He wants ICICI to take a quantum leap and become a truly global, universal financial powerhouse. And he's pulling out all the stops to make it happen in double-quick time. K.V. Kamath is ICICI's wired CEO with a global vision. He's a man in a hurry.

By Roshni Jayakar

Last month, the ICICI's (formerly the Industrial Credit & Investment Corporation of India) board approved a new pay-package for its CEO. The revised compensation for CEO Kundapur Vaman Kamath will now include a salary and a variable annual bonus upto a maximum of 100 per cent of his salary. That means Kamath could earn nearly Rs 1 crore this year, the highest that a CEO of a State-promoted organisation has ever been paid. Is he worth that much?

Back in May, 1996, a few days before the ICICI's former CEO, Narayanan Vaghul, stepped down, he called a meeting of his senior colleagues. He disclosed how difficult it would be to keep up with the scorching pace of the man he had hand-picked to succeed him. ''You'll all want to run away from here,'' he warned them, half in jest, half seriously. He was partly right.

Partly wrong. In the 3 years that Kamath, 51, has been occupying the corner-room at the ICICI, he has been driving the 44-year-old financial institution at breakneck speed. But Kamath's one-time mentor was wrong about the other thing. Today, each one of the senior executives that Vaghul had summoned to his room for that meeting 3 years ago is still around. And thriving-just like the organisation.

The one Kamath is trying to change. Already, from a financial institution, whose main business was lending money for industrial projects, the ICICI has become a finance company that also extends loans to individuals, finances car-purchases, and sells mutual fund units. He wants to drive further ahead. Kamath wants the ICICI to become a one-stop shop, a universal bank, a financial supermarket, catering to customers ranging from large multi-crore corporations to the man on the street. ''We want to be a global organisation in the domestic market,'' says Kamath.

The atmosphere in the 10th-floor office in his spanking new glass-and-granite headquarters, ICICI Towers, is hardly the stiff upper-lip banking kind. His 6-foot-2 frame is deceptive because his friendly demeanour quickly makes you feel at ease. In his three-piece suit, with a blue-not white, mind you-shirt, Kamath could be a technocrat, not a top-notch banker. At least not one who heads a corporation that, in spite of being in the private sector, has strong government links. ''We have to act like a global organisation, behave like one, and compete like one,'' affirms Kamath.

That's tough. But then, it was never going to be easy for Kamath to step into his predecessor's shoes. Vaghul was a larger-than-life visionary who had led the ICICI from the front and, during his 7-year tenure, was the architect who turned it into a progressive organisation that stood taller than its older peers. When Kamath was handed over the reins of the company, the economy was already 5 years into liberalisation. The issue now was not what the ICICI would have to do, but how quickly it could do it.

Competition was not just from its peers, like the Industrial Development Bank of India (IDBI) or the Industrial Finance Corporation of India (IFCI), but from a host of global players, commercial banks, and Non-Banking Finance Companies (nbfcs). What's more, with increasing financial disintermediation, the raison d'être of term-lending institutions, like the ICICI, was in question. Agrees Vaghul, currently the ICICI's Non-Executive Chairman: ''The future lies in globalisation, not merely in expanding operations overseas, but adopting global practices. For that, we required a person with a global perspective.''

Kamath's credentials fitted that to a T. An engineer from Karnataka Engineering College, Mangalore, and an MBA from IIM-A, Kamath began his career with the ICICI in 1971. After a 17-year stint, he took a break, and spent 8 years working abroad. First, with the Asian Development Bank (ADB) in The Philippines, followed by a job with the pt Bakerie Group in Indonesia. At the ADB, Kamath worked in the private sector lending department-which has clear synergies with the ICICI's core business of project-financing. At pt Bakerie-which deals in a range of financial services, including retail finance-he spent a year as an advisor. In 1996, Vaghul plucked him back for the top job at the ICICI.

For Kamath, it was a homecoming. Accompanied by a sense of deja vu. Back in 1988, just before Kamath, then 40, left for his stint overseas, chairman Vaghul was already talking about the shape of things to come. Recalls Kamath: ''What is happening now was foreseen by Vaghul 8 years ago. I have been able to translate it into reality because of the opening-up of the system.''

