He has just turned 51 but you wouldn?t guess he?s been through the stress of building India?s fourth-largest private sector bank from scratch. Uday Kotak, executive vice-chairman and managing director, Kotak Mahindra Bank, isn?t greying even at the temples. ?My father had jet black hair till he was nearly 65 so maybe I?ve inherited that from him,? he says laughing when asked about how he manages to look so young. His bank certainly didn?t inherit the kind of brand value and institutional-backing that the three private sector banks ahead of Kotak Mahindra did, so one can imagine how much more difficult it must have been. But then Kotak always wanted to lend his name to the business. And, inspired by marquee Wall Street names like Goldman Sachs and Lehman Brothers, he convinced partner Anand Mahindra way back in the eighties that it was the right thing to do. ?You have to be ready to risk the family name and protect its reputation,? he says.

Apart from a thick head of black hair, Kotak is also grateful to his father for encouraging him to start out on his own; otherwise he may just have spent a lifetime at Hindustan Lever. Not that his father handed him any money; Kotak entered the world of leverage, early in life, cobbling together Rs 30 lakh. His early start in life as a leader, as captain of the school cricket team, honed his leadership skills and it?s something he excels at. Not for nothing has the top team at Kotak Mahindra stayed with him for nearly two decades now. Kotak attributes it to ?a culture thing?. The team, he says has ?grown up together and is on the same wave length.? Rivals say he?s good because he delegates and takes care to fulfill everyone?s aspirations. He is never abrasive but makes his point. In an industry where attrition, if not rampant, is reasonably high, it?s a loyal core team that has helped the bank come this far.

Kotak?s been more than convincing in his role as a strategist, opting to carve out a niche in the capital markets space within the larger financial services arena. That not only differentiated the bank from its peers, but also allowed the organisation to play to its strengths. The strategy may not have played out exactly the way he had hoped it would with the stock markets having gone into a tailspin after the breakout of the global financial crisis. The bank?s capital-market related revenues remain under pressure, having come off by just under 10% sequentially in the December 2009 quarter. And in a fiercely competitive environment, the firm continues to lose market share with volumes having slipped sequentially.

But Kotak has realised that he needs to protect his company from the cyclicalities of the market and is not hesitating to course correct; even critics acknowledge that the man has hit feet firmly on the ground and is willing to make changes if necessary. Over the last twelve months, there has been a structural change in the mix of earnings with the bank piece as also the life insurance piece gaining in weightage. The bank, which today has a balance sheet size of just over Rs 40,000 crore, Kotak emphasises, remains the central piece of the overall strategy. His strong insights into the customer?s psychology have helped him understand the importance of a trusted brand. To that end both the branch and ATM networks are being beefed up to increase the comfort level. Moreover, he?s willing to be innovative, wooing them with products like the ?auto sweep? which allows them to move money into a term deposit and actually draw money from that account. Although that increases the bank?s costs, Kotak?s willing to experiment to see if it brings him customers.

But Kotak is also sure of his strategy of playing in the capital markets niche and is not about to give up on the idea. Far from it. He loves the space and is more than sure it?s ?worthwhile for us to be in.? Ideally, his model would have the bank, life insurance, investment banking, capital market and asset management businesses with the banking and life insurance pieces acting as stabilisers to combat the cyclicality of the capital markets. And he?s in no hurry to scale up; it?s important, he says, but cautions that taking on disproportionate risk to get scale or rather taking disproportionate risk on one?s reputation to get scale, is risky. It?s a lesson he learnt early on, in the late nineties when the business, then an NBFC, took a big hit. And one that he won?t ever forget. ?At the time, in1997, there were 4000 NBFCs in the country but only ten of those survived. You had to be really good to get through that. Kotak?s also learned from the Asian crisis, confessing that between 2003 and 2006, he was constantly asking himself whether the lessons of 1997 were really lessons or simply baggage. It turned out they were lessons.

He also recalls people almost cocking a snook at him, asking him at the time why the bank?s retail piece was not clocking the kind of run rate that other banks were. In the final analysis, Kotak?s decision not to rush things but take it one step at a time seems to have paid off, going by the loan losses that some of the other banks have piled up. He also defends the group?s relatively small market share of just 2% in the life insurance space ? and although February has been a good month, the business has been de-growing. In fact, although convinced about the value proposition of insurance products, he?s not sure the level of overheads that many companies are running with are sustainable. As he sees it, there?s a huge mismatch between the costs of asset-management companies (AMCs) and those of life insurers, which are five to ten times higher even though the element of asset management in life insurance is very high. Without meaning any disrespect, he?s not hesitant to point out that a lot of the profits that life insurers are making today are because so many policies are lapsing and it?s the large number of lapsed policies that are supporting the high cost structure. And Kotak is much too smart to fall into the trap.

He must know what he?s talking about because the group?s AMC has done relatively well to rank seventh in the industry with assets under management of Rs 40,000 crore. Perhaps it should have done better given that it has the distribution channel of the bank supporting it. Nevertheless, a place among the top five private sector players isn?t to be sneezed at. Once again, Kotak belabours the point of being able to sustain the performance and running the race like a marathon rather than a sprint pointing that there were many funds ahead of Kotak who have been left behind. His clear, composed mind tells him not throw away money on an acquisition although he would love to own a strong liability franchise. And it was this same clear thinking that led him to end the partnership with Goldman Sachs, confident that he would be able to do it on his own, of building an organisation that outlives him. As he puts it, ?You want to be in control of your destiny.? Uday Kotak sure is.