My Celebration Of IFMR’s Golden Jubilee

We are now in 2020. Let us go back in time to 1970. That’s the year when the Institute for Financial Management and Research (IFMR) was founded. I could be wrong by a year. It’s as likely that IFMR was founded and established in 1971. IFMR, therefore, could right now be in its golden jubilee year or will be stepping into its golden jubilee year soon.

This is my celebration

The classrooms – Lakshmi, Parvati and Saraswati – were shrines inside this temple of learning. Thus, I have a hundred and eight (108) reasons to express my deep gratitude, respect and appreciation. I am kicking off my celebration of IFMR’s fabulous fifty years. I am kicking off my celebration of IFMR’s glorious golden jubilee.

I have been a significant beneficiary of this great place of learning. I have been a beneficiary of the interaction and the banter with the witty and the wise faculty. They were young and yet veterans of the teaching world. Some played chess. I played table tennis with the faculty, the support staff and as many students that stayed late after classes.

The library was amazing and friendly. The librarians were the best I’ve seen. Our librarians were Ms. K. Indira and Ms. M. Bhanumathy. The coffee, the tea and the food were out of the world. The food was from around the world. The chefs were masters of a dozen cuisines and food cultures. The dining area was stately, classy and charming. The garden, the trees, the little lawn, the water fountain and the banyan together made the place better than my imagined landscape of the viceroy’s vast home in Delhi. This was a heritage campus! 

My neighbourhood

IFMR was established on Kothari Road in Nungambakkam, Madras. This road is named after the late Chandulal Mothilal Kothari (CM Kothari). CM Kothari came to Madras a little over 100 years ago in 1919. He came from the Kutch region of Gujarat. He was a lawyer by training. But his desire to be a daring entrepreneur in Madras City in Madras Presidency in British India was far too overwhelming.

CM Kothari went on to establish a business and an industrial empire. Along the way, he founded the Madras Stock Exchange in 1937. His home on Kothari Road in Nungambakkam, Madras, became the home of IFMR. His industrial empire was a cofounder of IFMR.

I was a resident of Nungambakkam between 1966 and 1978. My home was about 10 minutes away on my black Philips bicycle. For a year I rode past IFMR on my way to Loyola College in Nungambakkam, Madras 600034. Madras became Chennai in 1996. I rode past IFMR in the evening on my way home from college.

There is some magic about the X00034 pin code. Consider 400034 (Haji Ali in Mumbai), 500034 (Banjara Hills in Hyderabad), 600034 (Nungambakkam in Madras) and 700034 (Behala in Kolkata, cricketer Sourav Ganguly’s home is here). The X00034 locales have character and a pulsating ambience.  

My time: 1989-1991

IFMR was in its first half of its 50 glorious years when I joined as an assistant professor in March 1989. I had wanted to experience the ambience, the environment and the “fun” of teaching at one of India’s renowned and young places of learning. This was my first teaching assignment in India.

Dr. R.M. Honavar was its director. He had earlier been the chief economic advisor (CEA) to the Indian government. His predecessor in the office of the CEA was Dr. Manmohan Singh. Dr. Bimal Jalan succeeded Dr. Honavar as the CEA.

Dr. Honavar had a great impact on me. It is likely that I too had made a decent impact on him. Within a few months, he gave me the responsibility to coordinate the 1989 six-week training programme organised by the Commonwealth Fund for Technical Cooperation (CFTC). It is likely that I delivered what was expected.

The nascent but prestigious postgraduate diploma certificate (PGDC) in financial management course was in its seventh year since being rolled out. Professor U. Pancras was the coordinator of the PGDC. He was leaving IFMR to set up a new business school. Dr. Honavar and the other faculty decided much to my surprise and joy to hand over the trusteeship of the PGDC to me.

Then until my resignation in September 1991, I coordinated both the CFTC and the PGDC programmes. The CFTC had participants from around the Commonwealth. It was similar to one of the grand slam events in world tennis. Participants would come together for the grand slam event and then go home after the finals.

The PGDC, by contrast, was initially a two-year programme. It became a three-year programme in ‘my time’. Three timetables for daily classes between 6 pm and 8 pm had to be drawn. Each year comprised two semesters. There were four ‘subjects’ in each semester.

My colleagues

My faculty colleagues were my teammates. They made me wholly comfortable when I entered IFMR in March 1989. Some left between 1989 and 1991. Some joined.

Professor A.V.K. Aiyangar was the leader in operations research, optimisation and organisation effectiveness.

Professors S.V. Bokil, V.M. Gumaste, (Ms.) I.J.H. Louis and H.K. Pradhan were the economists.

Professor (Ms.) Rekha Joy Arif was our marketing and global trade expert.

Professor G. Balasubramanian was the entrepreneurial genius in accounting, finance, computing and information technology.

Professors P. Govindarajan, M.S. Narasimhan and D. Sampath Kumar were the experts in accounting, corporate finance, markets, regulation and policy.

Professors Mohan Kumar, D.S. Hanumantha Rao and S. Srinivasan were the management, business organisation, and strategy and management policy experts.