He's being modest. Points out Wayne Brockbank, 57, Associate Professor (HR), University of Michigan Business School, who has worked closely with Kamath and the ICICI for the past year-and-a-half: ''In the context of the challenges he confronts, Kamath has done a remarkable job. He is on his way to developing an institution that is world-class in every managerial dimension.''

Take a large dash of perspective. Add a liberal helping of pace. Don't forget to put in generous amounts of people-skills. Blend it all together to get the Kamath recipe. In just 3 years, he has brought about major change. For one, the monolithic institution has been broken up into profit-centres.

Second, Kamath has roped in McKinsey & Co. to help the ICICI adopt best practices in all its operations, and to advise it on strategy and restructuring. Third, Kamath has diversified into new products and businesses at a furious pace, constantly offering clients innovative ways of managing their money. Fourth, he has stressed technology, gearing up the ICICI to meet the challenges of the nano-second world.

Speed is of essence in his strategy. And, of course, prescience. In 1996, just back from Indonesia, Kamath sensed that the Reserve Bank of India (RBI) was going to dismantle the barriers between short- and long-term lenders. When that happened, the ICICI would have to access short-term money from the market. So, Kamath spurred the ICICI to create products geared to match the emerging scenario. Net result: when the RBI did liberalise the market, the ICICI was prepared.

Observes R. Seshasayee, 50, Managing Director, Ashok Leyland, who knows Kamath for the last 20 years: ''One of Kamath's biggest attributes is his rare ability to see the unfolding future, both in the Indian and the global markets.'' It comes from a mix of qualities: the gut-feel, and training. Kamath is a focused learner. Says he: ''I am always open to listening. You can't always re-invent the wheel; you have got to get the template, and recast it in your own mould.''

Peek into Kamath's calendar, and you'll see learning sessions with management gurus marked along with World Bank and ADB meetings. He makes it a point to attend every annual meeting of the 2 institutions. Points out Lalitha Gupte, 50, Chief Operating Officer and Joint Managing Director, ICICI: ''He thinks macro, and leaves it to his team to work out the detailed strategies.''

THE PEOPLE MANAGER

It's like everyone is trying to get on to a fast train that is bound to stop periodically at stations. You will have to allow some people to get off as they will get on to a slower train. Some others will want to find a faster train on a different path altogether while others will want to continue on the journey.

That was the first lesson that Kamath learnt about handling people from the late R. Jaykumar, a former professor at the Harvard Business School, and one of Kamath's early gurus. It's also a lesson that he has had ample opportunity to put into practice. At the ICICI, there is a large group of professionals, who have to be managed, driven, motivated and, at times, left behind. What made Kamath's task more difficult was the fact that head-hunters rank the institution as one with the most talented corps of managers.

Kamath's challenge was to bring about a change in mindsets to make the organisation truly world-class. The first stumbling-block was when he tried to change the way his managers worked. Earlier, the ICICI's managers believed that business could be got by sitting at their desks. With rising competition, that wasn't possible.

Kamath's first task was to get his managers to pro-actively market the ICICI's products and services to all its clients-large and small. Kamath, always in a hurry, couldn't wait for the change to happen. So, he dug into the ICICI's talent bank, and redeployed managers from other divisions in the marketing function. The organisation services its clients through 3 teams: the Major Clients Group, the Growth Clients Group, and the Personal Finance Group. Explains Gupte: ''He has the ability to spot brilliance, and bring people up to the levels where they can deliver sustained results.''

That has not meant that Kamath hasn't looked beyond his organisation. For the new businesses that the ICICI has diversified into-like personal finance-he has opted for lateral recruitment. Lauds Michigan's Brockbank: ''He has ensured that the ICICI has the best aggregation of people in terms of passion, capability, and values at every level of the hierarchy. He focuses on delivering results through a remarkably disciplined, innovative, and a bright human organisation.''

Kamath has been able to retain people through a combination of training and performance-linked compensation-structures. Declares he: ''Per capita training time spend has gone up nearly four-fold in the last 3 years. And that includes me. What I don't know, I go, sit, and learn.'' Kamath's calendar has the dates: 2 technology seminars spanning 6-7 days, a 3-4 day hr-related seminar, and, of course, every January, the 2-day seminar for CEOs conducted by University of Michigan's C.K. Prahalad.

