It all began with a bike ride. When Raamdeo Agrawal offered a lift to Motilal Oswal on his way to Andheri in Mumbai, the duo had no idea that they would one day become the most prominent names on Dalal Street. At that time, Agrawal was just helping a fellow junior staying at his hostel, but eventually their journey was going to be much longer than a bike ride. Oswal thinks that the movie Sholay depicts their friendship very well. Just like how Jai and Veeru’s friendship remained resilient through life’s highs and lows in the movie, Agrawal and Oswal, too, have stuck by each other through various tumultuous phases of the market with sheer conviction and, of course, a little bit of luck. Starting out as sub-brokers in 1987, today Motilal Oswal Financial Services (MOFSL), which clocks a revenue of more than 1,000 crore, has a diverse range of businesses under its fold including the AMC business, private equity, wealth management, home finance, retail broking, institutional equities and investment banking. It is hard to miss the contrast in their personalities. If they were to reprise the central characters in a remake of Sholay, then Agrawal, with his fun-loving demeanour, would be a natural fit for Veeru’s role while the sedate and soft-spoken Oswal could seamlessly fit into Jai’s character. 

How did the two of you meet?

Oswal: Both of us came to Mumbai to become chartered accountants and were living in the same hostel...

Agrawal: ...We had not interacted much with each other except for exchanging a few pleasantries. One day, I saw that he was looking for a lift. Since I had a bike, I offered to give him a ride. As we got talking, I realised both of us were equally passionate about stock markets. The next day, too, I saw him looking for a ride and we met again. On the third day, he just came over to my hostel room to hitch a ride. This is how our friendship developed. 

How did the idea of setting up a business come about?

Agrawal: We discovered that we could talk hours on end about the market. Actually, two of his brothers, from Chennai and Ahmedabad, were running a business and he was a conduit in Mumbai for his brothers. 

Oswal: I was keen on entering the market. Raamdeo was already investing in the markets by then, and that’s how we became friends. He used to go to the trading ring and I tagged along with him. 

Agrawal: I used to give him quotes to help his brothers. He would go to the nearest PCO and call his brothers to give them those. His brothers would buy those shares that would be trading lower at other exchanges. Subsequently, the brothers would offload the shares in Mumbai. I was clear in my mind that I wanted to enter this business because we knew everything about the markets; but, we didn’t have the money. So, when Sunder Iyer gave us the opportunity to work for him as a sub-broker; it was a win-win situation for us. Motilal’s brothers got us their sub-brokers and we, too, got some ready clients. With the brokerage earned, we started buying stocks for ourselves. In the 1990s, we decided to become members of the Bombay Stock Exchange. We borrowed 10 lakh from his brother and somehow arranged for another 23 lakh and bought the membership. This singular decision played a big role in shaping our future. 

How did the early days pan out?

Agrawal: It was an unbelievable story that two guys living in a hostel could make so much money in a matter of few years. We were fearless in buying stocks. We bought all kinds of stocks. We pretended we knew everything, but we didn’t know what was happening. We had bought into a lot of banks like SBI, ICICI, Vysya Bank, etc as reforms were coming. Unfortunately, in the Harshad Mehta scam, banking stocks were the worst hit. As a result, our 32 crore became 10 crore. 

Somehow, we lived through the bear phase and our operations started becoming larger. Between 1992 and 1997, we were making a lot of money again. We didn’t know whether we were underperforming or outperforming the index. We would just buy some stocks and it would go up by 20-30%. Then the Y2K bull run came and we touched 100 crore. 

Oswal: Earlier, the BSE members were not allowed to expand into other cities. However, NSE, which came in 1994, changed that. So, after becoming members of the NSE, we kept appointing more sub-brokers and intermediaries across the country. 

Agrawal: Before 1996, the regulations said that we couldn’t be partners if we were not blood relatives. So, I was working as consultant to the company and Moti was the proprietor.  

Oswal: In 1996, we floated a company together, which marked the beginning of our corporatisation. The market became larger as institutions started coming to India. Earlier, we were only doing retail broking. By 1992-93, Morgan Stanley came to India, so we became their brokers because of our research expertise. 

What qualities did you see in each other as business partners? 

Oswal: Earlier brokers were not trustworthy or transparent. So, I had lost money with one of the sub-brokers with whom I used to deal. We thought instead of generating business for somebody else, why don’t we do the business ourselves? He had access to the markets and I had the clients. His forte was research. I had some skills in terms of accounting. We kept on building on each other’s strengths and developed a sense of trust. 

Your relationship is nearly three decades old. What has been the learning during tough times and how has that strengthened your relationship?

Oswal: I think some of our toughest times have been when the market was in a prolonged bearish phase. However, on a personal level, there were no tough times. Even in our business spanning over 29 years, we only made losses for two years. And that’s not bad at all. There were challenges when markets were in turmoil, but we always had the conviction that in the next five to ten years, things will get better. We never lost confidence in the business. We consider ourselves lucky as the markets matured and expanded with liberalisation, entry of FIIs and better technology. All of those things threw up a lot of opportunities for us.

