Category Archives: Business

Is Education Over-rated?

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“Our performance efficiency is 99.9999% – six sigma ranking. We have 5,000 members working in coordination.  Out of 400,000 transactions every day, the error factor is 1 in every 20,000,000” said the President of a service organisation.

This is the organization which collects lunch boxes (dabbas) in the morning from the homes spread over 60 by 30 km city called Mumbai. These lunch packs are then delivered to their owners working in various nooks and corners of Mumbai. Post lunch, they collect the empty boxes and get them back to the respective houses by the same evening

.Bombay DabbawalaBombay Dabbawalas

This organisation is not a giant corporate like IBM, Wal-mart or Coca cola.  Almost all its members are illiterate and school drop-outs. It has functioned for over 125 years and gets only more efficient by the day.

The process is extremely complicated and needs perfect coordination. They don’t use technology nor do they use fuel-driven vehicles.  They work on foot or use cycles and suburban trains to transfer the boxes over 65-70kms every day, making it a 100% eco-friendly system.  It is a perfect example of the most complicated job done in the simplest way.

To provide better coordination and thus efficiency, the delivery people are divided in different groups. In the process, the dabbas change hands 6 times. But they have a system to ensure there is no mix-up in the process. Their lack of education has not held them back in following the best lessons taught in the world’s top ranked management schools like Harvard, Oxford and so on.  On the contrary, this set-up is taken up as a case study by the said schools.

They believe in fixed prices.  No favours or bias in price.

There’s no gossip at work.  Even when Prince Charles wanted to talk to the members, they refused to have a discussion with him while they were on duty.  Their working impressed him so much, that Prince Charles  invited two of them to his marriage in 2005 at par with Queen of Gwalior.

Each member carries aprx 40 dabbas (boxes), weighing 60 to 65kgs on their head most of the day.   For each building, one delivery person is assigned the responsibility of collecting the boxes.   These boxes are then assembled at the local suburban train station, and are reallocated to groups based on the destination train station.

At the destination stations, the boxes again are regrouped to specific building (And floor of building in some cases).  Freshly cooked meals are thus delivered from home to the customer within 3 hours commute over foot, cycles and train.

As one can imagine they had to develop a system to identify which box needs to be go where. They introduced the most practical coding system which is marked on each box.  It identifies who would collect each box from which building in which suburb.  The code also includes who would deliver information – right down to the floor of a particular building.   This coding system can be understood by the most uneducated person and at the same time leaves an almost zero margin for error!

They have also created a cost free advertisement system for themselves.  Every member has to wear the white cap which by itself has become a logo.  This identification has proven to be a boon as they are blocked by no authority/security. Everyone respects their need for punctuality to ensure the boxes reach the office employees well in time for lunch.

All members have to strictly follow the rules and any deviation attracts a penalty.   For example, if a delivery person is found on duty without a cap or any customer makes a complaint against them they are penalized the same day.   Penalty has to be paid the same day to be able to continue with the delivery, the next day.

They do not have any employer-employee relationship.  Each member is a shareholder and hence a stake holder in the operation.  They have had no labour strike during 125 years of the association’s existence.  The punctuality, complaint record and output all count towards their share of pooled funds and reward. They are all part of an association which collects a small fee every month, which in turn is fully donated for a social cause.

Minimum overheads and optimum output is the lesson I learn from these hard-working dabbawalas.

This example proves that literacy and technology is not essential to achieve perfection.  It is whole-hearted devotion and the right attitude which matters most.

Written : Badri Baldawa

Edited  : Meeta Kabra

Trust or Written Agreements ?

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There were many suppliers of stainless steel glasses from India. In my first deal, since I had taken the samples from Mr. Vishnu Goyal, it was ethical on my part, to buy the products from him.

After executing  my first order of $84,000, I felt that I had scope to expand in this business of stainless steel housewares and was worth a try in this range of product whole-heartedly.   If I made sure of maintaining quality and price, it wouldn’t be difficult to take a lead in the Middle East in this trade.

In my initial deals, I found Vishnuji very trust worthy, honest and sweetly cooperative. When I brought up the idea of making stainless steel housewares products as a regular export range, he consented to be associated with me.

