Comeback: A Story Of Bankruptcy And Survival

By Suhas Mantri

Mehtas ChoiceHarsh Mehta seems to be going great guns with his company Mehta Housing Ltd poised to become the next big thing in real estate. Till a series of reckless decisions by his trusted colleagues, of which he is quite unaware, take the company on a downward spiral and he realizes to his horror that he is on the brink of bankruptcy, confronted with the choice of either filing for insolvency or fighting it out. With his reputation at stake, he chooses to embark on a painstaking and arduous struggle not only to turn around his company but also salvage his honour among his clients and restore his self-esteem.Suhas Mantri presents a riveting corporate tale that would be of special interest to anyone who has ever wondered what it takes to survive in business.

• Language: English
• Publisher: HarperCollins
• Release date: Dec 20, 2014
• ISBN: 9789351360629

Suhas Mantri

Suhas Mantri is an engineer. He heads Mantri Constructions and is based in Pune.

Book preview

PART I

THE DOWNFALL

ONE

It was a hot and humid day in Mumbai, when Harsh Mehta emerged from the plush interiors of the Taj and got into his car. It was barely nine in the morning but the city was wide awake, ready to deal with the pressures of the day. Harsh felt charged and pleased with himself, looking forward to what lay ahead. Even though he lived and worked in Pune, he loved Mumbai. He liked the intensity and the pace of the city; there was always so much energy in the air. He had arrived the night before and stayed in his usual room—the one that offered a wonderful view of the sea dotted with fishing boats and yachts.

He was often in Mumbai to liaise with design consultants, legal firms and clients but this visit felt different. It was his first trip to the city after taking over as the managing director of Mehta Housing Ltd from his elder brother Shailesh. The thought that he was now in absolute control of his company and could freely implement his own ideas excited him. His mind had been bursting with new concepts for a long time and he finally had the opportunity to put them into practice. He was confident that the results would be impressive.

Harsh prided himself on being an entrepreneur with a sound head for doing business. He had travelled all over the world, had a passion for creating wealth, a taste for the finer things in life and was driven by ambition, not greed. He firmly believed that each person had been sent to this world to make an impact. Of course, he had his weaknesses too, such as occasional flashes of anger and impatience.

Harsh was looking forward to the first meeting of the day; it would give him a chance to analyse the designs that his architect had prepared for their next building project. He reckoned it would take at least an hour to reach Parel where the architect had his office. He settled down comfortably and briefly scanned the headlines of the Economic Times, but his mind was on the meeting and the new designs.

Harsh liked to imagine how a project would look after it had been completed. He would start to design with that final image in his mind. His architect shared his passion and they had often worked on projects together to try out innovative approaches to construction. In one of their current projects, he had included solar panels, vermiculture beds to take care of wet garbage, new insulation materials to ward off excessive heat during the summer and a water recycling unit that watered the lawns. Their latest challenge was to build ‘green’ eco-friendly buildings. He wondered if he could implement some of the construction techniques he had learnt of on his recent trips to Singapore and Dubai. Harsh kept track of the developments in the construction industry all over the world. He had often visited trade exhibitions and conferences in Dubai, Singapore, China, Hong Kong and Germany to keep abreast of the latest innovations. His office was full of real-estate and civil-engineering journals from around the world which offered the latest information in terms of architectural designs and structures.

Harsh reached the architect’s office just in time for the meeting. They spent the next hour finalizing the designs of their next project. Satisfied with the outcome, he left the architect’s office and headed for a meeting with his bankers in Dadar. Never having dealt with the company’s finances before, he wasn’t exactly looking forward to the meeting. He had been in charge of designing, planning and executing projects, while Nilesh, his eldest brother, looked after land deals and liaisoned with different local and state government officials, and Shailesh managed finance and marketing. Taking out a sheaf of documents from his briefcase, Harsh leant against the smooth leather of his car and studied them.

As his eyes scanned the columns of assets, liabilities, expenses, sales, profit and work in progress, his head began to spin. The bankers had been asking for this meeting since he took over as the managing director of the company. They wanted his inputs on the financial status of Mehta Housing and the new projects that were in the pipeline. Harsh mentally prepared himself to think and talk numbers.

Fortunately, the meeting was a success, and it ended with lunch with the regional manager of the bank.

Now he was heading for the third meeting, scheduled at the Centaur. The car inched its way to Juhu through heavy traffic. Even though he felt tired, he was keen to meet the head of a multinational company that had approached Mehta Housing to design and build an office complex for their pharma unit. A contract like this one would pose fresh challenges; it would be a learning experience.

After the meeting, Harsh drove back to Pune. The highway, fortunately, was free of heavy traffic and he reached home in just a little under four hours.

