NPAs are everybody's problem

This book review was first published in Business Standard on July 10, 2020; https://www.business-standard.com/article/beyond-business/npas-are-everybody-s-problem-120071000014_1.html

Vivek Kaul's Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System provides the answer and I am wiser years after having taken the loan

Book: Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System

Author: Vivek Kaul

Price: Rs599/-

Pages: 339

Publisher: Harper Business, an imprint of HarperCollins Publishers

When I was a fearless in twenties something, sometimes broke, research scholar, I went ahead and bought an under construction flat. I took on a home loan that covered 85% of the cost of the flat and a personal loan that covered the remaining 15% that was used for the down payment. After paying the EMIs, I would have barely enough to pay my share of the rent of a 500sft apartment shared by 3 or sometimes 4 friends and eat three square meals a day. I had started walking longer distances instead of taking autos, I stopped going to the Café Coffee Day and for shopping, unless for essentials. I sold the apartment soon enough at double the price.

In the recent years, whenever I have taken a loan, bogged down by the paper work, my thoughts always go back to those days and I always wonder how did someone like me, with no guarantors, on a stipend (not even a salary) and no credit history ended up getting the loans back then?

Vivek Kaul’s “Bad Money: Inside the NPA Mess and How it Threatens the Indian Banking System” provides the answer and I am wiser years after having taken the loans. Those were the years, 2005-06, when the bad loans rate was below 5 percent and hence the banks had “decided to go easy on their lending” and the growth rate of lending was highest around this time.

Last year, a friend lost her job and defaulted on the EMIs of her car loan and after the fifth month of default, two employees of the bank came and took her car away. She asked me, “How is it that Vijay Mallya and Nirav Modi get away but people like us can’t?” I had jokingly replied, “well you could get away too if you absconded to another country with the car.” Last week, I asked her to read Kaul’s book in which he lucidly explains why ‘If you owe your bank a hundred pounds, you have a problem. But if you owe your bank a million pounds, it has,’ as John Maynard Keynes had remarked and modified by the Economist [magazine] as “If you owe your bank a billion pounds everybody has a problem.” She read the book and called to thank me for suggesting it.

As evident from the above examples, Kaul’s book, if read with the attention it deserves, helps everyone, not just the economics and finance students and practitioners, to understand how developments in the banking sector and the various cycles of lending, NPAs and regulations have implications for everyone. The decisions taken over time slowly and steadily weave an invisible mesh of mess that gets noticed only when someone like a Mallya or a (Nirav) Modi gets trapped in that web and catches the imagination of the nation. How does this mesh get woven? That is what Kaul traces and explains in his book.

“Bad Money” is a focused saga of the banking system in India that includes the creation and evolution of the public sector banks, nationalization and privatization, regulations by the Reserve Bank of India such as the Insolvency and Bankruptcy Code, 2016 and how the politics too played out along the way. It goes back and forth like a “Tarantino movie”, as Kaul puts it, goes into the back stories, the sub-plots and the numbers that substantiate the stories.

The problem with the book lies in its strengths. The book is focused and hence it may not seem appealing to readers who look for more broad-based books on the economy and the financial system. However, once they pick up the book, they will find that it does take an overall view of the financial system while keeping the banking system at the centre. The book also throws a lot of numbers and graphs at the readers that may act as speed breakers, in an otherwise fast paced book, while reading though they make the book more authentic in its analysis.

The book is a one stop shop for anyone looking for references on the Indian banking system. One can only marvel at the number of books, monographs, articles, and documents from various websites that have been referred to. Anyone researching related topics need not look elsewhere and may be able to add only a “delta approaching zero” to what Kaul has written. This book organises the messy material and presents the “long and short” of it in a readable, understandable and relatable manner.

Reading is akin to breathing

This post is inspired by Oneknitatatime:

https://oneknitatatime.com/2020/07/08/knitting-versus-reading/?fbclid=IwAR2MAT4obzDzuTqyEw47IFAblyvjFmMhiw8cGhMSN1IMC424LXnqwUDY9DQ

Dear Kni-der,

Your post brought back memories of the times when I used to borrow comics, magazines and books on rent in the small town of Ramgarh as it lacked a library. I remember making a trip to this small store called the “Shreeji Stores” with Rs 2 or 3 in one fist while carrying the pile of read treasure in the other almost daily. In those days, even those Rs 2 or 3 were not easy to get and I had to beg (well, not literally, but it wasn't easy) for them many a times.

