Technology & TalenT Catalysts for Change - Directors Club
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28
Medical Devices: A New Phase
33
The New ‘Avatar’ of the Chief
Compliance Officer
37
Change is the only
constant. Is it really?
THE HUNT REPORT
Technology
& Talent
Catalysts for change
hunt-partners.com Vol. 13
Intellectual Capital. On Demand
ADVISORY | PROJECT | INTERIM
What 87 of the Fortune 100
have in common.
They hired us.
• Finance & Accounting
• Risk Advisory/Audit
• Strategy as a Service
• Leadership & Governance
• KPO/ Analytics
• Supply Chain
• Information Management
Serving major clients in India since 2007
Visit us at www.rgp.com
(A US-headquartered NASDAQ company)
preface
Dear Reader
With great pleasure, we present to you the 13th edition of The Hunt
Report, a half-yearly roundup of key trends influencing executive
hiring across various industries. This edition is a great blend of Tech-
nology and Talent impacting industries.
Trends like subsidiarization of banks and changes experienced by
the Private Equity industry are culminating in a metamorphosis of
the Financial Services landscape. The entry of large players in the
FinTech space is further giving a new shape to the Indian economy.
Technology has now become an indispensable tool that is used to
enhance customer experience. These developments are creating a
huge demand for high quality talent, that has a good understand-
ing of technology and can help these organizations ride the digital
wave with ease. As a result, newer roles are being created and vari-
ous innovative career opportunities are emerging.
While preparing to deal with the macro-economic changes with the
help of technology and talent, it is also essential to focus on the
effectiveness of the board and work towards improving it. The first
step towards this is to conduct a comprehensive evaluation of the
Board and to make internal changes accordingly. You can read all
about it in this edition.
We hope and believe these articles will provide you good insight
into the shifting mindset and the new hiring trends across various
industries.
We welcome you to share your view, opinions and comments at:
editor.thr@hunt-partners.com
Happy Reading!
The Knowledge Management Team,
Hunt Partners
hunt-partners.com 1
content
Corporate 21 41
Governance and Private Equity: Like A Leadership Development
the Board Phoenix, Rising From The Intervention: Executive
Ashes Coaching and its
03
Sunit Mehra | Tehsin Danawala effectiveness
Anne Prabhu | Suresh Raina
Directors’ Club 12th Edition in 23
a Nutshell Collaborate, Consolidate 43
and Control – Real Estate Sexual Harassment: The
05 Sunit Mehra | Nikita Garg Issue, Law and What you
India Board Report
can do
25 MZM Legal
06 Infrastructure -
HOW EFFECTIVE IS YOUR Ameliorating India the 45
BOARD? “T-E-C” way Freelance Community: The
Board Evaluation Limited Suresh Raina | Kajal Singh Future Workforce 3.0
Feelance Co.
08 28
MANDATORY BOARD Medical Devices: A New
EVALUATION: AN OPPORTUNITY Phase Sectoral Trends
MISSED? Anne Prabhu | Natasha Mistry
Global Governance Services 47
Healthcare: Opportunities
10 Careers and for Technology Adoption in
Taking Corporate Strategy
from Boardroom to
Leadership Healthcare
Anne Prabhu | Shreyash Jain
Frontline
31
Rescon Partners 49
Global Leaders - For India,
From India Technology: Global
14
Human Capital Leadership Product Support Centers in
A reboot to ‘Corporate
Institute India
Governance’ Arjun Erry | Omer Qureshi
Suresh Raina | Omer Qureshi
33
The New ‘Avatar’ of the 51
Industry Insights Chief Compliance Officer
Arjun Erry | Dhara Katkoria
The Era Of Fintech
Suresh Raina | Shraddha Naik
16
35 53
Banking: Subsidiarization in
ARE YOU READY TO THROW OUT Automotive Revolution
India
Arjun Erry THE BELL CURVE? Suresh Raina | Pooja Thakker
Open Spaces Consulting
18 56
37 Automotive: On the Power
Housing Finance:
Change is the only Trackk
Metamorphosizing
Arjun Erry | Tehsin Danawala constant. Is it really? Suresh Raina | Nikita Garg
RGP
39
Interim Management:
Disrupting the Management
Consulting model
Suresh Raina | Manisha Prajapati
2 hunt-partners.com
Corporate
Governance and the
Board
Directors’ Club 12th Edition in a Nutshell
Hunt Partners Successfully Concludes 12th Edition Of Directors’ Club.
In April 2018, Hunt Partners—in partnership with Global Governance Services (UK)—successfully
concluded the 12th edition of Directors’ Club – its flagship corporate-governance platform.
Launched in 2013, Directors’ Club (DC) has risen to become the country’s leading and longest-
standing platform to promote corporate governance by enhancing the capabilities and
effectiveness of Independent Directors. DC has the distinction of being recognized by the
National Foundation of Corporate Governance (NFCG), of the Ministry of Corporate Affairs. The
cohort of DC Alumni now numbers over 270 plus.
Directors’ Club was created to address the needs of Independent Directors for enhanced
skills, perspectives, and a deeper understanding of the role. Bolstering the effectiveness of
Independent Directors is one of the most important drivers to achieving highly-effective Boards.
The program saw the participation of a diverse set of senior executives from across industries
and sectors.
The key to the program’s success was the Some of the unique modules of DC are:
continued delivery of modules by world-class • R
ole of Independent Directors and
faculty including: Role of Boards- Effectiveness & Best
• D
r. Chris Pierce, CEO, Global Governance Practices: This module focuses on the
Services Ltd. and Consultant for Board formation, composition, and functioning
Evaluations Ltd. of board, and roles of the board and the
• M
r. OP Bhatt, Independent Director at Independent Director
Hindustan Unilever Ltd, ONGC and Tata • B
oard Evaluation & Effectiveness: With
Consultancy Services the help of statistics from India Board
• M
r. Nawshir Mirza, Independent Director, Report 2011 and 2014, this module focuses
Thermax Ltd. on parameters for Board Evaluation, and
barriers which hinder Board effectiveness
• Prof Raghu Iyer, adjunct faculty at SPJIMR and governance
• M
r. VishwanathVenkataramanan, Partner • T
ransition from Leading to Influencing:
KPMG This module covers personal drivers and
• M
s Kalpana Unadkadt, Partner Khaitan motivation for becoming an Independent
& Co. Director
• Mr. Barnik Maitra, Partner McKinsey & Co • Independent Director’s Role in Risk
• M
s. Vladislava Ryabota, Regional Management: This module equips directors
Corporate Governance Lead for South Asia to identify and assess risks, and stresses
at IFC on how the failure of Board to identify
hunt-partners.com 3
risks perceived can lead to fall of a hamper growth and ways to curb it are
company, also part of this module.