Concurrently, Kamath has ushered in a performance-measurement and reward system, dove-tailed with capability-based succession processes, and a system for communications. At the ICICI, these are not changes, but upheavals. Compensation is linked to performance, which helps attract the best talent, and also sends signals to people about whether they are performing or not. Says Kamath: ''The organisation has to bring out the best from a variety of talent, recognising that there will be super-performers whom it has to recognise and reward.''

Such changes have also had a qualitative impact; the ICICI is no longer an organisation where the number of years you have spent will determine your influence. It's the quality of the ideas that counts. Avers Kalpana Morparia, 49, Senior General Manager, ICICI: ''His mantra for everybody is lateral thinking. If he throws an issue at you, God forbid if you come up with a conventional answer.'' Adds Deepak Parekh, 53, Chairman, Housing Development & Finance Corporation (HDFC): ''He's a no-nonsense person. He believes in setting stiff targets. To that extent, he is a hard task-master.''

THE WIRED VISIONARY

When I took over in 1996 and logged into the system, my heart sank. It was still the 10-year-old MS-DOS interface that we used to have when I was at the ICICI. Did that mean that the Oracle database had not been upgraded? No. We had the latest version but, of the 30 senior executives, only one had used it in the last 30 days. Which reflected an apathy at the top towards technology.

Today, Kamath's focus on technology has earned him the epithet of the Wired CEO. He has a more formal office than his predecessor-Vaghul never had a desk in his living-room style corner-room-and what strikes you is the absence of paper. Kamath prefers e-mail to paper, and quickly clears the files that land on his desk in the course of his 10-11 hour workday.

Over the last 2 years, the new CEO has been at the vanguard of a technology revolution at the ICICI. With a crack T-team, Kamath wants to transform the ICICI into a virtual bank. Headed by Chief Technology Officer (CTO) Arvind Joshi, who hopped on board in 1998, Kamath's team comprises Nachiket Mor, V. Srinivasan, and A.G. Prabhu. He's already looking beyond brick-and-mortar banking to a cyber-driven system where, at the click of a mouse, managers will be able to interface with clients. Earlier, paper would move back and forth, with no guarantee of getting all the data required. Contends Kamath: ''Technology at the ICICI will revolutionise the way we access the public for assets or liabilities.''

Having a CEO who understands technology helps. But Kamath goes a step further. For 7 days in a year, he attends global seminars on technology, keeping himself abreast of the developments in on-line banking and financial services. Maintains Kamath: ''You do not necessarily require a technology-driven CEO; it's more of a metaphor to have a wired CEO in the wired world of finance.''

THE BIG THINKER

First, beginning with a GDR issue in 1996, we beefed up the ICICI's capital substantially. Then, through a series of mergers and acquisitions, we brought the assets up to a size comparable, not yet with global banks, but certainly with Asian banks.

Vaghul was a man of vision. But Kamath is a man who can spot opportunity. When it became imperative that the ICICI explore new business arenas-like retail finance-Kamath was ready with his moves. He acquired 2 seasoned portfolios-ITC Classic Finance and Anagram Finance-which helped the ICICI hit the ground running. Says Kamath: ''The takeovers gave us a leg-up on the retail front, and the head-start to get into the business quickly.'' Adds HDFC's Parekh: ''He can not only have his vision, but implement it too.''

Realising that sporadic attempts to get into retail finance would not work, Kamath felt that it was essential to create a brand for the ICICI. Again, that was a lesson learnt from the strategies of the global finance giants. Points out Marti G. Subrahmanyam, 52, Charles Merrill Professor of Finance and Economics, Stern School of Business (US), and a member of the ICICI board: ''He is a stickler for detail, and conscious of the look and the feel of the image.''

That doesn't mean Kamath won't delve into the brasstacks if needed. Cleaning up the ICICI's portfolio is now a priority. Departing from the practice of adding business for size, Kamath has changed the focus to quality of business. The aim: zero additions to the firm's Non-Performing Assets (NPAs).

