Moser Baer’s Ratul Puri is struggling to keep the company his father founded and his reputation intact
Ratul Puri, 39, is a charismatic young man. It is impossible not to like him. He is polite to a fault, coolly analytical—a computer engineering degree from Carnegie Mellon helps, no doubt—almost always impeccably dressed in a business suit and smokes Marlboro Lights. He has no hobbies and is a workaholic. No wonder then, that he is usually in office by 10 am and is often the last to leave. If you are an investor you would want someone like Puri to be at the helm of affairs.
Akhil Gupta, senior managing partner and chairman of the Indian arm of Blackstone, one of the world’s largest private equity firms, believes that Puri is one of the best entrepreneurs he has met. Gupta invested $300 million (about Rs 1,650 crore) in a company Puri founded: Moser Baser Projects Private Ltd. This company is an independent power producer and an energy company. “Ratul has reached every milestone before time,” says Gupta, pausing to deliver one of the highest praises an Indian entrepreneur can hope to get, “He reminds me of a young Mukesh Ambani.”
That’s Gupta. Now let’s talk about another investor, Rajesh Khanna. Khanna was the managing director of Warburg Pincus, another blue-blooded private equity firm, who invested heavily in Moser Baer India Ltd, the magnetic storage and solar panel manufacturing company. This is a company where Puri has been a key decision maker. He became the executive director in 2001. While Khanna did not talk to Forbes India for this story, his actions spoke quite clearly.
Warburg Pincus recently sold a major portion of its stake in Moser Baer, taking a substantial haircut on its original investment. It is estimated that the fund invested almost $220 million (Rs 1,210 crore) in the company. It sold about 24.5 percent of its stake in an off-market transaction to a Seychelles-based entity called Global Town Investment for about $11 million (Rs 61 crore). And then in June, Rajesh Khanna resigned from Moser Baer’s board. Investing in Moser Baer is possibly one of the worst investment decisions that Khanna must have made at Warburg Pincus.
Brave New World, Brave New Moser
A far bigger problem was that personal storage in the digital world was changing again. Thanks to the internet, the cost of storage had fallen dramatically. Flash memory was the next big thing for storage and transfer. In an interview with Forbes India in 2009, Ratul Puri had said growth rates fell from a CAGR of 70-80 percent in 2001-03 to about 15-20 percent by late 2004-05. “So you started expanding your capacity and adding capital cost in a falling market,” says a senior Moser official.
(This story appears in the 03 August, 2012 issue of Forbes India. To visit our Archives, click here.)