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The Rediff Interview/Rajiv Memani, Chairman & CEO, Ernst & Young India
Meet the man who heads Ernst & Young India
August 18, 2006
Rajiv Memani took over as the head of Ernst & Young India from his father, Kashi Nath Memani, on All Fools' day in 2004. It is nothing unusual in India (or, for that matter, the whole of Asia) for a father to hand over the reins of a business to his son upon retirement. But it had never happened in a multinational professional services firm, that too, a leading name in the business like Ernst & Young, writes Bhupesh Bhandari.
Eight key partners of the firm, including Bobby Parekh and Mukesh Butani, quit after the succession was announced. Parekh and Butani had strong brand equity in the market place, while Memani was still in his mid-30s and a little wet behind his ears. It was also up to him to see the integration of the Arthur Andersen (which it had acquired in 2002) team with the Ernst & Young team. Sceptics had called the merger a cultural mismatch. All told, industry watchers did not give Memani more than a few months on the hot seat.
Two years later, as he sips nimbu pani at Aangan, a restaurant that serves authentic Delhi cuisine, at the Hyatt Regency, Memani looks anything but challenged or under threat, though some hair has turned grey and he has put on some weight around the stomach. Even his worst detractors admit that he is in full control.
"For the first six months, the threat was more external than internal," says Memani. Soft-spoken and a miser with words, Memani has always given me the impression of knowing much more than what he chooses to disclose in the 10 years or so that I have known him. On some gentle prodding, he elaborates that more than people within Ernst & Young, it was some of the firm's clients who doubted his ability to deliver the goods. Initially, he did lose some business, Memani admits, but he more than made up in the days that followed.
"We have grown close to 40 per cent in 2005-06 (around 20 per cent in 2004-05)," Memani says with quiet pride. In 2005, Ernst & Young had 65 partners. By the end of this year, he is hopeful of raising the number to 90. Ernst & Young has four partners on deputation from the Ernst & Young practices in France, the US, Canada and Germany. Memani leads a young pack of professionals - the average age of his team is just 27.
Memani has been associated with several high profile transactions in the last couple of years - Ernst & Young is the Indian government's advisor in the Iran-Pakistan-India gas pipeline, it advised ONGC on its Sudanese foray and Indian Oil on its plans to acquire the prestigious Tupras refinery in Turkey. He also did the $400-million "takeout financing" (this involves replacing old debt with new, while placing some equity with the lenders) for Sanghi Cement, one of the largest such deals in the country.
Memani claims he is now ahead of all others in every practice - tax, audit, risk management and transactions advisory. But then all professional services firms are in the habit of making similar claims with remarkable regularity. As these firms choose not to disclose their financials, it is next to impossible to verify such claims and counter-claims.
However, Memani's rivals do admit that he has signed more deals than others. This lends itself to the question, does Memani close all the deals he signs up? Does he bite more than he can chew? As we wait for the grub (a Marwari to the core, Memani has settled for dal makhni and a mushroom and pea curry, while I have chosen ran-i-Aangan from the non-vegetarian fare only because it sounds so musical), I quiz him about some of the high profile deals that developed a snag.
Sahara had signed Ernst & Young to advise it on the sale of its airline, Air Sahara. After flirting with more than one suitor, including the flamboyant Vijay Mallya, it had chosen Jet Airways. But the deal fell through in the final lap, with both Jet and Sahara dragging the other to the courts. Memani is reluctant to talk about why the deal failed. "Not all deals you undertake get completed," he says philosophically, adding: "Maybe, the market read it differently."
In other words, the Jet stock fell after the deal was announced and Naresh Goyal would have to offload a much larger stake than he had originally planned in order to raise money with which to buy out Sahara. All the parts of the jigsaw puzzle now started to fall in place. Memani is a frugal eater. He takes a small helping of dal and starts nibbling at a tandoori roti, while my knife and fork work vigorously on the ran which has come straight from the oven. The mushroom curry lies at one corner, waiting to be partaken of.
Memani had also advised Malvinder and Shivinder Singh's Fortis Healthcare on its acquisition of Escorts Heart Institute in New Delhi from Rajan Nanda's Escorts. But Anil Nanda, Rajan's younger brother, went to the courts against the deal alleging that the hospital was fraudulently converted from a charitable trust to a hospital. (As a charity, it had got the land for the hospital at a concession.)
"Everybody went into it with their eyes open," says Memani. He shrugs off Anil Nanda's protests as nothing more than an irritant: "The hospital's management is with Fortis and the board has changed accordingly."
A cup of cappuccino later, Memani is ready to leave. The restaurant which had been empty when we came, had filled up to capacity and is now empty once again.