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The Rediff Money Interview/ UTI Chairman P S Subramanyam

'The future belongs to India'

PART I: 'There is no scope for NPAs in our portfolios'

PART II: 'I am confident the Sensex will touch 6000 by Diwali'

You must have interacted with several investors abroad. What have you gathered from these interactions about their perception of India as a destination for investors?

First, I would like to say they are very impressed by UTI's commitment to disclosures and transparency in operations. India as one whole country appeals to international investors. They believe Indian stock prices are still undervalued a lot. They feel there is a lot of money to be made in the Indian market. Global investors are increasingly appreciative of the fact that entry barriers in India are either crumbling or are becoming lower.

I miss no opportunity to tell them of my firm conviction that the future belongs to India.

What about China?

China? Okay, it may be 20 years ahead in certain sectors. But India's large educated middle class, the democratic traditions that we have nurtured over decades, our commitment to economic liberalisation give us an edge. I believe the future belongs to India.

You have interacted with Finance Minister Yashwant Sinha from close quarters. What are your impressions of him?

The finance minister is a very pragmatic person. He understands the ground realities of India. He knows the pulse of the Indian economy. Being a distinguished former civil servant himself, he is also aware of the finer details of administrative procedures. I find the interactions with him very enriching. I tend to agree with a lot of people who say he is the right man at the right place at the right time. Mr Sinha is a nice man to know.

You make it sound like as if Yashwant Sinha could make a good PM....

Do I? Who am I to say such things? It's for the people to decide.

You have seen fund managers in India and abroad at work. What is your opinion on their abilities?

Their behavioural patterns remain the same, be it in India or abroad. Talent-wise, I think our fund managers are second to none. It reflects in the same kind of work that goes on here and elsewhere. But rewards-wise, bonuses are less in India than developed markets. Indian fund managers are now turning more market-savvy than earlier. They are guided by equity research. They have their eyes and ears open for opportunities in the market. They are increasingly becoming Net-savvy.

Within UTI, everyone is a bright spark. I would be doing grave injustice to others if I mention one or two names as extraordinary performers. They impressed me a lot during the US-64 episode. They quickly assessed UTI's positions in various stocks, identified the tech stocks as a big opportunity and restructured the portfolio to make the most of the opportunity. They cautioned themselves, imposed internal cap limits, lost no opportunity to encash without affecting the market.

Given the size of UTI's corpus, did you ever feel the need for foreign fund managers?

No. We don't need them. We have enough talent in India, we have enough talent in UTI. I always encourage our personnel department to send our managers abroad for advanced training programmes.

It is believed that in your quest for positive results, you had to persuade your fund managers a great deal to improve their mindsets. Please elaborate on how you transformed India's largest mutual fund internally.

(Smiles). From the day I took over, I made it clear that our operations have to be transparent. I told them that transparency is what I expect. I believe in delegating power, not exercising it. I said UTI will have to declare internally the quarterly results. This spurred the markets team to perform. This pushed the accounts department to ensure that there are no outstandings. The compliance team got cracking on adhering to the mandate of the UTI Act and SEBI guidelines. And so forth. This way I created an internal pressure point, so to say.

Although results are examined on a quarterly basis, I make it a point to monitor them on a monthly basis. So it would be incorrect to say that only the fund managers turned around UTI. The credit should go to each and every employee.

Didn't you encounter any resistance to your initiatives?

Look, I didn't introduce a command structure. What I did was that I democratised our institution. I made the management participatory. That I am not the Big Boss but a first among equals was made clear. This, I believe, inculcated in our employees a tremendous will to achieve. The will to achieve is the highest today in UTI. This contributed to the US-64 turnaround.

Know something? It is we, the employees of UTI, who decided that the US-64 advertisements should highlight the phrase 'The Achiever.' It was our slogan; it was not coined by the ad agency. It reflects the spirit of every UTI employee.

When you meet with wealthy Non Resident Indians and prospective investors, what do you discuss?

I tell them that India will emerge as an IT superpower very soon. I also tell them that biotechnology has huge prospects in India, given our size, both physical and that of our population, natural resources and biodiversity. Upliftment of the underprivileged itself throws up tremendous business opportunities. The sheer numbers of the middle class offers a very large ready market. I simply tell them the future belongs to India.

Indian media in general and Net Age financial journalism in particular offer the highest level of vigilance now. In political science, it is said that vigilance is the price of democracy. India is safe and united.

Talking of the press, any number of publications castigated UTI in 1998 during the US-64 crisis. The beginning of the end, predicted the doomsayers. But you seem to have proven them wrong. When you look back, do you feel financial journalism in India was off the mark then?

I would say financial journalism in India has to mature a lot. Often times, I realise the headline and the text do not match at all. There is a general propensity towards sensationalism. Whenever I get misquoted, I check with the reporters concerned. And they tell me, 'We reported correctly, but the editorial production people distorted the story.' I understand the great need to make news attractive, palatable, interesting. I also discern constant improvement in the quality of content. In due course, things will get corrected; as competition increases, the pursuit of excellence intensifies.