• T
he Director & The Law: Providing an Directors’ Club is designed to cover every
overview on legal duties and obligations aspect which impacts board members,
associated with being a director and especially Independent Directors and
specific nuances in relation to Independent enhance their effectiveness while discharging
Directors, are covered in this module duties on the Board. The 12th edition, as the
• F
inancial Analysis & Effective prior editions, received a positive feedback
Decision Making: This module covered from all the participants
understanding and interpreting balance
Congratulations to our DC Alumni who
sheets and statements of changes in
have taken up Board positions:
equity. It also covered Audit Committee
basics such as qualification of reports • Sudipta Sen, MetricStream
and formulation of an external financial • Sudha Ravi, Goodyear
reporting and disclosure strategy
• Anjali Seth, Endurance
• R
ole of Audit Committee: The most
appropriate role of the Audit Committee,
• Shyam Rohra, Aarti Industries
and the importance of getting the right • A
shok Barat, Cholamandalam Investment
composition of auditors and actively & Finance Co. Ltd
engaging with them. This module also • S
angeeta Pendurkar, Aditya Birla Group
covered emerging challenges in relation (Pantaloons)
to Governance and Audit Committee and
crisis management • Ajay Bimbhet, Royal Sundaram Insurance
• B
oard Strategy: Developing a strategic • R
ajgopal Thirumalai, Hindustan Unilever
plan to generate value for the company Limited
and the role of the Board in developing • Bharat Banka, Sterlite Technologies Limited
that strategic plan are the issues that • R
akesh Bhutoria, Banyan Tree Bank,
are touched upon during the session. Maurituius
Understanding how a Board can also
4 hunt-partners.com
India Board
Report
The India Board Report, has been published by Hunt Partners—
in conjunction with AZB Partners and PwC—biennially since
2005. The India Board Report (IBR) is a first-of-its-kind, definitive
survey on board composition, effectiveness, and governance
best-practices of publicly-listed companies in India.
The last edition of the India Board Report,
published in 2015-16, delved deep into two
very topical areas, viz. the professionalism
and workload of Independent Directors,
and Board diversity. The workload of
Independent Directors is a current topic
and has been subject to regulations in the
Companies Act, 2013, as well as more recent
pronouncements on what constitutes an
‘overboarded’ director. Readers may recall
an episode with the country’s largest
private-sector mortgage lender, wherein
a special resolution to re-appoint the
Chairman was vehemently opposed by
proxy advisory firms – on the premise that
the director was overboarded.
The recommendations of the Kotak
Committee on Corporate Governance in
respect of public-companies appointing
The 2015-16 edition can be at least 1 woman Independent Director
accessed at our website, should hasten the progress around
www.hunt-partners.com. greater diversity on the Board. As
We are currently engaged in the Dr. Chris Pierce, PhD writes in the
publication of the 2018-19 issue Foreword of IBR 2015-16, “...around the
of IBR. world, the diversity of boards is becoming
increasingly valuable as a mechanism for
challenging ‘group think’ and stimulating
innovation in strategies.”
hunt-partners.com 5
HOW EFFECTIVE IS YOUR BOARD?
Gary Cowdrill
The principles of effective corporate To assess whether boards are performing
governance apply to all jurisdictions and effectively, there is a well-documented list of
industry sectors and best practice is now issues that should be considered. Points to
well established. One of the central elements Ponder:
of a best practice governance structure is • Is the board the right size?
the board effectiveness review.
• Is the mix of skills appropriate?
The purpose of the effectiveness review is to • Is there constructive challenge at board
improve the performance of the board and meetings?
it is important that directors engage in the
process with the understanding that these • D
o non-executive directors contribute
reviews can bring commercial value to an meaningfully?
organisation. • D
o directors contribute beyond their
technical specialisms?
Globally, it is now best practice, and in some
cases a legal or regulatory requirement, to • A
re discussions both operational and
have an independently facilitated review strategic?
carried out periodically, but just as important • Will the board make tough decisions?
is the annual internal review. • Is there a clear, board-driven strategy?
Internal Review Feedback for Improvement
Directors should critically assess the It is considered good practice to conduct
practical application of best practice a feedback session immediately after each
governance principles. They must look at the board meeting. The board should consider
culture of the business to determine if there allowing ten minutes to answer questions
is a real buy-in to best practice processes like:
and, importantly, whether this culture is
• How did we do?
encouraged and demonstrated by the board.
6 hunt-partners.com
• Can we improve? • T
he strategy is aligned to values,
• What didn’t work well? capabilities and culture
• The board is aware of the competition
An Outside Perspective
• T
he board understands how value for
The periodic externally facilitated review shareholders, customers and other
should then build on the annual internal stakeholders is created
review with the independent assessors
bringing an external perspective, challenging • T
he board understands the Key Success
accepted ways of doing things and raising Factors
issues that directors fear could destabilise • T
he organisation has a good track record
relationships within the business. Some in strategy execution
things an experienced adviser will look for: • The board is clear about risk appetite
• How well the Chairman runs the board • Performance is tracked
• Dynamics between the Chairman and CEO When considering the effectiveness of your
• C
onstructive challenge from non- board, you should also give thought to how
executives effective you are as a director.Here are some
• D
irectors’ contribution outside their area questions to consider
of expertise and their understandingof • D
o I contribute outside my area of
collective responsibility expertise?
