Meet IIT-Madras alumnus Prem Watsa, iconic BlackBerry’s new owner

Forty two years after he migrated to Canada, V. Prem Watsa, who was then just another IIT engineer in search of an MBA, now holds the future of an ailing, but still iconic BlackBerry in his hands. On Monday afternoon, a consortium led by Fairfax Financial Holdings, Watsa’s flagship company, bid $9 a share to buy out Blackberry.

A 1971 batch IIT-Madras graduate in chemical engineering, Watsa arrived in Canada with little more than pocket change with which to pursue his dreams. He did his MBA from the Richard Ivey School of Business at the University of Western Ontario.

Since then, he has made a name for himself, mostly as an investor who identifies distressed and undervalued assets, bets on them, and reaps returns. Fairfax Financial Holdings, an insurance-cum-investment company that Watsa founded in 1985, went on to become Canada’s most profitable company in 2008.

“I know he is an ardent admirer of Warren Buffett and is sometimes referred to as the Warren Buffett of Canada,” says MG Venkatesh Mannar, the Ottawa-based President of The Micronutrient Initiative, and Watsa’s senior at IIT-Madras. “I remember him then as a shy and reserved person (maybe he still is).”

Funds for Alma Mater
Watsa, Mannar says, has made significant contributions to the IIT-Madras Alumni Fund. Despite a couple of recent lacklustre years, Fairfax Financial Holdings’ revenue crossed $8 billion in 2012, up over 7% from a year earlier, with net profit at $532.4 million and nearly $37 billion in assets, spread across pulp mills, specialty retailers, and restaurant chains. Its stock price has compounded at 19 percent annually.

Watsa, 63, and one of the wealthiest individuals in Canada, is reclusive by nature and limits public appearances mostly to Fairfax’s annual shareholder meetings. However, his company’s latest move – a $4.7 billion bid to buy smartphone maker BlackBerry, has put the spot light on the Hyderabad-born billionaire. BlackBerry is by far the most high profile company in Canada and Fairfax – short for fair, friendly acquisitions – is its largest shareholder with around a 10% stake. Fairfax raised its stake in Blackberry from 2 percent in January 2012 (when he joined the Blackberry board) to 10% by mid-2013, during a period when the company stock prices were on a decline.

Last month, when BlackBerry announced it was exploring options for a sale, Watsa resigned as a director on the Blackberry board, citing potential conflict of interest. This was read as a statement of intent to mount a bid for the company.

Watsa has been a strong believer in BlackBerry from the time he started buying its shares. “The brand name, a security system second to none, a distribution network across 650 telecom carriers worldwide, a 79 million subscriber base, enterprise customers accounting for 90% of the Fortune 500….are all formidable strengths..” he wrote in a letter to Fairfax Financial shareholders this March.

Truck Start
His professional career started in 1974 at the Confederation Life Insurance Co. (CLI) in Toronto, where he stayed till 1983, rising to become the company’s vice president. After a short stint at GW Asset Management, he founded his own asset management company – Hamblin Watsa Investment Counsel Ltd. (now wholly owned by Fairfax) – along with his former boss at CLI and three others. In 1985, Watsa bought over Markel Financial, a Canadian company specialising in trucking insurance, and later renamed it Fairfax Financial Holdings.

Watsa’s mantra of risk-averseness and long term view has stood him well over the years, but it’s his eye for the big picture that enables him to see investment pitfalls and financial crises way before others, say observers. He was among the first to predict the crash of 1987, the Japanese collapse of 1990 and the 2008 sub-prime mortgage crisis in the US.

Source: The Economic Times (Online Edition), September 25, 2013

Alumni open purse to help IIT-Delhi build research schools

The highly successful alumni of Indian Institute of Technology-Delhi (IIT-D) have pumped in millions of dollars to the alma mater since it was established in 1961, helping the institute look beyond government funding for several ambitious research projects.

Currently, two complexes are being built in IIT-Delhi with 100 per cent alumni funding and the foundation for another one was laid recently to boost the institute’s research prospects. The first is Amarnath and Shashi Khosla School of Information Technology, named after parents of IIT-Delhi alumnus and US-based venture capitalist Vinod Khosla.

Khosla, a BTech in Electrical Engineering from IIT-Delhi, co-founded Sun Microsystems along with his Stanford classmates in 1982. Dean of Alumni Affairs Ambuj Sagar said Khosla has provided $5 million for construction of the building and for research work to be taken up there. “The complex will be ready in the next six months,” Dean of Infrastructure Ashok Gupta said. It will be for inter-disciplinary, goal-oriented research, and also serve as an innovation centre for post-graduate education in information technology.

