Chennai: When the 43-year-old first-generation entrepreneur Arun Jain, chairman and managing director, and CEO of Polaris Software Lab, decided to lead a small team to Indonesia, he thought it would be yet another business trip where hard negotiations would have to be done to minimise the damage to the company.
The company's Indonesian banking client Bank Artha Graha, a large retail bank with more than 70 branches in 15 cities, had some days ago communicated its decision to terminate its $1.3-million contract with Polaris.
Despite this, Jain boarded the flight as a happy man. His dream of building a software giant was on the way to fruition. He had recently bought out a business process outsourcing company, www.iBackoffice.com, and formed a joint venture with AIG Offshore Systems Services, part of the global insurance giant American Insurance Group (AIG).
A month ago Polaris finalised an acquisition deal with OrbiTech Solutions, a Citigroup company, thereby making Polaris a 4,100-strong employee company with a combined turnover of over Rs 600 crore. The company he started with Rs 25, 000 investment seemed all set to take off.
Neither he nor his team members had any inkling that the Jakarta trip would turn out to be a nightmare, and that they would end up getting arrested by the country's police upon a complaint made by Bank Artha Graha.
The Chennai-based company had signed agreements with the Indonesian bank in June 2002 and August 2002 covering central processing, disaster recovery and branch server- related work. The contract was supposed to be completed by July 2003.
But due to differences in the delivery milestones, the bank served notice of termination on Polaris on 27 November 2002. Polaris in turn responded to the notice on 3 December stating that the grounds for termination were incorrect and offered to resolve the issue through discussion. Jain decided to lead his team that included senior vice-president Rajiv Malhotra and two others. The bank had reportedly demanded $10 million as compensation, which the Polaris officials were reluctant to pay.
On their refusal to pay the compensation, the Polaris team was detained at the bank premises and later the Jakarta police arrested them .
The big dreamer Jain's father was a government servant, with a large family - Jain has eight sisters and a brother. Jain completed electrical engineering from Delhi College of Engineering in 1983. He was irked by his friends finding fault with India after being away for a year or so for couple of years. Jain wanted to prove that everything is possible in India.
Turning down an offer by one of his sisters to give him passage to the US, Jain set up his own outfit, International Information Systems, in Delhi, investing Rs 25, 000. Three years later, the company was transformed into Nucleus Software Workshop with three partners, and hit the growth path when it started doing backend work for Citigroup in India.
Soon Nucleus Software expanded and the lanky Jain decided to come to Chennai when, in 1990, Citibank relocated its global consumer banking business in the southern city.
Three years later, the partners decided to restructure the business amicably, as Jain wanted to focus more on the banking, financial services and retail segments, and slowly get out of the Citigroup's shadow. Thus Polaris came into existence in 1993 and went public in 1997.
First major setback Jain faced his first major setback in 2000 when he decided to go back on acquiring Data Inc, then touted as the largest cross-border acquisition deal in the software sector. Data Inc slapped Polaris with a case in the US for abrogating the memorandum of understanding (MoU) unilaterally.
The Data Inc fiasco resulted in Jain becoming reclusive. Jain, who never used to dodge media questions, became touchy at any query relating to Data Inc. He even started to avoid the media for some time (See: p).
But Jain did not lack the nerve to face reality. His attitude to risks came to the fore when OrbiTech, a year back, asked Polaris to confine its business to Citigroup work and not bid for other banking projects.
He was caught in a cleft stick. On the one hand, OrbiTech was its one major client, bringing in a sizeable chunk of revenues, and on the other hand, Polaris was being asked to refrain from other banking projects, impinging its growth prospects. It was then the audacious idea of acquiring OrbiTech was mooted and he started working on that.
An MoU was signed in May. Soon the Orbitech case took various twists and turns. Finding the going against Polaris shareholders, Jain turned into a hard bargainer without seriously offending his major client.
''I would have called off the whole deal if it didn't work out to our advantage,'' he remarked after finally sealing the deal with Citigroup. But how this deft negotiator landed up in a Jakarta police cell is still unknown.
Focusing on people A religious man, Jain believes that people drive a company, not strategy. According to him, happy people make a happy organisation and with committed people you can achieve what most people think is impossible. Jain proudly claims that Polaris hasn't lost any senior executives during the whole of last year despite there being a freeze on their pay hike.
Realising that the days of bagging software contracts on low pricing alone is over, Jain has started focusing more on marketing, branding and selling additional services to his existing clients. ''I firmly believe in the iceberg theory. What a client sees is only a small portion of our total offerings. We have now started to offer other services to our existing client.''
Jain is also active outside Polaris. He is vice-chairman of the Confederation of Indian Industry (CII)-Tamil Nadu State Council, a member of the governing board of the Xavier Institute of Management, Bhubaneswar, and a member of CII's National Committee of IT. He was also ex-chairman of the Indo-American Chamber of Commerce, Tamil Nadu branch.
His wife Manju, son Uday and daughter Aarushi have taken the disturbing news quite well, says Gaurav Jain, a relative.
Malhotra in a muddle Senior vice-president and head, BankWare division, Polaris Software Lab, Rajiv Malhotra must be cursing his stars for sealing the $1.3-million software services deal with Bank Artha Graha, Indonesia. The deal has landed him in a Jakarta police cell, and that too, when his wife is in the family way.
A 1984-batch computer science engineering graduate (BTech) from the Indian Institute of Technology-Delhi, Malhotra started his career with Texas Instruments, England. Starting out as a software engineer working on VLSI, handling design and development, Malhotra was one of the first few associates involved in setting up Texas Instrument's DAD centre in India.
From there, Malhotra decided to do Masters in Business Administration (MBA), specialising in finance and marketing from the Faculty of Management Studies, Delhi. Completing his MBA, Malhotra joined Citibank, and after three years he switched over to Bank of America where he spent eight years honing his banking knowledge.
The last two years saw him steering Polaris to where it is today, heading the corporate planning, strategy and communication cell. In the last 12 months, he moved to become Polaris' product evangelist by starting BankWare, the company's dedicated unit to roll out banking software products. Malhotra also heads the strategic practice unit (SPU) for Internet banking and heads a 125-strong team.
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