“We Have Created Value for Stakeholders: Uday Kotak 2023”
India’s financial industry has evolved along with its economic narrative, and it has developed an institution based on the fundamental principles of openness and trust.
In a letter to shareholders, managing director and chief executive officer Uday Kotak said that Kotak Mahindra Bank had generated value for all its stakeholders and currently supported 10,000 direct employees in addition to many more indirect ones.
“An investor who invested Rs 10,000 with the bank in 1985 would be worth Rs 300 crore today,” he said. According to statistics from Bloomberg, the bank’s stock has increased at a compound annual growth rate of 28% during the last 28 years (from 1995).
Additionally, he stated that Kotak Bank was the epitome of the financial sector’s transformation and the growth narrative of India and that it was founded on the fundamental principles of transparency and trust.
He also issued a warning against India’s financial industry becoming overly bureaucratized.
Since the fear of making a mistake outweighs the joy of invention and progress, he stated, “I feel the financial sector players run the risk of becoming more robotic and curbing the entrepreneurial flair.”
While risk management requires “Arjuna’s eye,” he continued, “we must stop the bureaucratization of financial services.”
It is unusual in today’s banking environment, according to the bank’s founder-promoter, who is expected to retire by the end of the year, to have a person with about 26% skin in the game, disproportionate family assets concentrated in one stock, and an emotional attachment to realizing his dream of making India proud.
Kotak said he had spent most of his life at this place, starting from nothing in 1985 with just three employees and a 300-square-foot office.
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In expressing his optimism for the Indian economy, he claimed that the country is currently in the Goldilocks stage of a positive cycle and the banking sector. For Cinderella, the moment of midnight feels far away. “We must resist the idea that limiting automobile access would make roads accident-free. To continue with this comparison, we need more roads, more automobiles, better traffic lights, and better traffic laws. Accidents must be controlled and avoided; they cannot be eradicated without negatively influencing growth ambitions, he added.
Regarding hiring, he stated that the bank is prepared to assess its internal talent in light of its requirements and to seek out talent from other sources to be the best in the industry at what it must do for stakeholders.
To implement potentially game-changing improvements in each of these areas, he said the bank hired a new CTO, chief of customer experience, a head of brand, product, and marketing, and a director of retail and commercial risk only in the last year. He said, “At the same time, we will develop internal talent that is prepared for the future.”
Kotak is sure that the bank will be able to navigate through a changing climate thanks to the alignment and commitment of shareholders, the bank, and management in the future.
To achieve optimal regulation, he added, “I would like to pursue the Indian dream of a $30 trillion economy and liberate the financial sector in a nuanced manner.”
The Kotak Group had around Rs 4.2 trillion in assets under control as of March 31. As of March 31, the alternative assets book has increased by 125% yearly to Rs 46,077 crore.
Checks from banks
For 2022–2023, Uday Kotak decided against his fixed pay and accepted a token salary of Rs. 1.
Dipak Gupta, joint MD, received a salary of Rs. 5.43 crore. His compensation package was Rs 2.74 crore in base pay and Rs 1.18 crore in yearly incentives.
Full-time directors Gaurang Shah, KVS Manian, and Shanti Ekambaram received compensation packages totalling Rs 5.3 crore, Rs 5.03 crore, and Rs 2.02 crore, respectively. This does not include the gratuities, automobile perquisites, and perquisites value on ESOPs.
Uday Kotak, the CEO and Managing Director of Kotak Mahindra Bank, recently reiterated his commitment to the company’s stakeholders, asserting, “We have created value for stakeholders.” This statement was made amidst significant financial and social challenges, setting the tone for the bank’s direction in 2023.
Uday Kotak’s leadership has been at the helm of Kotak Mahindra Bank’s steady rise, consistently demonstrating solid performance in the Indian financial market. It has been delivering healthy returns to stakeholders, successfully merging prudent risk management with a keen sense for opportunities in the banking sector.
Despite the global economic tumult brought about by the COVID-19 pandemic, Kotak Mahindra Bank has held its ground. Kotak’s strategic decisions and careful stewardship have steered the bank through unpredictable fluctuations, protecting and increasing shareholder value in these uncertain times.
In 2023, under Kotak’s leadership, the bank implemented several key initiatives to enhance value for its stakeholders further. Firstly, Kotak Mahindra Bank has aggressively adopted a digital-first approach, investing heavily in fintech and other digital technologies. This has improved customer service and convenience and made banking operations more efficient, ultimately contributing to the bank’s bottom line.
Secondly, the bank has shown an increased commitment to sustainability, integrating Environmental, Social, and Corporate Governance (ESG) considerations into its overall business strategy. This forward-thinking approach has been well-received by stakeholders, who increasingly demand more from corporations than just financial returns.
Lastly, Kotak has reiterated the bank’s commitment to prudent risk management, a critical factor in its ability to navigate an increasingly complex financial landscape. The bank has successfully mitigated potential risks through advanced analytics, stringent oversight, and conservative investment strategies.
The global economic landscape in 2023 has been anything but predictable, with many economies still reeling from the aftereffects of the pandemic. However, Uday Kotak’s prudent leadership and commitment to sustainable growth have proven successful in these trying times.
The CEO’s commitment to digital transformation and risk management and his strategic investment in human capital has allowed the bank to meet these challenges head-on. As a result, Kotak Mahindra Bank has thrived in these trying times, delivering robust performance and creating value for stakeholders.
Looking ahead, Uday Kotak has promised that the bank will continue to innovate, grow sustainably, and adapt to the changing landscape of the banking sector. His leadership promises a steadfast commitment to stakeholder value creation, even amidst economic uncertainties.
Under Uday Kotak’s guidance, Kotak Mahindra Bank’s performance in 2023 is a testament to a well-executed strategic plan that prioritizes stakeholders’ interests and the company’s long-term growth. The strategic measures taken by the bank ensure its resilience, reinforcing the belief that value creation is a continuous journey and not a destination. This philosophy underpins Kotak’s assertion that “We have created value for stakeholders,” and promises to guide the bank’s approach in the future.