Kusuma School of Biological Sciences, funded by alumnus Anurag Dikshit through the UK-based Kusuma Trust, named after his mother, is another project coming up on the campus. The trust has said to have contributed more than £5 million to build the school. Dean of Infrastructure Gupta said Rs. 100 million has already been released for the building, while the rest would be utilised for setting up research laboratories within the facility. The project mission is to promote research by “interfacing modern biology with applied engineering sciences to address problems affecting human health and welfare, and training scholars to be the next generation scientists”.

Patanjali Keswani, Managing Director of Lemon Tree Hotels and an IIT-Delhi alumnus, recently announced Rs. 200 million for GH Keswani Research Centre at the institute. Union HRD Minister Kapil Sibal laid the foundation of the project, which will be built in an area of approximately 130,000 square feet. It will reserved for research facilities for students.

IIT-Delhi has so far produced over 30,000 engineers, technologists, scientists, managers and entrepreneurs. Over the years, this rich roll-call has helped the institute financially and logistically take up several alumni-funded projects.

Source: The Indian Express, September 23, 2012

Jindal, his firm gift $2.5 million to University of Texas

Industrialist and Member of Parliament Naveen Jindal and his company Jindal Steel and Power Ltd. (JSPL) have gifted US$ 2.5 million (about Rs. 122.5 million) to his alma mater, University of Texas at Dallas, following which the university renamed its school of management after him. Jindal, a 1992 batch alumnus, gifted $200,000 from his personal fortune while JSPL gave $2.3 million, the company said in a statement.

The university had said last week that Jindal, along with two other alumni, “contributed a combined gift of $30 million, the largest alumni gift in the university’s history.” Asked about reports of Jindal and his firm making a gift of $20 million to the university, the company said they had only given $2.5 million.

The JSPL statement said both Jindal and the firm “will contribute in future too” as this “will support Indian students through creation of scholarships and fellowships”. Employees of JSPL and its associate firms would be eligible for executive programmes at the university, the statement said. “The company’s contribution has been approved by board of directors, given JSPL’s commitment to education,” it added.

Source: The Indian Express, October 17, 2011

Autonomy to IIM-A at variance with NCHER norms: Experts

HRD minister Kapil Sibal’s latest attempt to empower the Indian Institute of Management-Ahmedabad (IIM-A) is at complete variance with the legislation for the formation of a National Commission for Higher Education and Research (NCHER) that is currently pending clearance, say observers. Sibal has approved long-pending amendments to the institute’s memorandum of association (MOA) with the government, allowing IIM-A to choose its own director and raise resources.

Highly-placed sources in the Ministry of Human Resource Development (MHRD) who spoke on condition of anonymity said the move flies in the face of the proposed NCHER. “One of the key functions of this proposed body, as and when it comes into existence, would be to prepare a national registry of people eligible for appointment to the position of directors/vice-chancellors of all major national institutions of higher learning. That being the case, what would the IIM-A board do with the autonomy provided to it by the MHRD to select its own director?” said a source.

Moreover, though the MHRD has been actively involved in the process of selecting directors for IIM-A over the past two rounds, first in the case of Bakul Dholakia and then in the case of current incumbent Sameer Barua, it is the IIM-A board that has been the nodal body for selection of a director ever since the inception of the institute. Interestingly, though the government had increasingly been taking an interest in the selection of directors for the institute, the original MOA had not been tinkered with. In the case of the selection of the present director, the MHRD had even advertised the post in leading national dailies, leading to consternation in some quarters over the “complete infringement of the institute’s autonomy”.

“As far as the selection procedure is concerned, the amendments to the MOA do not change anything on the ground materially,” said a senior IIM-A faculty member.” As usual, it was the chairman of the IIM-A board who was sending a list of three names in order of preference and the government was granting its approval in accordance with this.” With the latest amendment to the MOA, however, the informal scope the government had of influencing the choice of director is likely to go completely. “If this is done, then it will be in complete variance with the role envisaged of the NCHER, which is supposed to prepare a panel of names for future appointments to all premier institutes of higher education through a collegium of academicians of distinction,” the faculty member said.

Another move of the MHRD that is not going down well is its nod to the amendment for granting the IIM-A financial autonomy as well including the selling of seats on the IIM-A board to the highest bidding corporate donor too is not being viewed favourably by insiders at IIM-A. A faculty member observed that the move to auction seats would actually be tantamount to backdoor privatisation of the institute over a period of time. “That’s because the board is accountable to the IIM-A Society. Thus far, it was the government which was monitoring the institute’s finances while the Society had been comatose. If the board now becomes answerable only to the Society as envisaged in the amended MOA, it would, over a period, lead to an increase in control of corporates,” he said.