• Dominant individuals • D
o I keep up to date on all relevant issues
• C
larity regarding ‘discussion’ as opposed and improve my capabilities as a director?
to ‘decision’ of agenda items • D
o I have regular performance appraisals
• S
ufficient time being allowed for items to with the Chairman?
be discussed properly • Am I prepared to disagree?
• E
xistence of bad practice and bad • Can I handle a forceful personality?
behaviours • W
ill I admit when I don’t understand
• Board living the values of the organization something?
• The independence of non-executives • Do I give the board my full attention?
• A
ppropriate diversity - diversity of thought • A
m I sensitive to the needs and feelings of
and knowledge fellow board members?
• R
elevance of the board composition to the • D
o I prepare diligently for each board
strategic aims and business model meeting?
• A
nything that has caught the board by • Do I make sure not to micro manage?
surprise over the previous year • D
o I fully understand my legal duties as a
• E
vidence of a culture of continuous director?
improvement • A
m I sensitive to the needs of
The contribution to strategic development is stakeholders?
a key responsibility for the board so we need • Do I never allow myself to get conflicted?
to assess whether:
When directors do not perform, boards
• The board drives strategy can malfunction, leading to poor decisions
• T
here is a process enabling everybody causing organisational duress and, in
within the organisation and key external extreme cases, insolvency.
stakeholders to contribute and engage
with the strategy So, make sure you understand your
responsibilities as a director and that you
• The strategy is regularly reviewed get the necessary support to ensure that
• T
here are clear, unambiguous and you and your colleagues on the board can
measurable objectives effectively discharge your responsibilities.
hunt-partners.com 7
MANDATORY BOARD EVALUATION: AN OPPORTUNITY MISSED? Chris Pierce Recognition of the importance of good Focusing upon the right board governance practices within Corporate India governance practices is still evolving and perhaps one of the most Many of the initial board evaluations have complex areas of governance change is that tended to focus upon the composition and of board evaluation. Indian listed companies structure of the board. Although these are have only recently moved to a mandatory important areas, boards may be missing board evaluation1, where boards are required an important and valuable opportunity to take into accountthe associated Guidance to identify further value adding activities Notes from SEBI2. In addition, SEBI is related to board practices. For example, currently phasing in the implementation the evaluation should review whether every of many of the Kotak Committee issue is comprehensively discussed during recommendations3.Responsibilities for board the board meetings and whether these evaluation for listed companies involve: discussions generally add value to decision • T he Nomination and Remuneration making. Many directors are surprised to learn Committee (NRC)– This involves that in the most recent NSE & IiAS survey, formulating the criteria for evaluation 94% of respondents claimed that their board of the performance of independent evaluation had improved the quality of board directors and the board of directors, discussions4. evaluating every director’s performance and determining whether to extend or Limiting the scope of the evaluation continue the term of appointment of the Many board evaluations in their initial stages independent directors. have very limited scope. For example, it is • T he Independent Directors– This involves quite usual for a board to determine that reviewing the performance of the non-independent directors and the board as a whole, reviewing the performance of the chairperson and assessing the quality, quantity and timeliness of flow of information between the company management and the board. • T he board of directors as a whole – This involves evaluating the independent directors. Initially, many boards conducted their first evaluation as a “tick box” compliance exercise. The evaluation process is now increasingly being perceived as an investment that can provide significant value-added outcomes to the company – however, this process is much slower than it need be. Here are some suggestions for you to get the most out of the evaluation. 8 hunt-partners.com
subsidiary board governance issues will not the entire board evaluation process. A
be covered by the evaluation process. professional evaluator will develop good
practice evaluation frameworks that can
Another common limitation voluntarily be used every year, identify and track
imposed upon board evaluation is for the measurable outcomes, show significant
process to solely focus upon input from trends and be appropriate for best in-class
board directors and not to obtain any benchmarking purposes.
input concerning the senior management
team’s perception regarding the nature of Leading the board evaluation
their relationship to the board members. A recent survey of NSE companies identified
Consequently, a key stakeholder‘s opinion of that over a quarter of companies did not
board performance is being ignored. involve their NRC chairperson or members
An outcome focus in the board evaluation process6. These
companies are in breach of the current law
Recent studies have shown that very and need to review their committee charters
few Indian companies make reference to to ensure that the NRC has a much clearer
developing action plans and the contents remit in the board evaluation process.
of the action plan. The latest SEBI Guidance
Note and the recent Kotak Committee Links to remuneration and continued
recommendations suggest that boards service
should clearly identify areas of improvement, Recent surveys have identified that only a
and produce a list of actions required which minority of Indian companies currently link
will contain details of the nature of the the results of the board evaluation process
actions, timeline, person responsible for to director remuneration. When board
implementation, resources required and evaluation is directly aligned and linked to
review of the actions within a specified time continued service as a director and to the
period. size of remuneration, all the board members
The use of external independent take the board evaluation process a lot more
evaluators seriously and the effectiveness of the board
performance rises in a dramatic manner.
A recent survey identified that only 7
percent of NSE
companies
engage the
services Dr. Chris Pierce is an independent
of external Senior Consultant at Hunt Partners
consultants and CEO at Global Governance
for their board Services Ltd. He has conducted many
evaluation5. board evaluations and his publications
include “Board Evaluations: Insights
An independent from India and Beyond” (IFC,2015)
evaluator can co-written with Dr M J Larson.He can
provide greater be contacted at chrispierce@ggs.
objectivity to uk.com.
1
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
2
SEBI Guidance Note on Board Evaluation, January 2017.
3
KPMG SEBI implements Kotak Committee recommendations, May 2018
4
National Stock Exchange & Institutional Investor Advisory Services Board Evaluation:
Disclosure and Practices – 2016-17 (February 2018) P.12
5
NSE &IiAS (2018) P.7
hunt-partners.com 9Taking Corporate Strategy from
Boardroom to Frontline
Manish Chordia
When you come across a report titled as “Strategy is Dead, Long Live Strategy” by one of the
world’s leading strategy consulting firm, you better take note of it. However, when the opening
sentence of that report contains “Far from it” – you know the intent behind the catchy title, and
it’s a big sigh of relief for management consultants like us who focus on taking strategy from
Boardroom to Frontline leveraging Balanced Scorecard (BSC) framework.
