BharatPe will likely appoint a permanent chief executive officer in the next two months, says non-executive chairman Rajnish Kumar. The former State Bank of India Chairman tells Ajay Ramanathan that the management at Byjus is making a serious effort to ensure that the company stays afloat. Excerpts:
Q. What can a banker with a long career at State Bank of India bring to the table for these startups?
A. The SBI experience is a very valued experience when it comes to guidance, corporate governance, and giving direction. Probably, people want to take advantage of this experience and that is where, I have been associated with many of these new age companies in different capacities. Of course I am a non-executive chairman at BharatPe. At Byjus, it is more of an advisory role. Earlier, I was in an advisory role with Oyo. I am in an advisory role with Indifi Technologies.
Q. By associating with these companies, do you see yourself as a crisis manager or a problem solver?
A. I do not see myself as a crisis manager. Probably, these companies see me as a crisis manager. That is a tag that is now getting attached to me. When I started at BharatPe, it was not to manage any crisis. It was just a normal process where I thought that my experience will add value to BharatPe which was an upcoming fintech and was doing quite okay as far as the valuations are concerned. But later on, certain issues came to light. I did not want to be associated with crisis management, but it so happened that some of the companies were finding it difficult and they thought my experience could be beneficial to them.
Q. Has the management churn at BharatPe cooled off?
A. Yes, almost everyone in the team is new. We have been able to acquire some good talent. The team is functioning well. We have been earnings before interest, taxes, depreciation, and amortization(EBITDA) positive since October. Hopefully that will continue. There are no compliance or governance issues because systems, processes, and policies have all been put in place. Now, it is all about how much can we grow given the overall regulatory environment.
We are still in growth and investment phase. The focus on profitability is very much there. We continue to invest in developing the business, expanding our network. There is an expenditure incurred there. But otherwise, things are moving in the right direction.
Q. Are you on the hunt for a permanent CEO at BharatPe?
A. Yes, I think we will have a decision in the next two one or two months. The exercise of choosing a candidate is being carried out separately by investors who are large shareholders. I think sooner or later, that will also happen. We are looking at all options, both internally and externally.
But as far as the company is concerned, we are working fine even with an interim chief executive officer. There is no issue. I am not saying that we do not need a permanent CEO. The organisation has sufficient strength now at the CXO level that it is functioning well.
Q. How do you assess the prevailing situation at Byjus, and where does the brand go from here?
A. They are making every effort to keep it floating. Byju Raveendran and Divya Gokulnath are both, very talented people. Obviously, we see that some of the decisions that they might have taken are in hindsight, not the right ones. They are making a serious effort to focus on what they do best. Let us hope that they come out of this crisis.
There is no issue about their content or quality. It is useful. When it comes to certain corporate decisions or corporate governance, there are some challenges. They need to take care of that and focus on what they do best.
Q. What are the learnings from the BharatPe and Byjus episodes?
A. The lesson is very clear. Nobody is against innovation but there are boundaries. Everybody has to operate within those boundaries. There is no scope for non-compliance. That message is coming out clearly from the regulators. Play by the rules. You need to have a business model that is sustainable. Earlier, it was all about growth but not anymore. Now, it is about growth, profitability, corporate governance, and compliance.
Q. In recent weeks, there has been some noteworthy regulatory actions on non-banks entities. Should we be concerned over the business practices of some of these entities?
A. We cannot generalise. Why non-banks? In any space, there are people who do not comply or do not follow the rules. It is not that everybody is non-compliant. There may be some. The message to those entities is – please fall in line.