Source: The Financial Express, July 19, 2011

Presidency College Kolkata to tap corporate houses

Kolkata’s Presidency College, now University, plans to tap big corporate houses and private funds to make it one of Asia’s best graduate studies institute. “We want to tap top corporate houses who have philanthropic exposure to higher education. However, donation will be accepted without any strings attached. We are building a database of prospective donors,” said Sugata Bose, Gardiner Professor of History at Harvard University.

Prof. Bose, appointed recently by West Bengal chief minister Mamata Banerjee as Chairman of the Presidency University mentor group to revive the fortunes of this institution, is a grand-nephew of Netaji Subhas Chandra Bose. In an hour long freewheeling interview with ET in Netaji’s ancestral home, Bose’s eyes lit up as he wondered aloud on his dream of taking his alma mater, Presidency, to the world stage. “And to do that, we need big funds,” said Bose. He cited the example of Harvard itself, which has endowments to the tune of $27 billion!

Bose has set a deadline of 2017-18 to make Presidency a world famous institution, when it will complete 200 years. He has formed an eight member mentor group comprising academics and administrators to come up with the turnaround plan, and will also take the help of fellow alumni and Nobel laureate Amartya Sen. The mentor group will also look at possibilities to seek funds from the Centre and to make Presidency a part of the 14 world-class universities which the union Ministry of Human Resource Development (MHRD) is planning to build across the country.

“The infrastructure at Presidency University is in dire straits. We have to look at various sources of funding to upgrade infrastructure since the West Bengal government’s fiscal health may not permit it to provide all the funds the institution would require to turn its fortunes,” said Bose. The first meeting of the mentor group is scheduled to take place around July 22-23, with the group suggesting turnaround measures for the next two years.

The mentor group will also evaluate possibilities to turn Presidency into a central university from a state one. “Central university status will enable it to tap central funds. It will also help us increase the salary of the teachers to attract better faculty, since the pay scale in central university is much more than a state university,” said Bose. Be that as it may, Bose’s email inbox is flooded with more than 1,000 job applications from teachers across the world. There’s a lot of enthusiasm. “But we need to provide the faculty an enabling environment,” he says.

Also on the cards, are plans to tie up with top universities in Japan, China and the Southeast Asia for faculty and student exchange. At the same time, the mentor group wants Presidency to start inter-disciplinary studies like the American universities. Bose wants to follow the Massachusetts Institute of Technology (MIT) model whereby the institution will focus on its core areas as centres of excellence, but also open up newer disciplines.

“Presidency will not be another IIT or IIM. It will continue its focus on liberal arts and science. But we want to bring newer subjects like applied science and IT which will ensure student placements. Plus, one full semester will dedicated for internship. We want to make Presidency an institute so that students choose to come here and not the IITs,” said Bose. Presidency in the last few years has been facing a lot of criticism about its falling standards due to alleged politics in teacher recruitment and frequent student unrest led by political parties.

Bose admits of “the steep decline in academic standards and infrastructure over the last 30 years when the institution lost its talented faculty”, but he sincerely hopes student politics will not hamper the turnaround process. “Student union is there in most of the top academic institutions, but those are not linked to party politics. Interest in politics is healthy but students should develop a new outlook when some real new things are going to take place,” he says. “For instance, the institution needs to raise academic fees but we will ensure that there are sufficient financial aid and scholarship for meritorious students who cannot afford such fees. Similarly, the chief minister has promised me there will be no political interference,” says Bose.

Originally called Hindu College that cradled the Bengal renaissance in the 19th century, Presidency boasts of thousands of noted alumni. This includes Netaji Subhas Chandra Bose, Bankim Chandra Chatterjee, Rajendra Prasad, Jyoti Basu, B.C. Roy, R.P. Goenka, Sir Jagadish Chandra Bose and Satyajit Ray.

Bose is confident Presidency will again produce and expand its famous alumni network. “We are confident Presidency will not get burnt out,” says Bose, who has started to burn midnight oil to bring back this 194-years-old goliath institution to its pink of health.

Source: The Economic Times, July 6, 2011

New facility at MIT with US$ 1 million grant from Lord Paul

A new facility for students and faculty of the Massachusetts Institute of Technology (MIT), Boston, built with a one million-dollar grant from Labour peer Swraj Paul, was opened on Friday and will be the new home for its School of Management. The grant was made through the Ambika Paul Foundation, set up by Lord Paul in 1978 in memory of his daughter Ambika who died of leukaemia in 1968 at the age of four.