Our home and our dome was the G.L. Mehta Faculty Block. We had no mental blocks.

Mr. K. Jayaraman, the diplomat

Mr. K. Jayaraman, the PGDC academic support manager, did a stupendous job. He made it all happen, semester after semester. He would ‘talk with’ the faculty with the simplicity, the commitment, the confidence and the suaveness of an ambassador.

We played table tennis with the support staff, the faculty and the students. We did this twice a day: for about 30 minutes in the afternoons after lunch and for about 45 minutes in the evenings when the students would assemble before or after their classes. We could write a decent note on ping-pong diplomacy.  

We would walk to a small but very popular teashop in Jayalakshmi Puram, a few metres away from IFMR, with the students to drink a cup or more of tea. We bit into the soft ‘butter biscuits’ while taking in the tea. This was tea diplomacy. Moreover, we could call Mr. S. Krishnan and Mr. Bindu Roy during IFMR’s kitchen hours and request to be served tea and/or coffee. No one said ‘no’ to tea.  

Everyone had the mind and the stomach for tea, anytime and any number of cups. It was up to us to manage the side effects, if any. So, we invested our time in exercises and good eating habits outside of our IFMR hours.

This is where and this is when we got our feedback – about the courses and how the students were connecting the courses with their jobs. The PGDC was a part-time course. Many of the students became chief financial officers and chief executive officers. These girls and boys went on to become leaders.

On their examination days – especially on Sundays when the IFMR kitchen was closed – I would buy tea from this Jayalakshmi Puram teashop and serve it to my dear students. I continue to go to this teashop in Jayalakshmi Puram when I need to feel the fullness of life through reminiscing. The owners have changed but the tea is the same. Timetables have changed but the purpose of life remains the same.  

Mr. Jayaraman ran the timetable for the classroom sessions, the schedules for the examinations, the compilation of grades, preparing the certificates and the graduation ceremony. Mr. Jayaraman – my everyday ally in those two years – now lives in retirement with his wife, his only daughter and her family in Bengaluru. This is a well-deserved retirement for a great man.

Mr. T.S. Gopal, the foreign minister

IFMR was an active and popular institute for executive education. These programmes were also known as management development programmes (MDP). Managers, bankers and civil servants from around the world attended these programmes.

Mr. T.S. Gopal was the programmes officer for the domestic MDP segment and the global MDP segment. Mr. Gopal was a natural and an ace. Mr. Gopal had earlier been a confidante of and secretary to Nani Ardeshir Palkhiwala (1920-2002). Twenty-twenty – 2020 – is the birth centenary of this great jurist, economist and corporate leader.

Mr. Gopal was everything that his mentor was. And more. He played the sitar. He was a master in Carnatic music, western pop and classical music, movie songs in about six languages, background music from Hollywood movies and the spoken words – dialogues – of stars such as Peter O’Toole and Omar Sharif.

Mr. Gopal made civil servants, bankers, central bankers and corporate honchos feel comfortable in our midst. He made us comfortable in their midst. Dr. Y. Venugopal Reddy, then a chief secretary of the government of Andhra Pradesh, had sat in my class. Dr. (Ms.) Girija Vaidyanathan was in the same class. This was a training programme for civil servants. 

Dr. Reddy went on to hold the office of the governor of the Reserve Bank of India between 2003 and 2008. That was 12 years after I had left IFMR. Dr. Vaidyanathan became the chief secretary of Tamilnadu 26 years later.

The CFTC was based in London, the United Kingdom. It had chosen IFMR as a hub for training civil servants and treasury officials from the Commonwealth. This training programme got me to work with Mr. T.S. Gopal, the programmes officer, from mid-1989.

Mr. Gopal was IFMR’s foreign minister. He could deal with the ministries, the bureaucracies and their heads in about 45 countries. Then the students – senior officials – came to our campus. He was their host, friend, food guide, health guide, entertainer, culture guide and channel of communication.

This was the pre-digital and pre-internet era. There was one television box in the hostel. Doordarshan was the only channel. Cable had yet to arrive. But there were big minds with one big, shared vision. “In the campus of visionaries, everyone was a three-eyed leader.” The third-eye was our inner eye.  

Dr. Honavar built the global face and the global thrust of IFMR. His ally in this was Mr. Gopal. Their consummate human, ministerial and diplomatic skills put IFMR on the world map and in the minds of the discerning. Students from around the world continue to know Mr. Gopal as their friend.     

Mr. Gopal and I have remained friends since 1989. He lives in Hyderabad with his wife and their son. We have written an article on IFMR. This article, “The IFMR We Know”, will soon be posted on LinkedIn.

Professor Dandavate’s 1990 budget

Big political changes came about because of the parliamentary election in November 1989. Professor Madhu Dandavate was the new finance minister. He presented the new government’s first budget on March 19, 1990.

The 1990 union budget had two major components. First, the investment allowance – a corporate tax deduction – was withdrawn. Second, Professor Dandavate slashed the corporate tax rate by five percentage points. The tax cut was a bold and an unexpected step.

