J. Paul Heylen: Watch out, this man's mind-reader

It's all in the mind, for this consumer psychologist and motivational research guru. A trained Freudian, J. Paul Heylen, Chairman Heylen International spoke to BT's Abir Pal in Mumbai about his imp/sys-Implicit model for predicting deep-seated consumer motives.

Let us start with an overview of the IMP/SYS (Implicit System). What is it, how did it emerge, and what is it that makes it unique?

Most systems come from logic. They emerge not from experiences but from thinking. Our system came from experience, day to day work with people. Take the European Union. It used this model to identify how to make French people feel more European, how to make Danish people feel European... We discovered that most people see their nationality as a kind of a maternal feeling. We, therefore, created an European identity which came from the father.

How can companies use this model?

Conventional systems describe behaviour. It tells people what happens and the marketer has to make a guess as to why it happens. When they use imp/sys they get information as to why it happened.

Can the model be applied across countries and cultures?

From our studies it becomes clear that all of us are very much alike.

Tell us a bit about the work you've done in India.

A lot of it is confidential-work that belongs to Hindustan Lever. But broadly we have a better understanding of what tea and coffee mean, an insight into laundry products, insights into cosmetics and beauty care.

SELF WORTH
The Once And Forever Fund Manager
Some smart manoeuvres help Alliance Capital's Samir Arora keep his cake and eat it too.

Samir Arora: Junior gets his own way

Sometimes, managers get so attached to the entities they manage that the thought of someone else getting their hands on them provokes radical responses. Put down Samir Arora's bid for Alliance Capital Asset Management's India operations to just such sentiment. The 41-year-old Arora has paternal feelings towards Alliance Capital in India. He was its first employee, and although he has since moved to Singapore to look after both India and emerging markets, filial ties run deep. ''Asian markets are part of my job,'' says Arora matter of factly, ''but Indian stockmarkets are my passion.'' Clearly, here's a man who wears his heart on his sleeve.

Only, rather than get all moony about this, Arora went about his job with a precision that would have made Sun Tzu proud. His December 2002 quarterly newsletter to Alliance's investor community in the country was titled Mujhse Dosti Karoge? (Will you be friends with me?), after a Bollywood motion pic. Stay with me, was the not-so-subtle message Arora was sending investors. Which could explain why, when it looked like HDFC Mutual Fund would acquire Alliance, the Rs 3,600-crore fund faced large-scale redemption.

Whether it was that-the redemption would have obviously eroded the valuation of the fund-or something else that changed their minds, Alliance's mandarins aren't saying, but in the first week of February, they abruptly announced that they were no longer keen to sell the India operations. The announcement followed some high drama when it looked like Arora, who was backed by Henderson Global Investors, a UK company had lost the race-he was reported to be meeting with the CEOs of some large Indian business groups to get them to pitch in with some more money to back his bid.

Today, Arora can afford to be casual about the whole affair. If he had lost out to HDFC Mutual Fund, he reasons, it would have been because of his pricing strategy. ''Being a fund manager, I buy something only if the price is right,'' says the man who was found browsing at Mumbai's Crossword and Strand book stores during his last visit to the city. ''India mein books saste mein milte hai,'' (Books are cheap in India), he was heard saying, lapsing into Hindi.

Now, the CIO from Wharton's class of '91 (External Affairs Minister Yashwant Sinha's daughter-in-law Punita Kumar Sinha was a batchmate) who has an engineering degree from IIT, Delhi and a MBA from IIM, Calcutta (he was called Junior on campus), is off to China to do what he best likes-spot winners early. That sums up his investment philosophy: get in early, ride the wave, and exit at the first whiff of bad news. The strategy seems to have worked at Alliance. Digital Globalsoft (formerly Digital Equipment), a stock Arora spotted in 1997, is today a market-favourite. but not everything Arora touched has turned to gold: his first investment as an advisor to the India Liberalisation Fund, a joint venture between Alliance and UTI, was public sector telco MTNL. The year was 1993, the fund paid Rs 310 a share for MTNL, and the telco has never seen those levels since. Still, a pick such as that isn't out of character for Arora, a perennial bull. ''Today,'' he says, ''being bullish is all about earning more than debt, but not (about) earning returns of 50 per cent.'' We'll buy that definition.

-Roshni Jayakar

LEAD STEER
The Incredible Mr Jhunjhunwala
A Mumbai-speculator predicts the longest bull market in Indian stockmarket history.

Rakesh Jhunjhunwala: Waiting to run with the bulls

Not too many people would agree with him, but Mumbai-based speculator, 43-year- old Rakesh Jhunjhunwala believes the Indian stockmarket is on the threshold of a longish bull run, akin to the Dow's rally from 1050 to 11700 in the go-go 1990s. And so, the Chartered Accountant by qualification has been investing in ''a new breed of companies that will give returns to investors over the next few years''. His checklist: sectoral leaders with clear competitive advantage, a scalable business model and a competent management team available at attractive valuation.

Jhunjhunwala has followed up his contrarian pronouncements with telling investments. CRISIL is one favourite: from 2.66 per cent in March 2002, his stake in the company has grown to 11.04 per cent today, higher than that of CRISIL promoter ICICI Bank's. Jhunjhunwala explains his preference for the credit rating company by spelling out its many pluses: a pure-cash flow business, growth prospects contingent on the performance of the financial sector, and professional management. ''CRISIL is a good investment,'' he says simply. The professional investor also has significant holdings in Geometric Software, BEL, Container Corporation, BEML, and Karur Vysya Bank-all among the 25 companies that he says will now constitute his portfolio. Ergo, he is engaged in divesting his holdings in some 50 other companies because ''it is tough to track them all''.

Stockmarket pundits believe the buy-and-hold strategy, where investors buy stocks and hold them for the medium-term before cashing out, doesn't work anymore. Jhunjhunwala thinks otherwise. ''History tells us that it is not always profitable to do what is popular in the market,'' he smiles. And so, the quiet bull waits for the run to break. He points to deep-seated structural changes in the economy, modifications in trading systems, and a lower interest rate regime. It won't be long now.

-Roshni Jayakar

CALL OR PUT?
Letting Go
GOI may actually divest MTNL and BSNL. What?

With disinvestment minister Arun Shourie now in charge of telecommunications, the divestment of BSNL and MTNL is back on track. The Department of Disinvestment is likely to target MTNL, where GOI owns 56.25 per cent first. Its strategy: sell 15 per cent and cede control to a strategic partner and then divest 10 per cent through a public offering. However, Pramod Mahajan's idea of merging the two telcos has gained some currency and could spike the DOD's efforts. Strategic partners are unlikely to be interested in a merged entity with 400,000 employees and no apparent synergies between businesses. It ain't over till the fat lady sings.

-Ashish Gupta