The Hindu Business Line : During Ravi Mehrotra's era

THE idea that an individual can find God is terribly self-centered. It is like a wave thinking it can find the sea" - Sir John Templeton (source: www.templetonpress.org)

The news that Mr Ravi Mehrotra would soon leave Franklin Templeton made the asset management industry sit up last week. No serious observer of mutual funds would want to ignore the development, especially in view of the fact that his name is almost synonymous with private-sector fund management in this country.

For those who joined the party late, Mr Mehrotra started out with the erstwhile Kothari Pioneer MF, the first private-sector player that took off in the early 1990s and was later acquired by Franklin Templeton. That acquisition, and obviously its own growth plans, has helped FT emerge as among the top fund houses in India, a large organisation that currently manages a fairly wide range of funds.

How should a lay investor react to the news? Should he react at all? After all, CEOs have come and gone, top management structures have changed, new systems have replaced the old. "These things keep on happening all the time," is one way of looking at it.

The scene then & now: The other, and possibly a smarter way, of considering it is by imagining yourself in the FT President's position, looking back into history and comparing the past with the present scenario. You would end up considering two vastly different sets of circumstances, set apart by a dozen or so years.

Circa 1993. Economic liberalisation has just set in. The private sector has been allowed to establish mutual funds, and a few corporate groups are exploring the possibility of investing in the business. The industry is completely dominated by UTI and other public-sector players like GIC. There are scores of guaranteed-return schemes. Investors are still heavily focused on fixed deposits and the like.

In 2005, it could not have been more contrasting, not with about 30 asset management companies (managing roughly Rs 2 lakh crore) clamouring for a greater share of the investor's wallet. There are lots of distinctive products, including exchange traded funds and funds of funds.

A plethora of diversified equity funds focused on major themes now wants your attention. There is a great deal of competition too, some of it generated by unit-linked plans offered by insurance companies. Guarantees are simply passé; returns are necessarily performance-linked.

Meanwhile, investors' sentiments are quite positive, particularly on the equity side with the Sensex hovering at over 9,000 points. Talk of new foreign players entering the Indian space is gaining ground.

Difficult times for CEOs?: But despite all the encouraging vibes, the current state of affairs probably makes a fund CEO's job even more difficult. Clients were never more demanding and money was never more flighty, while regulatory agencies were never more likely to spring a surprise or two. In short, there are far too many constituencies to think about.

Where does the chief's departure leave FT? As things stand, it is a leading player, complete with strong parentage and a number of well-known products. All of this would remain true - the stoic observer will surely suggest that the institution is greater than the man - but it would be interesting to see whether his replacement actually gives FT a new direction.

It would also be interesting to see how Mr Mehrotra himself re-surfaces and the kinds of things he brings to the table in a new avatar. Watch this space for more.

Feedback may be sent to nilanjan@thehindu.co.in

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