Normally the next step would be to sign a partnership agreement defining the business relationship between us.  But I wanted to try non-conventional method.   In many cases, misunderstandings come up because of interpretation of what was written in documents. These disputes start, extends to legal battles and aggravate to a level where the business cripples down to closure.  But if nothing is written, both the parties had to be reasonable and not greedy. Knowing that nothing has been written down, they figure out a practical solution together.

Yes, doing business without written agreements is dangerous.  The written agreements could be restricted to where there is slightest doubt on trust or if the Law  needs it.

This was one of the experiments I wanted to try in my business. We trusted each other and hence suggested Vishnuji that we would have an understanding and avoid a written agreement.  Both of us agreed willingly. We mutually understood our roles, financial arrangements and the nature of decisions each of us would take independently and those which needed joint decisions.

We were ambitious but not greedy.  Both of us believed “if I am destined to get something, it is bound to come? If it is not destined for me, how will I get at all?”.  It is now over 25 years since that arrangement. There isn’t a single word in writing till today. We have executed many multi crore value orders over the years. Touch wood, there have been no disputes. Of course, there have been differences of opinions very few and far between, for the good health of the organisation. When such differences come up, we have a lot of respect for each other’s opinion.

When friends in business ask me  what is your relation with Vishnuji in business,  I start thinking and I don’t get an answer even to myself.

We were able to maintain peaceful atmosphere between us. If Trust works, Peace prevails. And Peace brings better Prosperity.

Written Agreements can go wrong, but Trust always Cherish!

Experienced and Written: Badri Baldawa

Edited By : Meeta Kabra

Difficult Challenges? Grab Them!

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“Release these payments for the purchases from Australia,” said my boss, Mr. AA (renamed to hide identity) one of the three directors, who was respected in social and business circles in the Middle East.  It was a transaction of a few hundred thousand US Dollars.

I did not release the payment.  It wasn’t that the funds weren’t available. We were purchasing a quantity way out of proportion to actual requirement. I was not convinced, especially since these were food products that bore expiry dates.

I was the purchases and finance manager. We had set-up a system for placing orders.  Normally, the quantities for a re-order were based on a review of movement of product for the last four months, stock in hand, orders in transit and the seasonal demand.  That’s how a healthy inventory was maintained without a strain on cash flow.

Each of the other directors had their own individual group of companies, other than this company. I had to be loyal to the interest of the company and not to individuals. I insisted on approval of all the directors.

The above order was large and hadn’t gone through the laid down procedure. Most importantly, it was abnormally excessive.  The goods had arrived at the port and the payments had to be made immediately. Fortunately, the order was not in our company’s name.  The other directors considered all aspects and did not approve this purchase.

Mr. AA was upset and had to make alternate emergency arrangements.  On his return to the office, I was called in. I carried my resignation letter with me!  I was expecting to be relieved of my job.

He said, “Will you join me as Chief Purchase Manager and Financial Controller of my Group of companies”.  I realised discipline pays!  I said I needed a week’s time to think it over.  This was in 1981.

Within the week, I got all possible information about Mr. AA’s group.  The information I collected revealed that every day when they closed stores for the day, it wasn’t sure whether they would open the shutters of the business next day morning. Even the staff salary was in arrears for a few months. The financial position was absolutely critical.

After a week, I went to him:

Me: AA, I accept your proposal, if other partners have no objection to it.

AA: I will convince the other partners. Have you given this a good thought?

Me: Yes, I have.

AA: What would be your terms and salary expectations?

Me: It is not relevant.  If I perform, remuneration will follow by itself.

AA: Do you know the financial status of my group?

Me: Yes.  I Know.  Business may close down any day.

AA: You are in such a healthy company. Here, in my group, you are not sure if you’ll get a salary.

Me: Yes.  I considered that.  We have to create a position where everyone gets paid.

AA: I am surprised.  Why?  What makes you join my group?.

Me: Challenge!  It is the challenge which is tempting me to accept this responsibility.  The present company is healthy and wealthy and has systems which will not allow it to collapse.  This can be managed by anyone. But to revive a group like yours would be a real challenge to my abilities.

AA: You are risking your career.

Me: Yes, but I am confident of reviving the company.

