The Seven Subjects I learnt at MarwariBusiness School (MBS)By Alok Kejriwal, New Delhi, August 16, 2011Share 28On the last...
This monetization mentality made me create what I believe was the most detailed costingbreakup of any socks factory in the...
This taught me a lot. It taught me morals, ethics and righteousness and how to actually live up toothers peoples TRUST tha...
In the hotel lobby, while eating breakfast we met one of the largest textile Barons of Hong Kong -who was a Marwari and ha...
The standard colour in Melange was grey and not sky blue and camel.This order was lookinglike a train wreck for me.After a...
The trick that really mattered was treating the Toe portion innovatively. In Italian socks, the toewas knit within the mac...
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The seven subjects i learnt at marwari business school

  1. 1. The Seven Subjects I learnt at MarwariBusiness School (MBS)By Alok Kejriwal, New Delhi, August 16, 2011Share 28On the last day of my ICSE exam (10th standard finals), my Nani (Grand mother) offered me afree seat into the Marwari Business School.I was 16 and I had the opportunity to go and sit in my Nanas (Grand father) office.I took up the offer.These are the seven subjects I learnt:M = Monetization MentalityFor Marwaris, money pretty much means everything. Its the currency of success - punintended. People are sized and measured not by their waist sizes but by the width of theirbalance sheet. A Marwaris religion is making money and they meditate on it.What Monetization and its terms means is also unique for Marwaris.For instance, I learnt that Revenue was not what you bill or pass-thru or recognize. Revenuewas always what you net-net earned that came in your coffers.Revenue is bottom line for a Marwari - not top line.Also, the facets of revenue became very clear to me. Every capital investment (be it land, ormachine or even cars and computers) had a monetization expectation attached to it. You couldspend on things only if they made money. Hence ordering flowers for office tables in a typicalMarwari office would be disallowed (despite the plea that they enhance profitability).
  2. 2. This monetization mentality made me create what I believe was the most detailed costingbreakup of any socks factory in the world. I took 3 years to post mortem the cost of everythingwe incurred (whether real or notional in terms of interest lost) and link it back to revenues thatwere being earned. So, I could tell you that if you ran extra air-conditioning in the office building,then X was the revenue that needed to be generated to make a PROFIT on that extra spend.Also, I learnt that revenue was something to be always improved - not just by price hikes alone.If collecting money from debtors were improved by 3 days, then there would X reduction onbank overdrafts and hence extra income to the firm etc.A = Accounting ArcheryAll successful Marwaris really know their accounting. Trial Balances, P&L statements andBalance sheets are the juiciest novels that a Marwari reads. What they clearly understand is theconcept of Capital & how Capital gets generated at the lowest cost and how that same Capitalthen needs to be exploited to the fullest.Creativity in accounting was the highlight of what I learnt. I remember when I was 17, an unclesent me to his Chartered Accountant (CA) to finalize and close my Uncles books. Like a goodstudent, I prepared the P&L and presented it to Mr. CA, along with the tax liability. He chuckledand then called up my Uncle in my presence on a speakerphone. I expected Mr. CA to tell myUncle what I had prepared. Instead Mr. CA asked my Uncle Babu (Sir), how much tax do youfeel like paying this year? My Uncle grudgingly muttered a number and that was the end of thecall. Then Mr. CA took my P&L and completely re-crafted the numbers (and believe melegitimately) to perfectly match the tax outgo my Uncle wanted to pay!R = Righteous Rigor.Each month, there would be at least a couple of instances when a very old worker (you know theones who look like grand dads) would hang out near the factory cashier with a couple of hisrelatives. At the right opportunity, the worker would gently knock on my fathers cabin door; enternimbly; gently walk together my father and then bend down to touch his feet. The first time thishappened I was stunned. I mean it was very demeaning to see such an old man behaving insuch a subservient way. My dad of course would immediately stop the old man from bendingfurther, do a Namaste (fold hands) and greet the man. I would almost always notice the tears inthe old workers eyes.I learnt later that these workers had worked for 30 -35 years in our factory and this was the Dday they had withdrawn their Provident Fund account (saved in the factory for all those years) tobe used for marrying their daughters or for buying a house etc. The amount they received waslargely disproportionate to their monthly salary (lacs of rupees) and they solely relied on ourCompany to safeguard their moneys, banked safely for an important day.If you have read how corrupt many companies have been with PF accounting and the fact thatsome of them have NOT even maintained accurate PF accounts and have squandered what wasnot their own money, you will realize how damaging this is . Imagine telling this 60-year-oldworker on the eve of his daughters wedding that his fortune of 30 years will be paid later(meaning never).
