At 62, Max Group founder Analjit Singh is trim and fit and says he is at peace with himself—a state of mind achieved because he doesn’t feel the need for habra any more. Translated from Punjabi, that means he is no longer in a tearing hurry, as he was 30 years ago.
In January, Analjit Singh stepped down as chairman of the group he founded in 1982 and built into a Rs15,000 crore empire, with interests in life insurance; health and allied businesses; and speciality packaging films. In August, the board of Max Life Insurance Co. Ltd signed off on a merger with HDFC Life Insurance Co. Ltd that will create India’s largest private-sector insurer, with Rs1.1 trillion in assets.
The promoters of Max Financial—essentially Analjit Singh, his family and related family firms—will hold a 6.5% stake in the merged company and also get a non-compete fee of Rs850 crore. Analjit Singh, who within Max Group is called BAS (short for Bhai Analjit Singh, bhai being an honorific meaning brother), doesn’t like being called a “promoter", preferring the term “sponsor", and seems to have achieved what most business family owners can only think of wistfully—a degree of detachment from the business that allows him to take decisions without any emotional baggage.
Analjit Singh stands out among the top echelons of business leadership in India for his ability to spot an opportunity like he did with telecom (Singh made Rs561 crore in 1998 by selling his 41% stake in a joint venture with Hutchison Whampoa Ltd) and insurance and healthcare early on, and more than that to quit when on top. He ascribes that to foresight and luck; but in reality, it is the mark of a businessman who can read the tea leaves.
Analjit Singh, with the reputation of a serial entrepreneur, is also exploring new businesses, including information technology, real estate and education, under Max Ventures and Industries Ltd (MVIL). In an interview at his elegant home on New Delhi’s tony Abul Kalam Azad Road, Analjit Singh patiently explained his philosophy of life, his current state of mind and how the two relate to his business.
As a strategic businessman, what are the things you are looking at now? When you look at these opportunities, what excites you the most?
I am not so sure that people in my situation look at entrepreneurial opportunities from purely a new-world perspective, as you pointed out. I think they look at entrepreneurial and future opportunities in rather a traditional way but think of these developments as enablers.
What is the traditional way?
It is perspective of the market, key differentiators, compatibility of extensive weaknesses of the individual and the firm to be able to do something like this. So, therefore, in the traditional criteria of finding these opportunities what I meant was market, differentiator, opportunities, regulation...new factor, completely new factor in the decision-making set. The market is over-crowded. Everybody is in the business of over-promising and under-delivering. Capital is no longer a constraint like it was before. To some extent, even technology is no longer a constraint to those people who have some experience and network, you can find the technology. Anything is possible. If you run a world-class airline, technology is available. So, execution is the key. Team is a big factor. Team was never a question in our mind in the past 10-15 years. Today, if I were looking to be in a big business, probably the first question that I will ask apart from market and differentiator is people and team; and then you look at these new-world solutions that you are talking about as how they can become enablers to what they can do.
Besides that, this question is not so pertinent to me. I am not super-engaged to be so rattled about what am I going to do and what will be my next big play. It is not top-most of my mind.
But you will do new things, right?
I will do new things, but I will say I am not besotted with it anymore. My interest is more to tame myself and tame my mind and tame my life. Do you know this word habra? I have no habra.
Were you like that when you did the diversification?
Of course not! Thirty years ago, I was always in a rush.
If you forget about the future for now and look at the past 16 years, what are the things that you have picked up?
I don’t call myself a promoter. I prefer the word sponsor. I think if a sponsor does not have an affinity with the business, that business unless by luck things take-off, I think that business drags. The affinity of a sponsor to a particular business segment is very important. If (Bharti Airtel Ltd founder) Sunil Mittal did not have an affinity for telecom or for technology, Airtel would not have been what it is today (India’s biggest phone services provider). If I did not have an affinity for being in the businesses of life and, therefore, focus on healthcare and insurance for 15-16 years, it wouldn’t have worked.
Affinity and focus leads to execution, passion capital, heavy-lifting, good team equals to success. Therefore, you can apply that mantra to anything—old world or new world. What would you call an old-world business? Pick anything. If I say to myself that I am going to leave everything in my life and get into steel and cement, I will find a new way of doing it and I will be successful in 5-7 years. I will find a way because the need for steel and cement is not gone. If you do it as another unit with the traditional way and traditional people, it is a recipe for disaster. So, we have to find an IndiGo (India’s biggest airline) way of getting in steel or cement. IndiGo is a very good example of what I am saying. What is the revolution and reinvention of being in the airline business? People have been in the airline business. They are in the airline business. They will be in the airline business, but most companies fail.
