Mourn the Loss of India’s Value Investor

Posted On Wednesday, May 06, 2015


Life and destiny have their own way, natural disasters or may it be a sudden demise, we have no control over it. The Nepal tragedy was one such unfortunate event where we lost thousands of lives. Companies could have lost both staff and key leaders bringing operations to a standstill.

In the past there have been several instances in the Indian scenario where companies lost their heads and the positions were left vacant. To take a recent example this week the investor community of the country received the shocking news of the loss of one of its veterans. “India’s Value Investor” was involved in a tragic car crash in the US.

While we share in the losses, these unfortunate events highlight the vital importance of succession planning, both at the corporate level and individual level.

We believe that in all likelihood the said corporate would have had a plan in place which they might announce in the days to come. However at the same time it serves as a nudging reminder to all of us that – fragile the way life is – we must have in place proper plans and systems to ensure smooth transition for those succeeding us.

Succession planning is vital for managements
Leadership loss could happen for many reasons. Could be the case of a sudden illness or an accident as in the current situation. The top executives could have got wooed to another firm. Otherwise it can be that the captain steps down at retirement. Thus it could be a planned or unplanned event.

When people in key leadership positions of a firm are lost it can mean trying times even for the best-run companies. They leave a void at the top and the firm risks losing its momentum. Therefore it is important for firms to have a steady program to raise the next generation of leaders ready to fill those roles. If not, they may end up with an empty C-suite—or worse, under-qualified people may move into leadership roles because there is no one better to take over.

Sometimes the original founder could be a charismatic personality whereas the successor may not be so. However this does not necessarily impact the firm’s future business. What matters is that the successor is competent and shares the passion and vision of the founder. We see this in the case of Apple and Microsoft where after the departure of their legendary founders they are still very successful under their current leaders.

The quest for who will take over after the sudden demise of the founder is harder for smaller companies and family run businesses, in the absence of a prior succession plan. Experts say restaurant chains are particularly vulnerable as they employ large numbers of people, making good leadership so much more important.

Incidentally our fund managers give weightage to this issue and investigate their prospective managements about their succession plans, especially when the top leader is the overshadowing figure in the company. Only when they are satisfied with the plan do they consider them.

Often for corporates, succession planning has the shallow application of merely naming the Next-in-Lines on paper. Who’s going to take over the role of CEO/COO/CIO etc., once they are gone. However, good succession planning would go much, much beyond than that. It would involve not just identifying the Next-in-Lines but mentoring them throughout so they are prepared to take over the reins when their time arrives.

Moreover the best corporations involve not just the top level of managements in succession planning but ensure that culture is deeply embedded in the organization. That all employees are in sync with the philosophy and ideals of the firm and are dedicated to its common goals.

Provisions at Quantum
At Quantum we’d like you to know that succession planning is being treated with enthusiasm. In our early days our founder Mr Ajit Dayal and director Subbu were sort of like the face of Quantum Mutual Fund to the world outside. Gradually they have been stepping back to encourage other leaders to shoulder important responsibilities.

There are internal on-going programs to identify and foster our next generation of leaders through mentoring. Our HR program guides team leaders to identify and train the second-in-line at team levels. At the town hall meets senior leaders encourage all staff to nurture the Quantum culture, which is founded on the traditional ideals of simplicity, transparency and integrity; even as we stay focused on the needs of our investors and aim to be India’s most respected mutual fund house.

By emphasizing on teams which is central to Quantum’s philosophy we are invariably being prepared to tackle situations of casualty. We have always stressed on the team-driven process and approach to managing investments. Whatever decisions are made regarding the portfolio involves the entire investment team and is not a fund manager decision alone. It takes the conviction of team members to move on decisions.

In addition, similar to the best practices followed in other good companies we have risk policies in place to mitigate or protect against risk. Some of them include having a Disaster Recovery site, Business Continuity Plan which ensure that regular operations do not affected and Business Travel Policy for the executives.

As individuals we all need succession planning
Now coming to our preparedness for uncertainties as individuals, there are 3 important aspects to pay attention to. Firstly we can ensure that we have adequate insurance cover. This includes all assets that can be exposed to risk – life and health covers are the most common ones.

Secondly every person with some financial asset must have created a will. A will is nothing but a legal document which states your desire about who would receive your assets when you’re no longer around. Typically your will can be written on plain paper, but it should mention who the executor of your will is. Two witnesses must be there when you sign the will (they don’t need to see the contents of the will) and they must not be the beneficiaries of your will.

Finally we can ensure that all our financial assets including mutual fund folios have a nominee. The nominee is entitled to claim the units.

Thus like the old idiom goes, let us all hope for the best but at the same time stay prepared for the worst. Because… ultimately the show must go on! Do consult your financial advisor for assistance on investments and personal finance matters.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – to read scheme specific risk factors.

Above article is authored by Quantum.

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