Typical nuances working as an employee for a “babu” company

(A “babu” company is typically one where the owner is involved in the day-to-day management of the company ; from signing of vouchers to investor roadshows )

During my audit days , I went to a “babu” company — asked for supporting documents for the payment — the accountant said — “dont you see ‘babu’s signature on the paper”

As an employee, your power in the organisation depends on how close you are to the “babu” . If the “babu” starts trusting you , you can yield “absolute power” — remember power corrupts and absolute power …….

Also be prepared for regime changes — “babu’s mood also changes fast and so does his list of favorites”

In babu companies, you will often find 3 power centres and often clashes

- the original babu — who set the company , is now 70+ but comes to office daily — Chairman Emeritus

- the babu’s son who actually runs the show — in this mid 40s and early 50s

- the babu’s grandson, who just returned from UK and is working as a management trainee from a 600 sq feet chamber ..lolz

(this structure is much safer than an equation where original babu has 2 sons who are now jostling for the top position- they are living in peace only till the Chairman Emeritus is alive)

If the babu likes you , he will also accept the reality that you are making something extra — in a typical “babu” company, Vice President folks set up their own factories before they retire

“Babu” companies do not believe in any pretense around corporate governance etc. An Independent Director is also hardly Independent.

Babu knows costing on his fingertips — he doesnt need an Excel model

But Yes, babu often cannot scale — he is happy owing 100% of a Rs 500 cr company than 50% of a Rs 5000 cr company — even if babu companies are listed, babu holds a signficant portion of the public shareholding through friends and family

Decision making in a “babu” company is mostly very quick — unlike a professionally run company, where professional managers try to outshine each other in marathon meetings, in a “babu” company, everyone becomes a timid cat infront of the “babu” and even if the “babu” says sun has risen from the west, they will nod their heads in agreement, if “babu” wants cost to be reduced by 15%, they will say “ jo hukum”

(remember you will find even IIT IIM folks acting like this, if they are in a “babu” company)

There will be a lot of “chelaas- old time loyalists” across the rank and file — they are from the same village, maybe come from a close reference — you have to live with the reality that they are your colleagues, adding to headcount, even if their producivity is limited ( all members of the same family)

‘babu” companies might often have a cheque+cash combo for employee compensation — the most tax efficient method — becomes a challenge during job changes, when you claim that you receive 10L in Cheque and 5L in Cash and want a 30% hike on 15L

“babu” will mostly book personal expenses also in the company — during audit “I once question how babu’s son’s Europe holiday was booked in the company — they said “he is the Future Director”

Even if a Big 4 audit a babu company, you will see some sort of adjustment in profits , for sure

“babu” companies are recession proof. In Covid-19, you would have seen an Accenture and a Deloitte firing thousands of people, but “babu” companies didnt fire a single employee

“babu” companies are greatly fascinated by the guy who can raise funds from Banks, rope in Private Equity folks or show the dream of IPO — they are the highest paid professionals. babus treat bank money as equity — thats why you will see a lot of S4A Restructuring and Insolvency in babu companies — often ARCs purchase the equity from banks, funded by cash from the babu’s family office and will sell the company back to babu after 3 years

Politics in a “babu” company is an altogether different level — not that MNCs are any holy cows- but MNCs have HRs, governance structures — in babu companies, HR is just a showpiece

This list can go on and on

It is really an interesting place under the sun