So, why is IndiGo successful? Do you think (IndiGo co-founder) Rahul Bhatia goes and fixes the tyres of the plane every day? No. But somewhere between Aditya (Ghosh, IndiGo president) and him, the way they work is set.
So, the way we work in insurance and healthcare is set, and everybody then would perform to that tune. That’s because you have affinity. That’s a clear lesson and experience that I can share.
Somebody asked me the other day that you are not even now non-executive chairman of your companies. I am of the MVIL (Max Ventures India Ltd) because I am having fun again after 30 years to nurture a new company. Of those, you are of Vodafone.
My point there was: to be a non-executive chairman of a company where you are a sponsor is very different from a non-executive chairman of a company where you are not a sponsor. My remake, role, life, expectations, contact, engagement, communication has to be very different if I am a non-executive chairman of a Max company. The deliverables and expectations are different when it comes to being non-executive chairman of Vodafone. I am not a sponsor. They don’t have the same expectation.
When do you as a promoter decide that it is time that you should become a sponsor? Let us assume that this second wave of successful diversification that you did were not successful, would you still be saying all this?
So, in a way, it also gets linked to your expectations from future and living with disappointments from your past. That’s in a way what you are saying. I think the honest answer has to be that if the outcomes were not as exciting as they have been, I think, I would have not been as restful in my mind about it as I am appearing right now.
I think that’s possibly the case, but it also means in my current way of thinking that I would have to work harder at myself to become restful about the disappointments of the past.
So, luckily for me—and luck is a factor or the blessing that I have—the way I see it from nature and everything else is that these have moved reasonably in tandem. If they had not, the stretch would have been more and one would have to work harder to overcome those disappointments.
Is there someone else in your fraternity who has done this really well? Is there a role model?
I won’t go to the extent of saying whether I have a role model. I won’t say that I am looking at somebody and say look how he did it. But I can tell you who has done it and done it very successfully. He is Vikram Lal (promoter of Eicher Motors Ltd). He is very restful and peaceful as a person. Look what has happened to Eicher. He wanted a particular life for some reason and he went after it and he has got it.
I so solidly believe in impermanence that for me to be attached to a business, in this case, life insurance, it is stupid to be attached to it. When life is impermanent then what is this stigma about a business being permanent. Today, when you look at it, the power of this sector in this business is moving to banks. Whether these (insurance) companies are going to be profitable or not will not be because our premiums will get higher. We have the highest persistency (a measure of policy renewals) in the country—84%. It is unheard of. The No. 2 company is 63%. So, I can’t have more persistency in this business.
The banks are now controlling distribution virtually. So, the only way to improve profitability is expense management. So, power shifting from agency to bankers, premiums not going up, expense management, regulators everywhere in this world are tightening the screws on the companies.
Solvency margin, shareholder profits, expense allowance and disallowance, participating account versus shareholder account. No. 3 some sort of going back to expense management and market share, some sort of geographies have emerged for different companies.
We are very strong in Gujarat; Gujarat is our second or third largest territory. But, more or less, we are more strong in the north and the south than we are in the west or east. HDFC (Life) is more strong in the west and the south than they are in the north. So, if you take the bank they are, you take the opportunity to consolidate and, therefore, cut some unessential costs and you take the link and fourth, product. In our time, we were heavily into protection and savings products. Even today, 80% of our business comes from protection and savings products, not from ULIPs (unit-linked insurance plans) and the like. HDFC is other way around, may be two-third or one-third.
These are the four things that I saw writing on the wall about. And I have to tell you that when as a sponsor, among the 23 or 24 companies that are in life (insurance), if you take the balance sheet of the sponsor, we must be one of the smallest, I think. So from being in that position to sitting at No.3 of 23-24 with all the names you know sitting below us, you can get spoilt; and then, one fine day, because of these four factors, nobody gives you notice of failure in life like you never get notice of death.
The same is in this business, some things just happen, and they change and then all of a sudden you say, oh shit what has happened?
