Story No. 6
A Takeover Drama

Our company, a venture capital wing, was hived off in the wisdom of the directors and with the approval of the shareholders. As a consequence, we moved out to a new commercial location and occupied two floors. The main business of our company was to disburse venture capital fund to existing companies looking for diversification or to green field projects.

A word of caution for lay investors. Many a company takes its shareholders for a ride. Normally, Shareholders are concerned about only on their return in terms of dividends and bonus shares. They do not get into the nitty-gritty of financial figures.  If they did, it would have never reached a situation of no return as our company once did.

Our company with an elephant like structure pulled on in heydays when financial market was in the pink of health. There were 4 Managers, 15 Project Officers who would help with evaluation of the prospective companies and 5 Personal Assistants with secretarial work would help 5 vice presidents/Sr. Vice Presidents, in addition to administrative staff.  The Sr. Vice presidents in turn reported to the Managing Director before the board of Directors met and finally decided on the investments.  At the beginning of 1990s, the financial market was steadily growing and the Capital market was zooming past all records. Our company was able to make substantial profit by off loading shares after the expiry of 3 years lock-in-period. The profit went up to 30% to 40% of the invested amount. The employees were given a pie in profit sharing. This continued till the Harshad Mehta bubble burst. As a consequence the share market crashed and many small finance companies were forced to close down their shops as return on investments went negative. This difficult time continued for more than 4 years.  Although our investments were in crores but actually the value of 10 rupee shares went down to 25 paise in some cases. These companies were mainly suggested by our Managing Director using his discretionary power where some of our investments were made.  You can very well imagine the financial state of our company!

One evening we were all told to assemble and the Managing Director came to address us. He gave a list of our failures. He also mentioned some names whom he thought were responsible for the company’s poor performance. The lecture left a bad test in the mouth for the next few days.  My name was also black listed. As a last resort, the management thought out of a plan to salvage the company’s health. They appointed a tough Director and he was given 3 months time to turn around the company, if possible. If not, the company goes on sale.

Those three months were the most harassing and humiliating one.  Everyone’s work was checked, every paper wasread, all activities monitored. In our office earlier there was no attendance system.  The first thing this director introduced was the daily attendance register. Everyone from the peon to the Director had to sign, no late coming, no leave sanctioned.  Those who would come late would be called to the Director’s chamber and he or she was asked to come to office from next day 15 minutes before the office time. If you argued then the punishment would be doubled and so on.  We were not even allowed to sit in a relaxed position as the management thought this relaxation brought in the ruin of the company.  Let me confide to you that it was the senior management of the company that failed to bring in business while they were enjoying all the five star comforts. They were like the spoilt child of a rich man.

I was attached to a vice president looking after financing of manufacturing sector. My work was to keep all original documents of contracts made with a number of companies in respect of our investments made, make letters, and also assist the project officers, prepare presentations, book air tickets, hotel accommodation etc. After two months of this development, one day my boss called me and asked for all the original documents.  I immediately felt that it could be a prelude to the sell-off of our company. I expressed my apprehension to my boss.  I forgot that those were the very critical days for the company and any negative remark would be dealt with severely.  I awaited punishment.

In the meantime, of course without our knowledge, it was decided to trim the staff what is called sophistically ‘restructuring’ to cut cost. Everyday around 4 in the afternoon our office would receive a call to send a particular staff to the parent company. First day, we did not know what it was. But from the second day it was clear to everyone. The staff member who was called in there was gone from the company. His accounts were settled then and there and he was not seen in the company again. So this 4 O’clock telephone call became a dreaded one. No one knew on whose head the next axe would fall. This went on for about 10 working days.  This was only the tip of the iceberg and before the real take over happened.

After the expiry of three months, our company was sold to a large Infrastructure Finance company.  This news came through the Economic Times and other business newspapers. Later on we were introduced to our new CEO who took charge of the company. He promised there would be no retrenchment. The new management commissioned an evaluation committee to go into the performance of all employees in the management cadre.  It was found to be the failure of the erstwhile management and diversion of funds to the parent company than anything else.

This new CEO was very young and dynamic. Fortunately on the first day of his taking over, the PA to the former Director was absent. I did not know who recommended my name to him. I was called in to his chamber and was asked to take a dictation and occupy the seat next to the CEO’s office.  My first letter was commended by the new CEO. He would ask me to do things very fast. Whenever I would fail to do so, he would abuse me. All through my life I had never heard any abuse from my seniors neither did I abuse any one.  I was depressed. In the evening that day the CEO told me that he was sacking one of the vice presidents of the company and there are many in the queue. I was not amused.  Next day I came to office with my mind made up to resign.

