Tuesday, November 24, 2009

ET 500: Old is gold, alas

I usually scan through the pink papers in under 5 minutes. But this morning I picked up the annual "ET 500" report (free with do rupaye ka ET every year) and actually spent over an hour poring through it. Just.

It's fascinating for many reasons. The # 1 company in India, by revenue, is IndianOil. Its revenues of Rs 290, 946 crores are double of the # 2 company Reliance Industries (Rs 153, 138 crores). But Reliance profits are 5 times that of IndianOil www.icocl.com (Rs 15, 296 crores vs Rs 2,599 crores).

Both companies are in the very same space (oil & gas). And no, I am not saying Indian Oil should be 'doing better' - that would be comparing apples to oranges!

A few other facts which caught my eye:

* 6 out of top 10 companies are PSUs - that's pretty much the story, every year.

* Only 1 out of the top 20 companies is what you can call entrepreneurial (started by a first generation entrepreneur in last 20 years). That company is Bharti Airtel. In fact such companies are pretty much non existent even in top 100.

Infosys (# 22), Pantaloons (# 73) and Kotak Mahindra bank (# 75) are the few exceptions although technically, they're all over 20 years old.

* Bharti Airtel and TCS are the only two companies from 'new age industries' in the top 20 (Wipro & Infosys are # 22 and 29 respectively). Oil, steel, auto, banking, power, capital goods dominate the top 50.

Interestingly, apart from ITC (# 35) and HLL (#36) and a few banks like ICICI bank (# 10), HDFC bank (#29), Kotak Mahindra bank (# 66) and maybe an Asian Paints (#95) and Reliance in its myriad avatars - you won't see any of the top 100 companies on this list on India's top 20 bschool campuses.

Except in a recession year (like this one).
And even then, they aren't places MBAs would like to join.

Which brings me to the question: is there a disconnect between bschools and the business realities of India? For long, bschools have been accused of producing 'managers' not entrepreneurs. Ok - but even within that definition, they want to be managers only in certain kinds of companies and sectors.

I understand there are cultural issues. That the majority of these top 100 and even top 500 companies are old (if this was a gathering of people you would see mostly grey hair!) A large number are fuddy duddy, family or government run enterprises.

But surely these are the very places where so called modern management principles and bright young men and women can make a difference - in the longer run.

It would be interesting if ET could come out with a report on how many MBAs the top 500 companies in India today employ. And what is the profile of the people they do employ.

Cynics might wonder whether these companies are healthy because of lack of MBAs... There's a thesis waiting to be written by someone, somewhere, on that!

Lastly, I noticed 5 companies from the 25 Stay Hungry profiles make it to the list (not counting Sintex, where Dangayach is not the owner). The highest ranked is Shree Renuka Sugars art # 227.

Am sure there are other interesting stories hidden in this list... and I'm sure someday I will tell some of them :)


  1. Must say, Pretty Interesting observations. And, yes I agree that the Indian Institutes, be it IIT's or IIM's have mostly created good employees and managers. But very few entrepreneurs. That is a mindset and system short coming. Every MBA aspirant wants to get a good job, but no one wants to make it big. There are very very few such examples.
    And truly the reports you mentioned are much awaited by plenty of MBA's. But I guess there is one more report needed. Entrepreneural report ofr BSchools. How many of the candidates actually turn out to be Entrepreneurs so that aspirants who want to setup their own businesses have a right place to share ideas with like minded people.

  2. interesting write & noteworthy ...:))

    - gagrin

  3. Is the last line a teaser, telling us about Stay Hungry Stay Foolish 2.0?

  4. super observation and interesting insights...i'd love to see all that you have mentioned in a ET report some day.
    Another quite point here is that most of the Oil companies mentioned hire fresh engineers through recruitment exams who later grow up the heirarchy..does that mean 'management' education by learning on the job beats an MBA ??..another (hypo?)thesis there waiting to be written ..and gives the 'MBA ya Job continue karna hai?' question a whole new dimension!

  5. This is an interesting post. However I think that if oil companies are doing well, it is not much credit to them. The price of oil and gas is so high that they are automatically in that sector.

  6. Anonymous10:56 PM

    Very valid point! The disconnect is clearly visible. Inefficiencies, lack of intellectual capital......pay package etc
    are primarily why premier B-School chaps would never ever prefer a PSU. But they are the companies that need those chaps the most.

    Nice post!

  7. I recently joined one of these companies after IITKgp+IIMB.

    The key challenges are - tall hierarchy, perceived rigidity/bureaucracy/HRcracy, slowness and of course lower package. But all these are in place precisely because the companies are big.

    So the real challenge is adjusting to the unfamiliar environment.

  8. pathetic !
    do you know how much efforts it takes to be in top list.

    trouble with MBAs is that they think money-making is easy, as they get fat salaries.

  9. Becomin a entreprenur is not like doing an(as easy) MBA(may be from IIM).. The media highlights only the success stories.. For every success stories there may be some 5-10 failures too :)

    and a person who had done MBA in some low rung college is far lower amy be in communication/thinking or anything then a person who done his BCom from a reputed college/university

  10. ummm.. u know what, that thing abt these companies doing well because they do not hire MBAs from well known colleges may not be a joke at all. I think that the top colleges snatch the one thing that is crucial to success - that attitude of humility towards learning. Instead, it is replaced with a personality trait that is best described as "attitude" - not conducive to growth of most kinds.

    Generalisation, sure.. but u started the thought in my head! :-)

  11. Hi Rashmi,

    As a founder of a startup, and some one who does get MBA interns/hires , a few points to add :

    * MBAs from 2nd or 3rd rung schools have the fire in belly to excel and learn. the 'brand' MBAs are in cloud 9 and have a 'shut' mind refusing to learn new ideas.

    * MBAs typically want to work in 'finance' but dont understand that in a startup finance also means raising bills, tracking payment and deposit CHECKS. Thank god we didnt give him cash and he dropped it like some temple hundi.

    * They are always looking for their 'next jump' and not focuused much on their current role. Peer pressure and pay check amt is foremost in their mind - not realising that in a startup paycheck is directly proportional to revenue brought in per person !!


  12. Must admire your single minded focus on measuring everything through the MBA lens.Really. A most interesting observation, and really, well worth a proper study as you have suggested. I hope it is taken up quickly by someone.

    A simple explanation for the discrepancy, if one can call it that, is that, is that in recent years, the culture in the leading B schools has moved increasingly towards a 'star' system, where the MBA is expected to, or imagines he/she will, make a significant difference in the organisation they join. Thus, typically, they seem to end up working in small teams which have a disproportionate share of influence and prestige. A majority of these firms on the other hand, are where they are due to legacy issues like monopoly over resources like commodities and even capital, or markets in the case of power firms etc. Most importantly, they have predictable margions and cash flows. These situations leave a very limited role for the typical B School MBA, who sees himself as a profit maximizing jock, capable of making a 'disruptive' difference. That a huge majority settle into the normal scheme of things is a different matter.

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  15. These are very pertinet points you raise.
    Of course there is a disconnect. But I won't blame it all on the B-Schools. I have always believed that education is what you make of it. Entrepreneurship demands a certain amount of risk appetite, apart from the idea, plan and all those other ingredients.
    A choice between a six figure salary, with the comfort of corporate perks and an uncertain next few years with high reward potential, but equally high failure risk? Most (but not all) of us are conditioned to go with the safer way out.
    I don't have a solution to fixing this, but I do believe that this is something that has to be inculcated as part of your belief and value system, not just when you are doing your bachelor's or master's.

  16. I ll make it big. Only job job job... We do some thing to employ odas...

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