  3. 3. This taught me a lot. It taught me morals, ethics and righteousness and how to actually live up toothers peoples TRUST that they have placed in us.Most People are naïve and innocent and very trusting. We have to honor their faith in us.W = Wait, Watch and WinWhen I sauntered into my fathers factory on a bright Monday morning on my first day at work, Ithought the world would be at my feet. In my mind I had a desk to myself, lots of papers and files,a huge telephone on my desk with lots of blinking lights (remember the EPABAX) and a constantstream of visitors to meet and greet me.Quite the reverse of that happened.When I entered my dads cabin, he pointed me to a rather uncomfortable looking corner chair,and asked me to SIT. I remember his words so clearly even today. He said - Alok, learn how tosit. If you can just master sitting, you will have learnt a lot.Grrrr...I was exasperated! I mean I was a rock star supposed to gyrate and prance all over thestage. Instead I was being locked inside the backstage changing room?Slowly, the concept of waiting and watching began to sink in. For almost one year I sat like aflower vase on a pedestal in my dads cabin just watching him function.I was not asked for an opinion and was even barely noticed! Being completely ignored became anormal emotion for me, and I spent the hours just learning.And how I learnt! From everything about machines to finance to production planning to inventorymanagement.I guess the biggest lesson I learnt was that winning comes from waiting.In the first seven years of starting (my first independent business), thiswaiting training bore rich fruit. I became the expert at waiting outside clients offices for hoursjust to meet them for five minutes. Never once did I even feel bad or humiliated. I became bestfriends with these busybodys personal assistants and secretaries and learnt a lot about the waytheir business functioned. In fact, I even found a long-term partner in Rajiv Hiranandani whilewaiting for hours in the Shaw Wallace office in Mumbai! Rajiv was the head of sales of Yahoo atthat time and after many sofa meetings at Shaw Wallace, he agreed to head mobile2win India -a mobile business that I was just starting up then.All good things in life take time. One has to learn to wait, watch and then win.A = Attitude Adjustments.Marwaris generally have little ego issues. We are trained to do business and not to pretend to bethe Queen.In 1994, my father and I traveled to Germany to attend a textile fair. That was one of the busiestfairs in the world, and all the hotel rooms were fully booked. My father and I were sharing oneroom.
  4. 4. In the hotel lobby, while eating breakfast we met one of the largest textile Barons of Hong Kong -who was a Marwari and had emigrated there many years ago. He was hugely successful andvery well known globally.While all of us were eating together, a rather disoriented looking man in a crumpled shirt andHawaii slippers came across and stood next to Mr. Textile Baron. Mr. Baron smiled at him andexcused himself and arranged breakfast etc for the man. Later he came back and explained thatthis man was the chief jobber (mechanic) in his Indian factory and had never traveled in a planebefore or ever stayed in a hotel. He did not know how to operate the bathtub shower. Howeverhe was the heart of the factory and Mr. Baron was sharing his room with him to make sure hewas comfortable!That trip I learnt a lot about attitudes, and how to adjust them to be a very successfulentrepreneur.R = Risk and RewardAbout 4 years into having started the export division of my factory and having executed manysuccessful orders, I was on top of the world. I guess I was enjoying the sweet high of success.Retrospectively put, I think I had become over confident.As scheduled, I met my buyer from C&A (An erstwhile large European retail clothes store) in myfactory showroom and began discussing new orders. My buyer winked at me, retrieved a bundleof socks from his bag and laid them on the table. The yarn color and texture of the socks caughtme my surprise. This was that heather mixture/grey flannel type color (like the t-shirts that looklike a blended grey). My buyer said Alok, this new yarn is a rage in the EU. I am happy to giveyou an order that will be 5 times larger what we have ever done with you - if you can ship yoursocks in this type of new yarn in various color tones.I asked him what this yarn was and he very casually said oh, its a cotton mélange. All globalsocks manufacturers are working with the same yarn in their country; Im sure you will findsuppliers for it in India without a problem.I looked at him, and the socks and said yeah, Im doing it.What I never realized was that I had taken the biggest risk of my life. I also think that greed hadblinded me. I could have agreed for a trial order rather than one that was five times the usualsize.But I also learnt that what entrepreneurs do for a living is to leap without looking.Once I received the order sheets, I began scouting the market for mélange yarn. None of myregular suppliers made that type of yarn. A couple of the suppliers in Hyderabad (the south ofIndia) were large producers of Mélange, but their yarn composition was synthetic not cotton.Quickly I began to panic because I could not find a single yarn supplier of that yarn in India. Whathaunted me was that non-fulfillment of the socks orders meant severe penalties and a blacklisting to ever work with C&A.Added to the problem was that I had accepted the orders in 5 different types of yarns.
