A few years ago, I bumped into Jignesh Shah on a Chennai-bound flight. The impatient traffic on the gangway pushed me past his business class seat. Barely managing a "hello", I wondered what the purpose of his trip might be. "Is there a story?" Soon, I forgot.
My thoughts flashed back to the incident when National Spot Exchange Ltd (NSEL) investors demonstrated before the venue of the Financial Technologies annual general meeting in Chennai. This increased the curiosity about the Chennai connection, but no headway was made.
Last week, a chance encounter at one of my favourite Street corners in Mumbai brought up the name of C Subramaniam. The person I met told me Subramaniam owned a company called Worldwide Technologies and this eventually became Financial Technologies.
After some asking, C Subramaniam (Mani to friends) was on the phone. Like Shah, Mani calls himself a first-generation serial entrepreneur. A finance professional, he was employed with DSP Financial Consultants Pvt Ltd from 1979 to 1984. Thereafter, he promoted a financial consultancy outfit called Mani Management Consultants Pvt Ltd.
In 1987, Mani set up Worldwide Technologies, with partners S Anand and
N Muralidharan. "We had a team of technocrats. We were into manufacturing data modems. We had units in Chennai and Pondicherry." With the main production unit in the Madras export processing zone, Chennai was the natural choice for the company's registered office.
In the early 90s, Shah was running a company called Jignesh Consultancy Services. "They were system integrators. They were selling our modems. That's how I came in touch with Jignesh," Subramaniam told me over phone. In early 1995, Subramaniam took Worldwide Technologies public, raising about Rs 2.25 crore.
In the late 90s, the modem business became more of a commodity business, as people started importing goods from Taiwan and other east Asian countries. Mani was seeking an exit. Using a de-merger rule introduced when Yashwant Sinha was finance minister, Mani split Worldwide into two listed entities. "The software services division was spun off into a company called Nods Worldwide. This was a clean company, with a share capital of Rs 3 crore and assets of Rs 3 crore."
Mani said around this time, Shah had two different entities - Electronic Broking Services and Financial Technologies India Private limited (FTIPL). He added Shah was planning an initial public offering for FTIPL and he offered him the reverse merger plan. At that time, reverse mergers were popular, as these did away with the uncertainty of the book-building route. It also gave promoters better control over the shareholding pattern, Mani said.
Thus, Nods Worldwide was first merged into Electronic Broking Services and, in the second stage, FTIPL was reverse-merged into this new entity to form the modern day Financial Technologies.
Though reduced to a minority shareholder, Subramaniam continued to be on the board and was often consulted by Shah. "I was one of the longest serving shareholders in FTIL. I stayed there for 10 years and quit in 2010."
He added when he had quit, NSEL was just another loss-making company. He blames the limitation of human bandwidth and the "intoxicant of share prices" for the group's current troubles. "Technocrats do not delegate. They become possessed. When you run 20 companies, you need to be a super-human to get into everything," he said.