge and efficient bureaucracy where the bean counters rule. If such a  competency is identified with the organization’s core, banking is an appropriate business. I am waiting to open an account in Infy Bank.

– G. Mohan

Why Working with Hands is Looked Down Upon in India?

7 10 2009

It is now the festival season in India. The Hindus have a festival for everything. In the North and Eastern India, Vishwakarma Puja was celebrated on September 17th. In the Southern states, the last day of Navaratri i.e. the Vijaya Dashami or Dussehra day is celebrated as Ayudha Puja.

Vishwakarma Puja and Ayudha Puja are ceremonies to worship the Gods who look after the weapons, machines, vehicles, tools and implements used in factories and homes. On this day, the machines and tools are all cleaned up, painted and then a garland is put on them. A tilak of sandalwood paste and vermillion is put on each of them. On this day, tools are not used, as they are being worshipped. The workmen after the Puja distribute sweets and enjoy the break.

Whereas, the tradition of worshipping these tools and implements continue, the respect and regard for the various crafts like carpentry, smithy, plumbing etc which use these is declining. In urban Indian homes, even minor work which requires the use of these tools is outsourced. Yuppies, including qualified engineers, not only consider it infra-dig to dirty their hands and do this work, very often they lack the basic skills needed for using them. In a city like Hyderabad, most likely the artisan you call is likely to be a Muslim. Hindus prefer to theorize and manage, perhaps.

There is something about the Hindu culture or the Indian education system, which devalues the crafts and the vocational skills required to create and repair things. Students are encouraged to study science subjects like physics and chemistry, but they would much rather concentrate on the theory, learn the concept but leave the experiments. Practical and Laboratory work is often treated as a necessary evil to get through the school final.

In the engineering colleges, even the good ones, which have good laboratories and workshops, there are very few students who spend a lot of time there creating models or prototypes, or generally spending time to hone their craft. I have seen a few of my classmates, making their own music systems by  buying components and putting them together. But they are more an exception, than the rule. 

India may have a very large pool of scientific and technical manpower, but  a miniscule number of them who potter around their homes/ garages, playing with tools and creating new things. Every Indian city now has large number of malls. But I have not seen a single mall in any city which has D.I.Y (Do it yourself) stores which I have seen in the small towns of US and UK. 

One can argue that people in US and UK have to do a lot of work on their own, from home painting to fabricating their home furniture because labor is expensive. Labor has become expensive in India too, yet, there is little or no sign that more Indians are learning crafts or working with their hands.

Indians or Hindus were not always this way. Mahatma Gandhi used to weave his own cloth and used to stitch in his Singer sewing machine which he once remarked as ” one of the few useful things ever invented.”

The post-1991 India swears by consumerism. They want to acquire plush houses, fancy cars, designer furniture, latest gadgets. All these things involve crafts of different kinds. Yet, the consuming class would not do anything with their own two hands. They would much rather earn money by means, fair and foul and acquire them. More often than not, the best of the products are not made in India. In the scores of TV programmes on gadgets, rarely you see a single Indian product being discussed. 

Among many reasons very few inventions come out of India could be the fact that the scientists are poor in the craft of inventions. Inventors of the 19th and 20th Century like Edison, Edwin Land or Elihu Thomson had not only good scientific concepts, they would work with their hands to produce models and prototypes which led to so many great inventions. Indian scientists work on concepts and publish papers, but very few innovative products. The grass root innovators have the craft but they lack theoretical grounding, making their products uncompetitive.

The Union Minster of HRD, Kapil Sibal should consider reforms that would bring about the balance in teaching of science and technology where the craft gets its due. 

– G. Mohan

Errors of Omission or Commission : A Hobson’s Choice?

10 07 2009

Jeff Bezos, the founder of Amazon.com has recently commented:

“We’ve made many errors. People over-focus on errors of commission. Companies over-emphasize how expensive failure’s going to be. Failure’s not that expensive….The big cost that most companies incur is much harder to notice, and those are errors of omission.”