We all know that having just strategy in place will not help any organization become successful,
it needs to translate into action on the frontline. However, for a superior execution in the
direction of achieving long term goals, strategy should not only be understood but also be
believed in and actioned by the company’s middle management and frontline.
Is there an established way to create that “Pull” from the whole organization?
The answer is a resounding Yes, and the Balanced Scorecard (BSC) helps in achieving just
that. As a part of BSC implementation through facilitated workshops, employees break down
corporate strategy and associated ambitious goals into objectives and then set long-term and
short-term targets for themselves. In our long corporate and consulting career, we have yet to
come across such an intuitive and comprehensive framework that bridges the gap between
strategy and execution seamlessly. And we are not alone, BSC is now one of the most widely
practiced management frameworks, boasting an adoption rate of more than 50% amongst
Fortune 1,000 companies. The Balanced Scorecard concept was selected by the editors of
Harvard Business Review as one of the most influential management ideas of the last 75 years.
Balanced Scorecard Implementation
Strategy Translate to Measure
Formulation Action Implementation
• Mission & Vision • Strategy Maps - • Automated
• SWOT, PESTEL, Five Objectives with Dashboards
Forces, Blue Ocean “Cause & Effect” for Strategy &
• Organization Operating Reviews
• Strategy Statements
Alignment • Surface gaps
• SMART KPIs with in Capacities &
long and short Capabilities
term targets • Employee
• Initiatives mapped Performance Mgmt
to annual budgets & Goal Setting
10 hunt-partners.comThe Balanced Scorecard (BSC) was and promote active participation of middle
developed by Dr. Robert S. Kaplan of management. The workshops allow the
Harvard University and Dr. David P. Norton middle management team to realize their
as a framework for measuring organizational critical role in executing strategy. This helps
performance using a more balanced set in empowering the staff and taking decision
of performance measures. The system has making right into the hands of doers.
evolved over the years into a fully integrated • A
lignment - Row the boat in the same
strategic management system to ‘Translate direction
Strategy into Action’. In our experience, BSC
implementation helps organizations in: The “cause and effect” relationships between
strategic objectives clearly establish how
• E
xecution - Translate strategy into action each business unit is an “Internal Client” for
for frontline the other business unit, and the need for
Balanced Scorecard uses Strategy Map business units to collaborate to reach long-
to translate strategy into action. Strategy term goals. The key lies in the rigor applied
Map is a tool to convert strategy into a in developing strategic business objectives
visual representation of the cause-and- in a room with all participants creating an
effect relationships of most important environment of co-ownership and bringing
components of a strategy. As an example, alignment.
the following high-level map brings out • Focus - ZERO distraction
strategy of an Indian pharma company to
solidify its position in US Generic market. The exercise of teams themselves setting
As you can see that to “Achieve ROI in three-to-five-year goals for business units
US Dermatology Generics”, the company with intermediate monthly/quarterly targets
needs to be “Pharmacy Retailer’s First brings one hundred percent focus on
Choice”. The cause-and-effect relationship is achieving those targets – in other terms
clearly established that frontline can easily effective focused execution becomes the key.
understand. In addition, selecting only strategic initiatives,
to achieve the goals, with clearly defined
Strategy Maps are first created at the accountabilities and commensurate budgets
Strategic Business Unit (SBU) level and helps rationalize initiatives, optimize resource
then for each unit of the SBU e.g. Marketing, allocation and keep the organization focused
Operations, SCM, HR etc. A typical way on delivering.
to create maps is to carry out workshops
hunt-partners.com 11• M
easurement - Fail fast and change to win Financial vs Non-Financial, Internal vs
The cascading of strategic objectives External, Subjective vs Objective, Short term
and related Key Performance Indicators vs Long term, ensures a robust, objective
(KPIs) enables the creation of performance and balanced employee performance
dashboards focused around strategy management system.
implementation. Once the organization
starts using them for operational reviews,
the strategy implementation becomes
measurable. With clarity about direction
and measurements in place, teams will be
able to identify issues and failed strategies, To summarize, The Balanced
and correct the direction quickly towards Scorecard has been a proven
winning. overarching management system that
brings out strategy from boardrooms
• P reparation - Future proof organization
to the frontline with a premium on
A typical BSC has four “Perspectives”, and
execution, and helps organizations
one of them is “Learning & Growth” that
achieve long-term ambitious,
focuses on building desired intangible
popularly known as BHA (Big Hairy
capital i.e. organization capital, knowledge
Audacious),goals.
capital and human capital, to achieve long-
term goals and prepare the organization
for future. The linking of targets for each
strategic objective in the other three
Perspectives helps surface those internal
capabilities & capacities that an organization
needs to strengthen for long-term success.
• B
alanced - Keep the performance
management system balanced
Once the targets are established for each
business unit, it can then be broken down
and cascaded to employees to build related
KPIs for objectively measuring performances.
Balancing KPIs between Lead vs Lag,hunt-partners.com 13
A reboot to ‘Corporate Governance’
Suresh Raina | Omer Qureshi
Corporate governance continues to draw Key recommendations accepted by SEBI
mindshare as both SEBI & MOCA keep • R
eduction in the maximum number of
introducing new thoughts and regulations. listed entity directorships from 10 to 8 by
The complexity further increases as active April 01, 2019 and to 7 by April 1, 2020
and activist investors are increasing their
scrutiny, raising their voice to protect • E
xpanding the eligibility criteria for
shareholder interest, measuring Board independent directors
performance against objectives and risks. • E
nhanced role of the Audit Committee,
Nomination and Remuneration Committee
In 2017, Kotak Committee gave some and Risk Management Committee
meaningful suggestions on how to improve
corporate governance, but it is yet to be seen • E
nhanced disclosure of related party
how these get implemented. transactions (RPTs) and related parties to
14 hunt-partners.combe permitted to vote against recommendations may appear breaches.