I joined the group.  I had the support of a very capable CEO and jointly we resolved the problems.  After a year or so of revival, there were a few from known business circle to seek advise to revive their sick businesses!    I was with them for 5 years till the day I decided to return to India, to start my own business! I thank AA for giving me an opportunity to resolve very complicated problems and learn many lessons which otherwise, I would have missed!  It was a rewarding experience.

If you see a difficult challenge, grab it. It gives opportunities to learn.

Experienced and Written By: Badri Baldawa

Edited By : Meeta Kabra

 

Best Marketing Guru

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“Look, shops open at 9 in the morning and it’s fine if we leave for airport at 10 to catch the scheduled flight tomorrow.  We have that one hour.  Let us try to meet some buyers”. I had a quick talk with my agent in Riyadh late in the night.

I was on one of my business visits to Saudi Arabia in 1988.  As usual my trip was very hectic trying to book orders for my normal product range. I was to return to India the next day morning.  At night while I packed, I realised I had samples of a new product, stainless steel glasses, which I had forgotten to explore till then on that trip.

The agent said, “Normally 9am is the time when the shop owners (importers) discuss the previous day’s progress with their salesmen and make their marketing plans for the day. It is too early in the morning for them to discuss purchases.  We could pursue that business on your next trip.”

I said, ” never mind, if we are able to meet one or two buyers, we will get an idea about that line of business.  No harm. Atleast we will get prepared better for the next trip”.   He agreed “Ok, let us take a chance”

We left in time to catch as many importers as possible.  The first one was not prepared to discuss purchases at that time, as expected.

We went to the second Saudi buyer.  He was busy cleaning and setting his table right, and on our offering the stainless steel glasses, he very casually asked,

He: What price?

Me: 72gms a piece, 7.5 cm dia, 2dz to inner and 12 inners/ctn, non-magnetic stainless steel, 90 days L/C though we may ship in 60 days, $3.75 a dozen

He was still busy cleaning his table, duster in his hand.  He said casually, not even looking at us, “$3.50”

Me: No, 3.50 is slightly below my cost.  Can’t go below $3.75.

He said firmly: $ 3.50…. pause..….. I could have started with $3.00 and you would have given at $3.50.   But I don’t waste time.  You are the first one I am seeing this morning, hence don’t want to disappoint you nor get disappointed.  If no $3.50, then no interest”

Me: Quantity?

He: One container.

I was expecting the first order to be around 5,000 dz.  One container equaled 24,000 doz.  For this quantity, I would save some freight and other expenses and my cost would be around $3.50.

Me: Fine. Accepted. We want to start business with you so that you can test our quality of product and services!

He: Proforma banao. Usme Bank details mauzood.  Bank L/C details bukra mazboothan. (Make the proforma with your bank details, I’ll arrange and advise you the Letter of Credit details by tomorrow).

I prepared a proforma invoice for US$.84,000.  He signed and said in Urdu-Arabic to mean, “Without knowing you, I have placed an order because somehow I felt you are genuine.  But make sure you surely dispatch and ship right quality.  Don’t let down my judgment”

We concluded the deal and I left for the airport.

By the time I reached Mumbai, the cost of raw material had reduced by about 2%.  By the time I exported the goods, the exchange rate went 6% in my favour.  By the time I completed the order, I had made a decent saving of about 10%.  The value per container was high and the profit margin for this product ultimately turned out to be quite satisfactory.  I was tempted to expand my product range to stainless steel housewares!

After executing the order, when I met the same customer on my next visit, I was curious to know what made him place the order with me without knowing of me.  His reasons were interesting.

He said something to the effect that, “We have 3 major problems when we place orders with exporters from India.

One, they normally give a price and sometimes show a sample.  Intentionally, they do not give full details of the products unless we specifically ask for each of the details.  They try to keep an escape route ready for them.  In case, later, if the cost goes up, they compromise on the details missed out, and give an inferior, smaller or cheaper product.

Two, when we tie them down in the L/C with all specifications, in many cases they opt not to ship at all when the cost goes up.

Three, when the price increases, they divert the order to our competitors at a higher price. They might supply to us later when they have excess stocks.   Sometimes they even fail to supply which is a double loss to us as we lose our customers to the competitor to whom they supplied products meant for us.