Six months ago, we were like this. And you come from 3 to 6 to 8 to 9. I don’t want to take that chance; but then, it will go back to the question you asked me that if at the end of all this it was not good, would you have felt the same thing and I would have said no and I would have to start again, building again. I can see it happening, but my responsibility is I must not let it happen. Here is my opportunity that God has sent to me, I must take it.
But you do take impulsive decisions? You do take decisions on the basis of your instinct?
Of course, you do.
In South Africa, for instance.
Of course, I did. But hang on, yes and no. The impulsive decision that was taken about South Africa was not for business. The impulsive decision was to want to be there and enjoy the location. Like I may have a home. So, that was the impulsive decision. When it started to go away from becoming a holiday home or retreat to business, then I am very conscious, not impulsive. So, today that operation is being run exactly like any company of the Max group, with a board, people, CEOs, accountability, targets, budgets, matrix and data.
Is it a part of the Max group?
No, no, private. Max has nothing to do with it.
Could you elaborate a little bit, what is it about?
It is about hospitality, lifestyle, hotels, rooms, agriculture, plums, wines, almonds, wine-making, selling wines, three hotels, beer.
We have a similar property in the UK. The first property is Linthwaite (Lake District Hotel, Linthwaite House), which is in the UK. So, we will grow in the UK. We have just acquired it in April. On 25 April, we took over.
What’s the vision for it?
I have always wanted to be in the hospitality business. When I started vision 2000 of Max, I picked four areas: it was insurance, healthcare, education and hospitality. When we got cracking on insurance and healthcare, we did not have five rupees, or five minutes or five calories of energy to invest in anything other than insurance and healthcare; so we left it at that. In a way, Antara (homes for senior citizens) and remotely Vana (wellness resort) were born out of this idea of hospitality. And now, I am starting my life in education. Education is one of them, but it is a little too premature to talk about. In education, we have started some work. Are we engaged in it? Yes, but what are we going do, I don’t know. But we have decided to be in that sector, so I don’t know whether its 0 to 11 or KG to 16.
Is someone thinking about this?
Yes. Very much. But just now, in August, it’s too soon for me to say whether it’s going to be Boeing or Airbus or north only or all India or only abroad... But it will be top three. I just like that expression of top three. And it should be, otherwise what’s the point?
Why are you interested in the real estate business?
I have a bit of khurak (itch) here. Actually, my grandfather was in the contracting business. That was my great grandfather’s business in Pakistan. The bhai family were contractors. They built the road from India to Burma as a case in point. So, even now, you go to Lahore and all, and you will see a lot of buildings built by them. People in the street remember them as a family. So, I have a ‘khurak’ for civil, real estate and stuff. I like land. I like construction, I like design. I like building.
Every time the economy is on the cusp, and every time we talk about India being the next big thing... there are sections which are being talked about such as manufacturing, real estate, education... Do you see the economy like that?
I do and on the manufacturing side, I can’t tell you anything today. I hope I can tell you in 60 days. We will, if all goes well, we will be in that space, in the prime minister’s central part of his vision... Make in India. I will give you a beautiful project, if it succeeds, I don’t know, I can’t tell you today, we are working on it. I can’t tell you what it is today. But if it succeeds, Mr. (Narendra) Modi will use this as an example of Make in India.
Manufacturing is huge right? It’s like a huge umbrella.
Our manufacturing space is only in one sector, which is polymers area. I am talking about that area, I am not talking about planes or furniture or phones or cars. Let’s see. See, we never looked at anything else all these years. That’s why I coined this expression that I will look now at WWOB—wider world of business. Education is that. Differentiated real estate is that. Investing is that. Everybody did investment. Other than financial services companies, people didn’t use investing as a business. And you don’t have to be financial investor to invest. So, investing will be a vertical of ours. Could be in shoes, could be in water, could be in plants.
Do you see growth opportunities in the healthcare business?
Huge growth opportunities. Healthcare, if done and executed right. But most people will not be able to get it right. Most people will try and fail because of the population in our country, because of a very small percentage of it that can actually access healthcare, because of technology in this sector.
Answer to your question is Alpha. But we worked 10-15 years to create that foundation. In Saket we will build the single largest hospital in Asia. But why we have not broken the ground there because we are not designing the hospital that is not so difficult to do. We are designing an ecosystem around Saket with a world class company who is doing all the planning and master planning for us.
Which is this company?
HKS Architects. So we would change the shape of that part of Saket.
So it’s a complete revamp?
Complete revamp. Answer to your question. Healthcare is our big focus area.