Ajay Piramal

The Bhagavad Gita is omnipresent on the 10th floor of Piramal House, the corporate headquarters of Piramal Enterprises, at Mumbai’s Peninsula Corporate Park. There are inscriptions from the Gita on the walls. All around are brilliant 100-year-old sculptures made out of granite that were sourced from a place close to the ancient city of Hampi by sculptor Adwaita Gadnayak, meant to represent different interpretations of the Gita.

All the conference rooms bear the different names of Arjuna — Dhananjaya, Partha, Kapidhwaj and Parantapa, among others. The main conference room — which is where the all-important board meetings and monthly review meetings are held — aptly bears the name Arjuna. This is also where the Piramals, their friends and senior leaders from the company would get together for their weekly Gita classes, till the venue was shifted to the ballroom on the ground floor. 

Ajay Piramal

All this seems completely natural when you consider the fact that the Bhagavad Gita is the rule book Ajay Piramal, chairman of the eponymous group, swears by. It is what defines him as a leader and, more importantly, as a person. In fact, Piramal calls the Bhagavad Gita the greatest management book ever written, with his family even having put out a book on the 18 verses of the Gita and their relevance to corporate life.

It is from the Gita that Piramal derives the concept of trusteeship, as part of which he believes that he is the trustee of his stakeholders’ wealth and it is his responsibility to manage that wealth in a way that creates maximum value for them. The Gita’s teachings of focusing on action without expectation of the outcome, fearlessness and courage gave him the confidence to be a contrarian: to foray into pharmaceuticals from textiles, be an early entrant in contract manufacturing and, now, bet big on financial services. It is also the force behind the equanimity with which he takes both successes and abject failure —be it with respect to people or deals — in his stride.

But the single most defining lesson from the Gita for him has been the one that advises being fair and doing the right thing even in difficult situations. “He meticulously follows these principles. He believes that if you abide by these values, you can create value for all your stakeholders in the long term,” says Rajesh Laddha, the group’s CFO, who has been with Piramal for the past 15 years.

Origin story

Ajay Piramal was all of 24 in 1979, when his father passed away in New York. In 1982, his brother, Dilip, decided to carve out his share of the business from his father’s empire. A year-long textile strike led by Datta Samant took the wind out of the textile industry and the group’s flagship company, Morarjee Mills, started losing money by the day. Piramal’s eldest brother Ashok, who had taken over the family business, passed away in 1983 after an unsuccessful battle with cancer, leaving behind his wife Urvi and their three sons. So, in 1984, Ajay took over the reins of the business. “I still remember that by that time, textiles were already in trouble. He was conscious of the fact that he was looking at a difficult industry and wanted to enter the consumer business instead, where he thought he could build a brand,” says Vijay Shah, who joined the group in December 1987. 

Shah was chosen by Piramal to draw up a formal strategy for the group and evaluate new businesses as the country moved out of the license raj era. A string of acquisitions, such as those of the Indian subsidiaries of Roche, Boehringer Mannheim, Rhône-Poulenc, ICI and Hoechst Research Centre, helped Piramal become a force to reckon with in the pharma business. N Santhanam, who is now the CEO of Breach Candy Hospital and who worked with Piramal for a decade as the group’s CFO and COO, fondly recalls his first day at the group.

“The wedding preparations of his nephew were on, so he had taken a couple of days off from work. But he made sure he was in office the day I joined and duly introduced to me to the entire team. Anyone joining the group would start feeling at home by the end
of their first day at work,” he says. That was a courtesy Piramal extended to everyone in his senior management team. 

Once they are on board, Piramal trusts his team members implicitly and lets them take crucial decisions instead of testing them over a trial period. In fact, Santhanam recalls that he was asked to head the ICI acquisition fifteen days after joining the group in December 2001. “In the middle of January, I was called in by him to lead the deal and by the end of the month, we had wrapped it up,” he says.

He later found out through a lawyer friend that one of the other bidders had foregone their Diwali leave to complete the due diligence on the deal and Santhanam says he wondered how Piramal was able to snap up ICI so quickly. “There is no second-guessing on his part once he entrusts you with a responsibility,” he adds. According to him, Piramal has excellent people skills and that is the major reason behind the group’s ability to make acquisitions work. 

“He has this ability to connect with everyone, be it factory workers or the CEO of the acquired company,” says Santhanam. Shah recalls the time when he had just joined the group. He says he used to keep telling Piramal that the glass business wasn’t performing to its potential. “I used to pester him saying that we should be doubling our capacity. I felt that the management was being too conservative. After hearing me out a couple of times, he told me, ‘Why don’t you take over and do it?’” So, Shah took over as managing director in 1992 and, over the next eight years, he managed to grow the business from ₹26 crore to ₹232 crore, establishing a leadership position in the pharma packaging business.