There is increasing awareness that people do read body copy, not just headlines. And when there is too much variance between the two elements, publications, be they newspapers, magazines, television channels or online services, run a risk of losing their credibility.

I strongly feel that commentators, market experts, analysts, consultants, critics, what have you, should refrain from making stock-specific recommendations. I feel making such recommendations is not in the right spirit. It also means that they have no responsibility.

If the investors incur a loss because of such recommendations, people who make them are not accountable. Financial experts make numerous comparisons. But they should ensure that such comparisons are fair. Ideally, they should leave the judgement to readers. Vaguely worded disclaimers won't do. Disclaimers should be adequate and specific.

Lately, online financial journalism has added a new dimension to the media scene. We hear of stock analysts in the US becoming celebrities. They even receive death threats because their opinionated columns affect stock prices and sway the markets. In India, the impact has yet to be felt. Internet penetration is comparatively very less. But I feel there are signs that this segment will acquire a degree of maturity sooner rather than later.

What is your New Millennium message to retail investors in India?

Invest in UTI and be happy.

What would you say if someone were to retort: 'Even after the US-64 episode?'

(Smiles). That is history. This is part of the Old Millennium, so to say. 'Invest in UTI and be happy' is the New Millennium message, a slogan for the next 1,000 years! In the context of fraudulent companies, I would like to say we are passing through a transition from the era of control to an age of openness.

The scams involving the so-called vanishing companies, which disappear with public deposits, should be seen as growth pangs. We should not lose sight of the big picture. Already there are enough remedies in place. Loopholes that still exist are being plugged. The future would be safe. There is no cause for fear or concern in this context.

Does the fact that you preside over the investments of over 50 million investors induce stress? If yes, how do you cope?

Oh yes, it does. I would be wrong if I say there is no stress. When people tell others that I am a man of great humility and when I learn about it, I realise perhaps this aspect of my personality helps me to cope with stress. Every day, when I wake up in the morning, I tell myself that the main mission in life is to try to succeed in whatever I do. "Yes," I tell myself. "Yes" is a small word, but it fills one with a powerful positive energy. "Yes, we are going to achieve the highest. We will succeed," I tell myself. Believe me, this really helps. And when we do succeed in our projects, etc, it gives me very high satisfaction.

My aim is to mix responsibility with service in a way that our customers can't get anywhere else.

I am firm believer in the power of prayer. I pray every morning. Call it meditation, if you will. I also go out for a morning walk and exercise a bit.

All along, I have made it a point not to carry work-related worries back home and vice-versa. I have retained the ability to smile. A smile helps one to be at peace with oneself. It helps me to be a man who can say "Yes" even in trying circumstances.

How do you unwind after a day's hard work? How do you spend your off-work time?

I enjoy listening to music, especially classical music and bhajans. I am a devotee (follower, if you will) of Sri Satya Sai Baba of Puttaparthi and Sri Ganapati Satchidananda Swamiji of Karnataka (his home state. An aside: "Here's my business card. Please get the spelling of my name correctly. People often think that I am a native of some other region.")

Both of them have excelled in service to humanity. Swamiji's music has a divine quality to it. I have a huge collection of his music compositions.

I browse the Net occasionally. Being the manager of India's largest mutual fund has its own occupational hazards. Rather, I would call them occupational rewards. More often than not, others browse the Net for me, compile an eclectic mix of content, filter it and pass on the essence to me for reading.

I do watch television, but mostly business channels. There was a time when I used to go to the cinema. I'd love to catch up, but then, there are only 24 hours in a day.

Are you a family man?

Yes. My wife is a housewife. I have two daughters. One of them is married and well settled. The other daughter is working, she has done her master's in business administration. No, we do not generally discuss business and work at home. She often chides me for not taking time out to become adequately Net-savvy and keyboard-savvy.

What was the scene like at home when you were appointed UTI chairman?

(Pauses to recollect). All my family members were happy. My wife, like a typical Indian housewife who is full of common sense, reminded me that the responsibility of 50 million investors's hopes lie on me. She said it is necessary now more than in the past to keep my head steady over my shoulders.

On your way to the pinnacle of India's largest mutual fund, did you draw inspiration from any particular people?

Yes. I was born and brought up in Mysore. I started my career under the legendary Dr T M A Pai. My first job was with Syndicate Bank. It was in 1963. The bank was then called Canara Industrial and Banking Syndicate Limited. Mr Pai scribbled a small line on the blackboard in the office. "Can I do it better?" He exhorted me to always ask myself that question.

That has stuck in my mind ever since. I keep reminding myself about this everyday. It is always at the back of my mind.

Besides Mr T M A Pai, Sri Satya Sai Baba and Sri Ganapati Satchidananda Swamiji continue to inspire me by their selfless service to millions. Perhaps there is a parallel somewhere. Inspired by them, I also seek to do service to millions (of investors) in my own way. They are instrumental in inspiring me to aim at achieving things that I once considered beyond me. "This (the job of UTI chairman) is an opportunity for you to serve people," they once told me.

Money