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Mon, 28 Feb 2022 | The Economic Times
As Chitra Ramkrishna-Himalayan yogi drama unfolds, should NSE investors be worried? No, say experts.

As Chitra Ramkrishna-Himalayan yogi drama unfolds, should NSE investors be worried? No, say experts.

A monk who bought a Ferrari?

If yogis can run businesses effectively, then we probably need more of them. The CEO of a company is responsible for two things — onboarding the right people; and more importantly, efficient capital allocation.

Chitra Ramkrishna and Ravi Narain, who ruled the National Stock Exchange (NSE) with an iron hand and took many crucial decisions (on their own or with the help of a mysterious yogi) during their tenure, have managed to build a solid business over the years. However, some hirings are raising questions lately, and are being dealt with by the regulators (and our friends in the media).

While many skeletons have come tumbling out, with more clarity being sought, the fact is that none of it has hurt the exchange’s business fundamentals.

Over the last 10 years, NSE’s revenues have increased 18% to INR6,202 crore and its net profit has grown 22% annually to INR3,573 crore. In fact, when Ramkrishna was the CEO between 2013 and 2016, revenues increased 29%. All the advice in the e-mail was not only in good spirits, but also probably made great financial sense.

For the unversed, the last weekend saw our newsfeeds inundated with Bollywood-style drama at the NSE — a ‘spiritual yogi’ advising the management on how to run the country’s largest stock exchange.

Ramkrishna, the former head of NSE, shared confidential information with Yogi Paramahansa’, largely dwelling in the Himalayas. She also sought his advice on crucial decisions, reveals a probe by the Securities and Exchange Board of India (Sebi).

The market regulator has penalized Ramkrishna, former CEO Ravi Narain, and two others for allegedly violating securities contract rules related to the appointment of Anand Subramanian as the group operating officer and advisor to the managing director.

Subramanian joined the NSE in 2014, and by April 2016 was drawing a compensation of INR4.21 crore per annum. Interestingly, prior to joining the stock exchange, he worked at a subsidiary of Balmer & Lawrie at a salary of less than INR15 lakh per annum. As per Sebi, Subramanian, an accomplice of the ‘yogi’, was appointed without due procedure and lacked relevant experience.

What investors think
Corporate-governance allegations are not new for the IPO-bound company. The exchange initially had hoped to hit the market with a public issue in 2017, but its plans were dampened after it was alleged that some officials had provided a few high-frequency traders unfair access through co-location servers, which could speed up algorithmic trading. This is again attributed to the period when Ramkrishna and Narain were at the helm of affairs.

However, since Ramkrishna and Narain have left, the business has grown by leaps and bounds. Private-equity investors tell ET Prime that it is one of the most liquid stocks in the unlisted space and despite all incidents related to Ramkrishna, which have created a PR nightmare for the exchange, the investor confidence has only gone up.

The other major shareholder, IIFL PE, which holds a 13.5% stake, also echoes the sentiment.

“For IIFL PE, it is a commercial investment, and we look at risk-weighted returns on this company for investors. We are very happy how NSE has grown over the years. They have built a strong leadership and no matter what, the business can never be challenged,” says Anshuman Goenka, head of private equity at IIFL AMC, a part of IIFL Wealth and Asset Management.

“Over the last 11 years, the value of the company has jumped eight times, and the best is yet to come. How many comparable businesses do we have?” he adds.

Goenka points out that NSE has delivered an EPS of INR72 in the first nine months of FY22, while the same for the entire FY21 was INR72.

Separately, in a report dated January 4, Spark Capital estimates NSE’s EPS for FY22 and FY23 at INR98.6 and INR108.4, respectively.

NSE investors tell ET Prime that whether it is the co-location mess, hiring of friends, or even favouring undeserving friends for top jobs, the balance sheet of the company is solid and there are no concerns of any issues related to fudging of numbers or manipulation. This probably has to do with the fact that NSE was built as an institution with government backing and then it was run like a private enterprise.