The above quote from Jeff Bezos has set me thinking. Are the errors of omission always more costly than the errors of commission? Is it only applicable to high-technology businesses like Amazon’s or is it applicable for all businesses? In high-technology businesses like Internet, the business life-cycle is very short. It is important that the business leaders look for new opportunities constantly. Also, with barriers to entry being low in such businesses, there is always a competitor who can offer a better proposition to the end-customer. Microsoft’s delayed entry in the Internet space has been an error of omission, which it has not been able to make up in spite of all the efforts and investments. It is clear that the high-tech companies can ill-afford errors of omission. The cost of experimentation in Internet based businesses is not very high. Companies like Google are always keeping several products in beta stage, trying to learn about user-preferences and also learning from their own errors of commission. In other businesses, it may not be always true. The pace of change is slow, hence even if you miss being the first mover through an error of omission, there is a chance to catch up. There is lumpiness of investments, which can make errors of commission very costly, sometimes even leading to survival questions.


Ratan Tata has openly admitted that Corus and JLR acquisitions are errors of commission, in terms of timing and valuations. Now, both Tata Steel and Tata Motors have to really struggle hard for several years, to correct these errors. Business conservatism is about minimizing errors of commission. Infosys is a shining example of a conservative business in a high-tech business. It evaluates hundreds of acquisition proposals and just lets them go, if they find there is an iota of possibility of an error of commission. Even in the recent case of Axon acquisition, it chose not to compete with HCL Technologies. Only time will tell, it was an error of omission on the part of Infosys or an error of commission for HCL. In most old, large companies, the managers are obsessed with avoiding errors of commission, rather than avoiding errors of omission. Because, errors of commission can be attributable to an individual or a team and responsibility can be fixed. Nobody gets punished for errors of omission.


Stretching this discussion to another walk of life – in test cricket, – the captain or the batsman is focused in avoiding errors of commission. A batsman can leave several scoring opportunities but should not play a wrong shot, because he can get out. A captain can avoid an aggressive declaration thereby making an error of omission, because draw is an option. In T20, both errors of omission and errors of commission are punished immediately. In the recent World Cup T20, MS Dhoni by sending Ravinder Jadeja ahead of Yuvraj Singh , made an error of commission. By scoring at just 50 % strike rate in another match, Dhoni made an error of omission. Both got punished by Indian team losing the matches.


In career moves, several professionals commit errors of omission when they are either deeply absorbed in their routine work or they are in a cozy comfort zone, by being oblivious to opportunities for change. A few commit errors of commission by landing up into wrong roles or wrong organizations, when they are too desperate for change. In the case of a career, errors of commission are usually costlier than errors of omission.


 Warren Buffet while explaining his investing style explained that he normally invests in a business forever. He mentioned that he may let go of several investment opportunities, but the business that he selects he wants to be sure. In other words, he is open to several errors of omission even when he is sitting with huge piles of cash but wants to avoid errors of commission at any cost. He is the second richest man in the world, surely he knows what he is saying. Yet, I wonder can you really avoid making errors of commission, if you do not make errors of commission early on by burning your fingers and learning. Can we generalize that one should not make errors of omission in a growing stage and one should not make errors of commission when you have wealth or reputation to preserve. In the Indian housing market, if someone had not invested in a house or a property before the boom started in 2003, it would have been an error of omission. But if somebody booked a house that too an incomplete project in late 2007 or 2008 it would have been an error of commission. What can you take, an opportunity loss or a real loss? If you do not build physical exercise in your daily routine, it is an error of omission. If you acquire a unhealthy habit like smoking, it is an error of commission. Both can prove costly to a person’s health in the long run.


In selection of one’s spouse, which error is more distressing of omission or commission? 

 – G. Mohan

Deflation: When Inflation Makes an Ugly U-Turn

16 11 2008


In India, we have seen only inflation. The rate of inflation goes up or comes down. But prices of all things going down, all at the same time, has been just a dream.


In the first half of 2008, the inflation rose steadily on the back of high crude oil and food prices. It touched double-digit inflation and rose to nearly 13%, before slowly declining. Indian Government and the RBI have been taking all the steps necessary for bringing down inflation through various fiscal and monetary steps, all the while blaming global factors for the high inflation. Even the most optimistic economic analysts, did not expect the inflation to come down to single digits before the end of 2008.   Omkar Goswami, in a column as recent as 19 September in Businessworld said


Inflation is unlikely to be in single digits by the close of 2008-09. That’s what the data suggests. He qualified it by saying that “My take is that unless there is a spectacular fall in prices in the coming months, we won’t see 8 per cent point-to-point inflation by end-March 2009. It is more likely to be around 10-10.5 per cent — falling, but still in double digits. The moral of this story: Be hopeful, by all means. But don’t ignore the data.”


