A ‘religious’ stock market player

Taken from http://epaper.timesofindia.com/Daily/skins/ET/navigator.asp?Daily=ETH&login=default&AW=1211959657484

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ZAFAR Sareshwala had to literally lift his business from the embers after miscreants plundered and set his office on fire during the post-Godhra riots in Ahmedabad in 2002. Mr Sareshwala — the scion of an affluent Gujarati family that ran a century-old industrial valves business — was bought to the brink of bankruptcy, losing all that he possessed and making him eligible for receiving ‘zakat’ (alms that a rich Muslim gives to the poor).

“Those were the worst years of my life,” says Mr Sareshwala, the promoter of Parsoli Corporation, adding, “we were reduced to ashes. Our bank accounts were frozen, trading accounts suspended and bank guarantees withdrawn. We didn’t even have an office then.”

The story of Mr Sareshwala, 46, is a reflection of the rock-hard resilience of the Gujarati people, thousands of whom have rebuilt their lives after being economically wiped out over decades in one of India’s most disaster-prone states. “There was nothing we could do and no one was willing to help. Fortunately, I had a chance meeting with Uto Baader, the chairman of Germany-based Baader Bank, who was convinced about our business model,” says Mr Sareshwala, who went to St Xaviers’ School in Ahmedabad, and graduated in engineering and marketing.

Uto Baader, in his personal capacity, and Gulf Investment Services Company jointly picked up 49% in the company, thereby recapitalising Parsoli Corporation with about Rs 64 crore. This paved the way for a new beginning for Parsoli, which engaged itself in facilitating Islamic investors make ethical Shariah investments. “It’s a religious requirement of a Muslim to be invested; rather it is un-Islamic to hold money. Interest is forbidden, but sharing risk and responsibility, i.e. sharing profit and loss, is acceptable,” says Mr Sareshwala. Parsoli’s market cap stands at around Rs 350 crore, and it has over 13,000 clients. Revenues have risen 15 times from FY03 to FY07 and profits have shot up 146 times during the period.

Even though Mr Sareshwala and Parsoli have done well over the years, they have their share of detractors as well. There are many out there raising questions about Parsoli’s expertise in recommending Shariah investments and propagating Islamic finance.

“I have learned Islamic finance from scholars like Mufti Taqi Usmani (the Pakistani judge who gave the first fatwa on Islamic finance) and Sheikh Nizam Yaqubi. We’ve a very knowledgeable Islamic scholar board to consult on matters pertaining to Islamic finance. Between us three brothers, who run the show, we have got 60 years of experience in finance. I belong to a deeply religious family with strong Islamic convictions,” says Mr Sareshwala, to manifest Parsoli’s level of expertise in Islamic finance.

Mr Sareshwala is now reaching out to Islamic clerics who could educate common Muslims as to how they can invest in stocks without compromising religious beliefs. “This philosophy is also appealing to a lot of non-Muslims. In fact, 20% of our clients are non-Muslims,” he says, adding, “Islamic finance will catch up in India. We’ll see people in power, politicians and regulators acceding to the demands of millions of Indian Muslims and non-Muslims.”