But in your case, while quoting the price, on your own, you gave all the details of weight, size, packing, grade, delivery and price which I needed, without my asking for it.  This built my confidence that you are honest.  So, I took a chance and placed the order with you!”

I was completely got carried away by his reasons!  It enlightened me “If I could take care of these worries of the customers, it would make a difference to my business”.  I made these as guide lines.  Never did I compromise in quality.  Never did I fail to supply.  Never did I tried to take advantage of the situation.  It worked.   It gave satisfaction to both, me and my customers.  Within 2-3 years, we had around 60% of the Saudi Arabian market in stainless steel housewares!

I thank the customer, who was my best Marketing Guru

Experienced and Written By: Badri Baldawa

Edited By : Meeta Kabra

Every Activity Has Inbuilt Opportunity – Explore !

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“Badri, we need stainless steel utensils in bulk for Bellary’s Ganesh Temple. They are produced and marketed in Bombay. If I come to Bombay, can we get reliable quality at competitive prices?” This was a call I received in 1988 from my cousin, Bhagwandas who stayed in Bellary, my home town. I had moved out of Bellary twenty-three years before that.  We were all very active in maintaining our town temple and celebrating traditional functions at the temple.

The stainless steel dining and serving dishes were required on dinners organized during festivals.  The temple’s hall was also rented out for wedding and other functions. Having dinner sets ready for such occasions would attract more people to have their family celebrations at the temple, thereby increasing the funds available for the upkeep of the temple.

“It would be a pleasure.  Though I don’t know anyone in the stainless steel trade, I will get some contacts by the time you come next week,” I said.

At this time, I was settled in Mumbai and running a business in exports.  We were merchant exporters, mainly dealing with spices and imitation jewelry.  Dubai and Saudi Arabia were our main markets then.

I contacted a neighbour who I knew was in the steel business.  It turned out that he was dealing in steel products used in the construction industry and not in houseware.  But he introduced me to Mr. Vishnu Goyal (Goyalji), who was a manufacturer of stainless steel glasses and had his wholesale outlet at C P Tank in Mumbai.

I visited Goyalji with my cousin.  Since the products were for a temple, he volunteered to supply his products at cost and to arrange for other items from reliable sources at a competitive price.  In no time, he arranged for everything.  In fact, while I was discussing how to pack and dispatch the utensils to Bellary, he overheard the conversation and asked me to give him the address. He’d get them packed properly to avoid damage in transit and send them over.

We were relaxed and happy with the purchase.  It went out smoothly and was quick too! It was a time to celebrate!  We were offered biscuits and tea. As the trend prevails in the market, it was just half of a tiniest cup!  We had to ask for more!  Tea and biscuits go well with small talk and we had a casual chat.

He: Baldawaji, what do you do?

Me: I am a Chartered Accountant, but I don’t practice.  I am in export business.

He: Oh, Bahut Achhaa! Where do you export?

Me: Middle East – UAE and Saudi

He: Are Wah!  Even steel glasses are exported in large quantities.  Why not try?

Me: Goyalji, it is not in my range of products; but I will let you know if it interests me.

When we were about to leave, Goyalji gave me six glasses with specs and said, “These are the ones which were being exported there.  Please keep them with you in case you decide to carry these as samples on your next overseas visit.  Price is xx per kg.”  I accepted the glasses, hesitatingly, as he was giving them free of cost.

I had a suitcase in the office to collect samples of new exportable products as and when I got them.  I worked the pricing on a cost sheet and dropped those glasses in the suitcase.   Later this business developed to the extent that we had almost 60% of Saudi Arabian market.  An opportunity sent by Lord Ganesha, when explored, proved to be one of the Turning points in my career.

Lesson learnt:  Every activity has inbuilt opportunities.  Look for them and Explore!

Experienced and Written By: Badri Baldawa

Edited By : Meeta Kabra

Business With Strangers:

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“We are large importers in Sultanate of Oman and have an procurement office in Mumbai. We know you export spices to the Middle East. We have substantial orders on hand. If you pay a 10% commission to our Mumbai indenting office, we can place these orders with you.” A welcome call from a unknown prospective customer Harish Gupta on a Thursday morning!