In two months flat, he has been proved wrong. This week’s inflation figure is already single digit 8.98 %. It is a single digit figure, in spite of the fact that the administered prices of petrol, diesel have not been reduced. The fact is, there has been a spectacular fall in prices of commodities worldwide, particularly, metals.


If you set out to tame inflation and you achieve it sooner than expected, you should be rejoicing. Yet, the government and the RBI are not. Instead, they are worried about the fact there is a danger of Indian economy swinging towards deflation, much like the rest of the world.


What is deflation? The phenmenon of deflation is said to have occured when prices start declining over time. This is the opposite of inflation; when the inflation rate (by some measure) is negative, the economy is in a deflationary period.”


Deflation can occur because of a combination of four factors:


  • The supply of money goes down.
  • The supply of other goods goes up.
  • Demand for money goes up.
  • Demand for other goods goes down.


The liquidity squeeze in the economy has caused money supply to go down. In October, many goods supply have gone up and demand has fallen considerably. Automobiles, steel, cement, housing all have had considerable demand slowdown and inventory build-up in the last couple of months.


Deflation is painful because “in deflation [there’s] a declining spiral. Businesses make less profit so they cut back [on] employment. People feel less like spending money. Businesses then don’t make any profits and everything works itself into a declining spiral.” Deflation also has a psychological element as it “becomes rooted in peoples’ psychologies and becomes self-perpetuating. Consumers are discouraged from buying expensive items like automobiles or homes because they know those things will be cheaper in the future” says Colin Asher, an analyst with Nomura Securities. This kind of a deflation happened during the Great Depression in the USA during 1929-1933.


The managers of Indian economy seem to have sensed a threat. The RBI has already taken several steps to ease money supply. The Finance Minister is urging all the PSU banks to lend more money to spur demand. The central government employees have been given wage arrears based on the sixth pay commission scales. It is possible that the Indian government like their Chinese counterpart may announce some fiscal stimulus package.


If the above measures click, then it is possible that like 2007, India will have low inflation and reasonably good GDP growth.  It is also possible, that due to the increased money supply inflation goes up, but the growth does not happen, leading to stagflation. There is also a remote possibility that none of these measures work and the overwhelming impact of the global factors lead to a deflationary period in the Indian economy.



The trouble is it is very difficult to read the onset of deflation early. It is easy to get monetary and fiscal measures wrong on both counts –  trendspotting and timing.



– G. Mohan

Dodgy Pricing by Hindustan Unilever

28 06 2008

My wife recently bought two different size packs of  otherwise identical Clinic All-Clear shampoo. One was a 100ml pack and the other a 40ml one. Both had 02/08  as the date of packing and neither of them had any promotional offer. The 40ml pack is priced at Rs. 15.  Conventional logic and traditional fair pricing practice demand that the 100ml pack should be priced at Rs. 37.50 or less as usually bigger packs are usually cheaper.


But what did I see? The price tag on 100ml pack said Rs. 69.  I checked the number twice. Nothing was amiss. Now tell me why should anyone buy a 100ml pack when she can get four 40ml packs at Rs. 60 and will still be left with Rs 9 ?


Is it skirting the laws  (if not in letter then in spirit) on weights and measures or is it an honest mistake or is it   HUL’s pricing strategy to exploit different price elasticity of different?



(Marketing students may like conceive a project to compare the SKU level prices of various FMCG products and discover such anomalies. Maybe, there is some method in this madness.) 




– G. Mohan.


An Enigma Called Siva

29 04 2008
NRI prowler, deal-maker exraordinaire, serial entrepreneur are labels that are often attached to  C. Sivasankaran or just Siva.
Strangely, there is not much in the  public domain about this maverick  busnessman. For someone, who runs a US$ 2 billion company called Sterling Infotech Group, there is hardly an interview of his in the business media.
Would you believe that Siva apparently started off as a  humble fabrication contractor at Madras Refineries ( now CPCL)?
However it was with  Sterling Computers that he first tasted success. Sterling was a business which he bought from Robert Amritraj ( Vijay Amrtiraj’s father). Sterling Computers gained a sizeable marketshare in late 80s when it sold Siva PCs at basement bargain prices.

Siva’s name sprung up again when he was involved in the Tamilnad Mercantile Bank (TMB) deal. In a complex deal involving Siva, the Nadar community and the Essar Group, Siva bought and sold significant stakes in TMB and profited greatly.