Family man

His employees say Piramal is quick to address whatever concerns they might have. “He is an intuitive leader who quickly gets to the heart of the matter. He inspires and engages everyone he meets with his warmth and remembers everyone he has met by name — that is not an easy thing to do unless you are a fabulous listener,” says Jonathan Sandler, managing director, IndUS Growth Partners, which is responsible for identifying companies for the group’s foray into financial services, real estate and information management.

Sandler recalls his first meeting with Piramal and says most of the conversation veered towards family and value systems rather than work. For Sandler, used to straight-talking Americans, the interview was an eye-opener to the kind of person Piramal is and the foundation he has laid for the group — focused more on people and values rather than outcomes. His family — including wife Swati, daughter Nandini and son Anand — all play very crucial roles in the group.

On company offsite visits where the senior management gets together to discuss strategy, their families travel with them. So, during the day, the management holds its meetings and in the evenings, everyone unwinds together with their families. Piramal takes interest in how his employees’ family members are doing and finds out what they are good at. For instance, Santhanam’s wife was a good classical singer and Piramal, a connoisseur, would ensure that there would be a music session in the evenings during the offsites.

Anyone who has worked closely with Piramal will tell you that the first 5-10 minutes of conversation at a meeting — no matter how critical it is — is never about work. You are always greeted with a “So, what’s happening?” when you enter his room and time is always set apart for discussions about family, the latest political update or the latest cricket match. Piramal makes an effort to establish a personal connect with the people who work for him. “There is genuine concern about how people are doing and what is going on in their lives. The conversations always go beyond business and he is able to connect with people across the board. His talent of thinking of the business in terms of its people is very rare. In most companies — and more so in multinationals — you tend to think of the business in terms of numbers and metrics,” says Shikhar Ghosh, chairman, IndUS Growth Partners. 

PP Kutty Krishnan, who runs the chairman’s office at the Piramal group, remembers an occasion when he had to leave work early due to an emergency at home. A board meeting was underway but Kutty didn’t want to leave without informing his boss, so he sent a note inside the conference room, informing Piramal of his early departure.

“Mr Piramal came out immediately to enquire what was wrong and if I needed any help. It didn’t matter that he was in the middle of a very important board meeting — he just wanted to ensure that I was okay,” he says. 

Crunch time

Piramal’s equations with people remain the same even after they leave the group. Santhanam says Piramal makes it a point to meet him every time he visits Breach Candy. Piramal and his wife even made time to travel to Chennai for Santhanam’s daughter’s wedding.

During Catalist 2014, an Outlook Business event where Piramal was the keynote speaker, he didn’t hesitate to walk up to greet Ajit Mahadevan, country director, Acumen, and the former president of the contract manufacturing business at Piramal Healthcare, and spend some time with him. He is known for never putting his employees before the business and for Piramal, credibility comes before anything. Khushru Jijina, who is the managing director of Piramal Fund Management and who has worked with Piramal closely for more than a decade, recalls a situation with the textiles business back in 2002.

“Most of the textile mills were bleeding and nine out of 10 textile owners had thrown in the towel. We were facing similar problems and losing money every day. There were suggestions that we should let the business come under liquidation. But Piramal stood his ground and said that we will pay off everything. It is during testing times that the mettle of a man is apparent and how we emerged out of that crisis shows the character of our group,” he says. 

The management formed a task force that would meet in Piramal’s office every Monday at 6 pm to come up with a solution. They decided to convert the mills into real estate to pay off lenders but needed to get the nearly 2,500 employees on board for the plan to go through. Jijina recalls that one Sunday morning, Piramal met the employees to explain what he had in mind.

“He told them that my family is here because of you, as it was the textile business that had allowed him to set up his other businesses. He connected with the employees and explained to them what the situation was like. He told them that I don’t have the money and explained what plans he had in mind; he said, ‘I want you to go home happy’. At the end of meeting, all the employees agreed to get on board,” says Jijina. All of them left accepting a golden handshake that was three times what the company was required to give by law. The bankers were a happy lot, too, since they didn’t have to take a haircut on the loans. The group requested for a six-month period to pay off the loans and was not required to pay additional interest. 

Mahadevan recalls the time when — in the midst of closing a deal — he got the news that his wife had delivered a baby girl and, like most first-time fathers, he was dying to spend some time with the newborn. Piramal told him take 10 days off and come back when he was ready.