Me: “It is too high a commission”
He: “You can cover the cost in your product rates and we will still get you the order.”
Me: “Who will guarantee payments?”
He: “This is for supplies to the Oman palace. You will be covered with a confirmed L/C (an export document that carries guarantee). If you are interested, please send us a Proforma Invoice for all the products you have, for the trial order.”

I was certainly interested. I sent the Proforma on Thursday evening and got a call from one Mr. Harish Gupta on Friday morning stating that it is their normal practice to visit the supplier’s office before placing the order. Mr. Gupta, visited us the same day. Since, he came in hurry, he said he forgot to get his visiting card.

Friday evening kept me happy as I received an order for US$ 85,000 from a new customer. Gupta called me on Friday evening to say: “Even though your prices are high, we will confirm the order to test your services. Before we establish L/C on Monday, Sethji, our boss, would like you to meet him.”

Saturday morning, I was at their office in a building opposite Jaslok Hospital, Peddar Road, Bombay. The front room was a large, dim and dark hall of almost 20 feet by 30 feet. It had a well-used sofa in one corner and a table and chair for the receptionist, at the other end. Nothing else. Dirty walls and confusing, uncleaned balconies. The moment I entered, the main entrance door was closed and quietly locked. I handed over my business card to the receptionist and asked for a card of the boss. I was told that the cards are with the boss himself. I was told that the name of their boss is Mr. Rajesh Agarwal. Until then, it was a secret.

After about 10 minutes, Mr. Gupta took me to Mr. Agarwal’s room which was a decent executive office. The room also had a relaxing chair for boss to stretch and relax. Mr. Gupta mentioned that Mr. Agarwal is delayed at the Mahalaxmi Race course and would be at the office in a few minutes. He also mentioned that the boss was crazy about horse-race betting. Anyway, delays have to be tolerated when one approaches customers!

While I was waiting, a dhoti cladded decent middle-aged gentleman came in to offer daily prayers with agarbattis (essence sticks) to the deity photo in the office. After his prayers, he introduced himself as Abhishek Pandit, sat next to me, and started gossiping. Within minutes he got pretty friendly and gave me a lot of information about the boss. Boss had a lot of investments in real estate and luxury farm houses and he shuttled between the properties in his own chopper. He was cash rich by hundreds of crores. Most of this he had accumulated from betting in horse races and Mr. Abhishek was the retainer for the boss and helped him win.

He said he was not referring to the horse races which are played in the racecourses but which could be played in any room. He took out 6 symbolic horses in the form of conches and 52 sea-shells. He kept the horses in one line and told me to select any one. He played a few games and challenged me that the way he played the game, the horse that he desired, won, not even 1% chance of failure. He went on to explain how he played this game. Mathematically, I was convinced, that there were no chance of going wrong.

Then came the secret of secrets from Abhishek Pandit, “In fact, boss doesn’t even know how this game is played. He makes a lot of money because of me and I just get a token monthly retainership fee. I don’t know why, I feel you can be trusted. I suggest you play against boss, the Sethji. Of course, I will play on Boss’ behalf, I’ll allow you to win and we can share the amount you win. Even if he loses a Crore, It wouldn’t bother the boss, it is insignificant for him. You contribute Rs.10 lakhs which I guarantee, you will not lose and we can earn about a Crore and share the loot.”

I teased myself. “Look at my good luck, I came to get an export contract and I am being lead to gain Crores effortlessly!”

The moment I entered the office, it all sounded fishy. I could have tried to return, but I smelt it might not be a safe move.   The door was closed and any attempt to get out may invite huge risk.  They might hold me back as hostage for ransom. If they were convinced that I knew it was a trap, they might want to get rid of me forever instead of allowing me to leave and complain to the intelligence authorities. Yet, I felt this could be my negative way of thinking and they could as well be genuine businessmen. But one thing was sure, I had to be careful.

I realised the safest thing for me was to stay calm and try to be deceptively genuine in my moves. I told Abhishek, “Look, we are strangers to each other. I cannot take full risk. Though I have no problem in putting in full stake, it is fair that if you share profits, you should also share investment. You bring in 5 and I’ll put in 5. I assure you I will never disclose this deal to the boss.” He hesitatingly agreed.