“I would like to thank the Ambika Paul Foundation for their generous support and contribution towards the construction of these fabulous facilities. The Ambika Paul Mezzanine and Study Room create an impressive space, which will be an invaluable asset to both our school and the MIT for many years to come,” said David Schmittlein, Head of the MIT Sloan School of Management.

Akash Paul, son of Lord Paul, who attended the opening, said: “It gives me a great amount of pleasure to be able to present these facilities to the Massachusetts Institute of Technology on behalf of Lord Swraj Paul and family and Ambika Paul Foundation. The family is delighted to be in a position to offer valuable support to an academic community of such excellence, and one which has also been attended by so many members of our family.”

In a statement, the Foundation said that its aim was to inspire young people worldwide through education, culture and health. In 2007, it was approached by MIT for financial support towards the construction of a “21st century home for its School of Management.”

“The Foundation’s contribution will provide valuable meeting and study space in the modern E62 Building, for both students and faculty. The Ambika Paul Mezzanine, which takes a prominent part in it, is a modern light-filled area where students and lecturers can meet and talk while enjoying a perfect view over the dramatic Boston skyline. The Ambika Paul Study Room, on the other hand, is a quieter breakout area where students can study in groups and develop their ideas,” it said.

Source: The Hindu, May 14, 2011

>MHRD in sync with IIMs on tax waiver for donations

>If the Ministry of Human Resource Development (MHRD) has its way, individuals and corporations donating to educational institutions may soon be eligible for tax exemptions. In a bid to allow the Indian Institutes of Management (IIMs) to be financially independent, the MHRD will soon propose this to the Ministry of Finance. If accepted, this may be extended to other education institutes too.

“We are evaluating various options which may allow the IIMs to build a corpus. Thus, the donor may be able to avail tax exemption on their donations to institutes. We are also evaluating the option of noncash endowments. For instance, also allow grant of stock or equities and not incur tax on long term capital gains. The entire value of the gift could be exempted from IT as a charitable gift, thereby making it of double benefit to the donor,” a senior MHRD official told Business Standard.

For endowments in cash or in kind (property), the principal amount remains intact and expenditure would be from the interest accrued. Securities donated may have the dual advantages of no capital gains tax and tax exemption as charitable donation. The MHRD had last year asked IIM-Calcutta Chairperson Ajit Balakrishnan to study the system, especially in the context of the education sector and make suggestions, with reference to tax breaks and tax provisions. Balakrishnan told Business Standard that the report was submitted to the MHRD this February.

Last year, Hari S. Bhartia, presented the recommendations of the committee on fund raising by IIMs. His recommendations included setting up of a development office and campaign committees in each IIM. He enumerated possible ways of Fund Raising like Solicitation of Mass Alumni, Campaign Committees, Academic Seminars, lunches and dinners, formation of Board of Counselors, Board of visitors etc. Bhartia committee used case studies from the fund raising campaigns undertaken by Yale University in its US$ 3.5 billion campaign.

MHRD says it is seeking such exemptions on the lines of what the Finance Ministry approved in this Budget. “In the Budget, the Finance Minister enhanced the tax exemption on payments for scientific research to national laboratories, universities and the IITs (Indian Institutes of Technology) — from 175 per cent to 200 per cent. Encouraged by this, we would be seeking exemptions on the same lines,” added the MHRD official.

Indian companies have been seeking tax break from the government to increase donations in terms of endowments to higher education institutions. “Corporations have to give endowments and we support atax break of over 100 per cent towards the same. If you want more research to take place, more donations are required and the government needs to encourage this through tax breaks,” Rajan Mittal, Vice Chairman & Managing Director of Bharati Enterprises had earlier told Business Standard.

At present, donations by companies to higher education institutions overseas is tax exempted as these institutions are run by trusts. However, many of the trusts running education institutions in India are exempt from tax only if they are registered under the charities commissioner or as a Section 25 company under the Income Tax Act.

Also, many companies donate to international institutions abroad as mostly the Indian Income Tax department does not recognise these donations as legitimate ones but as a tax evading exercise. Also, these business houses say they prefer transparency with regard to the use of funds donated by them.

In October 2010, Harvard Business School received a US$ 50 million donation from the Tata Group. This has been the largest gift the school received from an international donor in its 102-year history. The funds will be used to build a new academic and residential building on the schools campus in Boston. Harvard said it hopes to break ground for the building, which will be named Tata Hall, next spring. Prior to this, Anand Mahindra, head of Mahindra Group, gave US$ 10 million to Harvard where he earned his undergraduate and master’s degrees.

Source: Business Standard, April 14, 2011