RPTs ahead of their time and • Human Capital: Institutional
• A
t least one woman require time to implement, investors are increasing
independent director in the India must accept that the their focus on human
top 500 listed entities by challenges of rapid growth capital, including effective
market capitalization by and globalisation require succession planning at the
April 1, 2019 and in the top Indian family businesses to act C-suite level and beyond.
1000 listed entities, by April decisively and responsibly.
1, 2020 Conclusion
Overview of Global Trends
In order to comply with Corporate governance is
• B
etter Investor Stewardship: attracting an unprecedented
these recommendations, An enhanced interest in
many companies may have level of attention – from
investor stewardship by governments, investors,
to completely overhaul their governments and investors
board and it will be interesting board directors, and even
is impacting corporate the public. With access to
to watch how companies will governance globally.
take up the compliance over capital becoming increasingly
the coming months. • B
oard Quality & liberal, investors are more
Composition: Gender likely to “migrate” as
Recommendations Made diversity, director skills and companies struggle to keep
By Kotak Committee And experiences, composition up with global governance
Its Impact refreshment, and allocation expectations. This positions
The Kotak Committee report of time by Directors shareholders as key
calls for key transformations dedicated to Board work influencers of governance
as listed: are becoming key indicators improvement. Anxious to
of board quality. attract capital, companies
1. An Impetus for Change are responding by working
• Compensation: Executive
Corporate India must adopt pay continues to remain in proactively to improve
the “Custodian” model the spotlight as investors governance, even in countries
which works on “Gandhian are looking for additional where regulatory standards
principles” wherein the engagement and/or may not be as strong.
promoters, boards, and disclosure around total
management wear the hat compensation and its link
of “trustees” and act in the Boards are responding slowly,
to long-term strategic goals director skills, background
interest of all stakeholders. and business performance and mix are also changing,
2. Separation of Roles • A
ctivist Investing: but progress is slow.
The Report recommends Navigation of activist Board turnover remains
segregating the role of a campaigns is becoming a low and doesn’t support
Managing Director (“MD”) and key requirement for boards a transformation, hence
Chairperson of a Company. and willingness to have a progress on several agendas is
3. True Independence meaningful dialogue with going extremely slow.
activists.
The Report calls for a stronger
role for independent directors. • E
nvironmental, Social, Governments and regulators,
& Governance Risk: meanwhile, are trying to walk
4. The Succession Dilemma
Climate change risk, on the thin line between
The Report has recommended social responsibility and striking the right regulatory
that each Board should sustainability have emerged balance, not becoming
specifically hold a meeting as areas of focus. excessively tough and at the
on an annual basis to discuss
• C
yber-security: Cyber risk same time creating a business
issues related to succession
continues to be a growing environment that is investor
planning.
concern for global investors friendly and encourages
Whilst some of these in light of multiple security companies to invest.
hunt-partners.com 15Industry Insights Banking: Subsidiarization in India Arjun Erry A subsidiary bank is a type of foreign entity that is located and incorporated in a foreign country but majority owned by a parent corporation in a different nation. For example, London-based Merrill Lynch International is the largest operating subsidiary of the Bank of America Merrill Lynch, outside of the USA. The subsidiary banking model helps the parent company avoid unfavorable regulations enforced by the host country. Also, subsidiary banks don’t need to adhere to regulations that apply in the home country or nations where the parent company is incorporated. Instead, they operate under the laws and regulations of the host country. 16 hunt-partners.com
Are subsidiary and foreign branches the R.B.I. Approvals
same? At present, The Reserve Bank of India (R.B.I.),
Subsidiary banks and foreign branch banks allows foreign banks to set up business in
differ in the various services they can offer India through a single mode of presence,
customers. For instance, foreign branch banks i.e. either branch mode or a wholly owned
are bound by regulations that apply to the subsidiary (WOS) mode1. As on date, two
parent company and country where the bank foreign banks, viz. DBS Bank (Singapore)
operates. Furthermore, branch banks can and State Bank of Mauritius (Mauritius) have
originate larger loans than a subsidiary bank, applied for WOS licenses; both have been
as assets held by the parent company influence granted in-principle approval by R.B.I.
loan sizes. In India, hitherto, foreign banks have
presence only through local branches. We anticipate significant governance
and talent perspectives for foreign banks
Financial crisis of 2008: Lessons learnt operating as WOS’s in India.
The global financial crisis of 2008 has Regulatory Requirements:
shown that the growing complexity and
interconnectedness of financial institutions, • N
o less than 2/3 of the directors will be
coupled with the lack of effective cross- non-executive;
border resolution regimes can compromise • A
t least 1/3 of the directors need to be
the ability of home and host authorities independent;
to cope with the failure of ‘too big to fail’ • 1 /2 the directors should be Indian
(TBTF) and ‘too connected to fail’ (TCTF) Nationals /NRI’s, of which 1/3 should be
institutions. resident in India
The lessons learnt during the crisis lean in favor These regulations will give rise to opportunities
of domestic incorporation of foreign bank. for well-qualified resident Indians with an
impeccable track-record to be appointed to
Advantages of local incorporation1 : the Board of Directors. In addition, the WOS
i. Creating separate legal entities, having Banks will need to invest resources and time
their own capital base and local board of in the induction of newly-appointed directors,
directors; training of senior management in board
matters, and formally structuring the board /
ii. Ensuring there is a clear delineation board committees, and formulating the terms
between the assets and liabilities of the of reference for the board.
domestic bank and those of its foreign
parent; Talent Management Initiatives
iii. Imparting clarity and certainty with The board and senior management will
respect to applicability of the laws of the need to formulate policies to ensure
country of incorporation on the locally the capabilities and effectiveness of
incorporated subsidiary; the senior management is continuously
enhanced. Further, appropriate training and
iv. Requiring the Board of Directors to act in development interventions will be needed.
the best interest of the bank, to prevent (It is expected that critical roles, including
the bank from carrying on business in a that of the C.E.O. will need to be necessarily
manner likely to create a risk of serious loss filled by Indian nationals.) The board will also
to the bank’s creditors/depositors; need to devise and implement appropriate
succession planning policies to ensure there
v. Providing an effective control to the local is sufficient depth of talent within the bank in
regulators. critical functions.
