Old vs new contest for IDFC Mutual Fund, a startup founder eats humble pie, banking drama, new worries for Congress and more

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MC Insider: Old vs new contest for IDFC Mutual Fund, a startup founder eats humble pie, banking drama, new worries for Congress and more

STARTUP FOUNDER EATS HUMBLE PIE

Not too long ago, a well-known startup swaggerer met face to face with an old-school businessman and came off worse from the encounter. The old-schooler was invited by the swaggerer with seemingly nothing on the agenda. So he was quite shocked to see a chequebook thrown at him by his younger counterpart. The offer on the table was to buy a small but fast-growing chain of eateries at any cost. Taken aback by the abrupt and insulting manner in which the offer was made, the old-schooler, instead of selling the chain, fed the swaggerer humble pie. Tells you that money can’t buy everything, certainly not decency or perspective.

MONTH’S A LONG TIME IN POLITICS

The main opposition party Congress which was upbeat a month ago has turned jittery these days. Insiders in Karnataka Congress whisper that their calculations seem to have gone wrong after Basavaraj S Bommai took charge as chief minister after the BJP top brass ousted BS Yediyurappa. A series of corruption charges and rampant nepotism were working in favour of Congress, which is hoping to come to power. But BSY’s replacement has put a spoke in Congress’ wheel. A top Congress leader admits that Bommai has taken off quite well and they will have to change their strategy to beat the BJP. Another birdie parted with this juicy info—a week-old survey gives BJP 100, Congress 90 and JDS 20 seats in the 224-member Assembly. Certainly not good news for the faction-ridden party.

STEP DOWN ‘A LITTLE’

We heard that the Congress high command recently asked one of the party’s three chief ministers to quit and instead become general secretary in-charge of Gujarat where assembly polls are due next year. The chief minister was told that he could get the post back after the assembly polls, which are scheduled to be held in December 2022. The chief minister, however, told Gandhi that even if the party wants him to leave the CM’s post, he would rather work in his own constituency. Congress is in power in three states— Rajasthan, Punjab and Chhattisgarh. Incidentally, all three states recently faced some kind of internal fighting. In Rajasthan, chief minister Ashok Gehlot and his younger colleague Sachin Pilot were at odds, Navjot Singh Sidhu rebelled in Punjab and in Chhattisgarh, chief minister Bhupesh Baghel and his cabinet colleague TS Singh Deo fought it out for the top post recently. Those who want Deo to be the chief minister say he was promised the top post after the incumbent chief minister Baghel completed two-and-a-half years in the government which he did last year. Gujarat is crucial for Congress and the party had won 77 of the 182-member assembly in 2017 polls. The BJP, which won the election, had won 99 seats in what many called a touch fight.

‘HONOURABLE’ CM

Files that pass through the desks of bureaucrats at the secretariat of this southern state have one noticeable change, we hear. Any mention of the chief minister in the files is now prefixed by ‘honourable’. The buzz in the corridors of power is that this came at the insistence of the chief minister, who is known for his strongarm politics. That said, one of the CM’s well-wishers said in the same breath that this was done voluntarily by the babus. Either way, this is revealing about the clout of the CM brooks, who has no interference in his party as well as the government machinery.

OLD VS NEW FOR IDFC MUTUAL FUND BUSINESS

In recent weeks, the buzz on the sale of some large fund houses has grown louder by the day. A raft of regulatory changes and increased competition—take a look at the number of fintech startups that have entered the fray—is piling the pressure on large asset management companies (AMCs) running mutual funds. There are strong rumours that one such company that is looking to exit through a sale is IDFC Mutual Fund. We hear that there are two main candidates that are vying to grab IDFC’s MF business. That is not the only interesting detail. One of the suitors happens to be among the oldest AMCs in India while the other is a new-age fintech company. It is clearly a battle between the old and new in mutual funds.

BACK TO OFFICE PREDICAMENT

This Indian IT services firm, which is also present in South East Asia, is in a dilemma. With a significant number of employees vaccinated, the company wants to bring employees back to the office in a phased manner. But the company has complex thoughts about getting the employees in South East Asia back to work. “I don’t like the choice of the vaccine the employees are getting there,” chuckled the executive. Unlike India, which had access to AstraZeneca and Bharat Biotech’s COVAXIN, the South East Asian countries the company operates in had access only to the one from China. “Well, it is still effective and something is better than nothing. We are thankful that our employees had access since it is still effective against serious illness and death,” the executive said.

THEIR VILLAIN, OUR HERO!

The three young probationary officers in this leading state-run bank got a shock of their lives when investigators’ glare fell on them for recommending a corporate loan that was later tagged as default and fraud. The three POs were only following instructions from the seniors. Yet, the fingers were pointed at them when the money went bad. Everyone except the zonal manager accused the POs of wrongdoing. After all, such junior officers weren’t supposed to do what they did. But what if the seniors push you and you got no choice? The zonal manager understood their dilemma and refused to give permission to prosecute the POs. The result? The zonal manager was shunted to a distant city as a punitive transfer apparently following oral directions from the Government babus. Thus, he became a villain for many in the story. But for the POs, who are just beginning their career journey, he is a hero for sure. We hear trade unions may take up this issue and might question the ‘highhandedness’ against the officer who supported his junior colleagues. The story isn’t over yet!

DIVERSIFICATION DILEMMA

Indian pharma companies have made a fortune on selling copycat drugs. At the turn of the century, some entered highly regulated markets and found success. But things aren’t easy anymore as competition heated up and regulation became tight. Now the problem is where to allocate capital. Some have tried to go up the value chain and placed bets on biosimilars speciality drugs and drug discovery. A few have cashed out. Others are now mulling at agri-chemicals, animal health, FMCG, hospitals, real estate. Can they replicate the same success, only time will tell. They are having a tough time explaining the rationale of their diversification strategy.

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