I became more academic oriented and slowed down on reading as I went to a boarding school and during the 11^th and 12^th classes. After that, I do not remember a day when I have not read. When pursuing my CA exams, I would place books inside the accounting and auditing books and read them while pretending to study. It was important that I passed the exams in the first attempt and I could not give the impression that I did not study well just in case I failed. Thankfully, I did not fail.

Book purchases became the largest expense category on my credit card. I especially got bookshelves designed when we bought the house in which we currently live. The shelves were designed to accommodate books bought over the next 25 years but are already overflowing. Meeting authors, getting first editions, author signed copies and going for book readings all made me excited. The importance of books in my life is so profound that on my first birthday after marriage, my husband gifted the complete collection of Jeffrey Archer’s books to me, signed and addressed to me, by him.

As recently as in 2018, on a trip to Ramgarh, I went to Shreeji Stores and asked the bhaiya, who  was perhaps a teenager when I used to borrow the comics and magazines, if he still had that collection. I was interested in buying the entire lot if he did. Sadly, he did not. He did not exactly recall it but guessed that it was sold off to the scrap dealer during one of the store revamps. I was left with a feeling of emptiness for a few days at least.

I have never wanted to be a librarian. The thought never crossed my mind. But the quest to open a “chai aur kitaabein” parlour where people come, settle themselves down with a book, regular and unlimited supply of tea and snacks as they keep reading, no hurry to leave and conversations revolving around books, is a retirement plan that I keep mulling upon. Tea being the other love of my life.

Netflix and Prime became the prime contenders for the scarce time in the last few years. And like you, I did not like it. I do not like it. I started exploring audiobooks then and hated it. I would miss entire paragraphs, would go blank at times, kept rewinding, and missed the feel and smell of paper. For the record, I never enjoyed reading on the Kindle or e-books on iPad too. Coming back to audiobooks, after trying a couple of books, I gave up audiobooks as well as Netflix and Prime. I lived happily ever after for many months, just reading, and reading whenever I could during the day and compulsively at night.

I have been driving to work for 14 years now. I bought my first car in 2006. Since then, listening to music to and from my workplace became a ritual. I would spend hours updating my playlists at least one weekend in a month, adding new songs, organising old ones, making folders like “most favourite”, “just favourite”, “okay”, “not-so-good”, “latest”, and so on. About two years back, I started to get bored of listening to pretty much the same songs since 2006 for the “not-so-good” and “okay” hardly ever got played and very few songs from latest made it to the “favourite” or “most favourite” lists. Once again, I decided to listen to an audiobook. Dan Brown’s Origin had just released, and I downloaded the book on audiobooks.com with the free credit available with the trial version. The rest as they say is history.

I bought the Bose wireless, noise cancellation, sweat-proof, earbuds. They have been my constant companions for all non-car listening to audiobooks. I have subscriptions for audible, audiobooks.com and storytel. I mix paper books and audio books. From cooking to cycling, driving to dusting and shopping to sanitising, I listen.

A key takeaway from “hate at first listen” to “love of my life” now, is that the first book should always be one that is fast paced, is a thriller and one that you want to get to the end as fast as possible. I do not recall the book that led to the “hate” experience. But I do recall sitting in the parking lot of my office a bit longer so that a chapter of Origin gets over. I do remember going back to my car to get my earphones during the lunch time so that I could listen to the book when eating. I do remember avoiding friends during the evening walk so that I could listen some more. So, to all those who are still trying to get used to audiobooks, listen to some recommended crime fiction initially or a genre that you enjoy the most. Once you get used to listening, there is no looking back.

The number of books that I read/listen to has increased manifolds with audiobooks complimenting the paper books. I do miss listening to music at times. But let us face it. There are hardly any good new songs getting released now a days. I switch to music occasionally to revisit the old favourites. Netflix and Prime have entered a rationalised zone and there are rare spells of binge watching. Overall, to quote you dear Kni-der, “Life is good again!”, my old friend is the center of my universe again!

Happy reading/listening.

N

The Magnificent History Of Indian Family Businesses

This article was first published in Family Business United blog on June 22, 2020;  Co-author: Yashodhara Basuthakur; https://familybusinessunited.com/2020/06/22/the-magnificent-history-of-indian-family-businesses/
 
India has a rich and magnificent history of family businesses. The country’s rich history and culture have molded the edifice and character of family businesses over the years. The joint family system was the backbone of these businesses and provided the required resources and capital for the cohesion and growth of the firms. In the early eighteenth century, India was predominantly an agrarian economy, with a deep-rooted caste-based social system that defined the occupational choices of the communities. Agriculture was the primary source of income and livelihood. The manufacturing industries were few and mostly in textiles, handicrafts. But India was lagging in the development of the economic, political, and commercial infrastructure essential for trade pursuits.
 
