Continuity and Transition: Uday Kotak’s Final Letter to Shareholders

Uday Kotak, the Managing Director and Chief Executive Officer of Kotak Mahindra Bank, stated that he will transition from his whole-time role to become a non-executive board member and strategic shareholder. Even after stepping down from his current position, Kotak also intends to remain involved with the bank in a different capacity, contributing strategically and maintaining a stakeholder position. 

Kotak has dedicated much of his life to building Kotak Mahindra Bank. He embarked on this journey in 1985 with minimal capital, just three individuals, and a modest 300-square-foot office. 

The banker said, “I look at Kotak as a constant confluence of river waters, collaborating to build a sustainable ocean, aspiring to live in perpetuity”. 

What does it take to build a sustainable institution for the future? Product excellence, customer obsession, and trust. We, at Kotak, are amid this mindset shift for these priorities. He added that we have moved in part from the physical world to the ‘phygital’ (physical enabled by digital) one. 

We are now leapfrogging to ‘digical’ (digital first supported by physical), and soon, technology and AI may change this too. We need to live with conflicting emotions of paranoia and excitement at the same time, Kotak said in his letter to shareholders. 

Moreover, he also stated that we were at the right place at the right time. We are a quintessential product of the India growth story and the financial sector evolution. We have created value for stakeholders and now provide approximately 1,00,000 direct jobs and a multiple of that in indirect jobs. 

He also stated that an investor who invested Rs 10,000 with us in 1985 would be worth approximately Rs 300 Crore today. Most importantly, Kotak said we have built an institution on the basic tenets of trust and transparency. 

“Looking ahead, I see my role as a non-executive board governance member and a strategic shareholder with a long-term perspective of nurturing a world-class institution.

It is unusual in today’s world of banking anywhere to have an individual with approximately 26% skin in the game with disproportionate family assets in one stock, emotionally attached to living his dream of making India proud,” Kotak added.

As of March 31, 2023, Uday Kotak, along with his relatives and enterprises in which he holds a beneficial interest, collectively holds 25.95% of the equity share capital of the bank. Furthermore, they hold 17.26% of the paid-up share capital of Kotak Mahindra Bank. 

The veteran banker ends his message to its shareholders with one of his favourite quotes from George Bernard Shaw: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.” 

At the time of writing this article, the shares of Kotak Mahindra Bank are trading approximately at Rs 1874 on BSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.