I did not wish him good morning, instead I presented my letter of resignation. ‘What is this?” My boss enquired. “My resignation
sir,” I told him. “Did I ask you for your resignation”?  No, I said, “your didn’t”. “But sir I am not used to listening to such foul language.”  “You know I have been associated with voluntary organizations where every individual is respected.” I neither abuse anyone nor do I take anyone’s abuse.” He read it and tore it into pieces and threw it into the trashbin. He again used abusive language. “This is the very cause of my resignation and you are again abusing me.” I was desperate. “Sir, for me self dignity is much more valuable than a mere job.”

He was again about to abuse me but somehow controlled himself and said. “ O.K. you give me two days time, if I abuse you during these two days, you can go, if not, you will have to work for me.” I said “agreed” and that friendship with the CEO still continues.

In the meantime, the whole office turned into a war Zone. All the big bosses were asked to present their Fund’s performance and to explain why it incurred losses. Frankly speaking their arguments were thrashed on every point and they came out from the CEO’s office with red faces. It was clear they were taken to task and I presume they had had enough of rough treatment. On the 3rd day the CEO called all the remaining vice presidents and asked them to collect the resignations of their respective managers, project officers, PA’s. He told them in clear terms that if they could not get the resignations of their juniors then they go. It was like a situation between the devil and the deep sea. One thing was very good with this CEO was that he was ready to talk to anyone in the office, give extension if one requested for it. But he was bent upon to clear the Augustine stable of the old staff.

For the last five years in this company I was given a very meagre rise every year in comparison to others and my performance was rated as ordinary.  While my boss was more than satisfied with my performance he was only too busy to take his career graph higher.  But I used to respect him as he was the most educated person in the company, IIT B. Tech and IIM, and he was a very amiable gentleman.  However at a later stage he highly commended my performance but this however did not contribute to my
higher pay scale except my annual benefits rose.

After three months of this takeover, one of the most grueling months I ever had, working from 9 a.m. to night 11 p.m. almost everyday, only with a saving grace that my boss would drop me at my residence after office. As my boss was very happy with
my performance, I thought it would not be out of place to request him to hike my salary which the earlier management had ignored for so many years. One fine day I broached the subject of my salary.

“Sir, is it possible to increase my salary?” I pleaded. “O.K. increase 20% in your basic and see how much the total impact comes to.” My boss said cheerfully. Within an hour the letter was finalized and signed. In a few month’s time, the investment scenario slowly picked up.  The group of venture funds constituted earlier for a number of states were merged into one Fund. This created more space for the management to invest in prospective high rated companies with greater freedom. So the investment amount went up to a few crores and consequently the prospect of return went up substantially. In the meantime as I said earlier the cost to the company in respect of staff salary and other long term benefits came down drastically as the number of staff came down to 12.  The regional offices opened earlier in different states were also closed down to bring down cost.  As the name of the company was also changed to give a clear signal to the shareholders that the management is in the hands of a company of repute. This, I am sure, boosted the image of the company among the investors. 

The other aspect was the dynamism shown by the new management. The new CEO with a new team of executives went about aggressively marketing the fund while the multilateral institutions were kept in constant touch as to the positive developments taking place in the company.  This prompted the foreign investors to infuse more funds into the newly created Master Fund.

The third aspect which boosted the company’s image was to appoint a celebrity in the world of business as Chairman. The new Chairman came with a vast experience of running Indian multinationals, his contacts throughout the business world gave an impetus to the company’s overall performance. As planned earlier by the management, a new office was opened in the South and our CEO shifted there.  He did request me to join him there but I had to politely declined as I did not want to shift from Delhi. My assignment as PA to CEO came to an end. But a new chapter opened in my life.  I was made the Administrative Officer for Delhi office.  In addition to that I was also given a responsibility to park unutilized funds with the banks, or in mutual funds and in corporate deposits.  These investments gave our company  more than a crore of rupees profit that financial year. At last, I felt, I was amply rewarded by the company for my honesty and hard work not only in respect of position and power but also in respect of salary package. I feel that it vindicates the proverb, ‘Honesty is the best policy”