The turn of the eighteenth century marked the transition from mercantile capitalism to industrial capitalism. The colonial rule led to the decline of the vibrant Indian merchant community. The Indian businesses faced discrimination in trade, policy and bank loans. During the Industrial Revolution in 1850, India became the supplier of raw materials and a market for the products of the British factories (cotton, iron and steel, chemicals, etc.). Some of the businessmen who emerged during this time were the Birlas, Kasturbhai Lalbhai, Walchands and the Tatas. They constantly criticized economic racism and created bodies of commerce and trade associations to lobby for the Indian companies. They invested in research and development and introduced new product lines. The Indian led business enterprises had expanded in scope and scale across the country by the end of the 1940s when India gained Independence.
 
The Indian family businesses also actively engaged in social causes and philanthropy through generous contributions to charitable trusts and other institutions driven by the cultural and religious traditions of “daan” (giving) as a sense of duty to the community. They played a pivotal role in institutional building by partaking philanthropic activities such as setting up premier educational institutes, research, and cultural centers for the progress of the country.
 
The post-independence period marked with communal unrest was not very conducive for business. Additionally, the new Industrial Policy (1948)[1] of free India was introduced which saw increased participation of the government in economic affairs. The large-scale nationalization and government monopoly of critical industries such as utilities, transportation, iron and steel, heavy industries, armaments, atomic energy, manufacturing curbed the freedom of operations of the private enterprises. The Monopolies and Restrictive Trade Practices Act, 1969, put severe bottlenecks with respect to the quantities and types of goods or services that could be produced by the private sector. The firms now had to obtain licenses or permits to expand or start new businesses. Because of the limited licenses and capacity constraints, firms focused on diversifying into areas wherever they could acquire the required licenses instead of building on their core competencies.
 
Some of the multigenerational business houses focused on restructuring by consolidation and expansion within the new framework by acquiring overseas companies and expatriate houses to enter new industries. Other business houses acquired a significant number of licenses to thwart competition and block other firms from entering the space. Also, there was a new genre of technology-savvy entrepreneurs who were well-educated with degrees from abroad and joined their family business or started new ventures. Some of the legacy business groups even lend their expertise in areas like engineering, iron and steel (Tatas) and shipping (Walchands) to the newly formed government enterprises. However, this period also witnessed some of the older business families already in their third generation going through splits due to waning family ties. The families had not yet adopted professionalization, and the dominant family coalition still controlled the ownership and management.
 
The economic liberalization in 1991 was a landmark decision which opened the economy and introduced several macroeconomic and structural reforms. These reforms brought in a gamut of opportunities and challenges for the family businesses. While the businesses now had to compete with foreign multinationals and new entrepreneurial organizations for capital and resources, but they could now enter sectors which were earlier exclusively reserved for the public sector. The family firms were quick to restructure and respond to environmental changes. Some of the multigenerational businesses were able to weather the turn and came out triumphant in the new economy, while others who couldn’t sustain disappeared from the thriving business scenario. This era also witnessed the dawn of a new set of stand-alone first-generation family firms who harnessed the information-led economy by investing in research and technology.
 
A study on Indian family firms by Bang, Ray and Ramachandran (2017) looks at the listed firms during the period from 1990 – 2015. The study categorizes the firms based on ownership and management into two categories, namely family business group firms (FBGF) and stand-alone family firms (SFF) [2]. According to the study, ninety-one percent of the listed firms are family-firms, which is a key driver of the Indian economy. A synopsis of the findings is tabulated in Table-1.
 
In the year 2015, the top 30 family firms contributed to almost 50 percent of the total revenue of all listed family firms, which translated to 13 percent contribution to the GDP of India. Overall, listed family firms contributed to 26 percent of the GDP (Total Income). Out of the listed family firms, the FBGFs contributed to 21 percent, and the SFFs contributed 5 percent to the nation’s GDP. The family firms contributed to 28 percent of indirect taxes and 18 percent of direct corporate taxes collected by the government exchequer.