https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2758
1
hunt-partners.com 17Housing Finance: Metamorphosizing
Arjun Erry | Tehsin Danawala
The advancement of the Indian Housing that will push the growth of housing and of
Finance sector is largely a saga of three Housing Finance companies in India.
institutions: HDFC, ICICI, and State Bank
of India. All three either introduced or A Golden Era
aggressively pushed concepts that turned With the fundamental building blocks in
the market upside down. Examples of this place and the road paved ahead for stronger
are: Floating rates introduced by HDFC and growth, HFCs focused on segments such
ICICI and fixed cum floating rates introduced as affordable and LMI to name a few; along
by SBI. This segment has seen a 360-degree with a strong heritage and a differentiated
change from almost four decades ago. Home business model, are well placed to tap into
Loans were never a brilliant option for home this potentially significant market to create a
buyers, while today it has emerged as a legacy of transformational change in India’s
robust borrowing and lending market. Housing sector.
Housing Finance in India It would be interesting to note that Housing
Despite it being a robust market, Housing Finance companies are attracting high
Finance is still at a very nascent stage. Private Equity interest. Important factors
Mortgage to GDP ratio is only 2%, whereas in for the same are the low delinquencies.
advanced countries it is up to 51%, so there Secondly, mortgage finance has been
is ample scope for growth in this sector. The growing at 25%-30% annually. Lastly,
Centre’s announcement of ‘housing for all’ and the number of players in the market has
the anticipated housing shortage of 25 million increased. There are 80 active HFCs and the
by 2021 are some of the key contributors NHB has received requests of licenses from
another 80 applicants.
In the recent past, Bessemer Venture
Partners, Tata Capital Growth Fund, and
True North invested in Home First Finance
Company. Carlyle made a 22x return on
PNB Housing investment. Kedaara Capital
and Partners Group have acquired
the Housing Finance business of Au
Financier. Multiples Alternate Assets
Management is setting up a green-
field Housing Finance platform.
The Game Changer
Evolving industry, increasing
number of players due to limited
entry barriers and limited customer
pool will add to the already existing
fierce competition. Thus, having an
innovative business model, leveraging
technology and analytics can become a
game changer. In order to stay differentiated
there will be a constant need to innovate
both the business model and the quality of
talent.
Talent on Demand
We expect a huge demand for talent with
18 hunt-partners.comexperience across technologies like analytics, highly sought-after.
artificial intelligence, and robotics in order
to drive better and cost-efficient market Retaining existing employees in a highly
penetration. Moreover, we have already competitive market will become equally
started seeing an increasing demand for important. To retain top talent, organizations
professionals with high quality operations, will need to devise a robust appraisal policy
technology, and risk and analytics to reward deserving employees through
experience. A professional’s capability to salary increments, employee stock options,
double-up and wear multiple ‘hats’ is also wealth creation mechanisms etc.
From Designation To Designation Date of the
Name of the person (Company) (Was) (Company) (As) move
TATA Housing
Anil Kaul ICICI Bank SGM CEO Jul-18
Finance
Head of home
Sona Singh Clix Housing loan and loan
CEO Tata Capital Jun-18
Gaharwar Finance against property
division
Company Company
Innovators
Radhika V India Home Secretary & Secretary &
Facade Systems Mar-18
Tibrewala Loans Compliance Compliance
Ltd
Officer Officer
ICICI Home Indie home
Rohit Salhotra CEO CEO Feb-18
Finance Loans
PNB Housing
Kapish Jain Xander Finance CFO CFO Feb-18
Finance
Aryarath
Sandeep Essel Finance
Director Housing MD & CEO Jan-18
Wirkhare Home Loans
Finance
PNB Housing
Jayesh Jain CFO Hero FinCorp CFO Jan-18
Finance
hunt-partners.com 1920 hunt-partners.com
Private Equity: Like A Phoenix, Rising From
The Ashes
Sunit Mehra | Tehsin Danawala
The Indian PE Industry has especially after Moody’s funds. Their confidence is
gone through a unique journey upgraded sovereign rating obviously driven by the over-
of resurgence from its nadir in outlook for India. Canadian all buoyancy in the global
2009 (total investment USD houses such as CPPIB, CDPQ and domestic markets. This
3.9Bn) to a record high of and Brookfield alone invested combined with the fact
USD 24Bn in 2017; truly like a over USD 4 Bn last year. that there is substantial dry
phoenix, rising from the ashes. Fund sizes have increased for powder with existing GP’s, will
most PE firms and they are ensure a robust hiring season
Factors Propelling PE looking at larger deals. Large for entry level professionals
Investment Growth ticket investments are leading into the industry, after a
Several factors led to this to billion dollar plus MBO’s long hiatus. Hunt Partners
upward journey over the (General Atlantic investing expects several opportunities
last decade, starting with in Capital Foods), setting emerging at the Director and
gradual changes like the the stage for more such Partner/MD level as well.
improved growth rate of the transactions in the future.
US and European economies, Key trends underscoring
currency appreciation of INR 2018 seems to be poised the Indian PE arena in 2017
vs. the US Dollar, Government for topping the previous • Increase in deal sizes and
stimulus to address non- year figures as more than fund sizes,
performing assets (NPAs) and 20 India-based funds such
as Gaja Capital, TVS Capital, • Availability of capital,
successful implementation
of GST. In addition, relaxing Multiples, Light Speed, CX • T
echnology being a driver
FDI norms and permitting Partners to name a few, of investment themes,
scheduled banks to invest up have in principle secured • P
ositive IPO market,
to 10 per cent of the paid-up and closed cumulative fund creating exit opportunities
capital in Category - II AIFs raising of approximately USD for older investments.