His strategy for dealing with existing NPAs too defies convention. Instead of the rigmarole of rescheduling corporate loans, the ICICI now tries to localise its asset-quality problems, and take corrective measures before it gets too late. Declares S.H. Bhojani, 55, Deputy Managing Director, ICICI: ''Kamath's way of thinking is reflected in his business style-whether it is in approaching new business, or in the recovery of stress cases.''

In a sense, the ICICI's new avataar that Kamath has created is a monster. It's a bank; it's a financial services company; it's a big-ticket project financier. Or, competition from 3 sectors: commercial banks, NBFCs, and financial institutions. But that doesn't faze the ICICI's unflappable CEO. Claims Kamath, confidently: ''In the Indian context, the ICICI will stack up squarely in terms of all three.''

Yet, things aren't all that hunky-dory at the ICICI. Although Kamath stresses on speed and the need to quickly evolve as a universal bank, there is a lot to be done. Take retail finance. While the ICICI and the HDFC both spawned their commercial banks in 1994, the HDFC Bank has made forays into the retail market by opening more branches than the ICICI Bank. Although Kamath is stressing on technology-driven risk-management systems, the ICICI's NPAs are still substantial.

THE FUTURIST

Look at boards of the global banks; they don't approve loans. A supervisory board sets policy, formulates strategy, and looks into other aspects of macro operations. Monitoring micro performance is the job of the executive board.

Ever since he took over, Kamath has stressed corporate governance. As a first step, he changed the constitution of the ICICI's board, ensuring that not less than 75 per cent of its members were non-wholetime directors. He also set up a series of sub-committees for overseeing the functions of the executive management, roping in Ashok Leyland's R. Seshasayee, Infosys' N.R. Narayana Murthy, ICI's Ashok Ganguly, and Ispat's L.N. Mittal.

In tandem, Kamath redefined the role of the CEO: from a super projects officer to strategic thinker. ''In the past, the role of the CEO was seen as no different from that of a project officer, leaving him no time for articulating strategy,'' explains Kamath. Things that his peers think he does best. Says K.A. Chaukar, 51, Managing Director, Tata Industries: ''He is focused, and has clarity of vision about what he wants to do.''

Neither Kamath nor the ICICI board looks at project proposals, which is the job of the risk department. Many of the ICICI's clients are yet to comprehend this paradigm shift. Some of them still want to meet the CEO. If it's a big client, Kamath does go. Early this year, at a presentation to an ICICI team by the Andhra Pradesh Chief Minister, Chandrababu Naidu, in Hyderabad, on a Knowledge Park that Naidu wants to set up there, those present recall that the interaction between the two was similar to that between a client and a banker advising him what to do. The outcome: Naidu incorporated all the suggestions Kamath made, and the Park will be a joint venture between the ICICI and the state government.

Many of Kamath's fans are on Dalal Street. The ICICI stock has outperformed the other financial institutions: its price-to-earnings ratio of 4.1 is double that of the IDBI's 2.1. Remarks Mihir Doshi, 42, Executive Director, Morgan Stanley Securities India: ''Kamath has put the company on the right track.''

Asserts Kamath: ''All our actions, ultimately, translate into what we can do in terms of shareholder value. Which is why, in an otherwise difficult market distrustful about the financial institutions, our stock has performed better.'' However, Kamath still has to carry the ICICI's institutional investors with him. Recently, 3 government bodies, that hold more than 27 per cent in the financial institution's equity, questioned Kamath's plans to raise money overseas.

To be sure, the ICICI's concern for shareholder value was boosted after its GDR (Global Depository Receipt) issue in 1996, when a new set of shareholders emerged. Global investors were more discerning, and this spurred Kamath to lay greater emphasis on creating and building value. Two years ago, the ICICI stock was quoting below its larger peer, the IDBI's. Today, the ICICI's market capitalisation is Rs 4,056.74 crore while the IDBI's is Rs 2,678.91 crore.

You could call it the Kamath factor and you wouldn't be wrong. Because, much of today's bullishness about the ICICI-whether it's on the bourses or in the boardrooms-is largely because of his vision. So, keep your eyes on Kamath.

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