“He told me that the deal can wait; he said, ‘You go do what you have to do’. I don’t know of any other business leader who would say that,” he explains. Mahadevan had a consulting background and after working overseas for a while, wanted to join an Indian company. He remembers meeting Piramal during an interaction set up by a headhunter.

“I didn’t come from the pharma business. He was very clear about the role that I was to take on. He told me that whatever I make of the role, he would be okay with it. He makes you relaxed. With him, you don’t have to know all the answers,” says Mahadevan, adding, “He is a great judge of people, not only his own, but also his business partners.” 

In fact, for the group’s pharma business, several of his key hires were from consultancy firms such as McKinsey as he felt that they brought in a new perspective and out-of-the-box thinking to the business and knew how to build brands. Piramal often takes a chance on the people he hires and gives them roles based not on their experience but where he thinks they would add maximum value. “This has worked well for him, since he has this ability to pick the right person for the job. Once he does, there is no backseat driving, which helps in developing leadership qualities,” says Mahadevan.

Takeover king

The Piramal group takes its acquisitions very, very seriously. Not only does Piramal focus all his attention on the deal, he also does a lot of the homework. While all acquisitions are put through a financial framework, Piramal relies on gut and intuition to take the final call. “There have been some companies that didn’t pass the financial test but mostly, he will try to convince you about why he wants to buy into a company,” says Laddha. During deal closures, irrespective of the time zone he is in, Piramal is available on call — sometimes through the night — for discussions. While successful deals are celebrated, missed opportunities are also analysed.

“We do a post-meet analysis on what we missed — and we better not have missed anything. The idea is not to look for mistakes but to understand why things didn’t work out and learn from that. We would examine some of our competitors’ deals to see what we might have missed out and that speaks of his humility,” says Vijay Sathye, who is now the managing director of Meghraj Consultants and used to head the investor relations and M&A function during his stint at Piramal. “There have been many times when the client — after having verbally agreed — backed out of a deal citing some minor technicality, but Piramal would never blame the team. He would say, ‘As long as you have done your bit, you are not responsible for the other party’s actions.’ At any other place, I would have lost my job.” 

A lot of Piramal’s way of thinking was shaped by his father, who believed in values and the importance of trusting and empowering people to run the business on their own. In fact, Ajay was all of 24 when he was given the responsibility of handling the Miranda Tools acquisition. Consequently, he allows people to make mistakes and learn from them. “He was okay with failure and would only ask if you did the best that you could. And if we did, then the outcome wouldn’t bother him. If you go to him with a problem, he will tell you how you can redeem yourself,” says Sathye. He still remembers the day in March 2005 that Piramal asked him to head the M&A function. “He told me, ‘You have done a great job with investor relations. Now, we want you to take over the M&A function as well. But before that, please call your wife and tell her that you won’t be seeing her for the next two years if you take up the opportunity. Go and speak to her. I will wait for your decision’.” 

It didn’t take Sathye long to take up the opportunity and he went on to work with Piramal on several acquisitions. He recalls a trip he took with Piramal to Basel in Switzerland to close one such deal. Sathye was furiously working on the next day’s presentation when Piramal told him to shut his laptop off, catch up on sleep, and not worry about the meeting. Early next day, he asked Sathye to join him for his early morning walk. As they walked the streets of Basel, he asked Sathye to go over the details of the deal, even stopping to check some cameras at a few stores, as photography is one of his passions. “At the end of the walk, he said, ‘Don’t worry, I will handle this. Let’s go enjoy a nice breakfast’,” says Sathye. True to his word, Piramal closed the deal that day.

Seeking a balance

All those who have worked closely with him agree that when Piramal decides to go after a company, there is very little that can stop him. “Behind that soft-spoken personality, there is submerged aggression. He may not know everything himself, but he excels at getting things done,” says Santhanam. Most times, it is very difficult to say no to him.

“He can be very persuasive when he wants to be. In fact, in those days, all of us were given this book by Roger Fisher and William Ury called Getting to Yes, a best-seller on negotiation, which we had to read and imbibe. When the sequel by William Ury called Getting past No came out, we promptly bought copies,” says Shah. According to Shah, during all his discussions, Piramal always played to the emotion of fairness. He would talk to his team about how they could ensure the longevity of the brand while still taking care of the employees. “He would explain our values to clients and detail how we planned to grow the business, and that would give the sellers a lot of comfort,” he says. In fact, in most cases, Piramal has never been the highest bidder, but given his sense of fairness, quick decision-making and the ability to make an instant connection, he has been able to close the deal ahead of the highest bidder.