Siva hit the headlines again he secured cellular licences in a few states including Tamil Nadu and Delhi.  He sold the Delhi licence to Essar. He bought the RPG Cellular business and merged it with his company Aircel. Aircel achieved significant scale and success in the South and in 2006 he sold it off to Maxis Telecom for over US $ 1 billion. Aircel is, probably, the only instance of Siva building a sucessfull business from scratch. 
Cellphone services were not his only interest in telecom. He also started Dishnet in 1998, an Internet Service Provider based on the DSL technology. During the dotcom boo,  this business achieved some success. He sold it to a Tata group company, VSNL.
Siva and Ratan Tata probably came together for the first time during the Dishnet deal. Their friendship is now an open secret. Mr. Tata has publicly acknowledged that Siva is close to the group and that the latter had helped  the group to bring down telecom purchase costs significantly.
The Tata-Siva friendship has led to a few more deals. Siva bought 7 % stake in Tata Teleservices Ltd. He had sold a significant stake in Barista to Tata Coffee which he later bought it back and then sold it to Lavazza, an Italian chain.
Apart from the Tata Group, Siva seems to had a close realtionship with the Essar Group in the past. It is hard to fathom though  whether Siva and the Ruias are friends or adversaries now. The TMB and the Delhi cellphone licence deals are , of course,   public testimony to their relationship in the past.
Vijay Mallya is another person with whom he has had many a deal. In the 90s, Siva bought a 9 % stake in UB Group through open market purchases and there was even hint of a takeover, but  this never fructified. Later ,  news appeared that Siva had taken over Best and Crompton, a Chennai based engineering company belonging to Mr. Mallya. Whether Best and Crompton shares were traded for Siva’s UB Group stake, is not known.  
Siva surely has friends in political circles too. But, you will never see him sharing diases with any politician. Recently one newspaper published from Mumbai suggested that Siva has funded Kalaignar TV, a channel started by Tamilnadu  CM M. Karunanidhi.
Siva has expressed his interest in investing and entering media and entertainment business. He had made a statement that he would enter the regional TV business through strategic stakes in regional TV channels. Apart from a 15 % stake in Sahara One, nothing much is publicly known of his media business. 
After making a windfall profit though the sale of Aircel, Siva created an investment company called  Siva Ventures Limited. Through this firm he is entering new businesses, through a mix of organic and inorganic growrth strategies. He has acquired a Norwegian shipping company and a wind-farm company in Finland. He has also started greenfield plants to produce ethanol from corn in the USA.
Nothing much is known about the other people behind Siva except two of his advisers- Vijay Bhatkar and V Srinivasan. Looks like Siva is a lone ranger, without an organisation behind him.
While Chennai remains the headquarters of the Sterling Infotech Group, its businesses span the globe. Siva himself is an NRI, who has been changing his home ever so often. After living briefly in Dubai, he now lives in San Francisco.   
Is Siva an industrialist ? In many ways, not. He has definitely managed a few companies for few years, but you can hardly associate any industry with him. He is definitely not an institution builder or a top-notch manager.
Is Siva a value investor in the Warren Buffet mould ? Perhaps not.  A look at the TMB or UB Group stock deals would indicate that he is a value investor, but he hardly has a portfolio of high quality companies which he has nurtured over many years. He appears to be an opportunist, who smells deals through his network, rather than by analysing balance sheets.
Is Siva a stockmarket wizard ? Maybe yes, maybe no.  No doubt, he is a consummate deal maker. He holds on to his investments till he gets the target value. He held on to his Aircel business for a long time and did not yield to lesser offers. He also does not shy away from selling and buying stakes back, like Barista or TMB. However, he seems to be reluctant in taking any of his company public. Had he been  a stockmarket wizard, he would have understood that lot of value can be unlocked by taking companies public. is he afraid of the  transparency requirements and the scrutiny by shareholders and analysts?
Is Siva a venture capitalist who takes big risks in new technologies ? In some ways, yes, in many ways no. His investments in ISP, ethanol and wind energy would indicate he is interested in entering new technologies, but then  how do you explain his huge investment in shipping,  among the oldest  of old economy businesses?
Is Siva a dodgy businessman with a shady background ? I’m not sure. He has been in business for over 20 years, which is a fairly long period of time. It is diffcult to survive this long with a dubious track record for that long. His businesses are now in countries which have strong corporate governance rules. He has a friend in Mr Tata, whose sense of ethics and morals are unquestionable.
But, if everything is above board, why is Siva so secretive? ” “Behind every fortune there is a crime ” said Blazac once. Could that be true for  Siva as well?
– G. Mohan

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