1. FE Best Banks Awards: Uday Kotak, Winner, Lifetime Achievement Award

FE Best Banks Awards: Uday Kotak, Winner, Lifetime Achievement Award

Uday Kotak chose to start up — long before it was considered cool — and established the non-banking financial company (NBFC) Kotak Mahindra Finance.

By: | Mumbai | Updated: December 6, 2017 6:33 AM
FE Best Banks Awards, Uday Kotak, Uday Kotak Lifetime Achievement Award Uday Kotak chose to start up — long before it was considered cool — and established the non-banking financial company (NBFC) Kotak Mahindra Finance.

“If what you create does not outlive you, then you have failed. The thing that excited me then, and excites me now, is the fun in the journey and not the destination.” That has always been Uday Kotak’s philosophy. In a country where being from a business family is often the same as being in the family business, Uday Kotak chose to start up — long before it was considered cool — and established the non-banking financial company (NBFC) Kotak Mahindra Finance. In the early 1980s, fresh out of B-school, he spotted opportunities in the gaping spreads that banks retained both in the plain vanilla loan business and while discounting bills. And in a sense, he was doing banking — borrowing from individuals by paying a rate higher than the deposit rate and lending to companies at a rate that was lower than the bank rate — even before starting a bank. Referring to a transaction with Nelco, Kotak says, “It worked since everybody I spoke to was willing to lend to a Tata company as the deposit was risk-free.” In 1989-90, he innovated in the car financing business — dominated by players like Citibank — offering customers not just the loan but also a car on the spot. That meant one didn’t need to wait for six months before getting the car. Quick to spot an opportunity, he snapped up a fixed deposit distribution business for some `50 lakh, pocketing an 800 square feet office on Dalal Street as part of the deal. In 1991, he forayed into merchant banking, and by the end of the year, had taken his own company public. Even as he grew the business, he was careful not to live beyond his means, always cutting his cloth according to his means.

In a somewhat amusing incident, Kotak reveals how when his staff doubled from three to six, there was not enough space in the office to accommodate the newcomers. “We doubled the working area by cutting all the desks in half,” he recalls. It was this prudence and caution that helped him survive. Even as thousands of NBFCs mushroomed around him only to go bust, Kotak survived. Because he kept an eye on his capital and not the returns. Even today, he believes it was this focus on preserving capital that helped him even though the company did take a hit of some Rs 100 crore. His conservative approach to growth, in spite of his eagerness to scale up, is what has helped him not just stay in the game but get ahead of competitors. Never in a hurry, Kotak has always waited for the right moment to strike. The cricketer in him would have called it sweet timing. So the NBFC that he founded with some help from Anand Mahindra became Kotak Mahindra Bank only in 2003. And more than a decade passed before KMB acquired ING Vysya Bank, a transaction that took the lender to southern India, giving it more of a pan-India presence. If today the Kotak group is a sprawling conglomerate across banking, asset management, insurance, merchant banking, stock-broking, private equity, a real estate fund, a payments bank and commodities trading, it’s because Kotak spotted the opportunities. But he could never have got where he has without his team. And that’s probably his biggest strength, the ability to build and motivate a team, leading from the front but also empowering. KMB today is well poised to exploit the opportunity in the Indian financial sector. Kotak understands the importance of technology but as he says, it is simply an enabler, the value addition must come from customer focus and service. In 1998, the market capitalisation of the NBFC was `81 crore; the bank today boasts a market capitalisation of close to Rs 2 lakh crore. More importantly, it is a brand trusted by 10 million customers. It’s a franchise Kotak must be proud of. And one that will survive him.

In a somewhat amusing incident, Kotak reveals how when his staff doubled from three to six, there was not enough space in the office to accommodate the newcomers. “We doubled the working area by cutting all the desks in half,” he recalls. It was this prudence and caution that helped him survive. Even as thousands of NBFCs mushroomed around him only to go bust, Kotak survived. Because he kept an eye on his capital and not the returns. Even today, he believes it was this focus on preserving capital that helped him even though the company did take a hit of some Rs 100 crore. His conservative approach to growth, in spite of his eagerness to scale up, is what has helped him not just stay in the game but get ahead of competitors. Never in a hurry, Kotak has always waited for the right moment to strike. The cricketer in him would have called it sweet timing. So the NBFC that he founded with some help from Anand Mahindra became Kotak Mahindra Bank only in 2003. And more than a decade passed before KMB acquired ING Vysya Bank, a transaction that took the lender to southern India, giving it more of a pan-India presence. If today the Kotak group is a sprawling conglomerate across banking, asset management, insurance, merchant banking, stock-broking, private equity, a real estate fund, a payments bank and commodities trading, it’s because Kotak spotted the opportunities. But he could never have got where he has without his team. And that’s probably his biggest strength, the ability to build and motivate a team, leading from the front but also empowering. KMB today is well poised to exploit the opportunity in the Indian financial sector. Kotak understands the importance of technology but as he says, it is simply an enabler, the value addition must come from customer focus and service. In 1998, the market capitalisation of the NBFC was `81 crore; the bank today boasts a market capitalisation of close to Rs 2 lakh crore. More importantly, it is a brand trusted by 10 million customers. It’s a franchise Kotak must be proud of. And one that will survive him.

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