His decision-making skills have actually been instrumental in making Piramal one of the greatest dealmakers we have seen. “He is a brilliant negotiator, but it is his ability to take quick decisions that sets him apart. He would always say that the worst decision in life is not taking a decision,” says Jijina. Indecision is something he has little patience for among his team members. Sathye says he remembers the Morpeth deal, where Piramal acquired Pfizer’s manufacturing facility in Morpeth, UK. “There were a lot of deliberations since we had to absorb close to 450 employees and there were doubts about whether their skill sets could be fully utilised in the new entity. We were not keen on laying them off. A lot of other companies were also eyeing the facility, but we couldn’t come to a quick decision. Finally, Piramal stepped in with a simple yet powerful advice: do what is best for the business and the interest of all stakeholders will be taken care of. We went on to complete the acquisition.”

While he gladly let his A-team drive many of the group’s acquisitions, Piramal kept his cards close to his chest when it came to the group’s biggest deal — selling off the company’s domestic business to Abbott in 2010 for $3.7 billion, a figure that was nine times the revenue and 30 times the Ebitda of the company. Apart from his daughter, only Santhanam and Laddha had an inkling about the deal and Piramal did most of the legwork for it because he was aware of the apprehension that would be raised if news of the deal travelled within the group. Piramal was very clear about the rationale behind selling the business and once he had made that decision, there was little anyone could do or say that could sway him. Also, in 2005, patents were finally recognised in India. “In the past, you could copy drugs and build on them, but 10-15 years down the line, you either have to buy patented drugs at very high prices or resort to in-licensing. Growth will come down and more players will enter the fray. He had realised that in the long term, there were challenges in the business,” says Shah. 

Meditating on work

But Piramal does his homework when he exits or enters businesses. When he enters a new business, he spends a lot of time understanding the sector. For instance, a lot of his attention now is focused on understanding the financial services and infrastructure space, where he has a presence through his structured investments group, which provides mezzanine funding for infrastructure projects.

“He spent his own time understanding the sector. At times, he would say that he didn’t understand what we were talking about, and to explain it again. But his listening skills and his ability to absorb things are among the best I have seen. During most meetings, he speaks for only 10-15% of the time but asks the most pertinent questions at the end,” says Jayesh Desai, co-head of the structured investment group. Desai joined the group in 2011 to lead investments in the infrastructure space and recalls the discussions they had about looking at road project buyouts.

“He told me that we are financial investors and I am not sure if we should be road owners. I think it took us the better part of a year to convince him. In the end, he told me it was my call, which is true delegation. It is always easy to delegate responsibility when you agree, but it is harder to delegate when you disagree,” says Desai. But Piramal has clear instructions to his team: no presentations more than five slides in length and no reams of printouts for him to read. His rationale is clear — if you haven’t been able to crystallise your idea down to five slides, maybe you haven’t thought through it completely.

Piramal is always curious to learn new things. “He loves new ideas and when he likes an idea, he is like a child with a new toy — totally obsessed with it,” says Jijina. He is also very accessible. “All you have to do is pick up the phone and tell him you want to talk to him about an idea. No lengthy presentations or worrying about punctuations and how to present the idea. In some companies, you spend more time crossing the t’s and dotting the i’s than on the idea,” says Jijina, who pushed the group into real estate fund management in 2012.

Even at the Piramal Foundation, which was founded in 2005 and leads the philanthropic activities of the group, he keeps a close watch on the trust’s initiatives and is curious to learn more about the new projects that it undertakes. “His willingness to learn and to keep at it is something remarkable — you know that there will be five to six levels of questioning. He will keep asking you ‘why’ till you get to the core of the issue,” says Paresh Parasnis, who heads the foundation. “It forces you to think because he asks the right questions, and by the end of it, you would have come up with a solution. Since you came up with the solution, you begin to own it. He will give you his inputs, but it will be your baby.”

As the Piramal group embarks on yet another transformation in its business model to achieve $20 billion in market capitalisation by 2020 driven by four verticals: pharmaceuticals, financial services, real estate and information management, Piramal remains an unchanged man. “It has been quite a journey for Ajay Piramal but he hasn’t changed one bit. The values are the same; the game has changed. The amount and the scale on which he takes a call may have changed, but he retains his humility,” says Jijina.

It is true that success, if not managed well, can become a huge burden, under which many stalwarts have crumbled. But Piramal will face no such problems. Despite the remarkable journey he has been on, Piramal wears his success lightly because he believes — as the Gita has taught him — that he has a right to perform his prescribed duty without thinking of the reward. And that not only makes him a remarkable leader but also a remarkable human being.