TWO

The next day, Harsh was back in office in Pune. After attending to letters and office memos, he asked the office boy to get him a cup of tea. He turned his attention to the plans of their most recent project that were spread across his table. He started tracing the processes outlined therein, searching for the possibility of bottlenecks, errors and omissions. At times like this, mulling over the designing aspect of a project, he felt as if he was aiding the growth of society, his clients and his company.

The room was quiet but for the steady hum of the air conditioner. Harsh let his mind wander and remembered how Mehta Housing was started nine years ago. While still in his final year of engineering, he had received many offers during campus recruitment drives conducted by well-known construction companies. The salaries were tempting as were the job profiles, but he had rejected all of them. The youngest son in a Marwari business family, he could not imagine working for someone else.

His grandfather had started the family business dealing in electrical goods and accessories. Later, his father and then his brothers had joined the family business. His father had moved the business from a small town in Maharashtra to Pune primarily because the educational facilities available in Pune were better and he was keen that all his sons should acquire good qualifications and expand the business.

After getting his degree in civil engineering, Harsh worked for a medium-sized construction firm for a few months before setting up Mehta Housing. Their first few projects were limited to designing and contracting for other builders. The company took on its first major project—building a residential complex—a few years later when Harsh bought a plot of land.

In the years that followed, Mehta Housing made rapid strides in this sector. Its modern designs, focus on using quality material, and commitment to deadlines helped build the company’s reputation, and before long they were handling several large-scale projects. Soon, Harsh was no longer able to manage everything by himself. He discussed the matter with his family. Nilesh and Shailesh did not know much about construction but realized that Mehta Housing would certainly do well if it was given the right inputs and direction. The two brothers decided to join the firm as full-time partners.

Nilesh’s work, involving the purchase of electrical goods and materials, often took him to Mumbai, and so he agreed to follow up with the various government departments for the required clearances. He also oversaw the acquisition of land for their projects. Shailesh, who had a keen mind for numbers, agreed to look after finance and marketing. This left Harsh free to focus on designing and executing their projects to perfection. The electrical goods’ business was also operational. However, within a year, the family realized that it was pointless to focus on another enterprise when the construction sector offered such huge opportunities.

Pune, in the early 1990s, had transformed from a pensioner’s paradise to a metropolitan city. The construction industry, as a result of this change, was booming. Harsh’s initial pitches to prospective clients paid off; his ideas were successful, and that drove him to do better and come up with more exciting and innovative designs. Within three years of starting Mehta Housing, Harsh had ten projects in hand. The company became well known for its customer-friendly service and was talked about in business circles; its potential and profitability made for serious discussions during cocktail parties and conferences.

Nilesh, who often met with builders and developers in Pune and Mumbai, was very keen on creating a large land bank to take advantage of rising prices. But it wasn’t easy to make such huge investments quickly as they had started with small equity. Mehta Housing still did not have a big corpus of funds. Mostly, the profit from one project was invested in another. This often made Nilesh impatient, eager as he was on expanding their business to Mumbai, Bangalore and Delhi. He suggested borrowing money from banks and investors, but in the early 1990s banks did not consider housing projects a sound investment. A solution had to be found and soon. Meanwhile, the construction industry went through a short recessionary wave which put further pressure on Mehta Housing in terms of liquidity.

We cannot turn down projects at this stage. It will create a very bad reputation. Our only option is to source funds. Otherwise all our efforts in the past years will be for nothing,’ Nilesh had said at one of their family meetings and though both Shailesh and Harsh agreed with him, there did not seem to be a way out.

THREE

Harsh never realized how time flew. Two years had passed since he took over as managing director of Mehta Housing. He had spent this time completing a few old projects, initiating new ones, steering the company in the right direction, giving it the right image. There had been so many new things to learn, handling the finances, declaring quarterly and annual results.

Looking out of the window at the cloudless sky, he reflected on how it had all shaped up. His thoughts went back to those days when his brothers and he had worked as a team and managed Mehta Housing. As was the case in most conservative Marwari business families, they had divided the responsibilities among them and there were no clashes or confusion of any sort. With each of them assuming control of specific aspects, the company had turned into a watertight compartment as every important or crucial facet was properly deliberated upon and monitored. ‘For a company to grow, teamwork is absolutely essential, and if it happens within the family, so much the better,’ Harsh had once remarked when asked to deliver a lecture on management at a college. With a thorough understanding of each other’s strengths and weaknesses, the brothers had worked hard to take the company to greater heights. And they had met with amazing success. Soon enough, Harsh, his brothers, and senior colleagues from the company were rubbing shoulders with the ‘movers and shakers’ of the real-estate industry. They were often written about in the financial newspapers and business magazines