The former BSE CEO discusses how salt influences his thinking, his passion for biking and what he plans for India’s newest commodity exchange
Rajnikanth Patel strongly believes that “everything you come across in your life teaches you a lesson — whether it is food, a restaurant you visit or a hobby you choose.” So the choice of Namak in Sahara Star hotel near Mumbai’s domestic airport is dictated not just by its proximity to the new Indian Commodity Exchange office but also because it reflects his management philosophy, writes Rajesh Bhayani.
In fact, Patel expounds on his salt theory even before we choose our meal. “No one likes excess,” he explains, “and namak teaches you to be balanced when you deal with people, even in the businesses you run. Anything in excess or deficient will make the food palatable or cause malnutrition. You should know what to use and in what quantity.”
As if to underline the point, the banker-turned-exchange professional who first demutualised and then corporatised Asia’s oldest bourse, the Bombay Stock Exchange (BSE), sets the culinary rules. “This is a vegetarian’s table,” he stipulates, which, as a fellow Gujarati, is not a problem for me.
Patel is familiar with the Namak menu, which contains a potted history of the Gandhi’s 1930 Dandi March that forced the British to repeal the salt tax. He selects subz-e-shorba (a spicy vegetable soup) and bharwan tandoori alloo (potato roasted with spices in a tandoor) for starters and defers ordering the main dish.
Patel became a somewhat controversial figure on the Street in the later part of his career. He resigned from BSE in August 2008 after a career of seven-plus years, a few years less than its popular Executive Director M R Maiya, and joined the Anil Dhirubhai Ambani Group (ADAG). It was, however, the manner of his exit that raised questions. That’s because in October 2008, ADAG’s Reliance Money bought a 10 per cent stake in Ahmedabad-based National Multi Commodity Exchange (NMCE), in which BSE had bought a 26 per cent stake in February of the same year.
In August, with Patel still in charge, BSE dropped plans to increase its holding in NMCE. So when Patel left the same month and joined ADAG in November, a month after it took its stake in NMCE, eyebrows were raised. I tell him that there was a lot of talk in those days that he had accepted the ADAG job while he was still managing director and CEO at BSE. He laughs and denies it. “How can the market know more about me than I do?”
But as minority shareholder, ADAG managed to do little with NMCE, and Indian Commodity Exchange, in which it is an anchor investor, has become the group’s chosen growth vehicle in this space. So Patel, who officially took charge a few months ago, has a critical role to play now.
But he’s used to such pressures. When he joined BSE from the Reserve Bank of India’s surveillance department a decade ago, it was in crisis. Patel corporatised the exchange, battled the finance ministry to save Rs 500-odd crore of stamp duty, reduced the brokers’ stake in the exchange to below 50 per cent and brought in overseas exchanges as stakeholders.
Then he abruptly resigned. The rumours swirling around Dalal Street were that the brokers, now pretty much out of power at BSE after over a century of dominance, were not allowing him to work. There were other charges and complaints with some allegations that BSE’s spending was not generating the required results.
What went wrong? He’s unwilling to discuss it, saying, “I never look back. It’s a done game and I don’t have regrets.”
His predilection for not looking back, he says, comes from several early disappointments. He was selected for the Indian Institute of Management, Ahmedabad, but had to give up halfway because his family wanted him to start earning. Lack of funds also meant he gave up studying chartered accountancy and an admission to University of California.
Had he had a choice, he says, he would have become a professor of literature. “I wrote poetry well in those days,” he remembers. He hopes to half-fulfil his writerly wishes by starting a book on the commodities market. But I can’t help thinking that a professorial profession wouldn’t have bought him his Mercedes (E Class), Mitsubishi SUV or allowed him to indulge his passion for motorbikes.
He learnt to ride a motorbike when he was 25, and within a year was participating in a Delhi to Kanyakumari rally. He has changed 12 bikes in the last 25 years. Bikes – he currently owns a Yamaha – also appear to endorse his management philosophy since “driving a bike teaches you balance.”
Biking is his chosen stress- and boredom buster. As he orders the main course — mirch makai hara pyaj, baingan ka bhartha with rotis (without butter for him), he tells me a biking anecdote. At one time, when he drove on the Western Express Highway, his bike invariably packed up near Dahanu, where the Maharashtra border ends. Once he started visiting the Mahalaxmi temple there, the breakdowns stopped. Then he quickly clarifies that he is religious but not superstitious.
Now that the main course has arrived, I get down to business, literally, by asking what challenges he faces in ICEX, given the growing crowds in the business (there are five active futures exchanges including ICEX and three waiting to start). Also, ICEX, which opened for business in October 2009 with ADAG assuming role of an anchor investor from January 2011, is struggling to gain double-digit share in a market in which MCX and NCDEX hold 90 per cent between them.
Instead of answering, he pounces on the short form I use, saying the exchange would now be called Indian Exchange, though the name is not being changed officially. A rebranding exercise is on — including a new logo, corporate colours, even visiting cards. “I have spent a lot of time with the designers on the design and colour scheme. They reflect our belief in transparency, doing everything right and seizing the right opportunity,” Patel says.
As for his growth strategy, he says he doesn’t intend to be a me-too. “Others do things differently, I do different things differently,” he adds. For instance in the spot exchange, Reliance Exchange Next, that he set up as a greenfield venture over a year ago, he opted for 100 per cent delivery and auction of commodities, a first for spot exchanges in India.
So how will Indian Exchange be different? “I am refocusing business because the transition [from IndiaBulls anchoring the exchange to ADAG] is over now and am paying more attention to the agriculture sector,” Patel said. Futures trading in minerals is also an option. The exchange has launched futures in iron ore, a first globally, but trading volumes are scarcely spectacular.
Patel says he’s not targeting huge volumes but a good delivery mechanism and better client servicing. “We’re looking at slow and steady growth, cementing our position and creating an institution,” he explains.
“We are also considering how we can be a thought leader in services in the business and establish synergies with the group’s spot exchange,” he adds. Since commodity trading is almost a Gujarati monopoly in India, he’s launching the website in Hindi and Gujarati as well.
By this time, we are through with the lunch but I still had a question to ask. Why, at 50, is he still a bachelor? He has twice avoided answering but now that he orders coffee, I get my chance to repeat the question. After some thought, he says, “I am a workaholic and not inclined to socialising.” Since socialising is the lifeblood of Gujarati families, he is certainly, in that sense, an ethnic outlier.