The family-firms built more assets in the manufacturing sector, which has a long-standing impact across all industries. The SFFs were predominantly in the services industry, owned and managed by the founder (or first-generation). The SFFs played a critical role in the rapid development of the services sector and generated large-scale wealth and employment opportunities. During the post-liberalization period, there was increased participation in equity markets by the family firms to meet the financing needs for expansion and growth. Among the listed family firms, the firms incorporated before the 1980s were more likely to create business groups as a response to the macroeconomic conditions. The average age of the listed FBGFs in the sample is 38.44 years, whereas that of SFFs is 28.73 years.
 
The family firms have displayed resilience, character, and adaptability over their long history and played a pivotal role in India’s growth story. However, with the current shifts in the economy and society, there are major challenges that family businesses must surmount. The family firms at the crossroads of succession have to take the decision on either to transition to next-generation or professionalize by inducting non-family managers. The family firms have to adhere to stricter and transparent corporate governance guidelines, better leadership and connect with the community to continue to chart the success story in years to come and ensure the perpetuity of the business and family.

[1](Ministry of Micro, Small & Medium Enterprises, 1948)
Statement of Industrial Policy, 6th April 1948, No. – 1 (3) – 44 (13) / 48, Ministry of Small-Scale Industries, Government of India, New Delhi.
 
[2] (Bang, Ray, & Ramachandran, 2017)
Bang, N. P., Ray, S., & Ramachandran, K. (2017). Family Business The Emerging Landscape 1990 to 2015. Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business.

The Impact of the Coronavirus on Investment Decisions

This article was first published by the Global Association of Risk Professionals, Risk Intelligence, on June 19, 2020; Co-author: Anisha Sircar; https://www.garp.org/#!/risk-intelligence/market/investment-management/a1Z1W000005VYeIUAW

As the world heads toward a global recession, with plunging equity markets and countries facing severe economic downturns, there are uncertainties and strong beliefs that have practically divided the world into the optimists and the pessimists. There are those, for example, who make rash, seemingly opportunistic investment decisions, and those who are more measured in their financial approach. Those who unwittingly indulge in herd behavior, and those who are less prone to such external influences.

What's more, there are those who are extremely cautious, favoring extended lockdowns and total isolation, versus those who have a more “que sera, sera” approach to COVID-19, supporting getting back to normal as early as possible.

It's easy for one group to feel that the other group is being unreasonable. The pandemic's unprecedented impact on our lives, both in the short and the long run, makes people highly susceptible to making decisions they would have otherwise avoided.

In this article, we reflect upon the financial and investment decisions being made by people in the backdrop of the pandemic, and the dichotomy facing risk managers and investors. What are the obstacles standing in the way of investors making rational decisions and avoiding unnecessary risks in a time of crisis?

Bias

When analysts, policymakers, “experts,” and/or news reports offer statements and opinions, it's sometimes assumed that they know what they are talking about. However, people find opinions credible as long as it confirms their own thoughts or anxieties, or as long as they seem like “educated” or even consensus-based guesses. This can involve a range of biases, from herding behavior, to action biases, to confirmation biases.

When COVID-19 hit markets, it resulted in phenomena such as dwindling risk appetite and investor interest and declines in the perceived values of stocks. That led to dramatic drops in stock prices, wiping out any potential investor gains.

Herding behavior is tricky with respect to risk appetite and investing. It drives markets toward excesses during market upturns and nose-dives during downturns. It's why stock indices in India, the U.S. and Europe plunged, especially between mid-February and mid-March this year, and why circuit-breakers were triggered several times in recent months.

In India, the major indices lost 40% in just two months. While it might be natural to get carried away with all the noise and the herd, turbulent times like these call for more reflection, rather than panic selling. Investors in countries like India have been used to more euphoric highs over the last few years, and the losses on investments therefore now seem particularly painful.

Markets in India spiraled almost immediately into a “bull phase” in a fortnight, recovering 20% from the bottom. However, it's important to keep in mind that, by and large, market indices have rebounded and hit new highs after every previous global financial crash. So, despite the noise, this may be the time for anxious decisions to hit pause.

Shortsightedness

In 1995, Shlomo Benartz and Richard Thaler conducted a study titled, “Myopic Loss Aversion and the Equity Premium Puzzle.” The researchers asked: How much will the equilibrium equity premium fall if the evaluation period (of a portfolio) increased? In other words, is checking and re-checking your portfolio beneficial or detrimental to how well it does?

Their research found that more frequent checkers show considerably lower portfolio performance over time. “In a sense,” they concluded, “5.1% is the price of excessive vigilance.” Long-term profits can be found where there is courage to move away from the crowd — and think long-term.