and relaxing transfer pricing 3Bn. Additionally, numerous
norms to avoid multiple GP’s are on the road to raise Conclusion
taxation for offshore funds set approximately USD 15 Bn. GP’s 2018 is looking more positive
up as multi-tier investment such as ChrysCapital, Kedaara, and optimistic than ever
structures have had a positive Multiples and TrueNorth before, with an upgraded
impact. amongst others, are looking Moody’s rating, an impending
to raise funds of USD 750Mn – election, markets on a high,
Large PE Deals 1Bn each improved ease of business
India-focused fundraising The People Movement index, and significant dry
totalled USD 6.4 Bn in 2017. powder among PE funds. On
Big-ticket asset owners such Amidst this resurgence, 2017 this note, we hope PE activity
as pension and sovereign also saw the largest number in 2018 will surpass 2017 levels
funds started showing interest, of senior professionals exiting and play a key role in shaping
to ostensibly start their own the Indian economy, as always.
hunt-partners.com 21Entrepreneurial Movements
From Designation To
Name of the person Date of the move
(Company) (Was) (Company)
Managing
Director & Head Own Business
Atul Phull Everstone Jun–18
of Business Venture
Development
Carlyle Group
Devinjit Singh Managing Director Own PE Fund Jun–18
India
Managing Director
Fairfax Financial Own Investment
Harsha Raghavan & Chief Executive May–18
Holdings Company
Officer
Launched an
V T Bharadwaj Sequoia Capital Managing Director Apr–18
Independent fund
Partner - Chief New Business
Bisher Barazi Abraaj Capital Mar–18
Operating Officer Opportunity
WestBridge Personal
Surendra Jain Managing Director Mar–18
Capital Partners Investments
Warburg Pincus Own Technology
Nitin Nayar Managing Director Jan–18
India Fund
PE People Movement
From Designation To Designation Date of the
Name of the person (Company) (Was) (Company) (As) move
Managing
Sumit Fairfax Financial Fairfax Financial
Vice President Director & Chief May-18
Maheshwari Holdings Holdings
Executive Officer
Providence
Zodius Capital Managing
Varun Laul Equity Partners Director May-18
Advisors Director
LLC
Managing Founder &
Warburg Pincus New Mark
Niten Malhan Director & Co- Managing Apr-18
India Advisors LLP
head India Partner
Prashant Kumar ChrysCapital Director KKR & Co Director Jan-18
Multiples Multiples
Managing
Sumit Sinha Alternate Asset Principal Alternate Asset Jul-16
Director
Management Management
22 hunt-partners.comCollaborate, Consolidate and Control
– Real Estate
Sunit Mehra | Nikita Garg
Collaboration It has also been seen from general PE
Over the past few years, Private Equity (PE) transactions, that growth-minority-equity
funds have joined hands to invest in real can be tedious to exit in India. With buyouts
estate projects to hedge risk in a sluggish one has control, the ability to monetize and
market and undertake big-ticket transactions create value and most importantly the lever
with longer return horizon. to manage such companies – Leadership.
A case in point A case in point
Blackstone is the largest office owner, Brookfield for example, has more than
operator and manager in India today. The 1,000 employees across its various portfolio
premise of their real estate platform here is companies in India today. The management
collaboration (with consolidation of prime teams are all professionals with prior
Grade A assets in the portfolio) – with experience of working with promoter-driven
Embassy in Bengaluru and Panchshil in Pune companies. These set of professionals have
& Mumbai. been with the promoters from the times
the latter used to be both shareholders and
Together, they have built strong teams that management. Brookfield has managed to
can execute the strategy and create value for staff up teams, deliver results and run the
all shareholders. businesses well. Bring them in, compensate
• How to market it better? them well, enable them with further high
quality resources and leave the performance
• How to deliver it better? of that business for them to run – a rare
• H
ow to improve tenant relationships and opportunity that they may not have held
bring in efficiencies? earlier.
On the Retail side, we see Blackstone One of the largest domestic Private Equity
acquiring assets and controlling its firms, Everstone Capital has now repeated
operations. the collaborate-consolidate-control theme
Controlled transactions twice – IndoSpace (Real Estate platform with
Realterm Global) and Eversource (Cleantech
The Real Estate team at Hunt Partners platform with Lightsource Energy).
also observes a slight uptick in buyouts or
controlled transactions in the sector and Leadership
while it is a small percentage of the overall Platforms looking to hire CEO’s keep the
transactions, we believe the core reason is following in mind while hiring them:
the willingness of GP’s and LP’s to undertake
such deals now more so than before. It is, • Domain expertise
however, situational and can lead to one of • Strong promoter connects
the following: • Operational leader
• L
everaged at the holding company • Hands on
level; with possibility of sale at the asset,
portfolio or entity level • Entrepreneurial
• D
ecision to exit a global business and Asset Management – an evolving skill
carve an Indian business unit set
• Succession issues An important skill in high demand today
hunt-partners.com 23for Private Equity Real Estate platforms is, Conclusion
Asset Management. Hunt Partners has had Global Buyout Funds such as KKR, TPG
the unique opportunity of working on this and Blackstone, are aggressively looking to
requirement for a large retail real estate ramp up their portfolios in real estate. One
platform. The critical ask for this role is also saw some consolidation in the Indian
ROI maximization while driving operational Real Estate Technology sector. The sector
efficiencies. Some of the key expectations has already witnessed 6 acquisitions this
from this person are: year including the $100-million buyout of
• R
esponsible for periodically reviewing Commonfloor by classifieds portal Quikr.
and assessing the rent yielding retail malls The other significant deals were PropTiger’s
(EBITDA, ROI, IRR & NOI) to ensure their acquisition of Proprates and 3DPhy,
adherence and growth of the Budgeted MagicSpace by the Indiannetwork.in and
Strategic and Annual Business Plans Lifepad by Fellahomes.
