Cold sweat broke on Rahul’s forehead. It was the headhunter again. This time, the stakes were higher — cost to company of Rs 3 crore per annum plus stock options. “That’s almost a three-fold jump over my current salary, without counting the options,” he told his wife. “Wow, that’s great,” said Sadhavi, who was also his classmate at B-school and now mum to Kartik, 10, and Kritika, 5. “Between the two of us, we’ll pull in a little over Rs 4 crore. Tax-adjusted that means, we would have saved over Rs 5 crore over the next two years.” Rahul smiled,”That means our apartment is paid for, children’s education is financed and.we can go to Honolulu.”Rahul’s lips were smiling, but his heart was pounding. From excitement — and fear. “Why am I scared?” he thought. If there’s such a good deal going — forget the money, he would jump from senior VP to CEO in one broad corporate jump — why was he hesitating? He, who was known in corporate circles as Mr Dealmaker; who had successfully launched over a dozen products, from soaps and perfumes to watches and mobile phones; who had always moved with confidence and made hundreds of crores for the companies he worked for. His personal brand equity was huge and was the poster boy of talented, young, ambitious Indians.“I don’t know the company,” he said. The headhunter had told him that this time the offer was from an Indian company that was on the fast track. The promoters were in the computer hardware business and now wanted to expand margins by getting into software products. Already, the share price of their company had jumped 16-fold over the past 18 months, from Rs 8.50 per share to Rs 136. The market buzz was that it is going to cross Rs 500 in the next three months. “This, Mr Rahul Bhatnagar,” the pause was cool and confident, as if the headhunter was exhaling smoke, “is the next Infosys.”Rahul wanted to believe the headhunter, but couldn’t. Something in the gut told him to wait. “Give me a week,” he said. “No problem, we’ll wait for the best candidate.” He began to research the company. Who are these guys? Where have they come from? What are their plans? What has been their track record? Is the company making good profits? Is there a future in this business — a business he didn’t understand? Is this really the next Infosys?Over the next two days he called up his batchmates — managers, analysts, fund managers, CEOs — to find out about the company. The responses were ambiguous. The finance types were sold out on the company. “It may not be the next Infosys,” said Jayant Shah, head of a broking firm, “but it’s definitely a software giant in the making.” What’s their turnover today, asked Rahul. “About Rs 16 crore, but that’s not what you look for, Rahul, you look at the future.” His banker friend was more cautious: “Yes, I’ve heard of this company but the balance sheet doesn’t look too good.”Balance sheet? That should have been the first place to go, thought Rahul. On the third day, with the share price a hair’s breadth away from Rs 150, Rahul got hold of the company’s annual report. When he began reading it, he couldn’t believe his eyes. The company was in a shambles. The topline of Rs 16 crore barely managed to rake in Rs 12 lakh as profits. These, too, he found from the quarterly results posted on the stock exchange website, had been coming only in the past 18 months — ever since the Sensex began its upward journey. Moreover, most of the Rs 16 crore, almost Rs 10 crore, were locked up as receivables, money that the company should have got but hadn’t.The past five years had seen the company collect Rs 10 crore from an IPO (Rs 8 crore) and a rights issue (Rs 2 crore). But the share price had tanked barely months after listing and had fallen to Rs 3 per share in October ’02. The bottomline was highly volatile doing the tango from losses to profits and back. The jump in margins in the last financial year was too sudden for Rahul’s sensibilities. As was its share price. “This is like courting death,” he thought. “No way am I going to leave my job for this offer,” he told Sadhavi over a meeting with his financial planner, Ajay.Ajay stood there with a knowing smile on his face. “What?” asked Rahul, pouring him a drink. “Well, if this company is so bad that you don’t want to work for it, why have you invested your hard-earned money in it?” Rahul put his glass down: “When?” Ajay laughed: “Don’t you remember? You had told me that your brother-in-law’s cousin’s pen-friend’s great-grand-uncle had told you that this company was the next Infosys?”Moral of the story: as with jobs, so with stocks.