Abhishek explained, “I have never done this type of cheating with my boss earlier. To get his confidence, we should initially lose a couple of games with small stakes. Once he wins a couple of times, he will go for bigger stakes and then we can have our kill.”

Just then, the boss arrived, holding a mini suitcase like briefcase. My friend Abhishek whispered to me, “we will speak about this later” and walked out.   In fact he said he was waiting for Sethji and when the Sethji arrived, he walked out!

Mr. Gupta, the guy who visited our place came in and introduced me to the Boss. While making himself comfortable to sit, boss told me “I am not feeling well. I have that damn BP problem. I have already called the doctor and he should be reaching any moment. Give me 5 minutes till the doctor is done.”

The boss pressed the call bell and asked the guy “call Vermaji” (guess, their accountant). Just then, the doctor entered, Boss lied down on the relaxing chair and started checking his blood pressure. Just then the accountant came in. Boss says, “the bag has 12 ‘peti’ (12 lacs). Keep it in the safe.” Verma asks what he should do with the 30 ‘peti’ he has received from the other guy. Sethji told him to keep that amount also in the safe and that a payment of 1 ‘khoka’ (1 crore) had to be made on Monday towards some real estate he had purchased.

At this stage, Verma picked up the briefcase and put it on the table very close to me. He opened it in such a way that I could see the currency and then took it away.

I wondered, “Would I expose cash in the presence of strangers?” No. I got the answer for my doubts. A reel of observations flowed. No visiting card so far, deserted office, intentional showing of cash, sequence of entry and exits of people and above all, this bait of 100% win to a stranger by cheating one’s own Boss. I was now convinced, that it was a trap. Export business was just an excuse to get me in to that place.

If I try to walk out or protest, they would not allow me to go out and would most likely harm me. I had to be extremely careful in my moves. Now, surely, my primary aim had to be to get out of that place convincingly.

Since the Boss was not well, he had to leave. He ordered tea for me and requested that I have the tea. By then, Abhishek, the retainer for playing games, entered. He said, “We are lucky, inspite of his not keeping well, Boss has agreed to play the horse race game. Before boss changes his mind, we should play with him, preferably today itself.”

My strategy was to get out of the place convincingly. I replied, “why not, let us play today itself. Such opportunities are rare. I wish I had known this earlier, I could have brought cash with me.” He proposed that let us make a start with whatever money I had with me at that time. I said it is my nature that I don’t I carry money with me except where necessary.

He said, “I can send someone to your place to get the money for you while you can relax here.”

I told him that I don’t keep 5 lakhs at home. I would have to withdraw from the bank. In the meanwhile, I proposed to him to contribute on my behalf and deduct it from my share of the win.

He said in a filmy style “I am a man of principles. In betting partnerships, it does not work that way. Everyone has to put in his stake. It’s okay, if you don’t have 5 lakhs, we can start with 2 lakhs each.”

I said, “I don’t have even 2 lakhs at home. I have no problems getting even 5 lakhs, but I have to withdraw from the bank. Unfortunately, today is Saturday, the Banks are already closed. Why don’t you fix Monday morning for a game.”

He: “okay, 11 in the morning?”

Me: “No. No. Why not earlier, at 10? Banks in suburbs open at 8.30 and I can reach here by 10. I am quite excited. I don’t want to delay any more than necessary.”

He: “Fine. We will play a major game on Monday. But why not start today evening with one lakh?”

Me: “That is possible. I may not have one lakh ready, but I can accumulate from my wife and friends. It is a good idea to play today; else I may not be able to control my excitement during the weekend. I will revert by 5 in the evening and you get this confirmed with your boss.”

He spoke to the boss in my presence over phone and meeting at 5pm was fixed.

As I was leaving, I asked him to check with Guptaji, when I was to expect the L/C, so that I could start working on the order. He said, “Don’t worry, Guptaji already told me. We will get that formality done next week. For you, earning from that order is negligible compared to what we are planning together.”

On my way out of the premises, I was nervous about what might happen till I reach home. For the time being, it looked like I had a temporary lease of life. They looked really dangerous. Every well-built person passing by was looking like a spy following me!