• P
lanning the long-term capex needs,
monitoring its deployment, evaluating,
advising on acquisition and restructuring
opportunities along with providing
strategic support to the top management
Hunt Partners believes that this space
on market research, financial feasibility,
is going to maintain heightened
revenue planning and cost optimization of
activity through 2020 and newer
the group’s new projects and investments
asset classes such as student housing,
• C
lose coordination with various functions serviced apartments, senior living
such as legal, tax and finance internally and co-working spaces will see a
and all clients externally. lot of interest from local and foreign
investors alike.Infrastructure - Ameliorating India the “T-E-C”
way
Suresh Raina | Kajal Singh
In last year’s budget speech, the Indian things are now stabilized. Companies are
Finance Minister coined the acronym ‘TEC calling the shots, with better availability
India’ - “Transform, Energise and Clean’ of quality talent, especially in Project
India. With this vision in the background, Management, Engineering & Business
there is renewed impetus on developing key Development. However, with rapidly
infrastructure. changing scale and size CXO layer needs to
be strengthened.
Energy Sector
The renewable energy sector continues to Power Transmission is the other sector
witness consolidation, rather than becoming witnessing a potential for buyers who are
quite active. Hinduja is picking up stake in looking for investments in this space with
Fonroche & Kiran Energy, IDFC’s acquisition support from global investors. Players like
of assets from Punj Lloyd and Jindal steel are IndiGrid and Adani Transmission are looking
a few key inflexion points in the renewable to grow and not just in India but even
energy sector with domestic firms being markets such as Latin America and MEA.
the prime movers. More recently Leap Being a highly regulated industry, senior
Green taking over Inox Renewables 200 talent adept at understanding and managing
MW portfolios and induction of China Light regulatory matters is in high demand,
Power as a strategic partner by Suzlon especially for emerging international
Energy, and merger of Orient Green Power territories.
and IL&FS Wind Energy are other examples. Smart City / Metro rail project
Macquarie has already consolidated more
than 300 MW on its platform Within Smart Cities, major share of projects
are taken by Environment, Transportation,
We also see some big-ticket transactions by Housing - Affordable and mass and
leading players including Renew & Greenko Technology Infrastructure. With all these
both of which are actively seeking assets to sectors speeding up, we see continued
add to their increasing portfolio. demand for Structural Engineering Experts,
• G
reenko set to buy Orange Renewables for Senior Urban Planners, Waste Water Experts,
$1 Bn Data Scientists etc.
• R
enew bought the Solar & Wind assets of Metro Rail, is an emerging sector and
Ostro Energy, the renewable platform for continues to require quality talent. Apart
Actis, deal value of around $1.63 billion from Project management, efficient
• S
B Energy, the India energy arm of operations are coming more into focus with
Softbank Group is becoming quite quite a few international players already
aggressive and has announced to invest managing some of the large Indian projects,
$60-100 billion in solar power generation. including Hyderabad, Mumbai etc. While
It also joined hands with Chinese company quality talent from Railways to some extent
GCL System Integration Technology for a fills the need, we will be requiring senior
solar power venture in India worth almost leaders for managing the Operations.
$ 1 Bn. At the same time, it has also tied up Roads/Ports
with IL&FS to jointly develop more than 20
gigawatts of solar power. Roads sector continues to draw interest from
international players. Italian road operator
The Talent Atlantia is in talks with IRB to acquire its
Though the industry had seen considerable operational road assets portfolio in a $2 Bn
hikes in compensation till a few years back, deal. Abu Dhabi Investment Authority is
buying a minority stake for about Rs 2,000
hunt-partners.com 25crores in Cube Highways & Infrastructure, NIIF, India’s first sovereign wealth fund, and
that owns and operates over 1,700 lane- DP World launched the platform to invest up
km of highways in India. Demand for to $3Bn in ports, terminals, transportation
senior leadership talent for Tolling, O&M and logistics in India. The Asian Infrastructure
and Regulatory is high with significantly Investment Bank also plans to invest
more investments expected into the sector. $200Mn in the fund. Adani Ports has bought
Peak Infrastructure is closing on the new Kattupalli Port from L&T and plans to convert
acquisitions. the same into a multi-commodity facility.
Leadership movements
From Designation To Designation Date of the
Name of the person (Company) (Was) (Company) (As) move
Adani
Anil Sardana TATA Power CEO, MD MD, Chief Executive May–18
Transmission
Adani Ports &
Amit Uplenchwar President HCC CEO (E&C) Feb–18
SEZ
Group President-
Paresh
Madison PR CEO Adani Group Corporate Feb–18
Chaudhry
communication
Vinod Adani Power Essel Infra
CFO CFO Feb–18
Bhandawat Limited projects Limited
President HR, CEO-
Kaustubh Future Group
Group CPO Essar Group ECSLLP, CEO- Jan–18
Sonalkar India
Essar Foundation
Business Business
L&T –
Jayant Kohale Leader, RPG Head, Smart Oct–17
Construction
Smart Cities Infrastructure
26 hunt-partners.comInfra People Movement
From Designation To Designation Date of the
Name of the person (Company) (Was) (Company) (As) move
Business
Ostro Energy PuREnergy
Rohit Vadera Development CEO May–18
Private Ltd Private Ltd
Manager
Suresh Bagrodia Telenor India CFO GMR Group Group CFO May–18
Greenko Brookfield
MD India
Vinay Kumar P Energies Pvt COO Asset Apr–18
Renewables
Ltd Management
Chief
Manoj Shapoorji Sterling &
Senior VP- IT Information Apr–18
Deorukhkar Pallonji Group Wilson Limited
Officer
Ayana
Renewable
Shivanand L&T Metro Rail
MD & CEO Power( CDC MD & CEO Jan–18
Nimbargi Hyderabad Ltd
group plc
initiative)
Head-
Procurements, Chief
Pramod Mahindra Mahindra
Contracts & Commercial Jan–18
Kalyanshetti Susten Susten
Supply Chain Officer
Management
Group
ACME Senior VP-
President-
Harish Kapoor Cleantech Essar Group Corporate Jan–18
Corporate
Solution Pvt Ltd Affairs
Affairs
Head of
Chief
GE Renewable Product
Suman Nag Suzlon Group Commercial Jan–18
Energy Management-
Officer
Asia
LM Wind
GE John
Power India,
F Welch
Nagesh Bailur CFO (GE Renewable CFO Dec–17
Technology
energy
Center
business)
Hindustan
Sushil Bhagat CFO Azure Power CFO Oct–17
Power Projects
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