What is the one skill you learnt from each other?

Oswal: One thing I have learnt from him is the science of reading balance sheets. I have also picked up from him the habit of reading books. It has helped me a lot in running the business because our business is all about knowledge, motivating people and retaining talent.

Agrawal: I have learnt to execute well and running the train on time from him. For instance, we hired a professional firm to work on our office. But, the work was getting delayed. He sat here for six months and saw to it that it got completed. So, somebody has to take the bull by its horns and get things done; it is not easy. Another thing I have learnt from him is about trusting people completely once they are competent. 

How would you describe each other?

Agrawal: He is someone you can trust 100%, whether in a business situation or personal situation. I know he commits mistakes; he knows I commit mistakes. But, he has created that space where we can disagree without being acrimonious — that is important. Right from the beginning, I was very clear that I did not want to be controversial. I didn’t want any irregularities from the income tax department to hound us. This company was built on twin pillars of integrity and research — both of which were missing in our competitors in those days. He took the responsibility of execution and made sure that these values get ingrained in the fabric of the company. He is a man of detail. He is a taskmaster and he gets things done. In this business, you cannot drag your feet on certain matters. 

Oswal: He is very upfront in his views. On many occasions, he would have a strong conviction on some ideas and I would have different views. But, I accept his views and we move forward. He is frank and passionate not only about markets, but also about growing the businesses. I am relatively restrained when it comes to delegating responsibilities; he will delegate 100%. I like to assess and understand the person first, before I slowly give him the freedom. On the other hand, he will just delegate responsibilities from day one. He will tell the guy, ‘You can join from tomorrow; don’t bother me. I will be around but you just take care of everything.’ So, we have a very different working style. 

What’s the one thing you’d like to change to about him?

Oswal: I think he can prioritise his time better. He can be far more valuable for himself and for the company, if he can prioritise his time for what I call ‘high-impact areas’. 

How often do you spend time together?

Oswal: Besides work, we visit each other’s homes. We also have a holiday home in Ambi Valley; we go there sometimes. Otherwise, most of our time is spent in office together. After that, he has his own set of friends; I have my own.  

How do you resolve professional conflicts generally? How do you come to a common ground, or do you decide to go with one view?

Oswal: There are many occasions when we differ in our views. However, major decisions are taken after consulting each other. Since different sets of responsibilities are marked for both of us, he handles new businesses, new people, research and asset management, while marketing, sales and managing relationships fall under my ambit. We offer each other our views, but in the end, we are responsible for taking our own decisions, given the different roles we play in the company. 

Have there been any decisions that have gone wrong that you have learnt from and today you can look back and laugh about?

Agrawal: One of my biggest mistakes while investing was to put money into Financial Technologies. I interviewed Jignesh (Shah) for about four to five hours. Next day, he (Motilal) warned me about Jignesh. But I went ahead and bought the shares. Then, within six months, what I had bought at 1,000, I sold at 155. That incident taught me that never to sleep with crooks. See even in today’s crisis, all the bad companies are in deep trouble and good companies are proving their mettle. 

Oswal: I had cautioned him because he (Jignesh) was being very pushy; I didn’t like that. He tried everything to make us buy his software. I said that if I didn’t like the software, I wouldn’t buy it. He kept pushing hard and I didn’t like his style of doing business. 

What’s the one thing he talks about for hours on end?

Oswal: Outside the office, most of our talks are around business. 

Agrawal: There is so much to do. When we meet outside, it is just like old times. If I want to talk about something concerning our senior management, I can speak to him. I can talk about some strategic issues that are on my mind. It is peaceful away from the daily hustle-bustle of office. We listen better. We can even discuss some very important personal matters like my son’s career or related issues regarding his son or any other family member. 

How do you stay connected? Who reaches out more?

Oswal: It is need-based. See, every Monday we meet during our corporate affairs meetings and on Fridays we meet over lunch. 

Agrawal: On Monday mornings, the first thing we do is to have a meeting of about one-and-a-half-hours where we discuss corporate strategy. Otherwise, during the day, we connect through calls, mails or a quick 5-10 minute chat. We also meet for monthly and quarterly appraisals.  Sometimes, we end up having impromptu meetings during lunch. So, we are constantly interacting. 

What’s the most memorable milestone that you achieved together?

Oswal: The way the AMC and PMS business has grown and performed over the last 13 years. The AMC crossing the $1 billion mark in assets under management was one of the memorable milestones for both of us.  

Do you know each other’s favourite food and drink?

Agrawal: Classic, hardcore Marwadi food. I think he loves dal baati.

Oswal: Oh yes! A Marwadi has to love dal baati. 

Agrawal: His favourite cocktail…. (chuckles and looks at Oswal)

Oswal: Chai.