On the other hand, there are those who did bottom hunting when the markets crashed and are now raking in the moola.

In essence, investors who hit the pause button (the que sera, sera group) felt that those who were rebalancing their portfolios were being myopic; on the other hand, those who were actively trying to buy and sell thought that the other group was simply being “stupid.”

However, in the end, every investment decision needs to incorporate the risk appetites and the risk-taking capability of people. Someone may have a higher risk appetite – but if the capability to absorb a huge loss is low, then wait-and-watch is perhaps a better approach than investing in uncertain times.

Overconfidence

Psychologist Daniel Crosby believes that uncertainty often leads to two kinds of behaviors —compensatory over-confidence or worst-case scenario thinking, neither of which results in smart financial choices.

While the volatility in markets during the pandemic may be partly attributed to panic, investor overreaction (which led to excessive trade volume) was certainly another cause. This is reflected in how markets have periodically surged because of overconfidence about the worst of the virus having passed.

Shortly after these surges, indices are found plunging back down again. The phenomenon is also reflected in how “experts” have been making a variety of assertions in the recent weeks, guaranteeing that investors will be spared the pain that others may be experiencing.

Overconfident people, write researchers Mao Zhang and Yi-Ming Wang, “may perceive themselves more favorably than others perceive them, or they may perceive themselves more favorably than they perceive others. (…) It is common for most people to rank themselves as better than the median.” Moreover, they note that it's also “common” for men to trade more excessively than women, and for individual investors to show more confidence than institutional investors.

This plays a significant role in market volatilities, because overconfident investors are usually quick to buy on margin ahead of a stock market crash. In the run-up to the Great Depression, the “Roaring Twenties” saw a lot of overconfidence, and several investors used large margin positions to leverage their beliefs. But this caused an asset bubble, and when the depression hit, they lost everything they owned. Indeed, they even owed large sums of money, ultimately leading to banks having to declare bankruptcy — and everybody losing.

The takeaway? Avoid overconfidence: think long and hard before buying on margin in uncertain times if you don't have the appetite to stomach a huge loss.

Faulty Forecasts

“Experts” have made an array of predictions, ranging from global economic agencies projecting India's potential economic recovery to analysts saying the global economy will bounce back in the next financial year. These forecasts assume that central banks will cooperate and offer a way out, and that currently spooked investors will react to the rescue and re-enter the market. But as we have seen in the past, people can just as easily do the exact opposite, crisis or not.

In a pandemic, the seemingly opposite behaviors of people get amplified. Everything starts to seem black and white to people, but markets and behaviors actually remain grey and complex, interacting with each other in intricate ways.

Parting Thoughts

Turbulence and downturns have causes relating to behavioral and psychological factors that are difficult to control and explain. But what's certain is that not allowing investment decisions to be fueled by emotions and biases is a wise course of action. Now more than ever, people need to get back to the basics: minimize costs, be COVID-19-cautious, and resist the urge to time markets — and the virus.

The Malaxmi Group- An Empowered Team in Action amidst a Global Pandemic

This caselet was first published by STEP on May 14, 2020; Co-Author: Pramodita Sharma, University of Vermont, USA; https://www.stepresearch.org/the-malaxmi-group-an-empowered-team-in-action-amidst-a-global-pandemic/

Headquartered in Hyderabad, a city of 6.8 million and a major technology centre of India, the Malaxmi Group is diversified Group that comprised of several small and medium enterprises (SMEs) in infrastructure, agriculture, irrigation and water management, and construction, with operations spread across India. Since its inception in 2006, founder Harish Chandra Prasad, a mechanical engineer and computer scientist, aspired to build a professional organization and hired his team very carefully to ensure a good fit with his vision of a focus on quality products and services, and values of building a sustainable business on strong ethical foundations. Rapid growth followed. By the end of 2019, the Group’s revenues exceeded $10 million with 300 plus employees. However, there was some catching up to do in terms of internal systems and strengthening relationships internally as well as externally.

Corona Virus in India

By first week of May, India had lost over 1,700 citizens to the virus and another 53,000 had tested positive. The country’s mortality rate of 1.0 per million population and proportion (4.2%) of positive amongst those tested were much lower than in many other countries. Nevertheless, in an attempt to contain the spread of this infectious virus in a populous nation of 1.3 billion with poor health infrastructure, on March 24th the Indian government imposed a complete lock down of the country without giving even one day notice. SMEs feared the devastating effect of the lockdown on them and the economy. Even Malaxmi Group had to stop all works spread across 16 project locations, severely affecting their operations.