I was pale when I reached home. I narrated the entire episode to my wife. She was worried too. Right at 5 pm, I got a call from Abhishek that they were waiting for me. I said, unfortunately, I could not accumulate 1 lakh. He asked if I had at least accumulated 50,000. I hadn’t. But I promised we could certainly meet on Monday with full 5 lakhs as my stake.

My biggest worry was that they had already marked my home. On Monday, I got the dreaded call. I said, “Look, I was feeling humiliated and that’s why I told you that I have adequate funds. In fact, I am starving for funds. I do not have any balance in the bank to withdraw cash. I was expecting the bank to sanction me a temporary loan on Monday. But they did not oblige.”

I answered their calls for next 5-6 days, each time giving them similar story – that the bank would probably approve the loan the next day. I even told them that, it would be easier for me to get a loan if I had the L/C for their order!

After a week, I told them that my loan application was rejected and hence have no funds. I did not go there. Right or wrong, I did not lodge an official complaint about them.

I have been waiting for almost 3 decades and the L/C for that order is yet to come!

I did mention this incident to people I knew, so that they wouldn’t fall prey to such calls. When I narrated this incident to one of my close friends at Napean Sea Road. He said “You are saved. Once they mark you and your place, be careful. One of my other friends had the same experience with similar guys, but at a different location, a month ago. They snatched his money. My friend complained to the relevant authorities. He was asked to lodge an official complaint the next day and was kidnapped the same night. I have not heard from him since.”

I decided, I would be more careful before I do business with strangers and extra careful, if I had to visit them.

Experienced and Written By: Badri Baldawa

Edited By : Meeta Kabra

Will Power Assures Success

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Lower Spondylitis, three cervical slips and dislocation of a toe-joint were the health related issues I faced in 2008. Alongside I had syncope and chronic high blood pressure.  In normal course, with these issues, one might vehemently oppose the idea of even going for a simple walk.

I, however, wanted to trek to Mt. Everest base camp.  Age 64 years.  My spine questioned its importance, “how can you ignore me and put me under such strain?” The toe protested “after all it is me who’ll ensure you to do the trek. If I am not well, how will you trek?”  To me they sounded like kids making excuses to escape from home work.

But I was very clear.  Come what may, I have to go. I wasn’t convinced that these were adequate reasons to not to go or to postpone the Everest Trek, even by a day.  I had to convince my so-called problems.  To my cervical spine, I said “I will not strain you. I won’t carry baggage on my shoulders; I’ll have a porter to carry the weight”.  To the lower spine, I extended a carrot stick, “Don’t you worry.  I have a nice, imported waist-belt to support you; you would love its company”.

For the toe I had, “I will take you to an orthopedic doctor, feed you with appropriate energy so that you won’t feel the pain, atleast for a few weeks.”

The Doctor advised me to postpone the trek by a fortnight to give some provisional treatment.  When I refused and asked for a better option, he came up with a solution. He’d inject a medicine and within a week the toe would be good for the next 8 weeks at least.

Looking at my firm attitude, my good-old companions from birth, neck, spine and toe were convinced and happily made my trek to Everest possible.

We are faced with similar problems in other fields too, in day-to-day life.  If we permit them to dominate, they restrict our success.  If we have the will power to dominate these problems, success is assured.

Written: Badri Baldawa

Edited: Meeta Kabra

Support, But Do Not Spoil

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Just like I was  looking for moral and financial support when I started my career, many youngsters need support from people who are established. I have been an active participant in trying to provide similar assistance and support, to the best of my means and limitations, for the last 20 years.  It is a pleasure to share a couple of experiences I learnt out of my experiences on matters of financial assistance.

Majority of the people who seek help come with genuine repayment plans and fulfill their commitments on time.  It is always a pleasure extending support to persons with such an attitude. If the loan is for commercial purposes, there is nothing wrong for the lender to have a fair return, as the objective of the loan was to earn money.

If the loan is for an essential nature, I consider providing assistance ‘free of interest’ as getting them out of the financial strain is an adequate satisfaction.  But the borrower should realise that the lender has given the help depriving himself of the earnings that he otherwise would earn on that amount.

