Motilal Oswal: The Astute Money Manager
After a change in business strategy from the bread-and-butter stock broking business to focusing on asset management and housing finance, Motilal Oswal’s revenue shot up to more than Rs 1,870 crore in FY17, driving the company’s stock market capitalisation past the Rs 13,800 mark. Little surprise, then, that its Chairman and Managing Director Motilal Oswal figures in the BW Businessworld’s Most Valuable CEOs 2018.
Oswal strove to create scale and expand the broking business across the country through franchises and sub-brokers. As a result, the company covers more than 2,200 locations. Later, the business branched out into private equity and asset management. Its latest foray has been into housing finance to lower income groups.
Oswal notes that size and scale would not have been possible without a great team, and that grooming people for leadership takes away nearly half of his time. “People will not miss me if I am out as they have been fully empowered. My job is to set the processes and we have built a set of very strong ones,” says Oswal.
Characteristically, Oswal does not believe in imposing his views, but, in fact, encourages ideation and strategy from his people. He believes that asking people questions generates the best ideas. In an organisation, ideas have to be weighed and the best ones need to be implemented.
Managing people and strategising accounts for the other half of his time. “It’s not about my view or yours. It’s about the best view. The merit of the case should get precedence,” says Oswal.
He reckons that people have different strengths and different capabilities, and that’s what should be highlighted and developed. Oswal notes that you can’t create scale if you have not invested in the right people.
Over the years, he has groomed several leaders, who have grown with the organisation; several vertical heads in the company started off in junior positions. “Most of our people are homegrown. We call ourselves a factory for producing leaders,” says Oswal.
One good thing about Oswal is that he does not have to worry about capital allocation because most of the businesses are free cash-flow-generating ones. Only its housing finance requires cash allocation, but Oswal states that the potential in this segment is huge.
Yet, despite the fact that most businesses generate loads of cash, Oswal charges his CEOs the cost of capital so that there is judicious use of capital. It also keeps the business gunning for better utilisation of capital and available resources.
Oswal also believes that a CEO should create a trustworthy environment because ultimately the business is about trust, and believes that mistakes happen but that the organisation should learn and grow from them. “We have to be transparent and ethical with clients, so any kind of non-transparency with them will not be tolerated. A mistake will be tolerated once, and we will create processes so mistakes don’t happen again. But if the mistake is about integrity or ethics, there will be no second chance.”
Oswal believes that you have to have the sharpest brains to discuss strategy, and that character and capability of people will define the organisation. “I always think that character and capability are key traits people should have. But character is table stakes, without which capability does not mean anything,” notes Oswal.
Oswal also likes to keep the organisation focused on its winning formula. Any successful organisation needs one. If it’s a service business or any other, Oswal reckons CEOs have to focus and sharpen core competency because the competitive environment is quite keen. “We constantly ensure that the system is robust and ethical practice is high because one is dealing with other people’s money,” says Oswal.