Crisis Management at the Malaxmi Group

Malaxmi had invested in a strong team of professionals. They felt that their Group can emerge stronger in the post-covid era, if they utilise the lockdown time to revisit every assumption of the current business practices, set strong systems and processes for the future and pivot the organisation to meet the uncertainties of the future. While providing thought leadership and holding weekly meetings with the top management team, the founder empowered his CEO, Pavan Kumar Bang, to spearhead the exercise. Few proactive measures pre-lockdown and actions post lockdown include:

Vigilance and AgilityWhen stories of the Corona virus epidemic in Wuhan, China reached India in January 2020, Pavan and his team followed it closely as some of their spare part vendors were based in this region. Immediate efforts were made to look for alternative suppliers within India. By the time the borders were closed, and international travel restricted, an alternate supply chain had been established.

Work from Home ProtocolsAnticipating the work from home advisory, Malaxmi decided to implement work from home one week before the Government directives. This helped the team to be equipped with laptops, internet connections and other hardware. When many others were still absorbing the shock of the new work from home reality, a 9:00 am to 7:00 pm ‘work from home’ routine has already been established for the Group and they hit the lockdown running.

Aligning Team Members and StrategyEmployees were encouraged to make a list of routine work-related activities and at least three new activities that were not a part of their routine responsibilities that each of them would take up during the lockdown period. Teams of employees were assigned specific tasks with an overarching aim to rigorously assess, ideate, innovate and consequently update the current systems and processes to help the Group beat the competition and stay ahead in the game. In addition, taking steps to build long-term trust-based relationships with key internal and external stakeholders was stressed upon. Some of the initiatives taken by the Group to achieve these include:

Process Evaluation and improvements:

• A comprehensive list of drawings, do’s and don’ts, mistakes committed and their root cause analysis, and good practices followed at project sites and all projects worked on was prepared, along with pictures. They were catalogued and stored with a semi-automated retrieval system for future reference and learning.
• Every assumption and convention of the businesses was questioned. WHY-WHAT-HOW matrices were prepared for several products and processes.
• Project proposal templates were revamped and standardized for potential customers.
• Financial statements were analysed closely to identify areas of improvement. Long overdue credits and debits were either written-off or cleared. 

Automation and Software upgradation:

• Realising that there will be uncertainty in availability of skilled workers, technologies to semi-automate several activities in construction and project execution such as plastering, tile laying and painting were identified and evaluated. Ten percent of the capital budget for the next year was allocated for procuring such tools and equipment.
• Enterprise Resource Planning software that had been bought 5-6 months earlier, but the implementation was patchy due to lack of time, training and commitment, was now being implemented meticulously.

Vendor relationships:

• Regular calls were made to all vendors, adjusting payment schedules to support those who were in dire need and delayed payments for the better endowed after discussing with them.
• Vendors were requested to conduct e-training for technical team members on issues like site level quality assessment of products, correct installation methods and do’s and don’ts while handling their respective products.
• Pictorial do’s and don’ts manuals were prepared for working with vendors and customers.

Employee training and skill enhancements:

• Senior and skilled technicians were encouraged to make videos on improving quality, increasing speed of execution and standard operating procedures for future training purposes.
• It was decided to reskill and employ existing team members in other departments. Internal job postings were done, interviews conducted, and transfers done. For example, new Quality assurance and Safety department were created with internal transfers and additional training.
• Online training programs were identified for each employee to help them be better prepared for future challenges.
• Employees were encouraged to challenge underlying assumptions and practices embedded in the Group to identify more efficient, environment friendly and sustainable solutions.

Family Governance:

• On his part, Harish started to adapt to working in a paperless virtual environment.
• He undertook peer discussions and consultations with family business experts and lawyers during this period to understand the best ways to govern the family business, steps to be taken for longevity of the enterprise and plan for succession of ownership and wealth transfer.
• He actively started to engage in treasury management and functioning of the family office too.

Key Insights

• Thoughtful visionary leaders can form organizational systems and structures to bring calm and efficiency in the storm of a global pandemic.
• Empowered teams with clear guidance and accountability can find multi-dimensional opportunities to strengthen organizational processes, systems and relationships, in a crisis.
• Paradoxically an obligatory moment of pause is an opportunity for intense activity on important yet ignored projects in the everyday rush of a growing family enterprise.

Sources: http://malaxmi.in/  | http://chiraharit.com/ | First authors’ interview with the CEO