Success in the backwaters

Success in the backwaters
19 Nov, 2007, 0001 hrs IST, TNN

From a lawyer who took to the capital market to pay his fees at law school, to setting up a private stock broking firm, CJ George, managing director of Geojit Securities has come a long way...

He is the odd man out in the capital market, having decided to build a business from the back of beyond in Kochi, rather than Mumbai. For a lawyer who took to the capital market to pay his fees at law school CJ George has come a long way.

And yet, for someone who is caught up in the frenetic world of stocks and shares, he still tries to ensure that he remains in touch with his roots — which is why he still makes it a point to visit his native place near Kochi on weekends, where he spends time with his mother and engages in farming. Just as we are about to say that is an odd hobby, he tells us that in his growing years, much time was spent in cultivation and tapping of rubber. “My father was a communist,” he says. “And though you may find it hard to believe, I myself used to be a communist student leader,” he adds.

His transition from a firebrand communist to a passionate capitalist was rather accidental. It so happened that there was an advertisement by Batliwala & Karani (B&K) on the Delhi University notice boards, seeking young, bright minds to come and join the firm as equity analysts. Those were the days when the market was run by old hands and equity research was considered just a passing phase. Equity research as a vocation was unheard of in the domestic capital market.

Mr George, though not really interested in the job, figured that this could be a way to pay his tuition fees at law school and signed up for the test. The legal community’s loss was, as they say, the capital market’s gain.

Like most people who end up making a living through the equity market, life for Mr George began in Mumbai. So, how did he end up in Kochi? Turns out that it was a desire to be close to his family that made him ask for a transfer to Kochi. While running the Kochi operations of B&K, he decided to invest in a Cochin Stock Exchange (CSE) card “purely from an investment perspective,” he says. This turned out to be a far-reaching decision, because when he ventured out on his own, he figured that in order to be a success in the capital market, he did not need to move to Mumbai; he could carry on his activities from Kochi itself.

His decision to set up Geojit arose because of what he says were differences with his employer. Rather than take up another job, he decided to venture out on his own. And thus, Geojit came into being. So, how did this rather unusual name come about? Mr George laughs and tells us that it is an amalgam of the first three alphabets of his name and the last three alphabets of Ranajit Kanjilal, the man whom he partnered back then. Armed with a broking card and a name, the two went into business in 1987.

In 1995, KSIDC (a Kerala government-owned financial institution) picked up a 24% stake in Geojit — this was the first time that a government company in India picked up a stake in a private stock broking company. Five years later, Mr George had come a full circle — back to the city of dreams, as his company was listed on the Bombay Stock Exchange (BSE).

As we sit at the Bombay Yacht Club — a venue he prefers to the more glamorous five-star hotels in the vicinity — we wonder what motivates him now. He tells us it is the same thing that motivated him when he set off — building a world-class capital markets institution. He says that Geojit was founded on the same principles as that of a Schwab or a Scotstrade, which is, to deliver best execution at the lowest cost for investors. Rather tongue-in-cheek, he tells us, “Which means that I have to contain all costs, including the MD’s perks.”

Mr George says that around the time he was contemplating how to take Geojit forward, the Schwab model started to gain acceptability and he decided to follow the same. Interestingly, this decision meant that Geojit never had a research team.

We tell him this is rather odd, given that his own career began as an analyst. But Mr George says he does not have a research team because it would have been foolish to carry such a huge level of fixed overheads, when revenues were driven by market cycles. Moreover, he doesn’t have a great opinion of analysts either — he says that most research is paralysed by self-interest and cannot really produce sustainable long-term returns.

So, what stocks does he have in his personal portfolio? “The only equity I own is my holding in Geojit,” he says. Clearly, Mr George is a man full of surprises. On being questioned as to why he does not put his money where his mouth is, he laughs and says, “It was the lack of money that caused me to stay away from the market a long time ago. Today, when I can afford to get in, I simply don’t have the time to follow the market.”

He points out that building an organisation consumes most of his time, especially since he’s looking after all the new initiatives, be it the joint venture with BNP Paribas or expanding into the lucrative Middle Eastern market.

We ask him what he considers to be the main reasons for his success, so far away from the financial capital of India. He tells us his success is largely due to bold decisions that paid off, such as franchising — a move that eliminated the sub-broker and gave greater control to the company. Another reason for his success is the rapid advancement of technology, which resulted in the shift from physical exchanges to electronic exchanges. “Without electronic trading it would have been impossible to succeed in a remote place like Kochi to this extent,” he says.

Along with success, he has had his fair share of failures as well — the most notable being that he fully missed the transformation of the business to an online model. While Geojit was among the first to launch online trading in February 1999, it neglected this segment and trailed behind most other players. After realising his mistake, Mr George is now fully focused on ramping up his online presence and taking it on par with the offline business.

So, is there anything else that he hopes for? He says the equity culture still has a long way to go in the country, since equities comprise just a fraction of the total savings. The socialist in him also perks up as points out that a large part of the populace continues to be far removed from the market gains in recent times.