However, I have experienced that this ‘interest free’ tag has a  negative effect.   In such cases, the borrower instead of being grateful for receiving concessions, unfortunately, feels that it was his ‘right’ to have received that assistance.  In certain cases it was taken for granted as a gift.  Besides the borrower conveniently takes the repayment of interest-free loan as a last priority, as it doesn’t cost him to delay the repayments.  In most of the cases, the borrower avoids talking to lender as he considers it is the duty of the lender to ask for money.  In some cases, because of the relationship in question, the lender does not talk about it, converting “good money” to “bad money”.

Who is responsible for this?  The borrower?  No. My experience says, it is the me the lender’s fault, for very many reasons.

  • First of all, the loan given was emotion-based and not merit based
  • Secondly,  I mis-judged the borrower, in his attitude
  • Thirdly, I reduced the value of money, by giving the loan interest free
  • Fourthly, if the loan was given for non-essential purposes, I helped the borrower in  investing the funds for non-productive purposes.

Thus I was the one who spoiled them.  I could have been wiser in taking the borrower in confidence by explaining that I value my relationship with him and wish to avoid misunderstandings in future citing Shakespeare, “neither a lender nor a borrower be.”

Had I said a firm “No” and avoided getting emotional, I could have saved them and their deterioration in quality of attitude.  Above all I could have retained my relations with them!

Written: Badri Baldawa

Edited: Meeta Kabra

Expanding Business? Take care !

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Expanding Business?  Take care

Expanding a medium size business needs to take care of certain tricky problems like expanding business vs infra-structure for increased activities and safety of capital already earned.    .

Any business is run to make money, of course, in a fair way.  Once a business starts earning money, the owner wants to make more money!  He realises soon that expansion or diversification of activities are the solutions. This invariably needs infrastructure which in turn needs further investment.

Expansion of activities also means a bigger uncertainty in revenues. Any unnecessary investments in infrastructure might eat up on the profits and liquidity, including that of the current business.  While, without taking business risks, it is close to impossible to expand business, an expansion without proper infrastructure is suicidal.  Therefore the owners have to adequately balance strategy between expansion of business and additional costs of larger infrastructure.

4-5 decades ago, our family business went through a similar balancing act or lack thereof.  The reasons stand good even today.  My dad owned iron ore and manganese mines.  He was as good at looking for and selecting remunerative mines as he was at obtaining Government permissions to operate those mines.  He started with a small mine of a few acres and expanded to 9 mining leases. From the records, I found out after his death that just two of them were as big as 1064 acres!  These could have been sources of unimaginable and unlimited revenues.

He was the lone manager of this enterprise.  Infrastructure for expansion was not planned.  We, all his sons, were still students.  Management was not adequate and therefore the controls on the resources were inadequate.  If controls are missing, the funds would go missing too!  The entire business turned out to be unremunerative whereas it should have earned multi-millions.  It was all due to inadequate infra-structure.

My son Anand, who earlier was in UK, took over operations of my business over a year ago. He wanted to expand and diversify the business.  His first thought was about infrastructure.  He spent almost a year in planning and building additional infrastructure for future activities and wisely limited it within affordable means.  We occasionally felt that the business could be managed without additional infrastructure, but learning from my dad’s experience, I was very happy to support him.

I have seen some not-very-large businesses that they were very successful when they were small, but failed miserably when they expanded.  On analysis, it was clear that the main reason for their failure was that only the value of fixed assets was taken as investments and funds for expansion were arranged accordingly. The need for working capital for day-to-day activities and transition costs were ignored.  This is extremely important and is a significant amount in most businesses.

A businessman I know, failed to notice another significant problem. “When one heads towards the top at top speed, he had to ensure that he doesn’t drop down”. At whatever height one is, it is a human tendency to assume that the peak is yet to come.  But one cannot judge when one is at his peak. Therefore, to be safe, at every stage of climbing, one should secure themselves from a fall.

How do we secure that?  Simple, set aside a good percentage of earnings for a rainy day, a saving for safety from failures.  Do not put entire capital at risk. For any reason, if expansion investment is lost, at least you are left with a base capital to survive for future.

These are some of the lessons learnt while analysing the reasons for failures of some of the prosperous businesses while undertaking expanded activities.

Take care!

Written: Badri Baldawa

Edited: Meeta Kabra