Those were the days when the budget presentation would begin at 5 pm. The stock exchanges would have post-budget trading the same evening. Think of the active trading floors in Bombay, Calcutta and Madras at 7 pm!

March 19: almost the vernal equinox, and almost 12 hours of day and 12 hours of night. But the light went out of the mind of the market. Stock prices declined considerably after the budget was presented in parliament.

Consternation and disappointment

The investment allowance was a tax-reducing factor. Its withdrawal would, therefore, lead to a rise in the tax outflow. The withdrawal of the investment allowance was hypothesised to be ‘bad’ for ‘corporate earnings’.

By contrast, the slashing of the corporate tax rate was hypothesised to be ‘good’ for ‘corporate earnings’. These were two forces in opposite directions.

Was the withdrawal of the investment allowance the bigger of the two opposing forces? Did the stock market sink because of this? Was the tax cut in vain?

IFMR was a towering institution that was engaged with the nation’s public finance, monetary policy and rates, savings, banking, markets and corporate finance. It had other deep engagements too.

After every union budget, IFMR would organise a public symposium along with the Madras Chamber of Commerce and Industry (MCCI) and the Madras Management Association (MMA). This would usually be on the Saturday immediately following the budget day. This was an initiative by Dr. Honavar to knit IFMR into the world of practitioners.

The IFMR-MCCI-MMA budget symposium in 1990 was held at ITC Chola Sheraton. The late Pesi Narielwala, head of the taxation committee of the Associated Chambers of Commerce and Industry of India (ASSOCHAM), had flown in to lead the symposium. Pesi had been the president of the Institute of Chartered Accountants of India between 1975 and 1976.

He – Pesi – was a learned man. He had trained to qualify as a chartered accountant from England and Wales. This was the first time I met Pesi.

The sinking stock market had everyone in knots. Consternation and confusion reigned. The big guns did not know whether to thank Professor Dandavate with high praise or to tick him off in angry prose. The clock was ticking away to lunch and towards the inevitable but inconclusive conclusion of the symposium.

Imagine 1990. No computers, no laptops, no smartphones. But paper and pencil were there. And, the prestige of IFMR was on the line. I scribbled a few equations and a little note for Pesi’s attention. He was on the big stage. I was almost in the last row.

I had suggested that (1) earnings and (2) cash flows were two different things. I showed him why (1) the tax cut and (2) the withdrawn investment allowance had together an adverse impact on corporate after-tax cash inflows.

My note went against the beliefs of accountants. My note explained why the stock market did the right thing by knocking prices down. Pesi agreed! It was stunning. The audience went to eat the tasty and sumptuous lunch served by the god-awesome chefs of ITC Chola Sheraton.

Efficient markets hypothesis

I had the vanity, the naiveté and the courage to think of the Indian market’s discernment as an acknowledgment of what financial economists describe as the “efficient markets hypothesis” or EMH. Pesi had emboldened me.

Within a few days or maybe weeks, The Economic Times published my article. I rushed to show this to Dr. Honavar. Some days later Professor Dandavate wrote a reply. Dr. Honavar was effusive in his appreciation. Would it be possible to get the numbers to see if EMH ‘worked’ in India?

It was perhaps the summer of 1990. Was it our annual vacation? I do not remember. But I had plenty of time to go about the task of so-called testing the EMH.

Classes reopened after the summer break. The new PGDC batch was in. There was another batch of CFTC participants. The table tennis games and the many cups of tea in the Jayalakshmi Puram teashop continued.

Then on December 1, 1990, IFMR organised a seminar on the EMH at the Taj Connemara. Mr. Pratip Kar, an executive director of the Securities and Exchange Board of India (SEBI), was in the audience. He was excited. He did not fly back to Bombay. December 1, 1990 was a Saturday. He had planned to leave for Bombay on Sunday.

Mr. Kar came to IFMR on Kothari Road on Monday, December 3, 1990. He expressed his view that the market’s unexpected but ‘right’ reaction to the March 1990 budget gave SEBI and the finance ministry a lot to cheer. My expectations and aspirations changed.

Innumerable causes for celebration

I taught at IFMR until September 16, 1991, the convocation day for the PGDC students. In the meanwhile, Dr. Singh had presented the epochal new economic policy and the union budget in July 1991. Dr. Honavar had retired from IFMR a few weeks before the convocation. I did not leave while he was the head. I left after he retired. Great man!

Those 30 months of teaching at IFMR have been of great consequence to me. I have been a significant beneficiary of this great place of learning.

I have many reasons to celebrate its golden jubilee. IFMR’s cool chutzpah, understated class, infinite earnestness, global and national clientele, faculty and our collective keenness to keep pace with a fast-changing world are what I remember the most. The fall of the Berlin Wall had taken place in November 1989. There were two thundering elections to parliament. There were four prime ministers.

Thus, I have more than a hundred and eight (108) reasons to express my deep gratitude, respect and appreciation. I am kicking off my celebration of IFMR’s fabulous fifty years. I am kicking off my celebration of IFMR’s glorious golden jubilee.