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Qualities Of A Successful Entrepreneur Three years ago the penny dropped on me that most of India's consistently successful businesses are actually led by anonymous people.

By Saurabh Mukherjea

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


As part of my day job I end up having to give interviews to the financial news channels on a monthly basis. Three years ago, during one such interlude – when the hostess on the channel was fawning over a dot com billionaire – it struck me that most of the financial media's coverage in India is either about crony capitalists – corrupt businessmen who in cahoots with politicians have usually defaulted on the huge sums that they owe the banks – or about dot com billionaires – bright, opportunistic young men (there are very few women) who have just raised a gazillion dollars from a foreign private equity fund.

Most promoters and CEOs of listed businesses that I come across are grounded, hard-working individuals who having risen in life from modest beginnings. Their life centres around steadily improving and growing their business whilst dealing with the vagaries of the economic cycle and India's thicket of regulations. If you see them on the street, you will not recognize them. Several of them drive ordinary cars and most of them live a life characterized by the middle class values. Three years ago the penny dropped on me that most of India's consistently successful businesses are actually led by anonymous people such as these. If you look back at the past decade in India and seek to identify listed companies which have consistently grown revenues at a minimum of 10 per cent per annum whilst maintaining Return on Capital Employed (ROCE) at 15 per cent or better, you will find that only 15-20 businesses in India are able to pass these twin filters. In fact, if you look back at post-1991 India and conduct such analyses on every rolling 10 year period since then, you will find eight companies that are most frequently able to pass these twin filters. These companies are: Asian Paints, Berger Paints, HDFC Bank, Axis Bank, ITC, Marico, Page Industries and Astral PolyTechnik. Having identified these companies, my colleagues and I then spent the best part of two years researching these companies threadbare. Whilst you will have to read "The Unusual Billionaires' to follow our memorable journey over the past two years, here is sneak peak here into what helps these eight remarkable companies succeed so consistently.

Focus on the long term without being distracted by short-term gambles

For 99 per cent of Indian promoters, the "opportunistic" gene is so deeply embedded that as soon as they spot a new sector they can venture into, they go "off-strategy". As the leading market strategy consultant, Rama Bijapurkar, says, "Most companies tend to focus on short term results and hence that makes them frequently do things that deviate away from their articulated strategy…these diversions take them away from the path they have to travel on to achieve their long term goals…the willingness to resist the temptation of short term "off-strategy' profits for long term sustainable gain is not there in most Indian companies."

Constantly improve the core franchise using the IBAS

(Innovation, Brands, Architecture and Strategic Assets) framework: The IBAS framework was created by the British economist, John Kay, and captures how great companies strive over many decades to create sustainable competitive advantages (which, in turn, allow them to pull away from their competitors). Examples of this theme include Asian Paint's use of IT as early as the 1970s to help forecast sales patterns. Similarly, Astral PolyTechnik has innovated with its CPVC pipes and fittings by launching products that are lead-free and bendable.

Sensibly allocate capital whilst avoiding expensive and unrelated forays

As successful companies grow, they throw off ever increasing amounts of cash. The challenge then becomes to allocate this cash in such a way that ROCE does not suffer. Beyond a point, the best way to protect ROCE is to return large amounts of money to shareholders, something that most promoters find hard to stomach. ITC stands out as an example of a firm that has always returned large amounts of money to shareholders whilst making modest investments in new businesses. Similarly, Asian Paints has forayed overseas but never stretched its balance sheet for this purpose.

(This article first appeared in the Indian edition of Entrepreneur magazine (September 2016 Issue)

Saurabh Mukherjea

CEO - Institutional Equities, Ambit Capital

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