  5. 5. The standard colour in Melange was grey and not sky blue and camel.This order was lookinglike a train wreck for me.After an agonizing search and hunt operation, the Hyderabad Company agreed to spin a specialCotton yarn for me in their regular 2/40s count. (In cotton, the larger is the count, the finer is theyarn - so 40s is good for garments and 200s is what we wear in shirts. s stands for single yarn).I actually wanted 20s which is used for socks.Now, 2/40 meant that 2 yarns of 40s would be twisted together to make it as thick as 20s (whichis what I wanted), but the cost was double of what I was paying for 20s yarn. So buying 2/40swas a no go.Finally, I convinced them to spin the yarn in 20s (20 single count) and they sent me a few spoolsto test.When I got the yarn and spun the socks, I had a heart attack. Because the yarn was mélangeand a single thread (20s), it was twisting and turning like a top and making the socks look likethey were wrung to death. The 2/40s yarn would not have that problem because a S twist anda Y twist were spun together giving the combined yarn a neutral spin - but as explained earlier,I could not afford that yarn!When I explained my agony to the mill, they asked me to heat the yarn via a specific process tokill the spin. I did just that and enjoyed my second heart attack - the color of all the 5 yarnsdramatically changed when heated.In the end, I got a duller 20s custom cotton yarn made, got that yarn heated to kill its twist makeit look like the original colour ordered and even washed all socks to kill the little spin left behind.Because the washing was shrinking the socks, I had to redesign all socks specs in a way thatafter they were washed and shrunk, they came back to the original size the buyer had ordered!I made my shipment just on time and that execution paved the way to tripling our exports in thenext few years. Interestingly, most of the orders that came in those next 7 years were mélangeyarn orders.I had learnt the very difficult lesson by taking on Risk; but more importantly managing riskcarefully and with perseverance to make it rewarding.In 1999, when I walked out of my factory doors to launch - I had no clue aboutthe Internet or promotions or marketing. I just thought of my European socks buyer and chuckled.Intriguingly, that day I was wearing a pair of mélange socks!I = Innovative IngenuityWhen I pitched to my father that there was a massive opportunity to export plain white, navy andblack socks to Europe but at ridiculously cheap prices, he took up the challenge and workedback to back with his technical team to refit Indian knitting machines bought from Punjab tomake socks worthy of European feet.In essence, he innovated and created a sock that was the same in quality as a European sock,but knit from a machine that cost 1000$ in India vs. 20,000$ in Italy.
  6. 6. The trick that really mattered was treating the Toe portion innovatively. In Italian socks, the toewas knit within the machine and very finely, so that it did not cause discomfort to the consumerwhile wearing. In Indian sock machines, the toe portion came out unstitched; to be manuallysown over the open ends to close the toe. The process of sewing Indian socks caused a thickseam that always created discomfort while wearing the socks over the consumers toes.My dad fixed the problem by using an external machine to sew the thread into the Indian sockalmost needle on needle (like grannys knit sweaters) using a slow manual process that yielded afinish that was better than the Italian machine. Labour was cheap in India, and the outcome wasperfect!You can imagine how profitable the business became since we were getting paid for sockspriced at EU costs whilst making them with Indian machines, yarn and labour.This experience embossed the passion to reinvent in my mind. I have observed that there is aconstant drive in all Marwari companies and entrepreneurs to re-think business processes,concepts and change this is how it is done to this is how it can be done profitably.In 1998, after spending 7 years in the socks factory, I quit and started Theday I left the factory premises, I think I had graduated with merit from the Marwari BusinessSchool.This post is dedicated to my Dad