Who Are the Best

Who are the best-performing CEOs in India? The first-ever ranking of Indian CEOs based on the long-term shareholder returns they generate (available here and published in Business Today, an Indian business magazine) provides an interesting answer. This answer is premised on the notion that the most objective test of a CEO's leadership ought to be how the company does during his or her full tenure at the helm, rather than the latest quarterly earnings of the company or the CEO's power, family pedigree or positive media coverage. Of course, shareholder return is not the only measure of performance and it omits contributions companies make to other stakeholders. But it is the fundamental scorecard for CEOs of public companies. And it's the same scorecard for everyone. Our study of 374 CEOs of 202 publicly traded Indian companies drawn from the S&P CNX 500 index since 1998 uses a methodology similar to our prior work ranking the top CEOs in the world by Morten Hansen, Herminia Ibarra and Urs Peyer on 1999 leaders from 1205 global companies, published in the January 2010 issue of the Harvard Business Review. We defined a CEO as the person holding the highest executive position in a specific listed company. For example, we identified Bhaskar Bhat (#4 on our list) as the CEO of Titan Industries and not Ratan Tata who is the head of the Tata business group that Titan Industries belongs to. Our ranking included some of the "usual suspects," such as Mukesh Ambani of Reliance and Sunil Mittal of Bharti Airtel. However, it excluded other well-known leaders such as Narayana Murthy (Infosys), Azim Premji (Wipro) or Deepak Parekh (pdf) (HDFC) because these leaders took the helm before 1995, whereas our study covers individuals who started their job as CEO during the time period January 1995 to June 2009. After generating the list, we analyzed the data to see which factors increased the likelihood that an executive would be placed higher in our ranking. We categorized our search into three buckets: (i) attributes of the CEOs as individuals; (ii) characteristics of the companies they led; and (iii) features of the broad industry sectors in which their companies participated. One of our most interesting findings was that CEOs who started their job when they were younger and had an MBA degree were more likely to attain a better ranking success. Our statistical analysis revealed that other things being equal, a CEO who started his job 10 years younger than the average age improved his ranking by 15 places. More interestingly, other things being equal, having an MBA degree also improved the place in the ranking by 15 places. Our top ranker The #1 CEO on our list is Naveen Jindal of Jindal Steel and Power (JSPL), the most valuable steel company in India today with annual revenues of about Rs 132 billion (approx. US $2.6 billion). Armed with an MBA from the University of Texas at Dallas, Naveen Jindal acquired control over the ailing Raigarh plant of the Jindal group in his early 30s. Young Jindal was thrust into this leadership role at JSPL when his father, Om Prakash Jindal, arranged an amicable fourway split of his business empire between his four sons. Naveen Jindal turned around the Raigarh sponge iron mill through a backward integration strategy that insulated JSPL from price volatility in commodity markets, thereby boosting

profitability. Buoyed by this success, JSPL has now set very ambitious investment plans in iron ore mining, steel production and power generation. During his tenure, Naveen Jindal has delivered a staggering total shareholder return (TSR) of 13,784%, increasing JSPL's market capitalisation by Rs 606 billion (about US $12.1 billion). The young professionals Naveen Jindal exemplifies in several ways the CEOs who are most likely to secure a high ranking on our list. For example, Bhaskar Bhat (#4 on our list) became CEO of Titan Industries when he was 47 years old, having started his career as a management trainee at Godrej & Boyce Manufacturing after completing an MBA from the Indian Institute of Management at Ahmedabad. Likewise, Sunil Duggal (#14) became CEO of Dabur India at age 45, having started his career as a management trainee at Wimco Limited after finishing an MBA from the Indian Institute of Management at Calcutta. These results suggest two things: First, an MBA degree does seem to provide some valuable skills for running Indian companies. Second, the prevalence of professional managers with MBA degrees (often from top Indian business schools such as the IIMs) suggests that the "visible hand" of managerial capitalism may be playing an increasingly important role in the Indian economy. In essence, youth and education seem to matter for CEO performance in India.