Mind & mettle a frontrunner make

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: The definition of a mid-cap and a large-cap company has changed over the past decade. Scores of companies have graduated to the large-cap segment and there are many more joining them. From an investing perspective, the best strategy would be to ‘catch them young and watch them grow’. But then this is easier said than done. Along with the rewards are risks and the corporate India highway is littered with remnants of promising mid-cap companies.

Near euphoric situations, where everything looks promising and any venture would grow simply on the momentum provided by the economy and the opportunity, causes many companies to misjudge their potential and get carried away. Investors too are blinded by the optimism and join the bandwagon. And when normalcy steps in, the tide goes out and many get left on the shore.

Old norms

The test therefore for picking up tomorrow’s winners starts from the top—the leadership and the team that will make things happen. An investment banker, not wanting to be named, says that the first lesson he learnt in his career is that good leaders can make a horrible project win, and an ordinary one can kill a smart project.

“The promoter and the leader are the biggest risk that a company has,” he adds. He points out to leaders like Aditya Birla, NR Narayana Murthy, as people who could weather testing times and also quickly re-work projects to get them on stream.

And here as well, experts are quick to point out that leadership needs to be tested. After all, it is during testing times that the character and the skills of a leader are demonstrated. The basic parameter for the test here is the management’s ability to stick to their guns and generate profitability to serve their shareholders.

Companies making the crossover need to understand that merely getting strong media attention and making promises might win them a battle, but the war is perennial and heads are counted—numbers matter. NR Narayana Murthy, probably the best iconic example of a person who catalysed Infosys to make that crossover, states succinctly, “In God we trust, everybody else bring data to the table.”