Twice he was nearly wiped out by turbulence caused by few brokers in the Bombay stock market. But he rose on both the occasions to carve out a niche for himself in the stock broking business. Rakesh Mehta of Mehta Equities has survived choppy waters many a times in his two decades career and now is planning to do trading on a global platform. In a no-hold-barred interview with YourStory, he talks about his life, business, and future plans.
Why an entrepreneur? Why not a regular 9-5 job? When did you get the first idea of this business?
Well, I always wanted to do something for the society but never thought of doing any business. I finished my CA course in 1988 and immediately started my own firm. That was a tough call as I didn't have any client list or contacts. I took some assignment from my firm where I did my articleship. But the real break came in 1989, when I got some Income-Tax raid cases and bogus hawala cases to handle. That set my business rolling.
Something on starting years
In 1990, a client gave me office space in lieu of maintaining his account books. I had two staff and one peon. Business was good with lot of I-T raid cases coming to me. In the month of June, same year, I met Jugal Maheshwari, one of my friends from college days. We both decided to put money in the stock market and started a company called 2M Corporation with a seed capital of Rs21, 000. Within a month, our investment doubled and we ploughed money back into the market. My audit firm also got lot of respect and credibility in the market as I started getting lot of govt projects to audit. In 1992, our firm became the sub broker of Motilal Oswal, a broker with BSE member card and a friend of mine. Together, we got empanelled as a broker with Bank of India (BOI) Mutual Fund. That was a huge step. We started getting good orders from BOI Mutual Fund and our business grew manifold.
Harshad Mehta scam in 1993 dealt a huge blow to our business and nearly wiped us out of the market. As luck would have it, financial institutions such as IDBI, UTI, LIC and GIC launched a short-term deposit scheme (18months) in those days for corporates and we started funding them and managing their accounts. Slowly these companies gave us mandate to manage their stock investments and mutual fund business. We bought the stock exchange membership card for more than Rs2cr and on 23rd January 1995 we started our own stock broking firm called Renaissance Securities Ltd. From 1995 to 1998, we were among the top ten brokers in institutional broking and second in terms of having maximum number of DP accounts. In 1999, we started the first retail franchise of Renaissance in my hometown Jodhpur and now we have 104 franchisees all across India.
Turning point in your business
I would say getting the Bank of India Mutual Fund business in 1992 and then starting Renaissance securities in 1995.
Did at any point you felt like giving up?
2001 was a journey through hell. Ketan Parikh scam broke out and CBI raided my house. I was detained for few days and lost everything. My partner Jugal Maheshwari left me and I underwent a heart surgery later that year. Thankfully my staff stood by me and we bounced back again. I renamed Renaissance Securities as Mehta Equities Ltd.
What drives you?
Faith in God, staunch support and faith of employees and franchisees, my wife and my children, and blessing of my parents! Values helped me come out unscathed from charges labeled against me in 2001. CBI detained me for few days. But I had no fear. I never spoke lie during the investigation and I had no fear. Finally, justice prevailed and I was acquitted of all charges.
On business - the differentiators of your business
I would say focus on relationship with the clients and employees alike. I still send salary to a retired 78 year old guy, who was my first employee and worked as a peon with me when I started in 1990.
Growth drivers / vision for your enterprise
I believe it's the era of consolidation. I want to increase my operations and work on a global platform. For that I am looking for global partners and associates. I also want to expand the franchisee network in India to 140 retail outlets by March 2009 from the current strength of 104
Key Requirements to grow your business
Looking for partners and associates, who can invest in the company and provide it a global platform to operate in financial services.